Exhibit 10.9
AMERICAN RETIREMENT CORPORATION
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
TABLE OF CONTENTS
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ARTICLE I
Introduction................................................................1
1.1 Establishment of Plan................................................1
1.2 Purpose..............................................................1
ARTICLE II
Definitions.................................................................2
2.1 Administrator........................................................2
2.2 Affiliated Company...................................................2
2.3 Beneficiary..........................................................2
2.4 Board of Directors...................................................2
2.5 Change in Control....................................................2
2.6 Code.................................................................4
2.7 Committee............................................................4
2.8 Company..............................................................4
2.9 Deferred Compensation Account........................................4
2.10 Disability...........................................................4
2.11 Effective Date.......................................................4
2.12 Eligible Executive...................................................4
2.13 Employer.............................................................5
2.14 ERISA................................................................5
2.15 Participant..........................................................5
2.16 Plan.................................................................5
2.17 Plan Year............................................................5
2.18 Retirement...........................................................5
2.19 Separation from Service..............................................5
2.20 Year of Service......................................................5
ARTICLE III
Participation...............................................................6
3.1 Participation........................................................6
3.2 Cessation of Participation...........................................6
ARTICLE IV
Deferred Compensation and Establishment of Deferred Compensation Accounts...8
4.1 Establishment of Deferred Compensation Accounts......................8
4.2 Accrual of Earnings..................................................9
4.3 Communication of Account Balances....................................9
4.4 Deemed Investment Directions........................................11
4.5 Employer Contributions..............................................11
4.6 Vesting.............................................................11
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ARTICLE V
Payment of Benefits........................................................13
5.1 Eligibility for Payment.............................................13
5.2 Separation from Service.............................................13
5.3 Time of Payment.....................................................13
5.4 Form of Payment.....................................................14
5.5 Medium of Payment...................................................14
5.6 Hardship Withdrawal.................................................15
ARTICLE VI
Financing the Plan.........................................................17
6.1 Costs Borne by the Company and the Affiliated Companies.............17
6.2 Medium of Financing the Plan........................................17
ARTICLE VII
Administration.............................................................18
7.1 Administration......................................................18
7.2 Claims Procedure....................................................18
7.3 Powers and Duties of the Administrator..............................19
7.4 Rules and Decisions.................................................20
7.5 Duty to Keep Records and File Reports...............................20
7.6 Authorization of Benefit Payments...................................20
7.7 Application and Forms for Benefits..................................20
7.8 Facility of Payment.................................................21
7.9 Indemnification of Committee and Administrator Members..............21
7.10 Governing Law.......................................................21
7.11 Severability........................................................21
7.12 Provisions of the Plan to Control...................................22
7.13 No Right to Continued Employment....................................22
ARTICLE VIII
Prohibition on Alienation..................................................23
8.1 Prohibition on Alienation...........................................23
ARTICLE IX
Change in Control..........................................................24
9.1 Change in Control...................................................24
ARTICLE X
Amendment and Termination of Plan..........................................25
10.1 Amendments and Terminations.........................................25
10.2 Distribution of Assets Upon Termination.............................25
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ARTICLE I
Introduction
1.1 Establishment of Plan. American Retirement Corporation (the "Company")
hereby establishes the American Retirement Corporation Supplemental Executive
Retirement Plan (the "Plan") as a plan that is unfunded and maintained by the
Company and any other Affiliated Companies primarily for the purpose of
providing deferred compensation for a select group of management or highly
compensated employees as described in Sections 201(2), 301(a)(3), 401(a)(1) and
4021(b)(6) of the Employee Retirement Income Security Act of 1974 ("ERISA").
1.2 Purpose. The Company has established the American Retirement
Corporation 401(k) Plan (the "401(k) Plan"), which permits an eligible employee
of the Company or its Affiliated Companies to elect to reduce his taxable cash
compensation in consideration for having the Company make a contribution to the
401(k) Plan on the employee's behalf of an amount equal to such reduction in
compensation plus a certain matching amount. Several provisions of the Internal
Revenue Code (the "Code") place restrictions on the amount of elective deferrals
or matching contributions under the 401(k) Plan or on the level of participation
of certain employees in the 401(k) Plan. The purpose of this Plan is to provide
supplemental deferred compensation to a select group of such employees.
