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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:
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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:
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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,
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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:
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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 .
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