<PAGE>   1
                                                             Exhibit 10(ll)


                             INCENTIVE AGREEMENT
                    IN THE EVENT OF A SALE OF SOURCE ONE



The following will occur at the close of a sale of the company:

1.   Sale Incentive:  Each of the individuals listed on the enclosed schedule
     shall be entitled to a special bonus in connection with the sale of the
     company which will consist of two elements:

     a.    One third of all shares allocated under the LTIP in each earning 
           period (26,442.97 shares in the aggregate) will become fully earned
           and vested to participants on the date of close, the value of which
           will be determined by using the Market Price (as defined in the
           Plan) of FAEH shares on the closing date of the sale;

     b.    Each listed individual will be entitled to a share (represented by 
           the pro rata factor) of the purchase price in excess of GAAP book.

The bonus amount payable to Messrs. Allemang and Densmore will be a minimum of
$356,092 and $360,616, respectively.

Payment of bonus amounts shall be made one year after the sale with interest
accruing from the date of sale at the "Daily Prime Rate," as defined in the
Company's Voluntary Deferred Compensation Plan.  Notwithstanding the foregoing,
however, the payment described above for each individual will be reduced by the
smallest amount required so that no part of the payment is not deductible under
Section 280G of the Internal Revenue Code of 1986, as amended (the "Code"), so
long as such reduction is less than the excise tax that would otherwise be
assessed under Section 4999 of the Code upon the payment of bonus amounts
absent such reduction.

The payout of the bonus is contingent upon continuation of the executive's
employment with Source One for a period of one year from the sale, unless
involuntarily terminated other than for "Cause" or as a result of "Constructive
Termination," both as defined under the LTIP, or in connection with a material
reduction in benefits as defined in Paragraph 2 below, in which case payment
will be made at time of termination.




<PAGE>   2



2.   Current Benefits:  Fund American will attempt to secure continuation of 
     benefits reasonably comparable to those currently in place for a period of
     at least 36 months after the sale.  Such programs include retirement
     plans, ESOP, LTIP, EICP, deferred compensation plans, health and life
     insurance, car leases and allowances, and club memberships.  A material
     reduction in these benefits would constitute "Constructive
     Termination." In addition, Jim Conrad and Bob Richards will be provided
     supplemental retirement benefits that will permit each of them to begin
     receiving retirement benefits (starting at the time of termination,
     constructive or otherwise) as if they had reached age fifty-eight (for
     purposes of eligibility for an early retirement benefit, determining
     Benefit Service and the percentage reduction in benefits due to the start
     of benefits before the normal retirement date) under the Company's
     retirement plan and SERP and begin receiving post retirement medical
     benefits coverage as if each had reached age fifty-five at the time of
     termination, if his employment should be involuntarily terminated other
     than for "Cause" or if "Constructive Termination" occurs, as defined above
     and under the LTIP.  Finally, Jim Conrad and Bob Richards will be entitled
     to any additional benefits available to terminated employees in such case.

3.   Transaction Pool:  A pool of $200,000 will be established by the Company 
     for possible distribution to certain employees, other than members of the 
     Management Committee, who deserve special consideration for making
     the sale a success.



Date:   2-15-96                           James A. Conrad
     -------------------                  ---------------------------------
                                          James A. Conrad
                                          President and CEO
                                          Source One Mortgage
                                           Services Corporation
 


                                          Terry L. Baxter
                                          ---------------------------------
                                          Terry L. Baxter
                                          President
                                          Fund American Enterprises, Inc.







<PAGE>   3


                                 SALE BONUS


<TABLE>
<CAPTION>

 
                         BASE SHARES          PRO RATA FACTOR
                                                    (%)
<S>                       <C>                     <C>
Conrad                    8,892.33                1.6814

Richards                  6,351.67                1.2010

Allemang                  3,176.00                 .6006

Densmore                  3,176.00                 .6006

Janssen                     333.33                 .1890

Brady                       635.33                 .1201

Champion                    635.33                 .1201

Courson                     635.33                 .1201

Manasco                     635.33                 .1201

Everett                     333.33                 .0630

Gillies                     333.33                 .0630

Jansen                      333.33                 .0630

Schrader                    333.33                 .0630

Taylor                      333.33                 .0630

Cleary                      305.67                 .0580
                         ---------                ------

                         26,442.97                5.1260


</TABLE>