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ARTICLE II
Definitions
The following words and phrases, when used herein, unless the context
indicates otherwise, shall have the following meanings:
2.1 Administrator. The individual or committee appointed to administer the
Plan pursuant to Section 7.1 of the Plan, which unless changed by the Committee
shall be the 401(k) Investment Fiduciary Committee.
2.2 Affiliated Company. Any organization, including a corporation or a
limited liability company, in an unbroken chain of such organizations beginning
with the Company if each of the organizations other than the last organization
in the unbroken chain owns fifty percent (50%) or more of the total combined
voting power of all classes of stock or other ownership interests in one of the
other organizations in the chain. "Affiliated Companies" means more than one of
any such organizations.
2.3 Beneficiary. The person or persons designated by a Participant, on a
form and in a manner prescribed by the Administrator, to receive the benefits
payable to the Participant under the Plan in the event of the Participant's
death.
2.4 Board of Directors. The Board of Directors of the Company.
2.5 Change in Control. The happening of any one of the following events:
(a) Any person or entity, including a "group" (as defined in Section
13(d)(3) of the Securities Exchange Act of 1934), other than the Company or a
wholly-owned subsidiary thereof or a benefit plan of the Company or an
Affiliated Company, is or
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becomes the beneficial owner, directly or indirectly, of securities of the
Company representing 35% or more of the combined voting power of the Company's
then outstanding securities that may be cast for the election of the Board of
Directors (other than as a result of an issuance of securities initiated by the
Company in the ordinary course of business); or
(b) During any period of two (2) consecutive years, individuals who at the
beginning of such period constitute the Board of Directors cease for any reason
to constitute at least a majority thereof unless the election, or the nomination
for election by the Company's shareholders, of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of the period; or
(c) As the result of, or in connection with, any cash tender or exchange
offer, merger or other business combination, sales of assets or contested
election, or any combination of the foregoing transactions, less than a majority
of the combined voting power of the then outstanding securities of the Company
or any successor corporation or entity entitled to vote generally in the
election of the Board of Directors of the Company or such other corporation or
entity after such transaction are held in the aggregate by the holders of the
Company's securities entitled to vote generally in the election of the Board of
Directors of the Company immediately prior to such transaction.
Notwithstanding the occurrence of any of the foregoing events, the Board of
Directors may determine that an event otherwise constituting a Change in Control
shall not be considered a Change in Control for purposes of the Plan because
such event has been approved by the Board of Directors. Such determination by
the Board of Directors shall be effective only if it is made
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by the Board of Directors prior to the occurrence of the event which would
otherwise be a Change in Control, or after such event if made by the Board of
Directors, a majority of which is composed of the same members as constituted
the Board of Directors immediately prior to the event that would otherwise be a
Change in Control.
2.6 Code. The Internal Revenue Code of 1986, as amended from time to time.
2.7 Committee. The Compensation Committee of the Board of Directors.
2.8 Company. American Retirement Corporation, a Tennessee corporation, and
any successor by merger, consolidation or otherwise.
2.9 Deferred Compensation Account. A bookkeeping account established
pursuant to Section 4.1 to serve as a measure of the benefits payable to a
Participant in the Plan.
2.10 Disability. A physical or mental illness resulting in disability as
determined under the Company's long-term disability policy.
2.11 Effective Date. January 1, 2004.
2.12 Eligible Executive. An employee of the Company or an Affiliated
Company who the Committee determines is a member of a select group of highly
compensated or management employees and who is designated by the Committee to
participate in the Plan in its sole discretion. An employee shall cease to be an
Eligible Executive upon a determination by the Committee that he should no
longer participate in the Plan in its sole discretion, including a determination
that he is no longer a member of a select group of highly compensated or
management employees.
