BROOKDALE SENIOR LIVING INC.

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT ("Agreement") is made and entered into as of the 25th
day of September, 2006 by and between Brookdale Senior Living Inc., a Delaware
corporation (the "Company"), and T. Andrew Smith ("Executive"). Where the
context permits, references to "the Company" shall include the Company and any
successor of the Company.

W I T N E S S E T H:

WHEREAS, the Company desires to secure the services of the Executive from and
after the Effective Date (as hereinafter defined); and

WHEREAS, Executive desires to provide such services.

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 6 hereof, from and after
October 16, 2006 (which shall be the "Effective Date" of this Agreement),
Executive shall be employed by the Company in the capacity of Executive Vice
President – General Counsel and Secretary. In such capacity Executive shall
report directly to the Company's Co-Chief Executive Officers. The principal
location of Executive's employment with the Company shall be the current
principal office of Brookdale Senior Living - Nashville in Brentwood, Tennessee,
although Executive understands and agrees that Executive may be required to
travel from time to time for business reasons. 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. Executive will 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 Co-Chief Executive
Officers. Notwithstanding the foregoing, nothing herein shall prohibit Executive
from (i) engaging in personal investment activities for the Executive and the
Executive's family that do not give rise to any conflict of interests with the
Company or its affiliates, (ii) subject to prior approval of the Company's Board
of Directors (the "Board"), accepting directorships unrelated to the Company
that do not give rise to any conflict of interests with the Company or its
affiliates, and (iii) engaging in charitable and civic activities, so long as
such outside interests do not interfere with the performance of the Executive's
duties hereunder.

 

2.

TERM AND WAIVER.

(a)         Term. Subject to Section 6 hereof, Executive's employment under the
terms and conditions of this Agreement will commence on the Effective Date. The
term of this Agreement (the "Term") shall consist of the Initial Term and a
maximum of two (2) Renewal Terms which, in any case, may be earlier terminated
pursuant to Section 5; provided, that in no event shall the Term extend beyond
the sixth anniversary of the Effective Date. The initial term

 

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of this Agreement (the "Initial Term") shall commence on the Effective Date and
end on the fourth anniversary of the Effective Date. The Initial Term shall
automatically renew for up to two (2) additional one (1)-year periods (each such
one-year period, a "Renewal Term") unless either party delivers to the other
party at least ninety (90) days prior to the end of the Initial Term or the
first Renewal Term a written notice indicating that it intends not to extend the
Term hereof. The delivery by the Company to Executive of written notice
indicating that it intends not to extend the Term as provided in this Section 2
prior to the expiration of the Initial Term or the expiration of the first
Renewal Term (i.e., so that the Term would end before the sixth anniversary of
the Effective Date) shall constitute "Good Reason" (as defined below) for
purposes of this Agreement. However, the delivery by the Company pursuant to
this Section 2 of a notice not to extend the Term shall not be deemed a
termination of Executive's employment by the Company without Cause for purposes
of this Agreement. If the Term expires on the sixth anniversary of the Effective
Date, and Executive is employed by the Company thereafter, such employment shall
be "at-will" and this Agreement will be of no further force and effect.
Expiration of the Term upon the sixth anniversary of the Effective Date, shall
not be considered a termination of employment entitling Executive to severance
pay or benefits under Section 5(b) or 5(c) hereof.

 

3.

COMPENSATION.

(a)          Base Salary. In consideration of Executive's full and faithful
satisfaction of Executive's duties under this Agreement, the Company agrees to
pay to Executive a salary in the amount of two hundred thousand dollars
($200,000) per annum (the "Base Salary"), payable in such installments as the
Company pays its similarly placed employees (but not less frequently than each
calendar month), subject to usual and customary deductions for withholding taxes
and similar charges, and customary employee contributions to health, welfare and
retirement programs in which Executive is enrolled. The Base Salary shall be
reviewed on an annual basis in accordance with Executive's annual performance
evaluation and adjusted at the Company's sole discretion; provided, however, in
no event shall the Base Salary be reduced without Executive's approval.

