EXHIBIT 10.4
                              EMPLOYMENT AGREEMENT
        THIS EMPLOYMENT AGREEMENT  ("Agreement") is made and entered into on the
  26th day of May,  1999, by and between  Capital Senior Living  Corporation,  a
  Delaware  corporation  ("CSL" or "the  Company"),  and  Lawrence A. Cohen,  an
  individual  residing in the State of New York  ("Employee").  The term of this
  Agreement  shall be deemed to have  commenced as of June 1, 1999  ("Employment
  Commencement Date").
        1. APPOINTMENT,  TITLE AND DUTIES.  CSL hereby employs Employee to serve
  in the positions as assigned to him by its Board of Directors, which currently
  shall be as its Chief Executive  Officer and as the Vice Chairman of its Board
  of Directors  and a member of the  Executive  Committee of the Board.  In such
  capacity,  Employee  shall  report to the  Chairman  of the Company of CSL and
  shall  have  such  powers,  duties  and  responsibilities  as are  customarily
  assigned  to the  Chief  Executive  Officer  and Vice  Chairman.  In  addition
  Employee shall have such other duties and  responsibilities  as may reasonably
  be  assigned  to him by the Board of  Directors,  including  serving  with the
  consent  or at the  request  of CSL on the board of  directors  of  affiliated
        2. TERM OF AGREEMENT.  The initial term of this Agreement shall be for a
  three  (3) year  period  ending  on May 31,  2002,  however,  the term of this
  Agreement  shall  automatically  be  extended  for a one  (1)  year  term on a
  consecutive  basis.  The term of this  Agreement may be extended by the mutual
  written  consent of the Employee and Company.  This Agreement  shall terminate
  upon the earlier of: (i) the date of the  voluntary  resignation  of Employee,
  (ii) the date of Employee's death or  determination  of Employee's  disability
  (as defined in Paragraph 6 below), (iii) the date of notice by CSL to Employee
  that this Agreement is being terminated by CSL whether "for cause" (as defined
  in Paragraph 6 below) or without cause,  (iv) upon the date a notice of intent
  to resign for "good  reason" (as defined in Paragraph 6 below) is delivered to
  the Company by Employee, or (v) expiration of the term.
        3.  ACCEPTANCE  OF  POSITION.  Employee  hereby  accepts  the  positions
  assigned  by the Board of  Directors,  and agrees that during the term of this
  Agreement he will faithfully perform his duties and will devote  substantially
  all of his  business  time to the  business  and  affairs  of CSL and will not
  engage,  for his own account or for the account of any other person or entity,
  in any other business or enterprise  except with the express written  approval
  of the Board of Directors of CSL.  Employee may, at his sole  discretion,  (i)
  serve as a director on the boards of directors of other  entities,  businesses
  and  enterprises  he  currently  serves  on, and (ii) make  personal,  passive
  investments.  Employee agrees to perform his duties faithfully, diligently and
  to the  best of his  ability,  to use his best  efforts  to  advance  the best
  interests of the Company at all times, and to abide by all moral,  ethical and
  lawful policies, guidelines, procedures,  instructions and orders given to him
  by the Company from time to time;  PROVIDED,  HOWEVER,  that in no event shall
  Employee  be  required  to move from the New York  City,  New York  area.  The
  Company will provide an office either in New York City or the immediate  area.
  Employee  shall  spend a  reasonable  amount of time in Dallas to conduct  the
  affairs of the Company.
        4. SALARY AND BENEFITS. During the term of this Agreement:
                 A) CSL shall pay to Employee a base salary at an annual rate of
  not less than $300,000 per annum, paid in approximately  equal installments no
  less  frequently  than  semi-monthly.  An  annual  bonus of  thirty-three  and
  one-third  percent  (33-1/3%)  of  Employee's  base  salary  shall  be paid in
  quarterly  installments,  subject to meeting  performance  standards  that the
  Company's  reported  quarterly  earnings  per share is not less than the First
  Call consensus earnings per share for that quarter, and subject to increase by
  the Compensation Committee. The Compensation Committee will use its reasonable
  discretion to determine  the amount of the  quarterly  bonus to be paid if the
  reported  quarterly earnings per share are lower than the First Call consensus
  earnings per share. The Company shall deduct from Employee's  compensation and
  bonus all applicable local, state,  Federal or foreign taxes,  including,  but
  not limited to, income tax,  withholding  tax, social security tax and pension
  contributions (if any).
