Exhibit 10.7

 

ALDERWOODS GROUP, INC.

 

NONQUALIFIED STOCK OPTION AGREEMENT

(2005 Equity Incentive Plan - Directors)

 

This AGREEMENT (this “Agreement”) is made as of                                
(the “Date of Grant”), by and between Alderwoods Group, Inc., a Delaware
corporation (the “Company”), and                                              
(the “Optionee”) who (i) is a member of the Board and (ii) is not an employee of
the Company or any of its Subsidiaries.

 

1.                                       GRANT OF STOCK OPTION.  SUBJECT TO AND
UPON THE TERMS, CONDITIONS, AND RESTRICTIONS SET FORTH IN THIS AGREEMENT AND IN
THE COMPANY’S 2005 EQUITY INCENTIVE PLAN (THE “PLAN”), THE COMPANY HEREBY GRANTS
TO THE OPTIONEE AS OF THE DATE OF GRANT A STOCK OPTION (THE “OPTION”) TO
PURCHASE                                                COMMON SHARES (THE
“OPTIONED SHARES”).  THE OPTION MAY BE EXERCISED FROM TIME TO TIME IN ACCORDANCE
WITH THE TERMS OF THIS AGREEMENT.  THE PRICE AT WHICH THE OPTIONED SHARES MAY BE
PURCHASED PURSUANT TO THE OPTION SHALL BE $                      , SUBJECT TO
ADJUSTMENT AS HEREINAFTER PROVIDED (THE “OPTION PRICE”).  THE OPTION IS INTENDED
TO BE A NONQUALIFIED STOCK OPTION AND SHALL NOT BE TREATED AS AN “INCENTIVE
STOCK OPTION” WITHIN THE MEANING OF THAT TERM UNDER SECTION 422 OF THE CODE, OR
ANY SUCCESSOR PROVISION THERETO.

 

2.                                       TERM OF OPTION.  THE TERM OF THE OPTION
SHALL COMMENCE ON THE DATE OF GRANT AND, UNLESS EARLIER TERMINATED IN ACCORDANCE
WITH SECTION 6 HEREOF, SHALL EXPIRE TEN (10) YEARS FROM THE DATE OF GRANT.

 

3.                                       RIGHT TO EXERCISE.

 

(A)                                  SUBJECT TO SECTION 6 AND SECTION 7 HEREOF,
THE OPTION WILL BE EXERCISABLE FROM TIME TO TIME PRIOR TO THE TENTH ANNIVERSARY
OF THE DATE OF GRANT TO THE EXTENT OF:

 

(I)            TWENTY-FIVE PERCENT (25%) OF THE OPTIONED SHARES ON EACH OF THE
FIRST TWO ANNIVERSARIES OF THE DATE OF GRANT; AND

 

(II)           AN ADDITIONAL FIFTY PERCENT (50%) OF THE OPTIONED SHARES ON THE
THIRD ANNIVERSARY OF THE DATE OF GRANT.

 

(B)                                 TO THE EXTENT THE OPTION IS EXERCISABLE, IT
MAY BE EXERCISED IN WHOLE OR IN PART.  IN NO EVENT SHALL THE OPTIONEE BE
ENTITLED TO ACQUIRE A FRACTION OF ONE OPTIONED SHARE PURSUANT TO THE OPTION. 
THE OPTIONEE SHALL BE ENTITLED TO THE PRIVILEGES OF OWNERSHIP WITH RESPECT TO
OPTIONED SHARES PURCHASED AND DELIVERED TO THE OPTIONEE UPON THE EXERCISE OF ALL
OR PART OF THE OPTION.  IF THE OPTIONEE SUBSEQUENTLY BECOMES AN EMPLOYEE OF THE
COMPANY WHILE REMAINING A MEMBER OF THE BOARD, THIS OPTION SHALL NOT BE AFFECTED
THEREBY.