(b)          Bonus Compensation. In addition to any salary payable pursuant to
Section 3(a) above, for the first fiscal year of the Company commencing after
the Effective Date, Executive shall be eligible to receive in respect of such
fiscal year a bonus (the "Bonus"), based on the achievement, as determined by
the Board in its sole discretion, of certain performance standards as agreed to
by Executive and the Board, with a target Bonus of two hundred thousand dollars
($200,000) (the "Target Bonus"), payable in a combination of 50% cash and 50%
vested shares of common stock of the Company ("Common Stock") (the stock portion
of any such Bonus, the "Bonus Stock Grant"). The number of shares comprising any
Bonus Stock Grant shall be determined by dividing the applicable portion of the
Bonus being awarded in Common Stock by the fair market value (as determined by
the Board in good faith) of the Common Stock on the date of grant. Any Bonus
Stock Grant described in this Section may be separately granted pursuant to the
terms of a stock agreement, and this Section is not intended to duplicate such
grant.

 

 

 

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In addition to any salary payable pursuant to Section 3(a) above, for each
succeeding fiscal year of the Company Executive shall also be eligible to
receive an annual bonus, based on achievement of certain performance standards,
as determined by the Board in its sole discretion, payable in a combination of
cash and vested shares of Common Stock, as determined by the Board in its sole
discretion, and to the extent permitted by law and applicable stock exchange
listing requirements; provided, however, that to the extent that any amount of
such annual bonus exceeds the Target Bonus, such excess amount may be paid in
the form of unvested Common Stock, as determined by the Board in its sole
discretion. The Target Bonus for each successive year after fiscal 2007 shall be
reviewed on an annual basis in accordance with Executive's annual performance
evaluation and adjusted at the Company's sole discretion; provided, however, in
no event shall the amount of the Target Bonus for any fiscal year be reduced
below two hundred thousand dollars ($200,000) without Executive's approval.

Notwithstanding anything herein to the contrary, Executive shall be guaranteed
to receive a 2006 cash Bonus calculated by multiplying two hundred thousand
dollars ($200,000) by a fraction, the numerator of which shall the number of
days during the period beginning with the Effective Date and ending with
December 31, 2006 and the denominator of which shall be 365, and a Bonus for
fiscal 2007 of at least two hundred thousand dollars ($200,000) in cash.

The cash portion of each Bonus, the 2006 Bonus and any other annual bonus shall
be paid to Executive within a reasonable time after the end of the fiscal year,
but in no event later than thirty (30) days (the "Outside Payment Date")
following completion of the Company's audit for the applicable fiscal year,
which the Company shall endeavor in good faith to complete within three months
of the last day of the applicable fiscal year; provided, however, that the
Outside Payment Date may not be later than the later of (i) two and one- half
(2-1/2) months after the end of the applicable fiscal year; and (ii) two and
one- half (2-1/2) months after the end of the calendar year; and the stock grant
portion, if any, of each Bonus shall be made on such date as the Board
determines in its discretion, though no later than the applicable Outside
Payment Date. Notwithstanding anything to the contrary contained herein, no
Bonus in respect of any fiscal year of the Company will be due to Executive
unless Executive is employed by the Company on the last day of the fiscal year
in respect of which the Bonus is awarded.

(c)          Initial Restricted Stock Grant. As soon as practicable after the
Executive's purchase of shares of Common Stock pursuant to Section 6 hereof, the
Company shall cause the Executive to be granted one hundred twenty thousand
(120,000) shares of Common Stock. The grant shall be pursuant to the terms of,
and subject to the restrictions set forth in, a separate stock agreement (the
"Initial Restricted Stock Grant") under the Company's Omnibus Stock Incentive
Plan. Twenty thousand (20,000) of the restricted shares subject to the Initial
Restricted Stock Grant shall vest upon the attainment of performance goals (the
"Performance-Vesting Shares"). One hundred thousand (100,000) of the restricted
shares subject to the Initial Restricted Stock Grant shall vest based upon
continued employment (the "Time-Vesting Shares"). This Section 3(c) is not
intended to duplicate the Initial Restricted Stock Grant, which shall
substantially incorporate the following terms and conditions and the terms and
conditions set forth on Exhibit A hereto (Exhibit A's terms and conditions also
being incorporated in this Employment Agreement):

