BROOKDALE SENIOR LIVING INC. EMPLOYMENT AGREEMENT

EXECUTION COPY

BROOKDALE SENIOR LIVING INC.

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (this “ Agreement ”) is made and entered into as of June 23, 2009 (the “ Effective Date ”), by and between Brookdale Senior Living Inc., a Delaware corporation (the “ Company ”), and W. E. Sheriff (“ Executive ”).  Where the context permits, references to “the Company” shall include the Company and any successor of the Company.

WHEREAS, the Company and Executive previously entered into an employment agreement, dated May 12, 2006 and amended on December 30, 2008 (the “ Original Agreement ”), pursuant to which Executive serves as the Chief Executive Officer of the Company (the “ CEO ”); and

WHEREAS, the Company and Executive mutually desire to amend and restate the Original Agreement in its entirety on the terms and conditions set forth in this Agreement.

NOW, THEREFORE , in consideration of the mutual promises, covenants and agreements herein contained, together with other good and valuable consideration the receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

1.            SERVICES AND DUTIES .  Subject to Section 2 hereof, from and after the Effective Date, Executive shall, pursuant to the terms of this Agreement, continue to be employed by the Company as the CEO, and shall report directly to the Company’s Board of Directors (the “ Board ”).  The principal location of Executive’s employment with the Company shall be the same as Executive’s principal location of employment as of the Effective Date, although Executive understands and agrees that Executive may be required to travel from time to time for business reasons.  During the Employment Term (as defined in Section 2(a)), Executive shall be a full-time employee of the Company and shall dedicate all of Executive’s working time to the Company and shall have no other employment and no other business ventures which are undisclosed to the Company or which conflict with Executive’s duties under this Agreement.  During the Consulting Term (as defined in Section 2(b)), Executive shall serve the Company as a Consultant (as defined in Section 2(b)) and shall provide such services to the Company on an exclusive basis.  Executive shall perform such duties as are required by the Company from time to time and normally associated with Executive’s position, together with such additional duties, commensurate with Executive’s position, as may be assigned to Executive from time to time by the Board.  Notwithstanding the foregoing, nothing herein shall prohibit Executive from (i) participating in trade associations or industry organizations which are related to the business of the Company or engaging in charitable, civic or political activities or (ii) subject to the prior approval of the Chairman of the Board, (1) engaging in personal investment activities for Executive and Executive’s family that do not give rise to any conflicts of interest with the Company or its Affiliates or (2) accepting directorships unrelated to the Company that do not give rise to any conflict of interests with the Company or its Affiliates, in each case so long as the interests in (i) and (ii) above do not interfere, individually or in the aggregate, with the performance of Executive’s duties hereunder.  The Company acknowledges and approves the

current activities of Executive as set forth on Schedule 1 hereto; provided , however , that the activities in which Executive participates pursuant to subsection (i) of the immediately preceding sentence do not require such acknowledgment or approval.

2.            TERM .

(a)            Employment Term .  Executive’s employment under the terms and conditions of this Agreement shall commence on the Effective Date.  Such employment (or consultancy as provided in Section 2(b)) shall expire on the fifth (5 ^th ) anniversary of the Effective Date (the “ Term ”); provided , however , that the Term shall earlier expire immediately upon the termination of Executive’s employment or consultancy (as applicable) pursuant to Section 5 hereof.  Notwithstanding anything to the contrary in this Agreement, at any time during the Term, Executive may elect to resign his position as the CEO, effective six (6) months following the date on which Executive provides written notice of such election to the Board (the date such resignation is effective, the “ Transition Date ” and the period from the Effective Date through the Transition Date, the “ Employment Term ”).

(b)            Consulting Term .  Following the Transition Date, Executive shall continue serving the Company for the remainder of the Term (the “ Consulting Term ”) as an independent contractor in the capacity of consultant (a “ Consultant ”) and will perform services at a level equal to 20% or less of the average level of services performed by Executive during the 36 month period prior to the Transition Date.  During the Consulting Term, Executive shall make himself available to perform consulting services with respect to the businesses conducted by the Company.  Such consulting services shall be related to such matters as the Board may designate from time to time.  It is understood that such consulting services will require Executive to, among other things, provide consultation and advisory services regarding corporate governance practices and procedures and business development matters, and to perform such other duties as may reasonably be requested.  At all times during the Consulting Term, Executive shall comply with reasonable requests for his consulting services and shall devote reasonable time and his reasonable best efforts, skill and attention to the performance of such consulting services, including travel reasonably required in the performance of such consulting services.  During the Consulting Term, Executive shall continue to be subject to the terms and conditions of this Agreement.