 

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(C)                                  (I) THE OPTIONEE, AT ANY TIME DURING THE
TERM OF THIS OPTION, MAY ELECT IMMEDIATELY PRIOR TO THE EXERCISE OF THIS OPTION
AND (II) THE COMMITTEE, AT THE TIME IMMEDIATELY PRIOR TO THE EXERCISE BY THE
OPTIONEE OF THE OPTION, MAY REQUIRE THAT THE OPTIONEE SO ELECT, TO EXCHANGE THIS
OPTION FOR A TANDEM APPRECIATION RIGHT.  THE TANDEM APPRECIATION RIGHT WILL
ENTITLE THE OPTIONEE TO A NUMBER OF COMMON SHARES EQUAL IN VALUE TO THE EXCESS
OF (A) THE AGGREGATE MARKET VALUE PER SHARE OF THE OPTION ON THE DATE THE OPTION
IS EXCHANGED FOR THE TANDEM APPRECIATION RIGHT OVER (B) THE AGGREGATE OPTION
PRICE.  SUCH AN EXCHANGE WILL REQUIRE AN IMMEDIATE EXERCISE OF THE TANDEM
APPRECIATION RIGHT AND WILL CAUSE THE IMMEDIATE TERMINATION OF THIS OPTION.  FOR
GREATER CERTAINTY, AN EXCHANGE PURSUANT TO THIS SECTION 3(C) MAY ONLY BE MADE
WHEN THIS OPTION IS OTHERWISE EXERCISABLE.

 

4.                                       OPTION NONTRANSFERABLE.  THE OPTION
GRANTED HEREBY SHALL BE NEITHER TRANSFERABLE NOR ASSIGNABLE BY THE OPTIONEE
OTHER THAN BY WILL OR BY THE LAWS OF DESCENT AND DISTRIBUTION AND MAY BE
EXERCISED, DURING THE LIFETIME OF THE OPTIONEE, ONLY BY THE OPTIONEE, OR IN THE
EVENT OF HIS OR HER LEGAL INCAPACITY, BY HIS OR HER GUARDIAN OR LEGAL
REPRESENTATIVE ACTING ON BEHALF OF THE OPTIONEE IN A FIDUCIARY CAPACITY UNDER
STATE OR FOREIGN LAW AND COURT SUPERVISION.

 

5.                                       NOTICE OF EXERCISE; PAYMENT.

 

(A)           TO THE EXTENT THEN EXERCISABLE, THE OPTION MAY BE EXERCISED BY
WRITTEN NOTICE TO THE SECRETARY OF THE COMPANY STATING THE NUMBER OF OPTIONED
SHARES FOR WHICH THE OPTION IS BEING EXERCISED AND THE INTENDED MANNER OF
PAYMENT.

 

(B)                                 PAYMENT EQUAL TO THE AGGREGATE OPTION PRICE
OF THE OPTIONED SHARES FOR WHICH THE OPTION IS BEING EXERCISED SHALL BE TENDERED
IN FULL WITH THE NOTICE OF EXERCISE IN CASH IN THE FORM OF CURRENCY OR CHECK OR
OTHER CASH EQUIVALENT ACCEPTABLE TO THE COMPANY.  THE OPTIONEE MAY ALSO TENDER
THE OPTION PRICE BY (I) THE ACTUAL OR CONSTRUCTIVE TRANSFER TO THE COMPANY OF
NONFORFEITABLE, NONRESTRICTED COMMON SHARES THAT HAVE BEEN OWNED BY THE OPTIONEE
FOR MORE THAN SIX MONTHS PRIOR TO THE DATE OF EXERCISE, OR (II) BY ANY
COMBINATION OF THE FOREGOING METHODS OF PAYMENT, INCLUDING A PARTIAL TENDER IN
CASH AND A PARTIAL TENDER IN NONFORFEITABLE, NONRESTRICTED COMMON SHARES. 
NONFORFEITABLE, NONRESTRICTED COMMON SHARES THAT ARE TRANSFERRED BY THE OPTIONEE
IN PAYMENT OF ALL OR ANY PART OF THE OPTION PRICE SHALL BE VALUED ON THE BASIS
OF THEIR MARKET VALUE PER SHARE ON THE DATE OF EXERCISE.

 

(C)                                  NOTWITHSTANDING THE FOREGOING, IF THE
OPTIONEE IS A RESIDENT OF CANADA FOR PURPOSES OF THE CANADIAN TAX ACT THE
AGGREGATE OPTION PRICE SHALL BE MADE IN THE FORM OF IN CASH OR CHECK ACCEPTABLE
TO THE COMPANY.