 

 

 

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As to Performance-Vesting Shares:

 

•

The first vesting date for the Performance-Vesting Shares shall be December 31,
2008. Up to fifty percent (50%) of the Performance-Vesting Shares may vest on
that date, depending on the degree to which a performance goal based on the cash
earnings of the Company during the fourth quarter of the preceding fiscal year,
2007, has been met, in accordance with the schedule set forth on Exhibit B
hereto. Any of such shares which do not vest on the first vesting date shall not
be forfeited, but shall remain subject to the terms and conditions of the
Initial Restricted Stock Grant.

 

•

The second vesting date for the Performance-Vesting Shares shall be December 31,
2009. Up to hundred percent (100%) of the Performance-Vesting Shares still
subject to the Initial Restricted Stock Grant (including shares which failed to
vest at the first vesting date) may vest on the second vesting date, depending
on the degree to which a performance goal based on the cash earnings of the
Company during the fourth quarter of the preceding fiscal year, 2008 has been
met, in accordance with the schedule set forth on Exhibit B hereto. Any of such
shares which do not vest on the second vesting date shall be forfeited.

 

•

If the Executive's employment shall be terminated by the Company without Cause
or by the Executive for Good Reason at any time prior to the second vesting
date, the shares of Common Stock subject to the Initial Restricted Stock Grant
at the time of such termination shall remain subject to the Initial Restricted
Stock Grant until the vesting date which immediately follows such termination.
Upon such vesting date the same number of shares shall vest as would have vested
if the Executive had remained employed by the Company on such vesting date. If
the Executive's employment terminates for any other reason while
Performance-Vesting Shares remain subject to the terms and conditions of the
Initial Restricted Stock Grant, all such Performance-Vesting Shares shall be
forfeited at such termination.

As to Time-Vesting Shares:

 

•

Subject to the Executive's continuing to be employed by the Company on the
relevant vesting date, one-fourth (1/4) of the Time-Vesting Shares shall vest on
each of the following four vesting dates: December 31, 2007, December 31, 2008,
December 31, 2009 and December 31, 2010; provided that, upon the occurrence of a
Change of Control, 100% of the Time-Vesting Shares that are not vested at that
time shall immediately vest.

 

•

If the Executive's employment shall be terminated by the Company without Cause
or by the Executive with Good Reason at any time prior to December 31, 2008,
fifty percent (50%) of the unvested Time-Vesting Shares remaining subject to the
Initial Restricted Stock Grant shall vest and any remaining Time-Vesting Shares
shall be immediately forfeited. If the Executive's employment is so terminated

 

 

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after December 31, 2008 and prior to December 31, 2009, fifty percent (50%) of
the unvested Time-Vesting Shares remaining subject to the Initial Restricted
Stock Grant shall vest and any remaining Time-Vesting Shares shall be
immediately forfeited. If the Executive's employment is so terminated after
December 31, 2009, and prior to December 31, 2010, all of the Time-Vesting
Shares remaining subject to the Initial Restricted Stock Grant shall vest. If
the Executive's employment terminates for any other reason while Time-Vesting
Shares remain unvested and subject to the terms and conditions of the Initial
Restricted Stock Grant, all such shares shall be forfeited at such termination.

As to all Shares subject to the Initial Restricted Stock Grant:

 

•

With respect to all shares of Common Stock subject to the Initial Restricted
Stock Grant, the Executive shall be entitled to receive, and retain, all
ordinary and extraordinary cash and stock dividends which may be declared on the
Company's Common Stock after the date of grant and before any forfeiture thereof
(regardless of whether a share later vests or is forfeited).

 

•

All shares of Common Stock which vest under the Initial Restricted Stock Grant
shall be subject to the Company's general policies regarding the sale of Common
Stock by executives in effect from time to time.