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2.13 Employer. The Company and any Affiliated Company.
2.14 ERISA. The Employee Retirement Income Security Act of 1974, as amended
from time to time.
2.15 Participant. An Eligible Executive who satisfies the requirements to
be a Participant pursuant to Article III.
2.16 Plan. This American Retirement Corporation Supplemental Executive
Retirement Plan.
2.17 Plan Year. The twelve (12) consecutive month period beginning on
January 1 and ending on December 31.
2.18 Retirement. Separation from Service at any time after the
Participant's 65th birthday.
2.19 Separation from Service. Termination of employment for any reason with
the Company and all Affiliated Companies.
2.20 Year of Service. Each year of vesting service credited to a
Participant under the American Retirement Corporation 401(k) Plan. ARTICLE III
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ARTICLE III
Participation
3.1 Participation. An Eligible Executive shall be eligible to become a
Participant in the Plan as of January 1 of any Plan Year in which he is an
Eligible Executive. An Eligible Executive may become a Participant for a
particular Plan Year by making a valid election before the beginning of such
Plan Year by executing and filing with the Administrator a deferred compensation
election and agreement form approved by the Administrator, which election and
agreement shall contain (i) a statement that the Eligible Executive elects to
defer a portion of his compensation for the Plan Year as provided in Section 4.1
and (ii) a statement that such election is irrevocable, except for bonus
payments as provided in Section 4.1. For the first Plan Year in which an
Eligible Executive is eligible to participate in the Plan an Eligible
Executive's election may be made after the beginning of the Plan Year but within
thirty (30) days after the date he becomes an Eligible Executive. Any election
to defer under this Section 3.1 after the beginning of the Plan Year shall apply
only to salary for services performed after the date of such election and to any
bonus payments made after the date of such election.
3.2 Cessation of Participation. A Participant shall cease to be a
Participant upon receiving payment for the full amount of benefits to which the
Participant is entitled pursuant to Article V or upon a determination by the
Committee in its sole discretion that he is no longer designated as an Eligible
Executive or that he is no longer a member of a select group of highly
compensated or management employees. A Participant who is not an Eligible
Executive for a Plan Year shall not be entitled to make a deferral election
under Section 3.1 for that Plan Year or to receive further credit to his
Deferred Compensation Account pursuant to Section 4.1 with respect to deferrals
but shall continue to be a Participant with respect to the benefits to which the
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Participant is entitled based on credits received as a result of prior deferral
elections and hypothetical earnings thereon and shall continue to be entitled to
credits for the accrual of hypothetical earnings on credits pursuant to Section
4.2 based on such prior credits for deferral elections and hypothetical
earnings.
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ARTICLE IV
Deferred Compensation and
Establishment of Deferred Compensation Accounts
4.1 Establishment of Deferred Compensation Accounts. The Administrator
shall establish an unfunded individual Deferred Compensation Account consisting
of book entries for each Participant to which the following credits shall be
made pursuant to this Section 4.1, Section 4.2 and Section 4.5. If an Eligible
Executive makes a valid election in the manner prescribed in Section 3.1 to
defer a portion of his compensation for a Plan Year, the Company or the
Affiliated Company by which the Eligible Executive is employed shall reduce the
current cash compensation otherwise payable to the Eligible Executive for that
Plan Year by an amount equal to the portion of his compensation that he elects
to defer. The Administrator shall, for each Plan Year, credit to the Deferred
Compensation Account of each Eligible Executive who makes a valid deferral
election for that Plan Year an amount equal to the amount of such deferral for
the Plan Year. A Participant may elect to defer a flat dollar amount, the
portion of his compensation in excess of a flat dollar amount, a specified
percentage of his compensation or any other portion of his compensation that the
Administrator shall determine may be clearly specified and reasonably
administrable. A separate election may be made for a Participant's base salary
and for each bonus payment as long as each such election is made as provided in
Section 3.1. A Participant may modify his election for each bonus payment to be
received by such Participant during a Plan Year no later than thirty (30) days
before the date he would otherwise have received such bonus payment. Such
credits to the Participant's Deferred Compensation Account shall be made
effective as of the last day of the calendar month in which the deferral occurs
or such other times as determined by the Administrator in its sole discretion.