                  B)  Employee  shall  participate  in all  health,  retirement,
  Company-paid  insurance,  sick leave,  disability,  expense  reimbursement and
  other  benefit  programs,  if any,  which  CSL  makes  available,  in its sole
  discretion,  to its  senior  executives;  however,  nothing  herein  shall  be
  construed  to obligate  the Company to  establish  or  maintain  any  employee
  benefit  program.  The Company may  purchase and maintain in force a death and
  disability  insurance  policy in an amount at all times equal to not less than
  an amount equal to Employee's  annual base salary multiplied by three (3). The
  Company shall be the  beneficiary of said policy and shall use said policy for
  the  purposes  described  in  Paragraph  7(A)(i),   below.   Reimbursement  of
  Employee's  reasonable and necessary business expenses incurred in the pursuit
  of the  business  of the  Company  or any of its  affiliates  shall be made to
  Employee upon his  presentation to the Company of itemized bills,  vouchers or
  accountings  prepared  in  conformance  with  applicable  regulations  of  the
  Internal Revenue Service and the policies and guidelines of the Company.
                  C) Employee  shall be entitled to reasonable  vacation time in
  an  amount  of four (4) weeks per year  pursuant  to the  Company's  Corporate
  Policies and Procedures Manual.
         5. STOCK  OPTIONS.  If the Company  adopts a stock option plan or other
  incentive  compensation  plan,  Employee  shall  receive  options to  purchase
  Company  Common  Stock.  The number of shares of Common  Stock of the  Company
  covered by options to be granted to  Employee  and the  exercise  price of the
  options shall be determined by the Compensation  Committee,  if it exists, and
  in the absence of a  Compensation  Committee,  by the Board of Directors.  The
  number of shares and approximate  vesting schedule of such options shall be at
  least as  favorable to Employee as those  contained in options  granted to any
  other officer of the Company and its subsidiaries.
         6. CERTAIN TERMS DEFINED. For purposes of this Agreement:
                  A)  Employee  shall be deemed to be  disabled if a physical or
  mental  condition shall occur and persist which, in the written opinion of two
  (2) licensed physicians, has rendered Employee unable to perform the duties of
  Chief Executive Officer, Vice Chairman and member of the Board of Directors of
  CSL for a period of ninety (90) calendar days or more, and which condition, in
  the opinion of such physicians, is likely to continue for an indefinite period
  of time, rendering Employee unable to return to his duties for CSL. One (1) of
  the two (2)  physicians  shall  be  selected  in good  faith  by the  Board of
  Directors of CSL, and the other of the two (2) physicians
  shall be  selected  in good faith by  Employee.  In the event that the two (2)
  physicians  selected  do not agree as to  whether  Employee  is  disabled,  as
  described  above,  then said two (2)  physicians  shall  mutually agree upon a
  third (3rd) physician  whose written opinion as to Employee's  condition shall
  be conclusive upon CSL and Employee for purposes of this Agreement.
                  B) A  termination  of  Employee's  employment  by CSL shall be
  deemed  to be "for  cause"  if it is based  upon  (i) a  final,  nonappealable
  conviction of Employee for commission of a felony  involving moral  turpitude,
  (ii) Employee's willful gross misconduct that causes material economic harm to
  the Company or that brings substantial  discredit to the Company's reputation,
  or (iii)  Employee's  material  failure or  refusal  to perform  his duties in
  accordance with this Agreement, if Employee has failed to cure such failure or
  refusal to perform within thirty (30) days after the Company notifies Employee
  in writing of such failure or refusal to perform.
                  C) A  resignation  by  Employee  shall  not  be  deemed  to be
  voluntary,  and shall be deemed to be a resignation for "good reason" if it is
  based upon (i) a material diminution in Employee's duties which is not part of
  an overall  diminution  for all executive  officers of the Company,  or (ii) a
  material  breach by CSL of the Company's  obligations  to Employee  under this
  Agreement or under the Company's Stock Option Plan, if adopted.
