Exhibit 10.8


    
      
        Exhibit
          10.8

          


           

          


          


          


           

          


          The
            Officer’s 

          Incentive
            Compensation Plan 

          (OICP)

          
 

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          



          PLAN
            OBJECTIVES

          


          American
            Retirement Corporation
            believes it is important to reward key executives who perform at
            exceptional levels resulting in outstanding company results. 

          


          The
            Officer’s Incentive Compensation Plan (OICP) is considered an important element
            of a competitive total compensation plan for Officers. The OICP strengthens
            the
            alignment of Officers’ individual performance with annual and quarterly company
            objectives by linking their individual performance to the financial and
            strategic success of the company. These rewards are at amounts and proportions
            commensurate with the level of each officer’s responsibilities.

          


          ELIGIBLE
            PARTICIPANTS 

          


          Participants
            in the OICP include ARC associates who meet the necessary eligibility
            requirements and hold the titles of Vice President, Senior Vice President,
            Executive Vice President, Chief Financial Officer, Chief Operating Officer
            or
            Chief Executive Officer, as approved by the Compensation Committee.

          


          INCENTIVE
            REWARD OPPORTUNITY BY COMPONENTS

           

          
            Officers’
              total incentive reward opportunity is based upon their level of job
              responsibilities as reflected by their title. This total incentive
              reward is
              comprised of three components and is weighted based upon the job title
              held.
              These three components are: Individual Quarterly Performance (Part
              A), Company
              Quarterly Performance (Part B), and Annual Company Performance (Part
              C). The
              total incentive opportunity and their weights are reflected
              below:

          

          


          
            	
                    Officer
                      Title

                  	
                    TOTAL
                      ANNUAL POTENTIAL

                  	
                    Incentive
                      Pay Components

                  
	
                    Individual
                      Quarterly Performance Opportunity

                    (MBO’s)

                    Part
                      A

                  	
                    Company
                      Quarterly Performance Opportunity

                     

                    Part
                      B

                  	
                    Annual
                      Company Performance Opportunity

                     

                    Part
                      C

                  
	
                    As
                      % of Earnings

                  
	
                    Vice
                      President

                  	
                    60%

                  	
                    20%

                  	
                    30%

                  	
                    10%

                  
	
                    Senior
                      Vice President

                  	
                    80%

                  	
                    20%

                  	
                    30%

                  	
                    30%

                  
	
                    Executive
                      Vice President

                  	
                    100%

                  	
                    20%

                  	
                    20%

                  	
                    60%

                  
	
                    Chief
                      Financial Officer

                    Chief
                      Operating Officer Chief Executive Officer

                  	
                    120%

                  	
                    20%

                  	
                    20%

                  	
                    80%

                  


          

          


          
 

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
 

          THE
            INDIVIDUAL QUARTERLY PERFORMANCE (Part
            A)

          


          Each
            Participant is required to develop individual quarterly performance objectives
            (MBO’s) that are discussed, weighted and approved by their immediate supervisor
            and Executive Committee. The opportunity for awards under the Individual
            Quarterly Performance (Part A) component is determined and modified by
            how well
            the predetermined objectives are achieved and is not contingent upon
            the
            Company’s overall performance during the quarter. The degree of achievement by
            each Participant is determined and approved by his or her immediate supervisor
            and is further reviewed and approved by the Executive Committee. 

          


          EXAMPLE

           

          Kelly
            Scott is a Vice President of ARC. Kelly makes $100,000 per year and has
            the
            opportunity to receive up to 20% of her total quarterly earnings from
            this
            component of OICP, the Individual Quarterly Performance. For Kelly, the
            Individual Quarterly Performance Award Opportunity (Part A) will be $5,000
            or
            20% of her total quarterly earnings of $25,000.

           

          The
            chart
            below reflects Kelly’s objectives, their weight as a percentage of the total
            individual performance objectives and Kelly’s completion of them. According to
            this chart, Kelly completed 55% of her individual quarterly performance
            objectives. 

           

          


           

          Kelly’s
            First Quarter Objectives and Achievements

           

          
            	
                    Objectives

                     

                  	
                    Weight
                      of Objective

                     

                  	
                    X

                     

                  	
                    %
                      of
                      Objective Achieved

                     

                  	
                    =

                     

                  	
                    %
                      of
                      Quarterly Individual Performance Achieved

                     

                  
	
                    Objective
                      1

                  	
                    30%

                     

                  	
                    X

                     

                  	
                    0%

                     

                  	
                    =

                     

                  	
                    0%

                     

                  
	
                    Objective
                      2

                  	
                    25%

                     

                  	
                    X

                     

                  	
                    80%

                     

                  	
                    =

                     

