Exhibit 10.1
SETTLEMENT
AGREEMENT
THIS SETTLEMENT AGREEMENT (“
Agreement ”), dated the 14th day of December, 2006
(“ Effective Date ”), is made by and between
SCPIE Holdings Inc., a Delaware corporation (“ SCPIE
”), on the one hand, and Joseph Stilwell, Stilwell Value LLC
and Stilwell Value Partners III, L.P. (collectively, the “
Stilwell Group ”), on the other hand.
WHEREAS, SCPIE and the Stilwell
Group have agreed that it is in their mutual interests to enter
into this Agreement, among other things, to set forth certain
agreements concerning SCPIE’s 2007 Annual Meeting of
Stockholders (including all adjournments or postponements thereof
(the “ 2007 Annual Meeting ”)), as hereinafter
described.
NOW, THEREFORE, in consideration of
the premises and the representations, warranties, and agreements
contained herein, and other good and valuable consideration, the
parties hereto mutually agree as follows:
1. Representations and Warranties
of Stilwell Group . The Stilwell Group hereby represents and
warrants to SCPIE as follows:
a. The Stilwell Group has beneficial
ownership of 847,400 shares of common stock of SCPIE and has full
and complete authority to enter into this Agreement and to bind the
entire number of shares of the common stock of SCPIE which it
holds, or may hold, including any shares purchased in the future,
to the terms of this Agreement. This Agreement constitutes a valid
and binding agreement of the Stilwell Group. No
“affiliate” or “associate” (as such terms
are defined in the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”)) of the Stilwell Group
beneficially owns any shares or rights to acquire shares of common
stock of SCPIE.
b. There are no arrangements,
agreements or understandings between the Stilwell Group and SCPIE
other than as set forth in this Agreement.
2. Representations and Warranties
of SCPIE . SCPIE hereby represents and warrants to the Stilwell
Group, as follows:
a. SCPIE has full power and
authority to enter into and perform its obligations under this
Agreement, and the execution and delivery of this Agreement by
SCPIE has been duly authorized by the Board of Directors of SCPIE
and requires no further Board of Directors or stockholder action.
The Board of Directors of SCPIE may be referred to hereinafter as
the “Board”. This Agreement constitutes a valid and
binding obligation of SCPIE and the performance of its terms does
not constitute a violation of its certificate of incorporation or
by-laws.
b. There are no arrangements,
agreements or understandings between the Stilwell Group and SCPIE
other than as set forth in this Agreement.
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3. Stilwell Group’s
Prohibited Conduct . No member of the Stilwell Group or any of
their affiliates, associates or other persons acting in concert
with them, shall, directly or indirectly,
a. solicit (as such term is used in
the proxy rules of the Securities and Exchange Commission) proxies
or consents, or participate in any manner in the solicitation of
proxies or consents, from SCPIE’s stockholders to elect
persons to the Board or to approve shareholder
proposals,
b. make any public statement
critical of SCPIE, or its Directors or management, or in favor of
any proposal opposed by the Board,
c. initiate any litigation against
SCPIE or any of its Directors or officers, except to enforce the
terms of this Agreement, and duties arising out of their services
as Directors,
d. make or be the proponent of any
shareholder proposal, whether pursuant to Rule 14a-8 of the
Exchange Act or otherwise,
e. acquire, offer or propose to
acquire, or agree to acquire (except, in any case, by way of stock
dividends or other distributions or offerings made available to
holders of SCPIE common stock generally), directly or indirectly,
or retain ownership of any SCPIE common stock, if when taken
together with the SCPIE common stock beneficially owned by the
Stilwell Group would constitute more than 9.9% of the then
outstanding shares of SCPIE; provided that “beneficial
ownership” shall have the meaning ascribed thereto under
Section 13(d) of the Exchange Act,
f. make any public announcement with
respect to any proposal or offer involving, or propose to enter
into, or assist or encourage any other person with respect to,
directly or indirectly, any merger, consolidation, business
combination, tender or exchange offer, sale or purchase of assets,
sale or purchase of securities, dissolution, liquidation,
restructuring, recapitalization or similar transactions of or
involving SCPIE, or to propose as a Director any of the foregoing
