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.


 





















 


(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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