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4.2 Accrual of Earnings. The Administrator shall credit each Participant's
Deferred Compensation Account with additional amounts to represent hypothetical
investment earnings (including losses) on the amounts credited to the Deferred
Compensation Account pursuant to Section 4.1 and Section 4.5. Such hypothetical
investment earnings shall be accrued commencing on the date of each credit made
pursuant to Section 4.1 and Section 4.5 and shall continue to accrue until the
date as of which benefits are determined pursuant to Section 5.1. Pursuant to
Section 4.4, a Participant shall have the right to designate how the amounts in
his Deferred Compensation Account shall be deemed to be invested in hypothetical
investment options selected by the Administrator. Additions credited to a
Participant's Deferred Compensation Account shall be based on the performance of
the hypothetical investment options designated by the Participant.
4.3 Communication of Account Balances. The Administrator shall communicate
in writing to each Participant the value of the Participant's Deferred
Compensation Account as of each December 31 or at such more frequent intervals
(not to exceed quarterly) as may be determined by the Administrator to be
appropriate.
4.4 Deemed Investment Directions. Subject to such limitations as may from
time to time be required by law or imposed by the Administrator, the Committee
or the Company, and subject to such operating rules and procedures as may be
imposed from time to time by the Administrator, the Committee or the Company,
prior to the date on which a direction will become effective, a Participant may
communicate to the Administrator a direction as to how his Deferred Compensation
Account should be deemed to be invested (in whole percent multiples) among the
hypothetical investment options. Such direction may separately designate
hypothetical investments (i) for that portion of the Participant's Deferred
Compensation Account attributable to amounts that will be credited to the
Participant's Deferred Compensation Account prior to the designation date on
which such direction shall become effective, and (ii) for that portion of the
Participant's Deferred Compensation Account attributable to amounts that will be
credited to the Participant's Deferred Compensation Account after the
designation date on which such direction shall become effective. Such direction
shall become effective subject to the following rules and procedures:
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(a) Any hypothetical investment direction shall be in writing, on a
form supplied by and filed with the Administrator, and shall be
effective as of the designation date determined by the
Administrator.
(b) (1) All amounts credited to a Participant's Deferred Compensation
Account shall be deemed to be invested in accordance with the
then effective hypothetical investment direction, and (2) as of
the effective date of any new hypothetical investment direction,
all or a portion of a Participant's Deferred Compensation Account
at that date shall be reallocated among the designated
hypothetical investment options according to the new hypothetical
investment directions and according to the percentages specified
in the new hypothetical investment direction unless and until a
subsequent hypothetical investment direction becomes effective.
(c) If the Administrator receives a hypothetical investment direction
that it finds to be incomplete, unclear, or improper, the
Participant's hypothetical investment direction then in effect
shall remain in effect (or, in the case of a deficiency in an
initial hypothetical investment direction, the Participant shall
be deemed to have filed no hypothetical investment direction)
until the next designation date, unless the Administrator
provides for, and permits the application of, corrective action
prior thereto.
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(d) If the Administrator possesses at any time directions as to the
hypothetical investment of less than all of a Participant's
Deferred Compensation Account, the Participant shall be deemed to
have directed that the undesignated portion of the Account be
deemed to be invested in any investment option selected by the
Administrator, and the Administrator shall not be liable for the
investment option(s) selected by it in such circumstances.
(e) Neither the Administrator, the Committee, the Company, nor any
Affiliated Company shall be liable for any losses or damages of
any kind relating to the hypothetical investment of a
Participant's Deferred Compensation Account hereunder.
4.5 Employer Contributions. At such times as determined by the Committee in
its sole discretion, or pursuant to a separate written agreement between the
Company or an Affiliated Company and a Participant which specifically references
this Plan, the Administrator may credit the Participant's Deferred Compensation
Account with an additional amount, determined by the Committee in its sole
discretion or pursuant to such an agreement between the Company or an Affiliated
Company and the Participant.