3.            COMPENSATION .

(a)            Base Compensation .  In consideration of Executive’s full and faithful satisfaction of Executive’s duties under this Agreement, the Company agrees to pay to Executive base compensation for his services as follows:  (i) during the Employment Term, a base salary in the amount of six hundred thousand dollars ($600,000) per annum, or (ii) during the Consulting Term, a consulting fee in the amount of three hundred thousand dollars ($300,000) per annum (as applicable, the “ Base Compensation ”), in either case payable in such installments as the Company pays its similarly placed employees or consultants, as applicable (but not less frequently than each calendar month), subject to customary employee contributions to any health, welfare and/or retirement programs in which Executive is enrolled.  The Base Compensation may be increased from time to time at the Board’s sole discretion, but except as

expressly provided in clause (ii) of this Section 3(a), in no event shall the Base Compensation be reduced without Executive’s approval.

(b)            Annual Bonus .  In addition to the Base Compensation, for each calendar year ending during the Employment Term, Executive shall be eligible to receive a bonus (“ Annual Bonus ”), subject to the terms of the Company’s incentive compensation plan for senior executive officers as in effect from time to time (the “ Bonus Plan ”), with a target Annual Bonus of six hundred thousand dollars ($600,000) (the “ Target Bonus ”).

Notwithstanding anything in this Section 3(b) to the contrary, for the year in which the Transition Date occurs, Executive shall be eligible to receive an Annual Bonus, determined as follows:  if the Transition Date occurs (i) prior to October 1 ^st of such year, a pro-rated portion of the Annual Bonus (to the extent earned under the terms of the Bonus Plan) based on the number of days in which Executive served as the CEO during such year or (ii) on or after October 1 ^st of such year, an Annual Bonus (to the extent earned under the terms of the Bonus Plan) based on the full year.  For the avoidance of doubt, Executive shall not be eligible to receive an Annual Bonus for any calendar year commencing during the Consulting Term.

The Annual Bonus shall be paid to Executive, in cash, no later than thirty (30) days following completion of the Company’s audit for the applicable year, which the Company shall endeavor in good faith to complete within three (3) months following the last day of such year; provided , however , that in no event shall the Annual Bonus be paid to Executive prior to January 1 or later than December 31 of the year following the year to which such Annual Bonus relates.

(c)            Restricted Stock Unit Grant .  Effective upon the Effective Date, Executive shall receive a one-time grant of 500,000 restricted stock units of the Company’s common stock.

(d)            Existing Restricted Stock Grants .  All grants of restricted stock made to Executive prior to the Effective Date (the “ Existing Grants ”) shall continue to be governed by the applicable terms of such grants; provided , however , that service as a Consultant hereunder shall be deemed to be continued employment for purposes of such restricted stock awards.

(e)            Withholding .  All taxable compensation payable to Executive pursuant to this Agreement shall be subject to any applicable withholding taxes and such other taxes as are required under Federal law or the law of any state or governmental body to be collected with respect to compensation paid by the Company to Executive.

4.            BENEFITS AND PERQUISITES .

(a)            Retirement and Welfare Benefits .  During the Employment Term, Executive shall be eligible to participate in all benefit plans made available to the Company’s senior executives, and during the Consulting Term, Executive shall be eligible to participate in all benefit plans made available to the Company’s similarly situated former executives.  In either case, the benefits shall be subject to the applicable limitations and requirements imposed by the terms of such benefit plans and shall be governed in all respects in accordance with the terms of such plans as from time to time in effect.  Nothing in this Section 4, however, shall require the

Company to maintain any benefit plan or provide any type or level of benefits to its current or former employees, including Executive.

(b)             Life Insurance .  During the Employment Term, the Company shall provide Executive with basic life insurance benefits, up to a maximum of $600,000, at no cost to Executive.

(c)             Paid Time Off .  During the Employment Term, Executive shall be eligible to participate in the paid time off policy generally applicable to the Company’s senior executives, as it may be amended from time to time.

(d)             Reimbursement of Expenses .  The Company shall reimburse Executive for any expenses reasonably and necessarily incurred by Executive during the Term in furtherance of Executive’s duties hereunder, including travel, meals and accommodations, upon submission by Executive of vouchers or receipts and in compliance with such rules and policies relating thereto as the Company may from time to time adopt.

5.            TERMINATION .  Executive’s employment or consultancy, as applicable, shall be terminated at the earliest to occur of the following:  (i) the end of the Term, unless Executive agrees to continue employment or consultancy with the Company on an at-will basis; (ii) the date on which the Board delivers written notice that Executive is being terminated for “Disability” (as defined below); or (iii) the date of Executive’s death.  In addition, Executive’s employment or consultancy, as applicable, with the Company (or its successors) may be earlier terminated (1) by the Company for “Cause” (as defined below), effective on the date on which a written notice to such effect is delivered to Executive; (2) by the Company at any time without Cause, effective on the date on which a written notice to such effect is delivered to Executive or such other date as is reasonably designated by the Company; (3) by Executive for “Good Reason” (as defined below), effective thirty-one (31) days following the date on which a written notice to such effect is delivered to the Company; or (4) by Executive at any time, effective fourteen (14) days following the date on which a written notice to such effect is delivered to the Company (or its successors).

