UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 5, 2006 (March 30, 2006)
AMERICAN RETIREMENT CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Tennessee 01-13031 62-1674303
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(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
111 Westwood Place, Suite 200
Brentwood, Tennessee 37027
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(Address of Principal Executive Offices) (Zip Code)
(615) 221-2250
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
|_| Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
|_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
|_| Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
|_| Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
On March 30, 2006, the Compensation Committee of the Board of Directors of the
Company, as part of its periodic review of benefits programs, amended and
restated its Executive Change in Control Severance Benefits Plan (the "Plan")
for certain of its officers. The Plan was initially adopted in 2001. Under the
terms of the Plan, those members of the Company's senior management holding the
titles of Chairman of the Board, Chief Executive Officer, Chief Operating
Officer, President, Chief Financial Officer, Executive Vice President, Senior
Vice President or Vice President will be entitled to severance benefits if they
are terminated within 18 months following a Change in Control (as defined in the
Plan) of the Company, but only if such termination is (a) by the Company without
Good Cause, or (b) by the officer for Good Reason (as such capitalized terms are
defined in the Plan). The Plan may be amended or terminated by the Compensation
Committee at any time prior to a Change in Control.
For those eligible executive officers, the severance benefits payable upon
termination following a Change in Control shall be calculated as follows:
o if, immediately prior to the Change in Control, the eligible officer
held the title of Chairman of the Board, Chief Executive Officer or President,
he or she shall be entitled to an amount equal to the product of three times the
sum of (x) such officer's annual base salary (as in effect for the calendar year
during which the Change in Control occurs) and (y) seventy-five percent (75%) of
the maximum bonus which the Committee determined such officer could have earned
(regardless of the amount actually earned) for the year in which the Change in
Control occurred (such amount, a "Bonus Amount");
o if, immediately prior to the Change in Control, the eligible officer
held the title of Chief Operating Officer or Chief Financial Officer, he or she
shall be entitled to an amount equal to the product of two times the sum of (x)
such officer's annual base salary (as in effect for the calendar year during
which the Change in Control occurs) and (y) the officer's Bonus Amount;
o if, immediately prior to the Change in Control, the eligible officer
held the title of Executive Vice President, he or she shall be entitled to an
amount equal to the product of one and a half times the sum of (x) such
officer's annual base salary (as in effect for the calendar year during which
the Change in Control occurs) and (y) the officer's Bonus Amount;
o if, immediately prior to the Change in Control, the eligible officer
held the title of Senior Vice President, he or she shall be entitled to an
amount equal to the sum of (x) the eligible officer's annual base salary (as in
effect for the calendar year during which the Change in Control occurs) and (y)
the officer's Bonus Amount; or
o if, immediately prior to the Change in Control, the eligible officer
held the title of Vice President, an amount equal to one-half the sum of (x) the
eligible officer's annual base salary (as in effect for the calendar year during
which the Change in Control occurs) and (y) the officer's Bonus Amount.
Subject to compliance with Section 409A of the Internal Revenue Code, as amended
("Code"), the severance benefits described above are payable on a bi-monthly
basis over a period of years equal to the multiplier set forth above for such
officer.
In addition to the severance payments described above, each eligible officer
shall also be entitled to receive the following payments, if applicable: (i) the
amount of all legal fees and expenses incurred by the eligible officer in
successfully seeking to enforce any right or benefit provided by the Plan; (ii)
an amount sufficient to reimburse the officer for the premium paid by such
officer for continued coverage for the officer (and covered dependents) under
the Company's healthcare plan pursuant to COBRA (subject to certain limitations
and conditions, all as set forth in the Plan); and (iii) expenses to cover
certain outplacement services. In addition, in the event that the aggregate
payments or benefits to be made to the eligible officer under the Plan, together
with any other payments or benefits received or to be received by the eligible
officer in connection with a Change in Control (collectively, "Total Change in
Control Payments") would exceed 110% of the maximum amount permitted under
Section 280G of the Code to be received without incurring an excise tax under
Section 4999 of the Code ("Section 280G Maximum"), then the amounts payable
under the Plan shall be increased by an amount necessary to reimburse the
eligible officer on an after-tax basis (as described in the Plan) for any excise
tax payable by the officer under Section 4999 of the Code. If Total Change in
Control Payments do not exceed 110% of the 280G Maximum, then, at the election
of the eligible officer, (i) such payments or benefits shall be payable or
provided to the eligible officer over the minimum period necessary to reduce the
present value of such payments or benefits to an amount which is $1.00 less than
the 280G Maximum or (ii) the payments or benefits to be provided under the Plan
shall be reduced to the extent necessary to avoid incurrence of the excise tax
under Section 4999 of the Code, with the allocation of the reduction among such
payments and benefits to be determined by the eligible officer.
Item 9.01. Financial Statements and Exhibits.
(c) Exhibits
10.1 Amended and Restated Executive Change in Control
Severance Benefits Plan
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.
AMERICAN RETIREMENT CORPORATION
By: /s/ Bryan D. Richardson
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Bryan D. Richardson
Executive Vice President - Finance
and Chief Financial Officer
Date: April 5, 2006
EXHIBIT INDEX
Exhibit
Number Description
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10.1 Amended and Restated Executive Change in Control
Severance Benefits Plan