4.6 Vesting. A Participant shall always be 100 percent vested in the
portion of his Deferred Compensation Account attributable to his elective
deferrals. Unless otherwise provided pursuant to a separate written agreement
between the Company or an Affiliated Company and a Participant which
specifically references this Plan, the portion of the Participant's Deferred
Compensation Account, if any, attributable to employer contributions as
described in Section 4.5 shall vest based on Years of Service in accordance with
the following schedule:
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-------------------------------------- -------------------------------------
Years of Service Vested Percentage
of Account
-------------------------------------- -------------------------------------
Fewer than 1 0%
-------------------------------------- -------------------------------------
1, but fewer than 2 25%
-------------------------------------- -------------------------------------
2, but fewer than 3 50%
-------------------------------------- -------------------------------------
3, but fewer than 4 75%
-------------------------------------- -------------------------------------
4 or more 100%
-------------------------------------- -------------------------------------
Notwithstanding the above schedule, a Participant shall be 100 percent
vested in his entire Deferred Compensation Account if he has a Separation from
Service on account of death, Disability or Retirement, or in the event of a
Change in Control.
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ARTICLE V
Payment of Benefits
5.1 Eligibility for Payment. Payments from a Participant's Deferred
Compensation Account shall be made only upon Separation from Service; provided,
however, that payments may be made from the portion of the Participant's
Deferred Compensation Account attributable to his elective deferrals upon the
occurrence of a "financial hardship" as described in Section 5.6.
5.2 Separation from Service. A Participant whose Separation from Service is
on account of death, Disability or Retirement shall be entitled to 100 percent
of his Deferred Compensation Account. A Participant whose Separation from
Service is for any other reason shall be entitled to 100 percent of the portion
of his Deferred Compensation Account attributable to his elective deferrals and
the vested percentage (determined pursuant to Section 4.6) of the portion of his
Deferred Compensation Account attributable to Employer Contributions. The
portion of the Participant's Deferred Compensation Account which is not vested
shall be forfeited at the time of Separation from Service.
5.3 Time of Payment. A Participant whose Separation from Service is on account
of Disability or Retirement shall be entitled to elect the time his payment
under the Plan commences; provided, however, that such payment shall commence no
later than ninety (90) days after the end of the calendar quarter during which
the Participant attains age seventy (70). Payment to a Participant (or his
Beneficiary) whose Separation from Service is for any other reason (including
death) shall commence within ninety (90) days after the end of the calendar
quarter during which the Participant's Separation from Service occurs.
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A Participant's election as to the time of payment shall be made at any
time on or before the last day of the Plan Year immediately preceding the Plan
Year during which the Participant's Separation from Service occurs. If no
election is made before the end of such Plan Year, the payment shall be made
within ninety (90) days after the end of the calendar quarter during which the
Participant's Separation from Service occurs.
5.4 Form of Payment. A Participant whose Separation from Service is on
account of Disability or Retirement may elect payment in one of the following
forms:
(a) One lump sum payment, or
(b) Payment in annual installments over a period not exceeding five
(5) years. Unless otherwise determined by the Administrator in
its sole discretion, the amount of each such annual installment
shall be equal to the amount determined by dividing the
Participant's total remaining vested benefit under the Plan as of
the date thereof by the number of installments (including such
installment) remaining to be paid to such Participant.
Payment to a Participant (or his Beneficiary) whose Separation from Service
is for any other reason (including death) shall be made in a single lump sum.
A Participant's election as to the form of payment shall be made at any
time on or before the last day of the Plan Year immediately preceding the Plan
Year during which the Participant's Separation from Service occurs. If no
election is made before the end of such Plan Year, the payment shall be made in
a single lump sum.
5.5 Medium of Payment. The payment of a Participant's benefit under this
Plan shall be made in cash.