 

(D)                                 THE REQUIREMENT OF PAYMENT IN CASH SHALL BE
DEEMED SATISFIED IF THE OPTIONEE MAKES ARRANGEMENTS THAT ARE SATISFACTORY TO THE
COMPANY WITH A BROKER TO SELL ON THE EXERCISE DATE A SUFFICIENT NUMBER OF
OPTIONED SHARES THAT ARE BEING PURCHASED PURSUANT TO THE EXERCISE, SO THAT THE
NET PROCEEDS OF THE SALE TRANSACTION WILL AT

 

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LEAST EQUAL THE AMOUNT OF THE AGGREGATE OPTION PRICE PLUS PAYMENT OF ANY
APPLICABLE WITHHOLDING TAXES, AND PURSUANT TO WHICH THE BROKER UNDERTAKES TO
DELIVER TO THE COMPANY THE AMOUNT OF THE AGGREGATE OPTION PRICE PLUS PAYMENT OF
ANY APPLICABLE WITHHOLDING TAXES ON A DATE SATISFACTORY TO THE COMPANY, BUT NOT
LATER THAN THE DATE ON WHICH THE SALE TRANSACTION WILL SETTLE IN THE ORDINARY
COURSE OF BUSINESS.

 

(E)                                  AS A FURTHER CONDITION PRECEDENT TO THE
EXERCISE OF THE OPTION, THE OPTIONEE SHALL COMPLY WITH ALL REGULATIONS AND
REQUIREMENTS OF ANY REGULATORY AUTHORITY HAVING CONTROL OF, OR SUPERVISION OVER,
THE ISSUANCE OF COMMON SHARES AND IN CONNECTION THEREWITH SHALL EXECUTE ANY
DOCUMENTS THAT THE BOARD SHALL IN ITS SOLE DISCRETION DEEM NECESSARY OR
ADVISABLE.  THE DATE OF THE OPTIONEE’S WRITTEN NOTICE SHALL BE THE EXERCISE
DATE.

 

6.                                       TERMINATION OF AGREEMENT.

 

(A)                                  THIS AGREEMENT AND THE OPTION GRANTED
HEREBY SHALL TERMINATE AUTOMATICALLY AND WITHOUT FURTHER NOTICE ON THE EARLIER
OF THE FOLLOWING DATES:

 

(I)                                     ONE (1) YEAR AFTER TERMINATION OF THE
OPTIONEE’S SERVICE AS A MEMBER OF THE BOARD FOR ANY REASON (INCLUDING, WITHOUT
LIMITATION, EXPIRATION OF THE OPTIONEE’S TERM WITHOUT RE-ELECTION OR BY REASON
OF THE OPTIONEE’S RESIGNATION, RETIREMENT, DISABILITY OR DEATH); OR

 

(II)                                  TEN (10) YEARS FROM THE DATE OF GRANT.

 

(b)                                 None of the Plan, the granting of this
Option or any other action taken pursuant to the Plan, shall constitute or be
evidence of any agreement or understanding, express or implied, that the
Optionee has a right to continue as a director for any period of time or at any
particular rate of compensation.

 

7.                                       ACCELERATION OF OPTION. 
NOTWITHSTANDING SECTION 3 HEREOF, THE OPTION GRANTED HEREBY SHALL BECOME
IMMEDIATELY EXERCISABLE IN FULL IN THE EVENT OF (A) A CHANGE IN CONTROL, (B) THE
DEATH OF THE OPTIONEE IF SUCH DEATH OCCURS WHILE THE OPTIONEE IS A MEMBER OF THE
BOARD OR (C) THE OPTIONEE’S PERMANENT AND TOTAL DISABILITY IF THE OPTIONEE
BECOMES PERMANENTLY AND TOTALLY DISABLED WHILE THE OPTIONEE IS A MEMBER OF THE
BOARD.

 

8.                                       TAXES AND WITHHOLDING.  TO THE EXTENT
THAT THE COMPANY OR A SUBSIDIARY IS REQUIRED TO WITHHOLD FEDERAL, STATE, LOCAL
OR FOREIGN TAXES IN CONNECTION WITH THE EXERCISE OF THE OPTION, AND THE AMOUNTS
AVAILABLE TO THE COMPANY OR A SUBSIDIARY FOR SUCH WITHHOLDING ARE INSUFFICIENT,
IT SHALL BE A CONDITION TO THE EXERCISE OF THE OPTION THAT THE OPTIONEE SHALL
PAY SUCH TAXES OR MAKE ARRANGEMENTS THAT ARE SATISFACTORY TO THE COMPANY OR SUCH
SUBSIDIARY FOR THE PAYMENT THEREOF.  THE OPTIONEE MAY ELECT TO SATISFY ALL OR
ANY PART OF ANY SUCH WITHHOLDING OBLIGATION BY (A) SURRENDERING TO THE COMPANY A
PORTION OF THE OPTIONED SHARES THAT ARE ISSUED OR TRANSFERRED TO THE OPTIONEE
UPON THE EXERCISE OF THE OPTION, AND THE OPTIONED SHARES SO SURRENDERED BY THE
OPTIONEE SHALL BE CREDITED AGAINST ANY SUCH WITHHOLDING OBLIGATION AT THE MARKET
VALUE PER SHARE OF SUCH SHARES ON THE DATE