During his employment with the Company, the Executive shall be eligible to
receive additional grants under the Company's Omnibus Stock Incentive Plan.

(d)         Withholding. All taxable compensation payable to Executive pursuant
to this Section 3 or otherwise pursuant to this Agreement shall be subject to
customary withholding taxes and such other excise or employment 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 an employee.

 

4.

BENEFITS AND PERQUISITES.

(a)          Retirement and Welfare Benefits. During the Term, Executive will be
entitled to all the usual benefits offered to employees at Executive's level,
including sick time, participation in the Company's medical, dental and
insurance programs, as well as the ability to participate in the Company's
401(k) retirement savings plan, subject to the applicable limitations and
requirements imposed by the terms of such benefit plans, in each case 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 employees, including
Executive.

(b)          Life Insurance. During the Term, the Company will provide Executive
with basic life insurance benefits, equal to $400,000, at no cost to Executive.

(c)           Vacation/Paid Time Off. Notwithstanding anything to the contrary
in the Company's vacation or paid time off ("PTO") policies, during calendar
year 2006 Executive shall

 

 

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be entitled to five (5) business days vacation and paid time off under the
Company's "PTO" plan, and, for each calendar year starting with 2007, Executive
shall be entitled to four (4) weeks (20 business days) vacation and paid time
off under the Company's "PTO" plan for each calendar year, and in the event
Executive does not utilize all such four (4) weeks during any calendar year, (a)
Executive shall be paid for up to two (2) weeks (10 business days) of such
unused vacation/PTO at a weekly rate equal to the then applicable Base Salary
divided by 52, and (b) the remaining unused days of vacation/PTO shall be deemed
forfeited at the end of such calendar year.

(d)          Reimbursement of Expenses. The Company shall reimburse Executive
for any expenses reasonably and necessarily incurred by Executive 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 shall be terminated at the
earliest to occur of the following: (i) at the end of the Term unless Executive
agrees to continue working for the Company, (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 with the Company (or its successors) may be terminated (i) by the
Company for "Cause" (as defined below), effective on the date on which a written
notice to such effect is delivered to Executive; (ii) 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; (iii) 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 (iv) 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 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 accrued but
unpaid Base Salary (payable as provided in Section 3(a)) and accrued and unused
vacation pay through the date of such termination (collectively, the "Accrued
Benefits"). If the definition of "Cause" set forth below conflicts with such
definition in any stock incentive plan or agreement of the Company or any of its
affiliates, the definition set forth herein shall control.

(b)          Termination by Company without Cause or by Executive for Good
Reason. (i) If Executive's employment 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 hereof and not within twelve (12) months following a "Change of
Control" (as defined below), then Executive shall be entitled to, upon
Executive's providing the Company with a signed release of claims in a form
adopted by the Company's Board of Directors from time to time and subject to
Executive's continued compliance with the provisions of any restrictive
covenants 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: (A) the

 

 

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Accrued Benefits, (B) an amount equal to six (6) months Base Salary payable in
the same manner as provided under Section 3(a), and (C) continuation of
Executive's coverage under the Company's medical plan until the earlier of
(x) the date the Executive becomes eligible for the medical benefits program of
a new employer or (y) the six-(6)-month anniversary of the date of such
termination.

(ii)          In the event of a Change of Control and termination of the
Executive's employment by the Company (or its successor) without Cause or by
Executive for Good Reason within twelve (12) months following such Change of
Control, then Executive shall be entitled to, upon Executive's providing the
Company with a signed release of claims in a form adopted by the Company's Board
of Directors from time to time and subject to Executive's continued compliance
with the provisions of any restrictive covenants in any other agreement or
agreements between Executive and the Company or to which Executive is a party:
(A) the Accrued Benefits, (B) an amount equal to twelve (12) months Base Salary
(at the rate in effect at the date of such termination, or if higher,
immediately prior to the Change of Control) payable in the same manner as
provided under Section 3(a), and (C) continuation of Executive's coverage under
the Company's medical plan or comparable medical plans to be paid by the Company
until the earlier of (x) the date Executive becomes eligible for the medical
benefits program of a new employer or (y) the twelve-(12)-month anniversary of
the date of such termination.