(a)            For Cause Termination .  If Executive’s employment or consultancy, as applicable, with the Company is terminated by the Company (or its successors) for Cause, Executive shall not be entitled to any further compensation or benefits other than, in each case if applicable as of the date of termination:  (i) any accrued but unpaid Base Compensation (payable as provided in Section 3(a)); (ii) any Annual Bonus earned but unpaid as of the date of termination for any previously completed year, payable as set forth in Section 3(b) hereof; (iii) reimbursement for any business expenses properly incurred by Executive prior to the date of termination in accordance with Section 4(d) hereof, payable on the Company’s first regularly scheduled payroll date which occurs at least ten (10) days after the date of termination; and (iv) vested benefits, if any, to which Executive may be entitled under the Company’s employee benefit plans as of the date of termination (collectively, the “ Accrued Benefits ”).  For the avoidance of doubt, the Existing Grants shall be treated as provided in the applicable equity incentive plan and award agreement governing such awards.

(b)            Termination by the Company without Cause or by Executive for Good Reason .  If Executive’s employment or consultancy, as applicable, is terminated by the Company (or its successors) other than for Cause or by Executive for Good Reason prior to the end of the Term, then Executive shall be entitled, upon (i) Executive’s execution and non-revocation of a general release of claims in a form satisfactory to the Company within thirty (30) days following the date of termination (the “ Release ”) and (ii) Executive’s continued compliance with the restrictive covenants set forth in Section 6 hereto and in any other agreement or agreements between Executive and the Company or to which Executive is a party, including, without limitation, any restricted stock agreement between the Company and Executive) and all other applicable ongoing obligations to which Executive is subject as of the date of termination, to, in each case if applicable as of the date of termination:

(i) the Accrued Benefits;

(ii) continuation of his then-current Base Compensation for the lesser of (1) twenty-four (24) months following the date of such termination or (2) the remainder of the Term, in either case payable in the same manner as provided in Section 3(a) hereof;

(iii) in lieu of any Annual Bonus to be provided pursuant to Section 3(b) hereof, an Annual Bonus (to the extent earned under the terms of the Bonus Plan) for the year of termination, pro-rated based on the number of days in which Executive served as the CEO during such year and payable as set forth in Section 3(b) hereof; provided , however , that if such termination occurs on or after October 1 ^st , the amount of such Annual Bonus shall not be subject to proration;

(iv) to the extent Executive is then eligible for, and elects, continuation of health care coverage under COBRA, the Company shall, for the length of the COBRA coverage period, pay an amount of Executive’s applicable health care premiums such that Executive’s monthly premiums are equal to those of the Company’s then-current employees or former employees, as applicable; and

(v) the treatment of the Existing Grants as provided in the applicable equity incentive plan and award agreement governing such awards.

For purposes of clarification, in no event shall Executive be entitled to any amounts under this Section 5(b) upon a termination of employment if Executive continues to perform services as a Consultant hereunder as contemplated by Section 2(b).

(c)            Death or Disability .  If Executive’s employment or consultancy, as applicable, is terminated by reason of Executive’s death or Disability prior to the end of the Term, in lieu of any other payments or benefits, Executive (or Executive’s beneficiary or estate, as applicable) shall be entitled to the Accrued Benefits.  For the avoidance of doubt, the Existing Grants shall be treated as provided in the applicable equity incentive plan and award agreement governing such awards.

(d)            Voluntary Resignation by Executive without Good Reason .  If Executive voluntarily resigns his employment or consultancy without Good Reason during the Term, then Executive shall be entitled to, subject to the execution and non-revocation of the Release and in either case if applicable as of the date of termination:  (i) the Accrued Benefits and (ii) in lieu of any Annual Bonus to be provided pursuant to Section 3(b) hereof, an Annual Bonus (to the extent earned under the terms of the Bonus Plan) for the year of termination, pro-rated based on the number of days in which Executive served as the CEO during such fiscal year and payable as set forth in Section 3(b) hereof; provided , however , that if such termination occurs on or after October 1 ^st , the amount of such Annual Bonus shall not be subject to proration.  For the avoidance of doubt, the Existing Grants shall be treated as provided in the applicable equity incentive plan and award agreement governing such awards.

(e)            Definitions .  For purposes of this Agreement: