SEVERANCE AGREEMENT

Exhibit 10.1 SEVERANCE AGREEMENT BY AND BETWEEN CAPITAL SENIOR LIVING CORPORATION AND JAMES A. STROUD

TABLE OF CONTENTS

ATTACHMENT I — Indemnity

SEVERANCE AGREEMENT      THIS SEVERANCE AGREEMENT ("Agreement") dated as of the 12th day of December, 2008 and effective as of the 31st day of December, 2008 (the "Effective Date"), by and between Capital Senior Living Corporation, a Delaware corporation ("CSLC" or the "Company"), and James A. Stroud, an individual ("Stroud").      WHEREAS, Stroud is a founder of CSLC and his leadership and commitment has been instrumental to the Company’s success, and he has prior to the Effective Date been Chairman of the Company, a director, and Chairman of the Board of CSLC (the "Board"); and      WHEREAS, Stroud now desires for personal reasons to retire from his officer position with CSLC and its subsidiaries, and he and CSLC have determined to terminate that certain Amended and Restated Employment Agreement, dated October 8, 1997, as further amended, by and between Stroud and CSLC (the "Employment Agreement").      NOW, THEREFORE, in consideration of the premises and covenants considered in this Agreement, the parties hereto agree as follows:      1.  CONFIDENTIALITY . Stroud hereby acknowledges his understanding that as a result of his prior employment by CSLC he has had and may have access to, and possession of, valuable and important confidential or proprietary data, documents and information concerning CSLC, its operations and its future plans ("Confidential Information"). Stroud hereby agrees that neither he nor any of his Affiliates (which does not include CSLC and its subsidiaries) will at any time divulge or communicate to any person or entity, or use to the detriment of CSLC or for the benefit of any other person or entity, or make or remove any copies of, such Confidential Information or proprietary data or information, whether or not marked or otherwise identified as confidential or secret. Notwithstanding any other provision in this Agreement to the contrary, Stroud shall have the right to use any Confidential Information that constitutes "Residual Knowledge," which shall mean Stroud’s memory (unassisted by tangible or electronic copies of any Confidential Information), skills, and experience obtained in connection with his employment with CSLC. Stroud, on or before the Effective Date, shall surrender to CSLC any and all materials, including but not limited to drawings, manuals, reports, documents, lists, photographs, maps, surveys, plans, specifications, accountings and any and all other materials relating to CSLC or any of its business, including all copies thereof, that Stroud has in his possession, whether or not such material was created or compiled by Stroud, but excluding, however, personal memorabilia belonging to Stroud and notes taken by him as a member of the Board ("Excluded Items"). With the exception of the Excluded Items, Stroud acknowledges that all such material is solely the property of CSLC and Stroud has no right, title or interest in or to such materials. Notwithstanding anything to the contrary set forth in this Section 1, the provisions of this Section 1 shall not apply to information which: (i) is or becomes generally available to the public other than as a result of disclosure by Stroud, (ii) is already known to Stroud as of the Effective Date from sources other than CSLC, or (iii) is required to be disclosed by law or by regulatory or judicial process.      2.  NON-COMPETITION; NON-SOLICITATION . Stroud and CSLC hereby agree that, notwithstanding the termination of the Employment Agreement as provided in Section 8 of

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this Agreement, (i) Paragraph 9 (Non-Competition; Non-Solicitation) of the Employment Agreement shall survive such termination and remain in effect for the periods after such termination that are specified in such paragraph; and (ii) notwithstanding Paragraph 9 of the Employment Agreement, Stroud shall be entitled to employ, solicit for employment or recommend for employment Elizabeth Marks ("Marks").      3.  WORK PRODUCT . Stroud acknowledges that all innovations, improvements, developments, methods, designs, analyses, reports and all similar or related information which relates to CSLC’s or any of its subsidiaries’ or Affiliates’ actual or anticipated business, or existing or future products or services and which were conceived, developed or made by Stroud while employed by CSLC belong to CSLC or such subsidiary or Affiliate. Stroud will perform all actions requested by the Board to establish and to confirm such ownership (including, without limitation, assignments, consents, powers of attorney and other instruments).      4.  SEVERANCE PAYMENTS; INSURANCE .      (a) CSLC shall:      (i) Pay to Stroud $500,000 in cash by the Effective Date; it is Stroud’s intention to use the after-tax amount from $250,000 of this $500,000 for the purpose of rewarding certain nonexecutive employees of the Company for their years of service to the Company.      (ii) On or before March 15, 2009, pay to Stroud the bonus earned by him for 2008 under an existing arrangement between the Company and Stroud, without regard to whether Stroud is employed by the Company on the date the bonus is paid.      (iii) CSLC shall promptly reimburse Stroud’s reasonable attorney’s fees incurred in connection with the negotiation and execution of this Agreement, but in no event later than December 31, 2009.      (b) All life insurance policies purchased by CSLC with respect to Stroud, of which the Company is the beneficiary, shall be allowed to terminate in accordance with their respective terms.      5.  OTHER BENEFITS .      (a) For eighteen (18) months after the Effective Date, with respect to Stroud and his dependents, CSLC shall, at the Company’s option: (i) continue to provide health benefits made generally available by CSLC to its senior executives; or (ii) pay Stroud’s premiums under the Consolidated Omnibus Reconciliation Act ("COBRA"). If COBRA is unavailable to Stroud, CSLC shall reimburse Stroud for the cost of obtaining health benefits substantially equivalent to those made generally available by CSLC to its senior executives. Reimbursements of amounts described in the preceding sentence shall be made promptly, but no later than the last day of tax year immediately following the date such expenses are incurred.