(c)          Death, Disability or Termination for other than Good Reason. If
Executive's employment is terminated by Executive for other than Good Reason
prior to the end of the Term, Executive shall not be entitled to receive any
further compensation or benefits under this Agreement or otherwise other than
the Accrued Benefits. If Executive's employment 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, upon Executive's (or Executive's estate, as
applicable) providing the Company with a signed release of claims in a form
adopted by the Company's Board of Directors from time to time, Executive (or
Executive's beneficiary or estate, as applicable) shall be entitled to (i) the
Accrued Benefits, (ii) receipt of a monthly payment equal to the Executive's
then applicable annual Base Salary on the date of death or on the date of
termination for Disability divided by twelve (such monthly payment, the "Monthly
Severance Payment") payable for twelve (12) months following such date (the
"Benefits Period"), which Monthly Severance Payment shall be paid to the
Executive, or the Executive's beneficiary or estate, as applicable, and (iii) in
the case of termination due to Disability, continuation, at the Company's
expense, of the Executive's coverage in any group health plan (which may be
provided by payment of COBRA continuation coverage premiums), life insurance,
long term disability and other employee benefit plans or programs, to the extent
permissible under the terms of such plans or law until the end of the Benefits
Period.

 

(d)

Definitions. For purposes of this Agreement:

"Affiliate" means an affiliate of the Company (or other referenced entity, as
the case may be) as defined in Rule 12b-2 promulgated under Section 12 of the
Exchange Act.

 

 

 

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"Beneficial Owner" (or any variant thereof) has the meaning defined in Rule
13d-3 under the Exchange Act.

"Cause" means (i) conviction of, or guilty plea concerning or confession of any
felony, (ii) any act of dishonesty committed by Executive in connection with the
Company's or its subsidiaries' business, (iii) any material breach by Executive
of this Agreement, after written notice thereof from the Board is given in
writing and such breach is not cured to the satisfaction of the Company within a
reasonable period of time (not greater than 30 days) under the circumstances;
(iv) any material breach of any reasonable and lawful rule or directive of the
Company; (v) the gross or willful neglect of duties or gross misconduct by
Executive; and (vi) the habitual use of drugs or habitual, excessive use of
alcohol to the extent that any of such uses in the Board's good faith
determination materially interferes with the performance of Executive's duties
under this Agreement.

"Change of Control" shall be deemed to have occurred if an event set forth in
any one of the following paragraphs shall have occurred:

(i)          any Person other than any Permitted Transferee is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company (not
including in the securities beneficially owned by such Person any securities
acquired directly from the Company or any of its affiliates as defined in Rule
12b-2 promulgated under Section 12 of the Securities Exchange Act of 1934, as
amended, the "Exchange Act" ) representing 50% or more of the combined voting
power of the Company's then outstanding securities; or

(ii)          there is consummated a merger or consolidation of the Company or
any direct or indirect subsidiary of the Company with any other corporation,
other than a merger or consolidation immediately following which the individuals
who comprise the Board immediately prior thereto constitute at least a majority
of the Board of the entity surviving such merger or consolidation or, if the
Company or the entity surviving such merger is then a subsidiary, the ultimate
parent thereof; or

(iii)        the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an agreement
for the sale or disposition by the Company of all or substantially all of the
Company's assets, other than (a) a sale or disposition by the Company of all or
substantially all of the Company's assets to an entity, at least 50% of the
combined voting power of the voting securities of which are owned by
stockholders of the Company following the completion of such transaction in
substantially the same proportions as their ownership of the Company immediately
prior to such sale or (b) a sale or disposition of all or substantially all of
the Company's assets immediately following which the individuals who comprise
the Board immediately prior thereto constitute at least a majority of the

 

 

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board of directors of the entity to which such assets are sold or disposed or,
if such entity is a subsidiary, the ultimate parent thereof.

