**Exhibit 10.68**

 

**DEFERRED COMPENSATION AGREEMENT**

 

**RECITALS**

 

 

This Deferred Compensation Agreement (this “Agreement”) is made and entered into as of January 1, 2001, by and between SCPIE Management Company (the “Company”), and Donald P. Newell (“Executive”).

 

WHEREAS, Executive is the Senior Vice Presidentand General Counsel of the Company and of the Company’s parent company, SCPIE Holdings Inc. (“Holdings”), and shall serve in such business and legal capacity as the Board of Directors of Holdings (the “Board”) shalldetermine from time to time; 

 

WHEREAS, theCompany and Executive have entered into an Employment Arrangement dated October 30, 2000, which became effective January 1, 2001 (the “Employment Arrangement”); 

 

WHEREAS, pursuant to Paragraph 5 of the Employment Arrangement, Executive is entitled to receive certaindeferred compensation benefits; and 

 

WHEREAS, theCompany and Executive desire to enter into this Agreement in order to set forth the terms and conditions of the Employment Arrangement relating to the deferred compensation benefits. 

 

 

**AGREEMENT**

 

 

NOW, THEREFORE, in consideration of the premises and mutual covenants contained herein, the receipt of which is hereby acknowledged, the parties hereto agree as follows: 

 

 

1.1    On the last day of each month during the period beginning on January 1, 2001 and ending on the last day of themonth in which Executive’s employment with the Company is terminated (the “Crediting Period”), the Company shall credit an amount equal to Sixteen Thousand Six Hundred and Sixty Seven Dollars ($16,667.00) to an account (the“Account”) in its books and records, which Account shall be maintained for the purpose of providing Executive with deferred compensation benefits, subject to the following terms and conditions. (The amounts credited to the Account underthis Section 1.1 are hereinafter referred to as the “Contribution Credits”). 

 

1.2    On April 30, 2001 and quarterly thereafter the Company shall credit the principal balance of the Account with interest at the rate of nine percent (9%) per annum, compoundedquarterly, until the Account shall have been fully distributed, as provided below. 

 
2. Payment of Account. 
 

2.1    The principal balance and accrued interest of the Account (the “Deferred Compensation”) shall bepayable to Executive in substantially equal monthly installments beginning on January 31, 2008 and ending on December 31, 2017 (the “Payment Term”); provided, however, that at any time before January 1, 2008 (the “Benefit CommencementDate”), Executive may elect to have the Deferred Compensation payable beginning at a different date or over such different period of time as Executive may irrevocably elect in writing, subject to the approval of the Company’s Board ofDirectors in its sole and absolute discretion. 

 

2.2    In the event that Executive’s employment by the Company is terminated by reason of Executive’s death prior to the Benefit Commencement Date or in the event of Executive’s death prior to theexpiration of the Payment Term, the entire unpaid balance of the Account as of the date of Executive’s death, including interest accrued thereon to the date of death at the rate prescribed by Section 1.2, shall be paid in a lump sum withinsixty (60) days after the date of death to the beneficiary or beneficiaries which Executive has designated in a written notice to the Company. If Executive has not designated a beneficiary, such amount shall be paid to Executive’s estate.Executive may revoke or amend his beneficiary designation from time to time. 

 

2.3    In the event of a “Change in Control” (as defined below) of the Company, the unpaid balance of the Account as of the effective date of such Change in Control,including all interest accrued thereon to the effective date of such Change in Control at the rate prescribed by Section 1.2, shall be immediately due and payable; provided, however, that at any time prior to the effective date of the Change inControl, Executive may elect to have the Deferred Compensation not be paid pursuant to this Section 2.3 and to have the Deferred Compensation continue to be held and distributed according to the other provisions of this Agreement. 

 

Solely for purposes of this Agreement, Change in Control shallbe deemed to occur if: 

 

(a) any Person (asdefined in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) is or becomes the Beneficial Owner (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of theCompany representing 20% or more of the combined voting power of the Company’s then outstanding securities (“Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (a), the following shall notconstitute a Change in Control: (i) any acquisition by the Company or any corporation controlled by the Company, (ii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporationcontrolled by the Company, or (iii) any acquisition by a Person of 20% of the Outstanding Company Voting Securities as a result of an acquisition of common stock of the Company by the Company which, by reducing the number of shares of common stockof the Company outstanding, increases the proportionate number of shares beneficially owned by such Person to 20% or more of the Outstanding Company Voting Securities; provided, however, that if a Person shall become the beneficial owner of 20% ormore of the Outstanding Company Voting Securities by reason of a share acquisition by the Company as described above and shall, after such share acquisition by the Company, become the beneficial owner of any additional 

 

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shares of common stock of the Company, then such acquisition shall constitute a Change in Control;

 

(b) during any period of two consecutive years(not including any period prior to the execution of this Agreement), individuals who at the beginning of such period constitute the Board, and any new director (other than a director designated by a person who has entered into an agreement withCompany to effect a transaction described in clauses (a), (c), (d) or (e) of this definition) whose election by the Board or nomination for election by the Company’s stockholders was approved by a vote of at least two-thirds (K) of thedirectors then still in office who either were directors at the beginning of the period or whose election or nomination for election was previously so approved (hereinafter referred to as “Continuing Directors”), cease for any reason toconstitute at least a majority thereof; 

 

(c) theconsummation by the Company of a merger or consolidation of Company with any other corporation (or other entity), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior theretocontinuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) 50% or more of the combined voting power of the voting securities of the Company or such surviving entity outstandingimmediately after such merger or consolidation; provided, however, that a merger or consolidation effected to implement a recapitalization of the Company (or similar transaction) in which no Person acquires more than 20% of the combined voting powerof the Company’s then outstanding securities shall not constitute a Change in Control; 

 

(d) the stockholders of the Company approve a plan of complete liquidation of the Company; or 

 

(e) the consummation of an agreement (or agreements) providing for the sale or disposition by the Company of all or substantially all ofthe Company’s assets other than a sale or disposition which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent 50% or more of the combined voting power of the Company or suchsurviving entity outstanding immediately after such sale or disposition. 

 

 
3. Miscellaneous Provisions. 
 

 

3.1    The Company shall withhold allapplicable income taxes and employment taxes from the amounts distributed hereunder as may be required by law. 

 

3.2    Notwithstanding anything contained in this Agreement, in the event that the Internal Revenue Service or anystate taxing authority makes a final determination which is not protested or appealed, or after a final determination with respect to any protest or appeal of any such determination, that all or any part of the Deferred Compensation is taxable toExecutive prior to the time that such amounts are actually distributed to Executive, the entire unpaid balance of the Account as of the date of such determination, including all interest accrued thereon to the date of such final determination at therate prescribed by Section 1.2, shall be paid to Executive in a lump-sum within thirty (30) days after the date of such final determination. 

 

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3.3    The Account shall not be assignable by Executive and shall not be subject to attachment, lien, levy, or other creditors’ rights under state or Federal law. 

 

3.4    Benefits under this Agreement shallbe payable from the general assets of the Company or pursuant to such other means as the Company deems appropriate and Executive shall not be entitled to look to any source for payment of such benefits other than the general assets of the Company.

 

3.5    The DeferredCompensation and any payments with respect to such amounts shall not constitute compensation for the purposes of any benefit plan or agreement maintained by the Company unless expressly provided otherwise in such plan or agreement. 

 

3.6    Nothing in this Agreement shallconfer upon Executive any right to continue in the employ of the Company or shall interfere with or restrict in any way the rights of the Company, which are hereby expressly reserved, to discharge Executive at any time for any reason whatsoever,with or without Cause. 

 

3.7    The Company and Executive agree that (i) the provisions of this Agreement constitute a “pension benefit plan” within the meaning of Section 3(2) of the Employee Retirement Income Security Act of1974, as amended (“ERISA”), (ii) such plan is unfunded and is maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees, within the meaning of Sections 201(2),301(a)(3) and 401(a)(1) of ERISA, and (iii) the provisions of this Agreement shall be governed by federal law. 

 

IN WITNESS WHEREOF, the parties hereto have each executed this Agreement effective as of the date first written above. 

 

 

 

**SCPIE MANAGEMENT COMPANY**

By:
 
/S/    DONALD J. ZUK
  
Its:    ***President***

 

 

 

 

/S/    DONALD P.NEWELL

***          Donald P. Newell***

 

 

 

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GUARANTY

 

 

1.    FOR VALUE RECEIVED and in consideration for, and as an inducement to Donald P. Newell (the “Executive”) entering into and continuing his performance under anEmployment Arrangement dated October 30, 2000, including a Deferred Compensation Agreement dated as of January 1, 2001, with SCPIE Management Company (collectively, the “Agreement”), SCPIE Holdings Inc. (“SCPIE Holdings”)absolutely, irrevocably and unconditionally guarantees to Executive, and his successors and assigns, the full and timely payment by SCPIE Management Company to Executive of the compensation required to be paid and benefits required to be provided bySCPIE Management Company to Executive under said Agreement on the terms and conditions set forth in said Agreement. 

 

2.    This Guaranty is a guaranty of payment, not collection, and Executive shall not be required to first pursue hisremedies against SCPIE Management Company but may instead proceed to enforce all of his rights and remedies directly against SCPIE Holdings or against SCPIE Management Company and SCPIE Holdings at the same time. This Guaranty cannot otherwise beterminated or modified without the written consent of Executive. Guarantor hereby waives notice of acceptance of this Guaranty, as well as all demands, presentments, notices of protest and notices of every kind and nature. 

 

3.    If any dispute arises pertaining tothis Guaranty, such dispute will be submitted to binding arbitration in accordance with the Rules of the American Arbitration Association before a single neutral arbitrator, such arbitration to take place in Los Angeles, California and judgment uponsuch award rendered by the arbitrator may be entered in any court having jurisdiction. 

 

Executed in Los Angeles, California, on October 23, 2002. 

 

 

**SCPIE HOLDINGS INC.**

By:
 
/S/    DONALD J. ZUK
  
Name:    Donald J. Zuk

Its:        ***President and Chief Executive Officer***

 

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