SUNCOAST HOLDINGS, INC. 2005 STOCK OPTION PLAN

EXHIBIT 10.7

SUNCOAST HOLDINGS, INC.
2005 STOCK OPTION PLAN

TABLE OF CONTENTS

		Page
ARTICLE I – PURPOSE			1
ARTICLE II – DEFINITIONS			1
2.01 Definitions			1
ARTICLE III – ADMINISTRATION/ELIGIBILITY			4
3.01 Committee Duties			4
3.02 Delegation of Duties			4
3.03 Participation			4
3.04 Conditions of Participation			5
3.05 Eligibility			6
3.06 Limitations on Committee			6
ARTICLE IV – STOCK SUBJECT TO PLAN			6
4.01 Number of Shares			6
4.02 Unfulfilled Awards			6
4.03 Adjustment in Capitalization			6
4.04 Limitations on Number of Shares Issuable to an Eligible Employee or Director			6
ARTICLE V – OPTIONS			7
5.01 Grant of Options			7
5.02 Option Price			7
5.03 Exercise of Options			7
5.04 Incentive Stock Options			7
5.05 Payment for Options			8
5.06 Restrictions on Option Exercise and Transferability			8
5.07 Restrictions on Reload/Repricing			8
ARTICLE VI – TERMINATION OF SERVICE/LIMITS ON EXERCISABILITY/BUYOUTS			8
6.01 Effect of Termination of Service on Awards			8
6.02 Other Limits on Exercisability			10
6.03 Buy Out of Article 6 Awards			10
ARTICLE VII – MERGER, CONSOLIDATION OR SIMILAR EVENT			10
7.01 Definition of Business Combination			10

TABLE OF CONTENTS
(continued)

		Page
7.02 Effect of Business Combination on Options			11
7.03 Application of Section 280G of the Code			11
ARTICLE VIII – AMENDMENT, MODIFICATION AND TERMINATION OF PLAN			12
ARTICLE IX – MISCELLANEOUS			12
9.01 Assignability			12
9.02 Beneficiary Designation			12
9.03 No Guarantee of Continuing Service			13
9.04 Tax Withholding			13
9.05 Indemnification			14
9.06 No Limitation on Compensation			14
9.07 Requirements of Law			14
9.08 Term of Plan			14
9.09 Governing Law			14
9.10 No Impact on Benefits			14

SUNCOAST HOLDINGS, INC.
2005 STOCK OPTION PLAN ARTICLE I – PURPOSE

This Plan is intended to foster and promote the long-term financial success of SunCoast Holdings, Inc. and its Subsidiaries (the “SunCoast Group”); to reward performance and to increase shareholder value by providing Participants appropriate incentives and rewards; to enable the SunCoast Group to attract and retain the services of outstanding individuals upon whose judgment, interest and dedication the successful conduct of the SunCoast Group’s businesses are largely dependent; to encourage Participants’ ownership interest in SunCoast Holdings, Inc.; and to align the interests of management and directors with that of the SunCoast Holdings, Inc.’s shareholders.

ARTICLE II – DEFINITIONS

2.01 Definitions. When used in this Plan, the following terms will have the meanings given to them in this Article unless another meaning is expressly provided elsewhere in this document or clearly required by the context. When applying these definitions and any other word, term or phrase used in this document, the form of any word, term or phrase will include any and all of its other forms.

Act. The Securities Exchange Act of 1934, as amended.

Annual Meeting. The annual meeting of the Company’s shareholders.

Award. Any Incentive Stock Option or Nonqualified Stock Option.

Award Agreement. The written or electronic agreement or other instrument or document that [1] describes the terms and conditions of each Award and the manner in which it will be settled if earned and [2] evidences an Award granted by the Committee and is signed or otherwise authenticated by both the Company and the Participant. If there is any conflict between the terms of this Plan and the terms of the Award Agreement, the terms of the Plan will prevail.

Beneficiary. The individual a Participant designates to receive (or to exercise) or is otherwise entitled to receive (or to exercise) in accordance with Section 9.02 any Plan benefits (or rights) that are unpaid (or unexercised) when the Participant dies. A Beneficiary may be designated or determined only by following the procedures described in Section 9.02 and neither the Company nor the Committee is required or permitted to infer a Beneficiary from any other source.

Board . The Company’s board of directors.

Business Combination. A transaction of the type described in Section 7.01.

Cause. For purposes of this Plan and unless otherwise specified in the Award Agreement, with respect to any Participant who is an Employee:

[1] Any act of fraud, intentional misrepresentation, embezzlement, misappropriation or conversion of any SunCoast Group member’s asset or business opportunity;

[2] Conviction of, or entering into a plea of nolo contendere to, a felony;

[3] Intentional, repeated or continuing violation of any of the applicable SunCoast Group member’s policies or procedures that occurs or continues after notice to the Participant that he or she has violated such policy or procedure; or

[4] Any material breach of a written covenant or agreement with a SunCoast Group member, including the terms of this Plan or any material breach of fiduciary duty to SunCoast Group member.