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5.6 Hardship Withdrawal. A Participant may request a withdrawal of all or
any portion of his Deferred Compensation Account on account of "financial
hardship." For this purpose, the term "financial hardship" means a severe
financial hardship to the Participant resulting from a sudden and unexpected
illness or accident of the Participant or of a dependent (as defined in Section
152 of the Code) of the Participant, loss of the Participant's property due to
casualty, or other similar extraordinary and unforeseeable circumstances arising
as a result of events beyond the control of the Participant. Withdrawals for
foreseeable expenditures, such as a down payment on a home or purchase of an
auto or college expenses, will not be permitted, nor will any withdrawal be
permitted to the extent that such hardship is or may be relieved:
(a) through reimbursement by insurance or otherwise; or
(b) by liquidation of the Participant's assets, to the extent the
liquidation of such assets would not itself cause severe
financial hardship.
The Administrator shall review the request and determine whether payment of
any amount is justified; and if so, how much is reasonably necessary to be paid
to meet the emergency. Any such payment shall be debited to the Participant's
Deferred Compensation Account, and the balance remaining in the Participant's
Deferred Compensation Account shall be payable in accordance with otherwise
applicable provisions of the Plan.
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A Participant who elects to make a hardship withdrawal of any portion of
his Deferred Compensation Account pursuant to this Section 5.6 shall not be
eligible to make Elective Deferrals until the Plan Year that first occurs after
the expiration of twelve (12) months from the date of such hardship withdrawal.
A Participant who is suspended from making Elective Deferrals pursuant to this
Section 5.6 shall remain a Participant even though he may not resume making
Elective Deferrals until after the period of his ineligibility has expired and
until he has completed and submitted to the person designated by the
Administrator a new Salary Deferral Agreement. Any suspension of a Participant
shall have no effect upon his rights under the Plan, except as expressly limited
by this Section 5.6, and earnings shall be credited to his Deferred Compensation
Account as in the case of all Participants.
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ARTICLE VI
Financing the Plan
6.1 Costs Borne by the Company and the Affiliated Companies. The costs of
the Plan shall be borne by the Company and the Affiliated Companies. Any reserve
that may be accumulated by the Company or the Affiliated Companies for the
payment of benefits under the Plan shall not be allocated to any Participant,
Beneficiary or Eligible Executive.
6.2 Medium of Financing the Plan. The Plan shall be financed by benefit
payments to Participants from the general assets of the Company and the
Affiliated Companies. The Company and the Affiliated Companies may accumulate a
reserve or reserves, and may use such vehicles as corporate owned life insurance
and "rabbi trusts" to accumulate such a reserve or reserves, which shall remain
the property of the Company or the Affiliated Company as part of the general
assets of the Company or the Affiliated Companies. Participants shall have the
status of general unsecured creditors of the Company or the Affiliated Companies
and the Plan constitutes a mere promise by the Company or the Affiliated
Companies to make benefit payments in the future. Any contract, policy or other
asset which the Company or the Affiliated Companies may utilize to assure
themselves of the funds to provide the benefits under the Plan shall not serve
in any way as security for the payment of Plan benefits and neither the Company
nor any Affiliated Companies shall be under any obligation whatsoever to
purchase or maintain any contract, policy or other asset to provide the benefits
payable under the Plan. It is the intention of the parties that the Plan is to
be unfunded for income tax purposes and for purposes of Title I of ERISA.
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ARTICLE VII
Administration
7.1 Administration. The Committee shall have the sole responsibility for
the administration of the Plan and shall have discretionary authority to
determine eligibility for benefits and to construe and interpret the terms of
the Plan. The Committee may designate persons other than the Committee to carry
out responsibilities under the Plan. Pursuant to this authority, these
responsibilities are delegated to the Administrator, which unless changed by the
Committee shall be the 401(k) Investment Fiduciary Committee. All usual and
reasonable expenses of the Committee and the Administrator in administering the
Plan shall be paid by the Company and the Affiliated Companies. No member of the
Committee or the Administrator who is an employee of the Company or an
Affiliated Company shall receive additional compensation for his services in
administering the Plan.
