Members of the Stock Option and Incentive Bonus Committee
Jack E. McCleary MD, Chairman
Henry L. Stoutz MD

Charter
This Stock Option and Incentive Bonus Committee Charter was adopted by the Board of Directors (the "Board") of SCPIE Holdings Inc. (the "Company") on February 26, 2004, and includes amendments through February 27, 2007.

1. Purpose

The purpose of the Stock Option and Incentive Bonus Committee (the “Committee”) of the Board is (1) to establish criteria and standards for incentive compensation awarded to senior executives of the Company, (2) to administer the stock option programs of the Company and (3) to ensure compliance with Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”).

In addition to the powers and responsibilities expressly delegated to the Committee in this Charter, the Committee may exercise any other powers and carry out any other responsibilities delegated to it by the Board from time to time consistent with the Company’s Bylaws. The powers and responsibilities delegated by the Board to the Committee in this Charter or otherwise shall be exercised and carried out by the Committee as it deems appropriate without requirement of Board approval, and any decision made by the Committee (including any decision to exercise or refrain from exercising any of the powers delegated to the Committee hereunder) shall be at the Committee’s sole discretion. While acting within the scope of the powers and responsibilities delegated to it, the Committee shall have and may exercise all the powers and authority of the Board. To the fullest extent permitted by law, the Committee shall have the power to determine which matters are within the scope of the powers and responsibilities delegated to it.

2. Membership

The Committee shall be composed of three directors, none of whom shall be an employee of the Company and each of whom shall be an “outside director” under the regulations promulgated under Section 162(m) of the Code. The Board may from time to time change the number of members of the Committee.

The members of the Committee shall be appointed by the Board on the recommendation of the Nominating/Corporate Governance Committee. The Chair of the Committee shall be appointed by the Board on the recommendation of the Chairman of the Board. Committee members may be removed from the Committee, with or without cause, by the Board.

3. Meetings and Procedures

The Chair (or in his or her absence, a member designated by the Chair) shall preside at each meeting of the Committee and set the agendas for Committee meetings. The Committee shall have the authority to establish its own rules and procedures for notice and conduct of its meetings so long as they are not inconsistent with any provisions of the Company’s Bylaws that are applicable to the Committee or the Company’s Corporate Governance Guidelines.

The Committee shall meet on a regularly scheduled basis at least two times per year and more frequently as the Committee deems necessary or desirable.

All non-management directors that are not members of the Committee may attend and observe meetings of the Committee, but shall not participate in any discussion or deliberation unless invited to do so by the Committee, and in any event shall not be entitled to vote. The Committee may, at its discretion, include in its meetings members of the Company’s management, representatives of the independent auditor, any other financial personnel employed or retained by the Company or any other persons whose presence the Committee believes to be necessary or appropriate. Notwithstanding the foregoing, the Committee may also exclude from its meetings any persons it deems appropriate, including but not limited to, any non-management director who is not a member of the Committee.

The Committee may retain any independent counsel, compensation and benefits consultants and other outside experts or advisors that the Committee believes to be desirable and appropriate. The Committee may also utilize the services of the Company’s regular legal counsel or other advisors to the Company. The Company shall provide for appropriate funding, as determined by the Committee, for payment of compensation to any such persons retained by the Committee.

The Committee shall cause to be prepared and shall maintain minutes of Committee meetings.

The Chair shall report to the Board following meetings of the Committee and as otherwise requested by the Chairman of the Board.

4. Duties and Responsibilities
1. The Committee shall administer the stock option plans of the Company and any plan dealing with executive officers who may be “covered employees” under Section 162(m) of the Code. With respect to those plans managed by the Committee, the Committee shall have responsibility for:
   1. general administration;
   2. setting performance targets under all annual bonus and long-term incentive compensation plans as appropriate and committing to writing any and all performance targets for all executive officers who may be "covered employees" under Section 162(m) of the Code within the first 90 days of the performance period to which such target relates or, if shorter, within the period provided by Section 162(m) of the Code in order for such target to be “pre-established” within the meaning of Section 162(m) of the Code;
   3. certifying that any and all performance targets used for any performance- based compensation plans under Section 162(m) of the Code have been met before payment of any executive bonus or compensation or exercise of any executive award granted under any such plan(s);
   4. approving all amendments to, and terminations of, all compensation plans and any awards under such plans;
   5. granting any awards under any performance-based annual bonus, long-term incentive compensation and equity compensation plans to executive officers or current employees with the potential to become the CEO or an executive officer, including stock options and other equity rights (e.g., restricted stock, stock purchase rights);
   6. approving which executive officers are entitled to awards under the Company’s stock option plan(s); and
   7. repurchasing securities from terminated executive officers who may be “covered employees” under Section 162(m) of the Code.
2. The Committee shall periodically review the need for a Company policy regarding compensation paid to the Company’s executive officers in excess of limits deductible under Section 162(m) of the Code.
3. The Committee shall evaluate its own performance on an annual basis, including its compliance with this Charter, and provide any written material with respect to such evaluation to the Board, including any recommendations for changes in procedures or policies governing the Committee. The Committee shall conduct such evaluation and review in such manner as it deems appropriate.
4. The Committee shall review and reassess this Charter at least annually and submit any recommended changes to the Board for its consideration.
5. Delegation of Duties

In fulfilling its responsibilities, the Committee shall be entitled to delegate any or all of its responsibilities to a subcommittee of the Committee, except that it shall not delegate its responsibilities set forth in Section 4 above or for any matters that it has determined executive compensation is intended to comply with Section 162(m) of the Code by virtue of being approved by a committee of “outside directors.”