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     (b) CSLC shall pay to Stroud all accrued but unpaid or unused vacation, sick pay and expense reimbursement according to CSLC’s Corporate Policies and Procedures Manual.      (c) CSLC shall, effective as of the Effective Date, sell to Stroud the office furnishings and personal computer located in his current office at Company headquarters for the current book value on the Company’s books of such furnishings and computer.      (d) For so long as Stroud is a member of the Board, and for thirty (30) days after Stroud’s service as a Board member terminates, CSLC shall:      (i) Employ Marks and shall assign Marks to provide administrative support to Stroud and continue her current duties as office manager. During such assignment, Marks shall continue to be employed by CSLC with a benefits package no less favorable than the one she now has, her compensation shall be not less than the compensation she now receives, and she shall be entitled to receive raises and additional benefits, including grants of equity awards, no less favorable than those provided to the secretaries or administrative or executive assistants of the Chief Executive Officer of CSLC;      (ii) Maintain Stroud’s access to his existing executive office and to his current parking space at Company headquarters; and      (iii) Reimburse Stroud’s reasonable and necessary business expenses incurred in attending trade association meetings of the National Investment Center and American Senior Housing Association, in any case if Stroud plans to attend such meetings while serving as a Board member, promptly after his presentation to CSLC of itemized bills, vouchers or accountings, but no later than the last day of tax year immediately following the date such expenses are incurred.      6.  REGISTRATION RIGHTS . Stroud shall have the following registration rights.      (a) For purposes of this Section, the term "Registrable Securities" shall mean any shares of Common Stock beneficially owned by Stroud (directly or indirectly) plus all shares of Common Stock that Stroud may acquire pursuant to the exercise of stock options.      (b) If CSLC at any time proposes to register any of its securities under the Securities Act of 1933 (the "Securities Act") for sale to the public, whether for its own account or for the account of other security holders or both (except with respect to registration statements on Forms S-4 or S-8 or another form not available for registering the Registrable Securities for sale to the public), each such time it will give written notice to Stroud of its intention so to do. Upon the written request of Stroud, received by the Company within 30 days after the giving of any such notice by CSLC, CSLC will cause the Registrable Securities as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by CSLC, all to the extent requisite to permit the sale or other disposition by Stroud (in accordance with his written request) of such Registrable Securities so registered;

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provided, however, that if the managing underwriter of CSLC’s offering delivers in good faith a written opinion to Stroud and the Company that either because of (i) the kind of securities which Stroud or CSLC intends to include in the offering or (ii) the size of the offering which Stroud or CSLC intend to make, the success of the offering or the market for CSLC’s Common Stock would be materially and adversely affected by the inclusion of the Registrable Securities requested to be included (A) in the event that the size of the offering is the basis for the managing underwriter’s opinion, the amount of the securities to be offered for the account of Stroud and each other person registering securities of CSLC pursuant to similar incidental registration rights shall be reduced pro rata to the extent necessary to reduce the total amount of securities to be included in such offering to the amount reasonably recommended by such managing underwriter; and (B) in the event that the combination of securities to be offered is the basis of such managing underwriter’s opinion (1) the Registrable Securities and other securities to be included in such offering shall be reduced as described in clause (A) above or, (2) if the actions described in Clause (A) would, in the reasonable judgment of the managing underwriter, be insufficient to substantially eliminate the material and adverse effect that inclusion of the Registrable Securities requested to be included would have on such offering, such Registrable Securities will be excluded from such offering. Notwithstanding the foregoing provisions, CSLC may withdraw any registration statement referred to in this Section 6(b) without thereby incurring any liability to Stroud.      (c) If and whenever CSLC is required by Section 6(b) to effect a piggy back registration, CSLC shall as expeditiously as possible:      (i) prepare and file with the Securities and Exchange Commission (the "Commission") a registration statement (which, in the case of an underwritten public offering shall be on Form S-1, Form S-2, Form S-3, any successor forms thereto, or other form of general applicability satisfactory to the managing underwriter selected as therein provided) with respect to such securities and use its best efforts to cause such registration statement to become and remain effective for the period of the distribution contemplated thereby (as determined hereinafter); provided, however, that CSLC may postpone the filing, effectiveness, supplementing or amending of the registration statement for up to 90 days if, in the good faith opinion of CSLC’s Board, the registration or sale of Registrable Securities would adversely affect a material financing, acquisition, disposition of assets or stock, merger or other comparable transaction or would require CSLC to make public disclosure of information the public disclosure of which would have a material adverse effect upon CSLC. During any time that CSLC defers amending or supplementing the registration statement, the holders of Registrable Securities shall discontinue disposing of Registrable Securities;      (ii) subject to the provision in subsection (i), prepare and file with the Commission such amendments and supplements to such registration statement and the prospectus used in connection therewith as may be necessary to keep such registration statement effective for the period of distribution and comply with the provisions of the Securities Act with respect to the disposition of all Registrable

