Document:

Exhibit 10.53

AMERICAN RETIREMENT CORPORATION

INCENTIVE 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, as amended
(the “Plan”).

                WHEREAS, the Company has adopted the Plan pursuant to which the Company is authorized to grant employees
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 an Incentive Stock Option (the “Option”), exercisable
in whole or in part, to purchase _____ 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, except as provided in Section 12, is intended to qualify
as an Incentive Stock Option, as that term is used in Section 422 of the Internal Revenue Code of
1986, as amended (the “Code”). The Option 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.  Optionee may exercise the Option with respect to the percentage and number of shares set forth below from and after the dates specified below:

	 

	Percentage Vested	 	Date of Vesting	 	Cumulative

    Options Exercisable    
	
	 	
	 	

	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 

	
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), in the form of shares of Common Stock
already owned by the Optionee and 

	

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held for at least six (6) months prior to the exercise date, or such other method of payment as the
Committee may accept. In the event of payment by shares of Common Stock, the shares used in payment
of the purchase price shall be considered payment to the extent of their Fair Market Value on the
date of exercise of the Option. 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.               Nontransferability of Option.  The Option shall not be transferable by the Qptionee 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 Employment.

                                  (a)           Termination by Death.  If the Optionee’s employment by the Company terminates by reason of death, the Option may thereafter
be exercised, to the extent the Option was exercisable at the time of death, by the legal representative
of the estate or by the legatee of the Optionee under the will of the Optionee, for a period of one
year from the date of such death or until the expiration of the stated term of the Option, whichever
period is the shorter.

                                 (b)           Termination by Reason of Retirement or Disability.  If the Optionee’s employment by the Company terminates by reason of Retirement or Disability,
the Option may thereafter be exercised by the Optionee, to the extent it was exercisable at the time
of termination, for a period of three years from the date of such termination of employment or until

	

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the expiration of the stated term of the Option, whichever period is the shorter; provided, however,
that if the Optionee dies within the three year period specified above, any unexercised portion of
the Option shall thereafter be exercisable to the extent to which the Option was exercisable at the
time of death for a period of one year from the date of such death or until the expiration of the
stated term of the Option, whichever period is shorter. If an Incentive Stock Option is exercised
after the expiration of the exercise period applicable to Incentive Stock Options, but before the
expiration of the period that would apply if such Stock Option were a Non-Qualified Stock Option,
the Option will thereafter be treated as a Non-Qualified Stock Option.

                                 (c)           Other Termination. If the Optionee’s employment by the Company is voluntarily terminated, the Option shall thereupon
terminate immediately. If the Optionee’s employment with the Company is involuntarily terminated
for any reason other than death, Retirement or Disability, the Option shall thereupon terminate,
except that the Option may be exercised by the Optionee, to the extent otherwise then exercisable,
for the lesser of three months or the balance of the term of the Option if such termination is not
for Cause.

                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 

	

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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.               Adiustment. 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 Committee 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.

	

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	 	To the Company:
		 

	 	American Retirement Corporation
	 	111 Westwood Place, Suite 200
	 	Brentwood, TN 37027

		Attn:      
Terry L. Frisby
		 

	 	To the Optionee:
	 	 
	 	 	——————————————————————————
	 	 	——————————————————————————
	 	 	——————————————————————————

	 
	
                12.           Excessive Shares.  In the event that the number of shares subject to the Option exceeds any maximum established under
the Internal Revenue Code for Incentive Stock Options that may be granted to Optionee, or in the
event that the Option becomes first exercisable in any calendar year to obtain Common Stock having
a fair market value (determined at the time of grant) in excess of $100,000, the Option shall be
treated as a Non-Qualified Stock Option to the extent of such excess. If the exercise of the Option
is accelerated by reason of a Change in Control (as that term is defined in the Plan), any portion
of such Option that is not exercisable as an Incentive Stock Option by reason of the $100,000 limitation
contained in Section 422(d) of the Internal Revenue Code shall be treated as a Non-Qualified Stock Option.

	

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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:
	 	         —————————————————————
	 	Title:
	 	             ————————————————————
	 	 
	 	 
	 	 OPTIONEE:
	 	 
	 	 
	 	————————————————————————

	

7Exhibit 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:	 
	 	 	 
	 	 	————————————————————————
	 	 	————————————————————————
	 	 	————————————————————————
	 	 	 

	                 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:
	 	         —————————————————————
	 	Title:
	 	              ————————————————————
	 	 
	 	 
	 	 OPTIONEE:
	 	 
	 	 
	 	————————————————————————

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