Notwithstanding the foregoing, a "Change of Control" shall not be deemed to have
occurred by virtue of the consummation of any transaction or series of
integrated transactions immediately following which the holders of the common
stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions. As used in the
foregoing definition of "Change of Control", the term "Company" shall not
include any successor of the Company.

 

"Disability" means, as determined by the Board of Directors in good faith,
Executive's inability, due to disability or incapacity, to perform all of the
Executive's duties hereunder on a full-time basis for (i) periods aggregating
one hundred eighty (180) days, whether or not continuous, in any continuous
period of three hundred and sixty five (365) days or, (ii) where Executive's
absence is adversely affecting the performance of the Company in a significant
manner, periods greater than ninety (90) days and Executive is unable to resume
Executive's duties on a full time basis within ten (10) days of receipt of
written notice of the Board's determination under this clause (ii).

 

"Good Reason" means either (i) the occurrence, without the express prior written
consent of Executive, of any of the following circumstances, unless such
circumstances are fully corrected by the Company within thirty (30) days
following written notification by Executive (which written notice must be
delivered within thirty (30) days of Executive's becoming aware of the
occurrence of such circumstances) that the Executive intends to terminate the
Executive's employment for one of the reasons set forth below: (A) the failure
by the Company to pay to Executive any portion of Executive's Base Salary or
Bonus within thirty (30) days of the date such compensation is due, or (B) the
relocation of Executive's principal office at the Company to a location outside
a fifty (50) mile radius from the present office location of Brookdale Senior
Living - Nashville in Brentwood, Tennessee (provided that Executive shall be
available to provide services periodically at the other office locations of the
Company as deemed necessary by the Company and the Executive's provision of such
services at such locations shall not be deemed to be a relocation of Executive's
principal office); or (C) Executive is assigned duties, compensation or
responsibilities that are materially and significantly reduced with respect to
the scope or nature of the duties, compensation and/or responsibilities
associated with the Executive's position as of immediately after the Effective
Date and, within ten (10) days following written notice by Executive to the
Company of Executive's objection to such reduction, the Company fails to
reinstate the Executive's duties, compensation and/or responsibilities so
reduced; or (ii) the delivery by the Company to Executive of written notice
indicating that it intends not to extend the Term hereof pursuant to Section 2
hereof. Notwithstanding the foregoing, a termination by Executive for "Good
Reason" shall not be deemed to have occurred by virtue of changes (which do not
result in a material diminution) in Executive's duties, benefits and
responsibilities resulting upon (or shortly thereafter) the consummation of any
transaction or series of

 

 

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integrated transactions immediately following which the holders of the common
stock of the Company immediately prior to such transaction or series of
transactions continue to have substantially the same proportionate ownership in
an entity which owns all or substantially all of the assets of the Company
immediately following such transaction or series of transactions.

"Permitted Transferee" shall mean, (i) any Affiliate ( a "FIG Affiliate") of
Fortress Investment Group LLC, a Delaware limited liability company ("FIG"),
(ii) any managing director, general partner, director, limited partner, officer
or employee of any FIG Affiliate, (iii) any investment fund managed directly or
indirectly by FIG or any of its Affiliates (a "FIG Fund"), or (iv) any general
partner, limited partner, managing member or person occupying a similar role of
or with respect to any FIG Fund.

"Person" shall have the meaning given in Section 3(a)(9) of the Exchange Act, as
modified and used in Sections 13(d) and 14(d) thereof, except that such term
shall not include (i) the Company, its Affiliates or any of their respective
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its Subsidiaries, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.

(e)         Resignation as Officer or Director. Upon the termination of
employment for any reason, Executive shall resign each position (if any) that
Executive then holds as an officer or director of the Company or any of its
subsidiaries.

(f)          Section 409A. To the extent required to comply with Section 409A of
the Code, as determined by Executive's counsel, if requested by the Executive,
one or more payments under this Section 5 of this Agreement shall be delayed to
the six-month anniversary of the date of Executive's separation from service,
within the meaning of Section 409A of the Code. In addition, if and to the
extent required to prevent a violation of Section 409A of the Code as determined
by the Executive's counsel, if requested by the Executive, the Executive will
pay the entire cost of any health insurance benefits provided under Section 5 of
this Agreement for the first six (6) months after the effective date of the
termination, and the Company will reimburse the Executive for the Company's
share of such costs as provided in this Agreement on the six-month anniversary
of the Executive's "separation from service" as defined in Section 409A of the
Code.