types of transactions,
g. form, join or in any way
participate in any “group” (within the meaning of
Section 13(d)(3) of the Exchange Act) with respect to SCPIE
common stock,
h. deposit any SCPIE common stock in
any voting trust or subject any SCPIE common stock to any
arrangement or agreement with respect to the voting of any SCPIE
common stock,
i. execute any written consent as
stockholders with respect to SCPIE or its common stock, except as
set forth herein,
j. otherwise act, alone or in
concert with others, to control or seek to control or influence or
seek to influence the stockholders, management, the Board or
policies of SCPIE, other than through non-public communications
with the Directors of SCPIE; provided , that, subject to
clause (f) above, nothing herein shall limit Joseph Stilwell
from acting in his capacity as a Director of SCPIE in
accordance
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with his fiduciary duties at any
meeting of the Board, including his ability to discuss and vote
upon the items in clause (f) above,
k. seek, alone or in concert with
others, (i) to call a meeting of stockholders,
(ii) representation on the Board of SCPIE or its subsidiaries,
except as set forth herein, or (iii) the removal of any member
of the SCPIE Board or any of its subsidiaries, except if any such
action mentioned in this clause (k) is approved by the SCPIE
Board as a result of a majority vote of the Directors other than
Stilwell,
l. make any publicly disclosed
proposal regarding any of the foregoing,
m. publicly make any request to
amend, waive or terminate any provision of this
Agreement,
n. advise, finance, assist or
encourage any other person or entity in connection with any of the
foregoing, or
o. otherwise take, or cause others
to take, any action inconsistent with any of the
foregoing.
4. Voting at Meetings of
Stockholders . The Stilwell Group shall vote all of the shares
of SCPIE common stock beneficially owned by its members for each of
SCPIE’s nominees for election to the SCPIE Board and, in
other matters, in accordance with the recommendation of the SCPIE
Board, or, if so directed by the Board, pro rata with all other
stockholders.
5. Directorships and
Committees . SCPIE agrees that Joseph Stilwell (“
Stilwell ”) will be appointed to the Board of SCPIE,
effective January 15, 2007, and in accordance with the
following terms:
a. Stilwell will be appointed to the
Class of Directors of SCPIE whose terms expire at the 2007 Annual
Meeting and to the Strategic Planning Committee of the SCPIE
Board.
b. Stilwell will be entitled to
receive the identical compensation and benefits being paid to the
other non-employee Directors of SCPIE.
c. No member of the Stilwell Group
shall accept any incentive or compensation that would influence any
member of the Stilwell Group to recommend that SCPIE enter into a
transaction for the sale of SCPIE or to recommend any other
significant initiative affecting SCPIE and its stockholders. For
purposes of this subparagraph 5(c), neither an increase in the
value of the Stilwell Group’s holdings in SCPIE shares nor
any fees earned by Stilwell in connection with managing his limited
partnerships shall constitute an incentive or compensation
hereunder.
d. SCPIE and its Board agree to
nominate and support Stilwell for re-election to the Board of SCPIE
at the 2007 Annual Meeting for a term that expires at the 2010
Annual Meeting of Stockholders.
6. Litigation . During the
term of this Agreement, SCPIE will not, directly or indirectly,
initiate any litigation against the Stilwell Group, except
to
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enforce the terms of this Agreement and duties
arising out of Stilwell’s service as a Director.
7. Dispositions . The
Stilwell Group agrees that any disposition of shares of common
stock of SCPIE will be made in open market transactions in a manner
designed to effect an orderly disposition of such shares. The
Stilwell Group further agrees that it will not transfer or dispose
of any shares of SCPIE common stock if, as a result of such
disposition or transfer, to the knowledge of any member of the
Stilwell Group, the person making such acquisition will
beneficially own, together with its affiliates and any member of a
“group” (within the meaning of the Exchange Act) in
which such acquiror is a party, immediately following such
acquisition, 5% or more of the SCPIE common stock then
outstanding.
8. Certification of Ownership
. The Stilwell Group shall, upon request of SCPIE, certify to SCPIE
as to the amount of shares it beneficially owns.
9. Termination .
a.