Code. The Internal Revenue Code of 1986, as in effect on the Effective Date or as amended or superseded after the Effective Date, and any applicable regulations and rulings issued under the Code.

Committee.

[1] In the case of Awards to Directors, the entire Board; or

[2] In the case of all other Awards, the Board’s compensation committee. The Committee will be comprised of at least three individuals.

Company. SunCoast Holdings, Inc., a corporation organized under the laws of Delaware, and all successors to it.

Director. Each member of the Board or of the board of directors of any Subsidiary.

Disability. A disability as defined in Section 22(e)(3) of the Code.

Effective Date. The earlier of [1]  the date this Plan is approved by the Board or [2]  the date this Plan is approved by the Company’s shareholders.

Eligible Employee. Any Employee who is employed in an executive position, as determined by the Committee, by a SunCoast Group member.

Employee. Any individual who is a common law employee of a SunCoast Group member. A worker who is classified as other than a common law employee by an Employer but who is subsequently reclassified as a common law employee of such Employer for any reason and on any basis will be treated as a common law employee only from the date of that reclassification and will not retroactively be reclassified as an Employee for any purpose of this Plan.

Employer. Each member of the SunCoast Group.

Exercise Price. The price, if any, at which a Participant may exercise an Award.

Fair Market Value. The value of one share of Stock on any relevant date, determined as follows:

[1] If the shares of Stock are traded on an established securities market (including the NASDAQ National Market System), the reported “closing price” on the relevant date, if it is a trading day; otherwise on the immediately preceding trading day; or

[2] If the shares of Stock are not traded on an established securities market, the fair market value, as determined by the Committee in good faith under a reasonable valuation method, as of the valuation date coinciding with or, if none, most recently preceding the relevant date provided that it is no more than 12 months before the relevant date. Such fair market value determination shall be made in a manner consistent with the rules prescribed under Section 409A of the Code, and, with respect to Incentive Stock Options, consistent with rules prescribed under Section 422 of the Code.

Grant Date. The date specified as the grant date in the Award Agreement.

Incentive Stock Option. Any Option granted under Article V that, on the Grant Date, meets the applicable requirements of Section 422 of the Code and is not subsequently modified in a manner that results in the grant of a new stock option that does not meet the applicable requirements of Section 422 of the Code.

Nonqualified Stock Option. Any Option granted under Article V that is not an Incentive Stock Option.

Option. The right granted under Article V to purchase a share of Stock at a stated price for a specified period of time. An Option may be either [1]  an Incentive Stock Option or [2]  a Nonqualified Stock Option.

Participant. Any Employee or Director to whom the Committee grants an Award. Designation of an Eligible Employee to receive an Award in any year will not require the Committee to designate that person to receive an Award in any other year or, once designated, to receive the same type or amount of Award granted to the Participant in any other year. The Committee will consider the factors it deems pertinent to selecting Eligible Employees and in determining the type and amount of their respective Awards.

Plan. SunCoast Holdings, Inc. 2005 Stock Option Plan.

Plan Year. The Company’s fiscal year.

Retirement or Retire. In the case of:

[1] An Employee, Termination of Service (without Cause) after attainment of age 55; and

[2] In the case of Directors, their departure from the Board for any reason other than Disability or death.

Stock. The class A common stock of the Company, which contains substantially similar rights (disregarding any difference in voting rights) to the class of common stock of the Company having the greatest aggregate value of common stock issued and outstanding of the Company.

Subsidiary. Any corporation, partnership or other form of unincorporated entity of which the Company owns, directly or indirectly, 50 percent or more of the total combined voting power of all classes of stock, if the entity is a corporation; or of the capital or profits interest, if the entity is a partnership or another form of unincorporated entity.

Termination of Service (or references to a Participant’s Service being Terminated). As applicable, [1]  termination of the employee-employer relationship between a Participant and the Company and all Subsidiaries for any reason, [2]  with respect to an Employee of a Subsidiary, a severance or diminution of the ownership relationship between the Company and that entity after which that entity is no longer a Subsidiary and after which that person is not an Employee or [3]  cessation of a Director’s service on the Board (and the boards of directors of all Subsidiaries) for any reason. However, with respect to any Award that is not an Incentive Stock Option and unless the Committee specifies otherwise either in the Award Agreement or subsequently, a Termination of Service will not have occurred solely because an Employee becomes a consultant to a SunCoast Group member unless that consultant is providing bona fide services to such SunCoast Group member. Also, with respect to any Award (including an Incentive Stock Option), a Termination of Service will not have occurred while the Employee is absent from active employment for a period of not more than three months (or, if longer, the period during which reemployment rights are protected by law, contact or written agreement, including the Award Agreement, between the Participant and the Employer) due to illness, military service or other leave of absence approved by the Employer.

