Exhibit 10.54

AMERICAN RETIREMENT CORPORATION

OUTSIDE DIRECTOR STOCK OPTION AGREEMENT

                THIS STOCK OPTION AGREEMENT is made and entered into this ____ day of ___________ _____ by and between
AMERICAN RETIREMENT CORPORATION, a Tennessee corporation (the “Company”), and _________________,
(the “Optionee”). Capitalized terms not otherwise defined herein shall have the meaning
ascribed to such terms in the American Retirement Corporation 1997 Stock Incentive Plan (the “Plan”).

                WHEREAS, the Company has adopted the Plan pursuant to which the Company is authorized on the date of each Annual Meeting of Shareholders
to grant outside directors of the Company options to purchase shares of the Company’s common stock, par value $.01 per
share (the “Common Stock”);

                WHEREAS, the Company desires to afford the Optionee an opportunity to purchase Common Stock as hereinafter
provided in accordance with the provisions of the Plan.

                NOW, THEREFORE, in consideration of the mutual covenants hereinafter set forth and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound hereby, agree as follows:

                1.             Grant of Option.   The Company hereby grants to Optionee a Non-qualified Stock Option (the “Option”), exercisable
in whole or in part, to purchase 3,000 shares of the Company’s Common Stock for an exercise
price of $______ per share (which equals the fair market value of the Common Stock on the date of
grant).



	











	
       
         
2.             Option Plan.   The Option is granted under the Plan, and is subject to the terms and conditions set forth in the
Plan. In the event any of the provisions hereof conflict with or are inconsistent with the provisions
of the Plan, the provisions of the Plan shall be controlling.


                
3.          
   Timing of Exercise.   The Option will fully vest and
become exercisable on the date of the Annual Meeting of Shareholders held in ____, provided the Optionee has been a member of the Board until such date
(whether or not the Optionee will remain a director following such date).
In the event of a Change in Control, the Option, to the extent not previously exercisable
and vested, will be exercisable and fully vested automatically. The Option will expire ten years
from the date of grant of the Option with respect to any then unexercised portion thereof, unless
terminated earlier pursuant to Section 6 below.


                
4.             
Manner of Exercise.   The Option shall be exercised by the Optionee (or other party entitled
to exercise the Option under
Section 6 of this Agreement) by delivering written notice to the Company stating the number
of shares of Common Stock to be purchased, the person or persons in whose name the shares are to
be registered and each such person’s address and social security number. Such notice shall not
be effective unless accompanied by the full purchase price for all shares so purchased. The purchase
price shall be payable in cash (payment in currency or by certified check, cashier’s check,
postal money order or wire transfer shall be considered payment in cash), or in the form of shares of
Common Stock already owned by the Optionee and held for at least six (6) months prior to the exercise
date.



	











	

At the time of payment of the purchase price and
prior to delivery of any certificate for such shares, the Optionee shall pay to the Company in cash
an amount sufficient to satisfy any federal, state and local withholding or other tax requirements.


  
              5.
            Non-transferability of Option.   The Option shall not be transferable by the Optionee without the prior written consent of the Committee
other than (i) transfers by the Optionee to a member of his or her Immediate Family (as that term
is defined in the Plan) or a trust for the benefit of the Optionee or a member of his or her Immediate
Family, or (ii) transfers by will or by the laws of descent and distribution. The terms of the Option
shall be binding on the executors, administrators, heirs and successors of the Optionee.

                

6.             Termination of Service as Director.
  Upon termination of the
Optionee's service as a director of the Company, (i) this Option, to the extent then vested and exercisable will remain vested and
exercisable through the expiration date and (ii) any portion of this Option that would have vested and become exercisable within a period of less than twelve months following the
date of the termination of Optionee's service as a director shall become vested and
exercisable through the expiration date. Any unvested Options held by the Optionee on date of termination of
service will be forfeited to the event such shares would not have become vested and exercisable until at least twelve months from
the date of termination of service.


                7.             Restrictions on Purchase and Sale of Shares.   The Company shall be obligated to sell or issue shares pursuant to the exercise of the Option only
in the event that the shares are at that time effectively registered or otherwise exempt from registration
under the Securities Act of 1933, as amended (the “1933 Act”). In the event that the shares
are not registered under the 1933 Act, the Optionee hereby agrees that, as a further condition to
the exercise of the Option, the Optionee (or his successor under Section 6 hereof), if the Company
so requests, will execute an agreement in form satisfactory to the Company in which the Optionee
represents that he or she is purchasing the shares for investment purposes, and not with a view to
resale or distribution. The Optionee further agrees that if the shares of Common Stock to be issued
upon the exercise of the Option are not subject to an effective registration statement filed with the 



	











	
Securities and Exchange Commission pursuant to the requirements of the 1933 Act, such shares shall
bear an appropriate restrictive legend.

                8.             Adjustment. In the event of any merger, reorganization, consolidation, recapitalization, extraordinary cash dividend,
stock dividend, stock split or other change in corporate structure affecting the Common Stock, the
number of shares of Common Stock of the Company subject to the Option and the exercise price per
share of such shares shall be adjusted appropriately by the Committee.

                9.             No Rights Until Exercise.   The Optionee shall have no rights hereunder as a shareholder with respect to any shares subject to
the Option until the date of the issuance of a stock certificate to him or her for such shares upon
due exercise of the Option. Nothing contained herein shall create an obligation on the part of the
Company to repurchase any shares of Common Stock purchased hereunder.

                10.           Amendment. The Board of Directors may amend the terms of the Option, prospectively or retroactively, but, subject to
Section 8 above, no such amendment shall impair the rights of the Optionee hereunder without the
Optionee’s consent.

                11.           Notices.   All notices required to be given under the Option shall be deemed to be received if delivered or
mailed as provided for herein, to the parties at the following addresses, or to such other address
as either party may provide in writing from time to time.



	











	 	To the Company:   
	 	 
	 	 	American Retirement Corporation
	 	 	111 Westwood Place, Suite 200
	 	 	Brentwood, TN  37027
	 	 	Attn:  Terry L. Frisby
	 	 	 
	 	To the Optionee:	 
	 	 	 
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	                 IN WITNESS WHEREOF, the parties have caused this Stock Option Agreement to be duly executed as of the day and year first above written.

	 


		 
		AMERICAN RETIREMENT CORPORATION


	 	 
	 	 
	 	By:
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	 	Title:
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	 	 OPTIONEE:
	 	 
	 	 
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