                  	
                    20%

                     

                  
	
                    Objective
                      3

                  	
                    25%

                     

                  	
                    X

                     

                  	
                    60%

                     

                  	
                    =

                     

                  	
                    15%

                     

                  
	
                    Objective
                      4

                  	
                    20%

                     

                  	
                    X

                     

                  	
                    100%

                     

                  	
                    =

                     

                  	
                    20%

                     

                  
	
                    Total
                      Objectives

                     

                  	
                    100%

                     

                  	
                    %
                      of Total Quarterly Individual Performance Achieved

                     

                  	
                    =
                      55%

                     

                  


          

          


          


          


          Achievement
            of First Quarter Individual Quarterly Performance
            Opportunity:

          


          $5,000
            X 55% = $2,750

          


           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

           

          THE
            COMPANY QUARTERLY PERFORMANCE (Part
            B)

          


          The
            Company Quarterly Performance component is funded when the Company meets
            its
            quarterly target (net of incentive accruals for the Company Quarterly
            Performance component for the OICP and the Management Incentive Plan
            (MIP)).
            Performance measure(s) and quarterly target(s) will be established and
            approved
            each quarter by the Compensation Committee of the Board of Directors.
            

           

          Upon
            achieving the approved target, the Company Quarterly Incentive begins
            to be
            funded.   When the target is exceeded, 100% of the excess will be
            applied to fund the Company Quarterly Incentive [under the OICP and the
            Management Incentive Plan]. The Company Quarterly Incentive will be fully
            funded
            to the extent that such excess is sufficient to fund all amounts due
            under the
            Company Quarterly Incentive [and the Management Incentive Plan], and
            will be
            partially funded to the extent such excess is not sufficient to fund
            all such
            amounts due. [For quarters where the OICP and the Management Incentive
            Plan are
            partially funded, funding for both plans will occur on a pro rata basis.] 
Each Participant's Company Quarterly Incentive opportunity is modified
            by the
            percentage of funding and is
            subsequently adjusted by the percentage of Individual Performance Objectives
            achieved.

           

           

           

          EXAMPLE

           

          As
            a Vice
            President of ARC, each quarter, Kelly has the opportunity to earn 30%
            of her
            total quarterly earnings of $25,000. This amount is further adjusted
            by her
            percentage of Individual Quarterly Performance achieved. Assuming that
            the
            Company Quarterly Performance pool (Part B) is completely funded and
            her
            Individual Quarterly Performance achievement was 55%, Kelly has earned
            the
            following under this component, Part B, for the first quarter: 

          $25,000
            X 30% X 55% = $4,125

          If
            the
            Company’s Quarterly Performance pool had been partially funded at the 80% level,
            Kelly would have earned the following:

          $25,000
            X 30% X 80% X 55% = $3,300

          
 

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

          
 

          THE
            ANNUAL COMPANY PERFORMANCE (Part
            C)

          


          Performance
            measures and annual targets will be established and approved by the Compensation
            Committee of the Board of Directors. The amount earned under this component
            is
            contingent upon the Company exceeding the approved annual company target
            which
            funds this component. It is NOT modified by the Individual Quarterly
            Performance
            percentage, or percentage of objectives achieved. 

          


           

          When
            the
            target is exceeded, 100% of the excess will be applied to fund the Annual
            Company Incentive.  The Annual Company Incentive will be fully funded to
            the extent that such excess is sufficient to fund all amounts due under
            the
            Annual Company Incentive, and will be partially funded to the extent
            such excess
            is not sufficient to fund all such amounts due.

           

          


          EXAMPLE

           

          As
            a Vice
            President of ARC, each year, Kelly has the opportunity to earn 10% of
            annual
            earnings. (10% X $100,000 = $10,000) based upon the company’s achievement of the
            Annual Company Performance target. Assuming the company achieved complete
            funding of the annual incentive, Kelly would receive the following for
            the
            year:

          $100,000
            X 10% = $10,000

          If
            the
            Company’s Annual Incentive was partially funded at 75%, Kelly would receive the
            following for the year:

           $100,000
            X 10% X 75% = $7,500

          


          AWARD
            PAYMENT

          The
            total
            of all components (Part A, Part B and Part C awards) will be calculated
            and paid
            annually after the completion of the company’s annual audit and the review and
            approval of the Compensation Committee of the Board of Directors. 

          


          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          



          


          OICP
            Administrative Rules

          


          	1.  	
                  Newly
                    hired Officers 

                


          Newly
            hired Officers become eligible to participate in the OICP in their first
            full
            quarter of service as an Officer in which individual quarterly performance
            objectives (MBO’s) have been approved and established. 