6.          EXECUTIVE'S INVESTMENT OBLIGATION. Notwithstanding any other
provision of this Agreement, this Agreement shall not become effective and shall
be null and void ab initio, unless, as of the Effective Date, the Executive
invests the sum of two hundred thousand dollars ($200,000) in shares of Common
Stock, at the current market price per share. The number of shares of Common
Stock to be so acquired shall then be determined by dividing the investment
amount by the above-stated price per share of Common Stock, and rounding down to
the nearest whole number. The shares so purchased (the "Purchased Shares") shall
be subject to a eighteen (18) month "Holding Period" described on Exhibit C
hereto and shall at all

 

 

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times be subject to the Company's general policies regarding sale of Common
Stock by executives then in effect.

7.          ASSIGNMENT. This Agreement, and all of the terms and conditions
hereof, shall bind the Company and its successors and assigns and shall bind
Executive and Executive's heirs, executors and administrators. No transfer or
assignment of this Agreement shall release the Company from any obligation to
Executive hereunder. Neither this Agreement, nor any of the Company's rights or
obligations hereunder, may be assigned or otherwise subject to hypothecation by
Executive. The Company may assign the rights and obligations of the Company
hereunder, in whole or in part, to any of the Company's subsidiaries, affiliates
or parent corporations, or to any other successor or assign in connection with
the sale of all or substantially all of the Company's assets or stock or in
connection with any merger, acquisition and/or reorganization, provided the
assignee assumes the obligations of the Company hereunder.

 

8.

GENERAL.

(a)          Notices. Any notices provided hereunder must be in writing and
shall be deemed effective upon the earlier of one business day following
personal delivery (including personal delivery by telecopy or telex), or the
third business day after mailing by first class mail to the recipient at the
address indicated below:

To the Company:

 

Brookdale Senior Living Inc.

330 North Wabash Avenue

Suite 1400

Chicago, IL 60611

 

Attn:

Chief Executive Officer

To Executive:

T. Andrew Smith

c/o Brookdale Senior Living, Inc.

111 Westwood Place

Suite 200

Brentwood, TN 37027

 

or to such other address or to the attention of such other person as the
recipient party will have specified by prior written notice to the sending
party.

(b)          Severability. Any provision of this Agreement which is deemed
invalid, illegal or unenforceable in any jurisdiction shall, as to that
jurisdiction and subject to this paragraph be ineffective to the extent of such
invalidity, illegality or unenforceability, without affecting in any way the
remaining provisions hereof in such jurisdiction or rendering that or any other
provisions of this Agreement invalid, illegal, or unenforceable in any other
jurisdiction. If any covenant should be deemed invalid, illegal or unenforceable
because its scope is considered

 

 

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excessive, such covenant shall be modified so that the scope of the covenant is
reduced only to the minimum extent necessary to render the modified covenant
valid, legal and enforceable.

(c)          Entire Agreement. This document together with all restrictive
covenants in any and all agreements between Executive and the Company or to
which Executive is a party, constitute the final, complete, and exclusive
embodiment of the entire agreement and understanding between the parties related
to the subject matter hereof and supersedes and preempts any prior or
contemporaneous understandings, agreements, or representations by or between the
parties, written or oral.

(d)          Counterparts. This Agreement may be executed on separate
counterparts, any one of which need not contain signatures of more than one
party, but all of which taken together will constitute one and the same
agreement.

(e)          Amendments. No amendments or other modifications to this Agreement
may be made except by a writing signed by all parties. No amendment or waiver of
this Agreement requires the consent of any individual, partnership, corporation
or other entity not a party to this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any third person any rights or
remedies under or by reason of this Agreement.