 

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OF SUCH SURRENDER, OR (B) UTILIZING THE BROKER ASSISTANCE ARRANGEMENT PROVIDED
IN SECTION 5.

 

9.             COMPLIANCE WITH LAW.  THE COMPANY SHALL MAKE REASONABLE EFFORTS
TO COMPLY WITH ALL APPLICABLE FEDERAL, STATE AND PROVINCIAL SECURITIES LAWS;
PROVIDED, HOWEVER, NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT, THE
OPTION SHALL NOT BE EXERCISABLE IF THE EXERCISE THEREOF WOULD RESULT IN A
VIOLATION OF ANY SUCH LAW.

 

10.                                 ADJUSTMENTS.  THE BOARD MAY MAKE OR PROVIDE
FOR SUCH ADJUSTMENTS IN THE NUMBER OF OPTIONED SHARES COVERED BY THE OPTION, IN
THE OPTION PRICE APPLICABLE TO THE OPTION, AND IN THE KIND OF SHARES COVERED
THEREBY, AS THE BOARD, IN ITS SOLE DISCRETION, EXERCISED IN GOOD FAITH, MAY
DETERMINE IS EQUITABLY REQUIRED TO PREVENT DILUTION OR ENLARGEMENT OF THE
OPTIONEE’S RIGHTS THAT OTHERWISE WOULD RESULT FROM (A) ANY STOCK DIVIDEND, STOCK
SPLIT, COMBINATION OF SHARES, RECAPITALIZATION, OR OTHER CHANGE IN THE CAPITAL
STRUCTURE OF THE COMPANY, (B) ANY MERGER, CONSOLIDATION, SPIN-OFF, SPLIT-OFF,
SPIN-OUT, SPLIT-UP, REORGANIZATION, PARTIAL OR COMPLETE LIQUIDATION, OR OTHER
DISTRIBUTION OF ASSETS OR ISSUANCE OF RIGHTS OR WARRANTS TO PURCHASE SECURITIES,
OR (C) ANY OTHER CORPORATE TRANSACTION OR EVENT HAVING AN EFFECT SIMILAR TO ANY
OF THE FOREGOING.  IN THE EVENT OF ANY SUCH TRANSACTION OR EVENT, THE BOARD, IN
ITS DISCRETION, MAY PROVIDE IN SUBSTITUTION FOR THE OPTION SUCH ALTERNATIVE
CONSIDERATION AS IT MAY DETERMINE TO BE EQUITABLE IN THE CIRCUMSTANCES AND MAY
REQUIRE IN CONNECTION THEREWITH THE SURRENDER OF THE OPTION.

 

11.                                 AVAILABILITY OF COMMON SHARES.  THE COMPANY
SHALL AT ALL TIMES UNTIL THE EXPIRATION OF THE OPTION RESERVE AND KEEP
AVAILABLE, EITHER IN ITS TREASURY OR OUT OF ITS AUTHORIZED BUT UNISSUED COMMON
SHARES, THE FULL NUMBER OF OPTIONED SHARES DELIVERABLE UPON THE EXERCISE OF THE
OPTION.

 

12.                                 AMENDMENTS.  ANY AMENDMENT TO THE PLAN SHALL
BE DEEMED TO BE AN AMENDMENT TO THIS AGREEMENT TO THE EXTENT THAT THE AMENDMENT
IS APPLICABLE HERETO; PROVIDED, HOWEVER, THAT NO AMENDMENT SHALL ADVERSELY
AFFECT THE RIGHTS OF THE OPTIONEE UNDER THIS AGREEMENT WITHOUT THE OPTIONEE’S
CONSENT.