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Securities covered by such registration statement in accordance with the intended method of disposition set forth in such registration statement for such period;      (iii) furnish to Stroud and to each underwriter such number of copies of the registration statement and the prospectus included therein (including each preliminary prospectus) as such persons reasonably may request in order to facilitate the public sale or other disposition of the Registrable Securities covered by such registration statement;      (iv) use its best efforts to register or qualify the Registrable Securities covered by such registration statement under the securities or "blue sky" laws of such jurisdictions as Stroud or, in the case of an underwritten public offering, the managing underwriter reasonably shall request, PROVIDED HOWEVER, that CSLC shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction;      (v) use its best efforts to list or qualify for quotation the Registrable Securities covered by such registration statement with any securities exchange or inter-dealer quotation system on which the Common Stock is then listed or quoted;      (vi) notify Stroud at any time when a prospectus relating to Registrable Securities is required to be delivered under the Securities Act or the happening of any event as a result of which the prospectus included in such registration statement contains an untrue statement of a material fact or omits any fact necessary to make the statements therein not misleading, and, at the request of Stroud, CSLC will prepare a supplement or amendment to such prospectus so that, as thereafter delivered to the purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of a material fact or omit to state any fact necessary to make the statements therein not misleading, provided that the 180-day period described below will be tolled from the time a prospectus contains such a statement or omission until a prospectus correcting such statement or omission has been delivered to Stroud and may be delivered to the purchasers of such Registrable Securities in compliance with the Securities Act;      (vii) notify Stroud immediately, and confirm the notice in writing, (1) when the registration statement becomes effective, (2) of the issuance by the Commission of any stop order or of the initiation, or the threatening, of any proceedings for that purpose, (3) of the receipt by CSLC of any notification with respect to the suspension of qualification of the Registrable Securities for sale in any jurisdiction or of the initiation, or the threatening, of any proceedings for that purpose, and (4) of the receipt of any comments, or requests for additional information, from the Commission or any state regulatory authority. If the Commission or any state regulatory authority shall enter such a stop order or order suspending qualification at any time, CSLC will promptly use its best reasonable efforts to obtain the lifting of such order; and

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     (viii) otherwise use its best efforts to comply with all applicable rules and regulations of the Commission, and make available to its security holders as soon as reasonably practicable, but not later than 15 months after the effective date of the registration statement, a statement covering a period of at least 12 months beginning after the effective date of the registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act.      For purposes hereof, the period of distribution of Registrable Securities in a firm commitment underwritten public offering shall be deemed to extend until each underwriter has completed the distribution of all securities purchased by it, and the period of distribution of Registrable Securities in any other registration shall be deemed to extend until the earlier of the sale of all Registrable Securities covered thereby or 180 days after the effective date thereof.      In connection with each registration hereunder, Stroud will furnish to CSLC in writing such information with respect to Stroud as reasonably shall be necessary in order to assure compliance with federal and applicable state securities laws.      In connection with each registration pursuant to this Section covering an underwritten public offering, CSLC and Stroud agree to use their best efforts to select a managing underwriter (and any co-managers) and to enter into a written agreement with the managing underwriter in such form and containing such provisions as are customary in the securities business for such an arrangement between such underwriter and companies of CSLC’s size and investment stature.      (d) All expenses incurred by CSLC in complying with this Section, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for CSLC, fees and expenses (including counsel fees) incurred in connection with complyi