(f)           Choice of Law. All questions concerning the construction, validity
and interpretation of this Agreement will be governed by the laws of the State
of Illinois without giving effect to principles of conflicts of law of such
state.

(g)          Survivorship. The provisions of this Agreement necessary to carry
out the intention of the parties as expressed herein shall survive the
termination or expiration of this Agreement.

(h)          Waiver. The waiver by either party of the other party's prompt and
complete performance, or breach or violation, of any provision of this Agreement
shall not operate nor be construed as a waiver of any subsequent breach or
violation, and the failure by any party hereto to exercise any right or remedy
which it may possess hereunder shall not operate nor be construed as a bar to
the exercise of such right or remedy by such party upon the occurrence of any
subsequent breach or violation. No waiver shall be deemed to have occurred
unless set forth in a writing executed by or on behalf of the waiving party. No
such written waiver shall be deemed a continuing waiver unless specifically
stated therein, and each such waiver shall operate only as to the specific term
or condition waived and shall not constitute a waiver of such term or condition
for the future or as to any act other than that specifically waived.

(i)           Captions. The captions of this Agreement are for convenience and
reference only and in no way define, describe, extend or limit the scope or
intent of this Agreement or the intent of any provision hereof.

(j)           Construction. The parties acknowledge that this Agreement is the
result of arm's-length negotiations between sophisticated parties, each afforded
representation by legal counsel. Each and every provision of this Agreement
shall be construed as though both parties

 

 

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participated equally in the drafting of the same, and any rule of construction
that a document shall be construed against the drafting party shall not be
applicable to this Agreement.

(k)          Arbitration. Except as necessary for the Company and its
subsidiaries, affiliates, successors or assigns or Executive to specifically
enforce or enjoin a breach of this Agreement (to the extent such remedies are
otherwise available), the parties agree that any and all disputes that may arise
in connection with, arising out of or relating to this Agreement, or any dispute
that relates in any way, in whole or in part, to Executive's services on behalf
of the Company or any subsidiary, the termination of such services or any other
dispute by and between the parties or their subsidiaries, affiliates, successors
or assigns, shall be submitted to binding arbitration in Chicago, Illinois
according to the National Employment Dispute Resolution Rules and procedures of
the American Arbitration Association. The parties agree that each party shall
bear its or his own expenses incurred in connection with any such dispute. This
arbitration obligation extends to any and all claims that may arise by and
between the parties or their subsidiaries, affiliates, successors or assigns,
and expressly extends to, without limitation, claims or causes of action for
wrongful termination, impairment of ability to compete in the open labor market,
breach of an express or implied contract, breach of the covenant of good faith
and fair dealing, breach of fiduciary duty, fraud, misrepresentation,
defamation, slander, infliction of emotional distress, disability, loss of
future earnings, and claims under the United States Constitution, and applicable
state and federal fair employment laws, federal and state equal employment
opportunity laws, and federal and state labor statutes and regulations,
including, but not limited to, the Civil Rights Act of 1964, as amended, the
Fair Labor Standards Act, as amended, the Americans With Disabilities Act of
1990, as amended, the Rehabilitation Act of 1973, as amended, the Employee
Retirement Income Security Act of 1974, as amended, the Age Discrimination in
Employment Act of 1967, as amended, and any other state or federal law.

 

9.            EXECUTIVE REPRESENTATION AND ACCEPTANCE. By signing this
Agreement, Executive hereby represents that Executive is not currently under any
contractual obligation to work for another employer and that Executive is not
restricted by any agreement or arrangement from entering into this Agreement and
performing Executive's duties hereunder.

IN WITNESS WHEREOF AND INTENDING TO BE LEGALLY BOUND THEREBY, the parties hereto
have executed and delivered this Agreement as of the year and date first above
written.

 

BROOKDALE SENIOR LIVING INC.

 

 

 

 

By:

/s/ W.E. Sheriff

 

 

Name:

W.E. Sheriff

 

 

Title:

Co-Chief Executive Officer

 

 

 

 

 

 

 

EXECUTIVE

 

 

 

/s/ T. Andrew Smith

 

T. Andrew Smith

 

 

 

 

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