                  D) A  Fundamental  Change  shall  be  defined  as  any  of the
  following:  (A) a merger,  consolidation,  statutory  share  exchange or sale,
  lease,  exchange or other transfer (in one  transaction or a series of related
  transactions)  of all or  substantially  all of the assets of the Company that
  requires  the consent or vote of the holders of the  Company's  Common  Stock,
  other than a  consolidation,  merger or share exchange of the Company in which
  the  holders  of  the  Company's  Common  Stock   immediately  prior  to  such
  transaction  have the same  proportionate  ownership  of  Common  Stock of the
  surviving corporation immediately after such transaction; (B) the stockholders
  of the Company approve any plan or proposal for the liquidation or dissolution
  of the  Company;  (C) the  cessation  of  control  (by  virtue  of  their  not
  constituting a majority of directors) of the Board of Directors of the Company
  by the individuals  (the  "Continuing  Directors") who (x) at the date of this
  Agreement  were  directors  or (y)  become  directors  after  the date of this
  Agreement  and whose  election or  nomination  for  election by the  Company's
  stockholders  was approved by a vote of at least  two-thirds  of the directors
  then in  office  who were  directors  at the date of this  Agreement  or whose
  election or  nomination  for election  was  previously  so  approved;  (D) the
  acquisition  of beneficial  ownership  (within the meaning of Rule 13d-3 under
  the  Securities  Exchange  Act of 1934) of an  aggregate of 20% or more of the
  voting power of the Company's  outstanding  voting securities by any person or
  group (as such term is used in Rule 13d-5 under the Securities Exchange Act of
  1934)  who  beneficially  owned  less  than  15% of the  voting  power  of the
  Company's outstanding voting securities on the date of this Agreement,  or the
  acquisition of beneficial ownership of an additional 5% of the voting power of
  the  Company's  outstanding  voting  securities  by any  person  or group  who
  beneficially  owned  at  least  15%  of the  voting  power  of  the  Company's
  outstanding  voting  securities  on the  date  of  this  Agreement;  provided,
  however,  that  notwithstanding  the  foregoing,   an  acquisition  shall  not
  constitute a Fundamental  Change hereunder if the acquiror is (x) a trustee or
  other  fiduciary  holding  securities  under an employee  benefit  plan of the
  Company and acting in such  capacity,  (y) a  wholly-owned  subsidiary  of the
  Company or a corporation owned, directly or indirectly, by the stockholders of
  the Company in the same proportions as their ownership of voting securities of
  the  Company or (z) any other  person  whose  acquisition  of shares of voting
  securities is approved in
     advance by a majority  of the  Continuing  Directors;  or (E) in a Title 11
     bankruptcy proceeding,  the appointment of a trustee or the conversion of a
     case involving the Company to a case under Chapter 7.
                  A) In the event  that  Employee's  employment  terminates  (i)
     because of death or disability,  (ii) because CSL has  terminated  Employee
     other than "for cause," as described  above, or (iii) because  Employee has
     voluntarily resigned for "good reason," as described above, then,
                           i)      CSL shall pay Employee in accordance with its
     Corporate  Policies and  Procedures  Manual his base salary plus his annual
     bonus paid during the term of this Agreement in the past twelve (12) months
     for the balance of the term of this  Agreement  (not  including  any future
     extensions), but not less than two (2) years (base salary plus annual bonus
     paid during the term of this  Agreement  in the past twelve (12) months for
     three (3) years if termination  due to a Fundamental  Change) from the date
     of the notice of  termination,  and  Employee  shall retain all his Company
     stock options that are vested; provided, however, the benefits described in
     this Paragraph 7(A)(i) shall terminate at such time as Employee  materially
     breaches the provisions of Paragraphs 7(D), 8, or 9 hereof.
                           ii)      All accrued but unpaid or unused vacation,
     sick pay and expense  reimbursement  shall be calculated in accordance with
     CSL's Corporate  Policies and Procedures  Manual and shall be promptly paid
     to Employee upon such termination.
                  B) In the event that Employee's  employment terminates for any
     other cause other than those set forth in Paragraph 7(A), which can include
     but  not  be  limited  to  voluntary   resignation   without  good  reason,
     termination  by CSL "for cause,"  expiration of the term of the  Agreement,
     etc., then,
                           i)       CSL shall promptly pay Employee his base
     salary and pro-rated annual bonus up to and through the date of termi-
                           ii)      All accrued but unpaid or unused vacation,
     sick pay and expense reimbursement  shall be calculated in accordance with
     CSL's Corporate Policies and Procedures Manual and shall be  promptly  paid
     to Employee upon such termination.