ARTICLE III – ADMINISTRATION/ELIGIBILITY

[1] The Committee is granted all powers appropriate and necessary to administer the Plan. Consistent with the Plan’s purpose, the Committee may adopt, amend and rescind rules and regulations relating to the Plan, to the extent appropriate to protect the Company’s interests, and has complete discretion to make all other decisions necessary or advisable for the administration and interpretation of the Plan. Any action by the Committee will be final, binding and conclusive for all purposes and upon all Participants.

[2] The Committee (or the Board, as appropriate) also may amend the Plan and Award Agreements without any additional consideration to affected Participants to the extent necessary to avoid penalties arising under Section 409A of the Code, even if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement (or both) before those amendments.

3.02 Delegation of Duties . In its sole discretion, the Committee may delegate to any individual or entity (including Employees) that it deems appropriate any of its duties other than those described in Section 3.03[1] and [2].

3.03 Participation .

[1] Consistent with the terms of the Plan, the Committee will:

[a] Decide which Employees and Directors may become Participants;

[b] Decide which Participants will be granted Awards;

[c] Identify the type of Awards to be granted to each Participant;

[d] Specify the terms and conditions imposed on any Awards granted;

[e] Develop the procedures through which an Award may be exercised;

[f] Specify the circumstances under which the Company may cancel an Award or reacquire any Award or shares of Stock acquired through the Plan; and

[g] Impose any other terms and conditions the Committee believes are appropriate and necessary to implement the purpose of this Plan.

[2] The Committee may establish different terms and conditions:

[a] For each type of Award;

[b] For Participants receiving the same type of Award; and

[c] For the same Participant for each Award the Participant receives, whether or not those Awards are granted at different times.

[3] The Committee (or its delegate) will prepare and deliver an Award Agreement to each affected Participant with respect to each Award. The Award Agreement will describe:

[a] The type of Award and when and how it may be exercised;

[b] The effect of exercising an Award;

[c] Any Exercise Price associated with the Award;

[d] Any conditions that must be met before the Award may be exercised;

[e] When and how the Award may be exercised; and

[f] Any other applicable terms and conditions affecting the Award.

3.04 Conditions of Participation . By accepting an Award, each Participant agrees:

[1] To be bound by the terms of the Award Agreement and the Plan; and

[2] That the Committee (or the Board) may amend the Plan and the Award Agreements without any additional consideration to the extent necessary to avoid penalties arising under Section 409A of the Code, even if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement (or both) before those amendments.

3.05 Eligibility. Participation in the Plan is limited to Eligible Employees and Directors. Only Eligible Employees and Directors may receive an Award under the Plan. An Employee’s status as an Eligible Employee or an individual’s status as a Director does not guarantee that any Award will be made to such Employee or individual.

3.06 Limitations on Committee. Notwithstanding anything in this Article III, the Committee shall not have the authority to reduce the Exercise Price for Options other than as provided in Section 4.03 of the Plan.

ARTICLE IV – STOCK SUBJECT TO PLAN

[1] Subject to Section 4.03, the number of shares of Stock subject to Awards under the Plan is the greater of 350,000 shares of Stock or the number of shares of Stock that represents 8% of the fair market value of the Company as of the Effective Date (rounded to the nearest whole number of shares).

[2] The shares of Stock to be delivered under the Plan may consist, in whole or in part, of treasury Stock or authorized but unissued Stock not reserved for any other purpose.

4.02 Unfulfilled Awards. Any Stock subject to an Award that, for any reason, is forfeited, cancelled, terminated, relinquished, exchanged or otherwise settled without the issuance of Stock or without payment of cash equal to the difference between the Award’s Fair Market Value and its Exercise Price may again be granted under the Plan and, in the discretion of the Committee, may be subject to a subsequent Award.

4.03 Adjustment in Capitalization. If, after the Effective Date, there is a Stock dividend or Stock split, recapitalization (including payment of an extraordinary dividend), merger, consolidation, combination, spin-off, distribution of assets to shareholders, exchange of shares, or other similar corporate change affecting Stock, the Committee will appropriately adjust the number of Awards that may or will be granted to Participants in any Plan Year, the aggregate number of shares of Stock available for Awards under Section 4.01 or subject to outstanding Awards (as well as any share-based limits imposed under this Plan) the respective Exercise Prices and/or limitations applicable to outstanding or subsequently granted Awards and any other affected factor, limit or term applying to Awards. Any decision of the Committee under this section will be final and binding on all Participants and Beneficiaries.

4.04 Limitations on Number of Shares Issuable to an Eligible Employee or Director. The aggregate number of shares of Stock with respect to which Awards may be issued under this Plan to any Eligible Employee or Director in any calendar year will not exceed 25,000 (adjusted as provided in Section 4.03) during the Plan Year granted; however, such limit may be increased for any Plan Year only to the extent permitted by the Board.

ARTICLE V – OPTIONS

[1] The Committee may grant Options to Eligible Employees at any time during the term of this Plan. Options granted to Eligible Employees