 

13.                                 SEVERABILITY.  IN THE EVENT THAT ONE OR MORE
OF THE PROVISIONS OF THIS AGREEMENT SHALL BE INVALIDATED FOR ANY REASON BY A
COURT OF COMPETENT JURISDICTION, ANY PROVISION SO INVALIDATED SHALL BE DEEMED TO
BE SEPARABLE FROM THE OTHER PROVISIONS HEREOF, AND THE REMAINING PROVISIONS
HEREOF SHALL CONTINUE TO BE VALID AND FULLY ENFORCEABLE.

 

14.                                 RELATION TO PLAN.  THIS AGREEMENT IS SUBJECT
TO THE TERMS AND CONDITIONS OF THE PLAN.  IN THE EVENT OF ANY INCONSISTENCY
BETWEEN THE PROVISIONS OF THIS AGREEMENT AND THE PLAN, THE PLAN SHALL GOVERN. 
CAPITALIZED TERMS USED HEREIN WITHOUT DEFINITION SHALL HAVE THE MEANINGS
ASSIGNED TO THEM IN THE PLAN.  THE COMMITTEE ACTING PURSUANT TO THE PLAN, AS
CONSTITUTED FROM TIME TO TIME, SHALL, EXCEPT AS EXPRESSLY PROVIDED OTHERWISE
HEREIN, HAVE THE RIGHT TO DETERMINE ANY QUESTIONS WHICH ARISE IN CONNECTION WITH
THE OPTION OR ITS EXERCISE.

 

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15.           SUCCESSORS AND ASSIGNS.  WITHOUT LIMITING SECTION 4 HEREOF, THE
PROVISIONS OF THIS AGREEMENT SHALL INURE TO THE BENEFIT OF, AND BE BINDING UPON,
THE SUCCESSORS, ADMINISTRATORS, HEIRS, LEGAL REPRESENTATIVES AND ASSIGNS OF THE
OPTIONEE, AND THE SUCCESSORS AND ASSIGNS OF THE COMPANY.

 

16.           GOVERNING LAW.  THE INTERPRETATION, PERFORMANCE, AND ENFORCEMENT
OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE,
WITHOUT GIVING EFFECT TO THE PRINCIPLES OF CONFLICT OF LAWS THEREOF.  EACH PARTY
TO THIS AGREEMENT HEREBY CONSENTS AND SUBMITS HIMSELF, HERSELF OR ITSELF TO THE
JURISDICTION OF THE COURTS OF THE STATE OF DELAWARE FOR THE PURPOSES OF ANY
LEGAL ACTION OR PROCEEDING ARISING OUT OF THIS AGREEMENT.

 

17.           NOTICES.  ANY NOTICE TO THE COMPANY PROVIDED FOR HEREIN SHALL BE
IN WRITING TO THE COMPANY AND ANY NOTICE TO THE OPTIONEE SHALL BE ADDRESSED TO
THE OPTIONEE AT HIS OR HER ADDRESS ON FILE WITH THE COMPANY.  EXCEPT AS
OTHERWISE PROVIDED HEREIN, ANY WRITTEN NOTICE SHALL BE DEEMED TO BE DULY GIVEN
IF AND WHEN DELIVERED PERSONALLY OR SENT BY REGISTERED MAIL OR ELECTRONIC MEANS
OF COMMUNICATION, AND ADDRESSED AS AFORESAID.  ANY PARTY MAY CHANGE THE ADDRESS
TO WHICH NOTICES ARE TO BE GIVEN HEREUNDER BY NOTICE TO THE OTHER PARTY AS
HEREIN SPECIFIED (PROVIDED THAT FOR THIS PURPOSE ANY MAILED NOTICE SHALL BE
DEEMED GIVEN ON THE THIRD BUSINESS DAY FOLLOWING DEPOSIT OF THE SAME IN THE
MAIL).

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be executed on its
behalf by its duly authorized officer and Optionee has also executed this
Agreement in duplicate, as of the day and year first above written.

 

 

ALDERWOODS GROUP, INC.

 

 

 

By:

 

 

 

Name:

Ellen Neeman

 

Title:

Senior Vice President, Legal &

 

 

Compliance, Corporate Secretary

 

The undersigned Optionee hereby acknowledges receipt of an executed original of
this Stock Option Agreement and accepts the Option granted hereunder, subject to
the terms and conditions of the Plan and the terms and conditions set forth
herein.

 

 

 

 

 

 

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