                  C) In the  event  that  Employee's  employment  terminates  by
  reason of his death,  all benefits  provided in this Paragraph 7 shall be paid
  to  Employee's  estate or as his  executor  or personal  representative  shall
  direct,  but  payment may be deferred  until  Employee's  executor or personal
  representative  has been appointed and qualified pursuant to the law in effect
  in Employee's jurisdiction of residence at the time of his death;
                  D)  Following  the  termination  for any reason of  Employee's
  employment,  Employee  shall not for himself or any third  party,  directly or
  indirectly  (i) divert or attempt to divert from the Company or its affiliated
  companies  any  business  of any  kind in  which  it is or has  been  engaged,
  including,  without  limitation,  the solicitation of,  interference  with, or
  entering into any
  contract  with any of its past or then  existing  customers,  and (ii) employ,
  solicit for employment, or recommend for employment any person employed by the
  Company  or its  affiliated  companies  during  the  period  of such  person's
  employment and for a period of two (2) years thereafter.
         8. CONFIDENTIALITY. Employee hereby acknowledges his understanding that
  as a result of his  employment by CSL, he will have access to, and  possession
  of,  valuable and important  confidential or proprietary  data,  documents and
  information  concerning  CSL, its  operations  and its future plans.  Employee
  hereby agrees that he will not,  either during the term of his employment with
  CSL,  or at any time  after the term of his  employment  with CSL,  divulge or
  communicate to any person or entity, or direct any employee or agent of CSL or
  of his to  divulge  or  communicate  to any  person or  entity,  or use to the
  detriment of CSL 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.  Upon any  termination  of this  Agreement for any reason  whatsoever,
  Employee  shall  surrender  to CSL 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 the Company or any of its business,  including all copies thereof,
  that Employee has in his possession,  whether or not such material was created
  or  compiled  by  Employee,  but  excluding,   however,  personal  memorabilia
  belonging  to  Employee  and  notes  taken by him as a member  of the Board of
  Directors.  With  the  exception  of such  excluded  items,  materials,  etc.,
  Employee  acknowledges  that all such  material is solely the property of CSL,
  and that  Employee  has no right,  title or interest in or to such  materials.
  Notwithstanding  anything to the contrary  set forth in this  Paragraph 8, the
  Provisions of this Paragraph 8 shall not apply to information which: (i) is or
  becomes generally available to the public other than as a result of disclosure
  by  Employee,  or (ii) is  already  known to  Employee  as of the date of this
  Agreement from sources other than CSL, or (iii) is required to be disclosed by
  law or by regulatory or judicial process.
         9. NON-COMPETITION.  Employee hereby agrees that during the term of his
  employment  with the  Company  and for a  period  of one (1)  year  after  any
  termination for any reason whatsoever of this Agreement,  he will not and will
  cause his  Affiliates  not to,  directly or  indirectly,  acquire,  develop or
  operate senior living  facilities  anywhere in the United  States,  other than
  through the Company and its subsidiaries  except as otherwise requested by the
  Company.  CSL hereby  acknowledges  and agrees that Employee's  ownership of a
  class  of   securities   listed  on  a  stock   exchange   or  traded  on  the
  over-the-counter  market  that  represents  five  percent  (5%) or less of the
  number of shares of such class of securities then issued and outstanding shall
  not constitute a violation of this Paragraph 9.
         10.  WORK   PRODUCT.   The  Employee   agrees  that  all   innovations,
  improvements,  developments,  methods,  designs,  analyses,  reports  and  all
  similar or related  information  which  relates to the Company's or any of its
  subsidiaries' or affiliates'  actual or anticipated  business,  or existing or
  future products or services and which are conceived,  developed or made by the
  Employee while employed by the Company ("Work  Product") belong to the Company
  or such subsidiary or affiliate. The Employee will promptly disclose such Work
  Product to the Board and perform all actions reasonably requested by the Board
  (whether  during or after the  employment  period) to establish and to confirm
  such ownership (including, without limitation,  assignments,  consents, powers
  of attorney and other instruments).