          


          	2.  	
                  Newly
                    appointed and promoted Officers

                


          Quarterly
            Incentives

          Officers
            will become eligible for their new OICP incentives in the quarter in
            which they
            are promoted provided their approved, individual quarterly performance
            objectives (MBO’s) are established and approved and applicable to the new
            position. Otherwise, newly promoted Officers will become eligible for
            their new
            OICP incentives upon the first full quarter of service in their new role
            following their promotion or appointment where approved individual quarterly
            performance objectives (MBO’s) are applicable to their new role.

          


          Annual
            Incentive 

          Annual
            incentives will be prorated on a quarterly basis, beginning upon the
            participant’s date of OICP eligibility.

          


          	3.  	
                  Earnings
                    used for the calculation of OICP awards 

                


          OICP
            award
            calculations will be based upon the participant’s total quarterly earnings
            attributable to base salary.

          


          	4.  	
                  Plan
                    Year 

                


          The
            plan
            year coincides with the fiscal year which is also the calendar year.
            

          


          	5.  	
                  Award
                    Payments 

                


          A
            participant’s total realized incentive compensation under this Plan (Part A, B,
& C) shall be disbursed according to performance measures, target
            achievements and calculations as approved by the Audit and the Compensation
            Committees of the Board of Directors. In the event payment cannot be
            made on or
            prior to March 15 of the year subsequent to the year earned, any authorized
            payments made through this plan will be made on April 15 of such
            year.

          


          	6.  	
                  Performance
                    Expectations

                


          One
            time,
            extraordinary events that have a significant impact (positive or negative)
            on
            objectives, may be reviewed by the CEO on an individual basis and potentially
            offset when calculating final awards.

          


          	7.  	
                  Termination
                    of Employment

                


          An
            officer
            forfeits his or her eligibility for an incentive award if he or she leaves
            the
            Company before awards are paid. The only exceptions to this rule are
            terminations resulting from death, permanent or total disability, retirement
            or
            as otherwise approved by the CEO. In these cases, an officer or his or
            her
            estate will receive a prorated award as of the date of termination, subject
            to
            the other terms and conditions of this plan.

           

           

          
            
              
              

            

            
              
              

              
                

              

            

            
              
              

            

          

           

           

          	8.  	
                  Awards
                    subject to state and federal withholding
                    taxes

                


          All
            incentive awards are calculated as gross dollar awards and are subject
            to the
            appropriate state and federal tax withholdings.

          


          	9.  	
                  Maximum
                    Awards

                


          Awards
            for
            the OICP are capped at the Participant’s maximum percentage of earnings as set
            forth herein. The only exceptions to this rule are discretionary awards
            proposed
            by ARC’s Chief Executive Officer to award exceptional performance.

          


          	10.  	
                  Not
                    a Contract. 

                


          This
            Plan
            shall not be deemed to constitute a contract between the Company and
            any
            Officer; neither shall it be a consideration nor an inducement for the
            employment of any Officer. No provisions of this Plan shall be deemed
            to abridge
            or limit any managerial right of the Company, give any Employee the right
            to be
            retained in employment, or to interfere with the right of the Company
            to
            discharge any Officer at any time regardless of the effect which such
            discharge
            may have upon him or her as a Participant. By his and/or her act of
            participation in this Plan, each Participant on behalf of himself or
            herself,
            and his or her heirs, assigns and beneficiaries shall be deemed conclusively
            to
            have agreed to and accepted the terms and conditions of this Plan.

          


          	11.  	
                  Plan
                    change or termination

                


          ARC’s
            Board of Directors retains the right to amend, suspend, or terminate
            the OICP in
            whole or in part, at any time and for any reason, without the consent
            of any
            Participant, provided that such action does not adversely affect the
            right to
            receive any amounts to which Participants have become entitled prior
            to such
            action.

          


          	12.  	
                  Availability
                    of Funds 

                


          Notwithstanding
            anything contained herein to the contrary, the payment of all awards
            is subject
            to the availability of unrestricted funds.

          


          	13.  	
                  No
                    Cumulative or Duplicative
                    Amounts

                


          Notwithstanding
            anything herein to the contrary, in the event that any Participant shall
            simultaneously hold two offices that would entitle him or her to awards
            hereunder, the awards to be received hereunder shall not be cumulative
            or
            duplicative, and such Participant shall be entitled to receive only the
            awards
            associated with the highest office, and specifically shall not receive
            awards
            associated with the lower office.

          


          	14.  	
                  Previous
                    OICP Terminated

                


          Upon
            the
            effective date of this Plan, the Company’s currently outstanding OICP shall be
            terminated and no further awards shall be made thereunder (other than
            payment of
            the awards for the year ending, December 31, 2005).