7.2 Claims Procedure. The Administrator shall make all initial
determinations regarding a claim for benefits. Any denial of a claim for
benefits made by a Participant or Beneficiary shall be stated in writing and
delivered or mailed to the Participant or Beneficiary. Such notice shall set
forth the specific reasons for the denial, written in a manner that may be
understood by a layman, and containing specific reference to pertinent
provisions of this Plan document on which such denial is based. In addition, the
Participant or Beneficiary whose claim for benefits has been denied shall have
the opportunity, within sixty (60) days after receipt of the written denial, to
submit a written request that the decision denying the claim be reviewed by the
Administrator.
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Within sixty (60) days after the receipt of a request for review, the
Administrator will review the denial of the claim. After considering all
materials presented by the claimant, the Administrator will render a written
opinion, written in a manner calculated to be understood by the claimant,
setting forth the specific reasons for the decision and containing specific
references to the pertinent provisions of the Plan on which the decision is
based. If special circumstances require that the sixty (60) day time period be
extended, the Administrator will so notify the claimant, and the Administrator
will render the decision as soon as possible, but no later than one hundred
twenty (120) days after receipt of the request for review. Any determination or
decision of the Administrator on review of the denial of the claim shall be
final, conclusive and binding.
7.3 Powers and Duties of the Administrator. The Administrator shall have
such discretion, duties and powers as may be necessary to discharge its duties
hereunder, including, but not by way of limitation, the following:
(a) To construe and interpret the Plan, decide all questions of
eligibility and determine the amount, manner and time of payment
of any benefits hereunder;
(b) to prescribe procedures to be followed by Participants or
Beneficiaries in filing application for benefits; and
(c) to appoint or employ individuals to assist in the administration
of the Plan and any other agents it deems advisable, including
legal and actuarial counsel.
Except to the extent the Administrator is expressly authorized in the Plan
to exercise discretion to be used to calculate benefits under the Plan, the
Administrator shall have no power to add to, subtract from or modify any of the
terms of the Plan, or to change or add to any benefits provided by the Plan, or
to waive or fail to apply any requirements of eligibility for a benefit under
the Plan.
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7.4 Rules and Decisions. The Administrator may adopt such rules as it deems
necessary, desirable or appropriate. All rules and decisions by the
Administrator shall be uniformly and consistently applied to all Participants
and Beneficiaries in similar circumstances. When making a determination or
calculation, the Administrator shall be entitled to rely upon information
furnished by a Participant or Beneficiary, the Company, the Affiliated
Companies, or the legal counsel of the Company or an Affiliated Company.
7.5 Duty to Keep Records and File Reports. The Administrator shall keep
records and other data as may be necessary for proper administration of the
Plan. The Administrator shall file or cause to be filed all annual reports,
financial and other statements as may be required by any federal or state
statute, agency or authority within the time prescribed by law or regulation for
filing such documents. The Administrator shall furnish such reports, statements
and other documents to Participants and Beneficiaries of the Plan as may be
required by any federal or state statute or regulation.
7.6 Authorization of Benefit Payments. The Administrator shall issue
directions concerning all benefits that are to be paid pursuant to the
provisions of the Plan.
7.7 Application and Forms for Benefits. The Administrator may require a
Participant or Beneficiary to complete and file with the Administrator an
application for a benefit and all other forms approved by the Administrator, and
to furnish all pertinent information requested by the Administrator. The
Administrator may rely upon all such information so furnished it, including the
current mailing address of the Participant or Beneficiary.
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7.8 Facility of Payment. Whenever, in the Administrator's opinion, a
Participant or Beneficiary entitled to receive any payment of a benefit or
installment thereof hereunder is under a legal disability or is incapacitated in
any way so as to be unable to manage his financial affairs, the Administrator
may direct payments to such Participant or Beneficiary or to his legal
representative or to another person or institution maintaining him, upon receipt
by the Administrator of satisfactory evidence of such disability or incapacity
and satisfactory evidence that such person or institution is maintaining him.
Any payment of a benefit or installment thereof in accordance with the
provisions of this Section 7.8 shall be a complete discharge to the
Administrator, the Company and the Affiliated Companies of any liability for the
making of such payment under the provisions of the Plan.
7.9 Indemnification of Committee and Administrator Members. The Company and
the Affiliated Companies shall indemnify and hold harmless each member of the
Committee and Administrator against any and all liability, claims, damages and
expense, including fees of individuals appointed pursuant to Section 7.3(c) that
the member may incur in administration of the Plan, unless arising from the
gross negligence or willful misconduct of such member.
7.10 Governing Law. The Plan, except as otherwise provided by ERISA, shall
be construed in accordance with and governed by the laws of the State of
Tennessee.
7.11 Severability. If any of the provisions of the Plan shall be for any
reason invalid or unenforceable, the remaining provisions shall nevertheless
remain in full force and effect.
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7.12 Provisions of the Plan to Control. In the event of any conflict
between the terms of the Plan as set forth in this instrument and any
description of the Plan that may be furnished to the Participants or others, the
Plan set forth herein shall control.
7.13 No Right to Continued Employment. Nothing contained herein shall be
construed as conferring upon a Participant the right to continue in the employ
of the Company or an Affiliated Company as an Eligible Executive or as a manager
or in any other capacity.
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ARTICLE VIII
Prohibition on Alienation
8.1 Prohibition on Alienation. No Participant or Beneficiary shall have the
right to assign, alienate or otherwise encumber any benefit payable under the
Plan, and any attempt to do so shall be void. None of the benefits payable to a
Participant or Beneficiary under the Plan shall be subject to the Participant's
or Beneficiary's debts or liabilities or claims of the Participant's or
Beneficiary's creditors, nor shall the benefits be subject to attachment,
garnishment or other legal process by such creditors.
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ARTICLE IX
Change in Control
9.1 Change in Control. In the event of a Change in Control of the Company,
a Participant or Beneficiary shall immediately have nonforfeitable rights to all
benefits under this Plan, including the portion of his Deferred Compensation
Account attributable to Employer Contributions. In the event of a Change in
Control, or at such other times as the Board of Directors shall determine, the
Company shall either contribute an amount to a "rabbi trust" sufficient to
provide payment of all benefits to which the Participants or Beneficiaries would
be entitled under the Plan as of the date on which the Change in Control occurs
or distribute such amount to the Participants or Beneficiaries or to trusts or
accounts designated by the Participants or Beneficiaries. The contribution to
the "rabbi trust" or the distribution described in this Section 9.1 shall be
made in cash.
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ARTICLE X
Amendment and Termination of Plan
10.1 Amendments and Terminations. The Board of Directors reserves the right
to amend or terminate the Plan. In the event of any such amendment or
termination such amendment or termination shall not reduce the amount of the
payment of any benefit currently payable to any individual who is a Participant
or Beneficiary on the effective date of the amendment or termination or
eliminate the right of a Participant to payment of the then current balance of
the Participant's Deferred Compensation Account. Any action by the Company
amending or terminating the Plan may be by resolution of the Board of Directors
or by any person or persons duly authorized by resolution of the Board of
Directors to take such action.
10.2 Distribution of Assets Upon Termination. The Company and the
Affiliated Companies shall retain absolute ownership of any assets held to
finance the payment of benefits under the Plan. Upon termination of the Plan,
any such assets held by the Company and the Affiliated Companies or otherwise
held as a reserve for the payment of such benefits shall remain the property of
the Company and the Affiliated Companies. No Participant or Beneficiary shall
have any right or claim to such assets except as provided herein.
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IN WITNESS WHEREOF, American Retirement Corporation has caused this
instrument to be executed on the ____ day of December, 2003, effective January
1, 2004, by its duly authorized officers.
AMERICAN RETIREMENT CORPORATION
By: _________________________________
ATTEST:
- -----------------------------------
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