         11. LEGAL ACTION. In the event that any action or proceeding is brought
  to enforce the terms and provisions of this  Agreement,  the prevailing  party
  shall be  entitled to recover  reasonable  attorneys'  fees and costs.  In the
  event of a breach  or  threatened  breach by  Employee  of the  provisions  of
  Paragraph  7(D), 8, 9, or 10, Employee and the Company agree that the Company,
  shall,  in  addition  to any  other  available  remedies,  be  entitled  to an
  injunction  restraining  Employee from  violating the terms of the  applicable
  Paragraph and that said  injunction is appropriate  and proper relief for such
         12. NOTICES.  All notices and other  communications  provided to either
  party hereto under this  Agreement  shall be in writing and  delivered by hand
  delivery,   overnight  courier  service  or  certified  mail,  return  receipt
  requested,  to the party  being  notified  at said  party's  address set forth
  adjacent to said party's signature on this Agreement, or at such other address
  as may be  designated  by a party  in a notice  to the  other  party  given in
  accordance  with this  Agreement.  Notices given by hand delivery or overnight
  courier  service shall be deemed received on the date of delivery shown on the
  courier's  delivery  receipt or log.  Notices given by certified mail shall be
  deemed received three (3) days after deposit in the U.S. Mail.
         13. CONSTRUCTION.  In construing this Agreement, if any portion of this
  Agreement shall be found to be invalid or  unenforceable,  the remaining terms
  and provisions of this  Agreement  shall be given effect to the maximum extent
  permitted without considering the void, invalid or unenforceable provision. In
  construing  this  Agreement,  the  singular  shall  include  the  plural,  the
  masculine shall include the feminine and neuter genders,  as appropriate,  and
  no meaning or effect shall be given to the captions of the  paragraphs in this
  Agreement, which are inserted for convenience of reference only.
         14.  CHOICE OF LAW;  SURVIVAL.  This  Agreement  shall be governed  and
  construed in  accordance  with the internal laws of the State of Texas without
  resort to choice of law  principles.  The provisions of Paragraphs 7, 8, 9, 10
  and 17  shall  survive  the  termination  of this  Agreement  for  any  reason
         15.  INTEGRATION;  AMENDMENTS.  This is an integrated  Agreement.  This
  Agreement constitutes and is intended as a final expression and a complete and
  exclusive  statement of the  understanding and agreement of the parties hereto
  with  respect  to the  subject  matter of this  Agreement.  All  negotiations,
  discussions  and writings  between the parties hereto  relating to the subject
  matter of this  Agreement  are merged  into this  Agreement,  and there are no
  rights  conferred,  nor  promises,   agreements,   conditions,   undertakings,
  warranties or representations,  oral or written, expressed or implied, between
  the  undersigned  parties as to such matters  other than as  specifically  set
  forth herein.  No amendment or  modification of or addendum to, this Agreement
  shall be valid  unless the same shall be in writing  and signed by the parties
  hereto.  No waiver of any of the provisions of this  Agreement  shall be valid
  unless in  writing  and  signed by the party  against  whom it is sought to be
         16. BINDING  EFFECT.  This Agreement is binding upon and shall inure to
  the  benefit  of the  parties  hereto  and their  respective  heirs,  personal
  representatives,  successors  and assigns;  PROVIDED,  HOWEVER,  that Employee
  shall not be entitled to assign his interest in this Agreement  (except for an
  assignment by operation of law to his estate),  or any portion hereof,  or any
  rights hereunder, to any
  party. Any attempted  assignment by Employee in violation of this Paragraph 16
  shall be  null,  void,  ab  initio  and of no  effect  of any  kind or  nature
         17.      REGISTRATION RIGHT.
                  A) If the Company at any time  proposes to register any of its
  securities  under 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 Employee of its intention so to
  do. Upon the written  request of Employee,  received by the Company  within 30
  days after the giving of any such  notice by the  Company,  the  Company  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 the Company,  all to the extent requisite to
  permit the sale or other  disposition  by  Employee  (in  accordance  with its
  written  request) of such  Registrable  Securities  so  registered;  provided,
  however,  that if the managing  underwriter of the Company's offering delivers
  in good faith a written  opinion to Employee  that  either  because of (A) the
  kind of securities which the Employee or the Company intends to include in the
  offering or (B) the size of the offering  which Employee or the Company intend
  to make,  the success of the offering or the market for the  Company's  common
  stock would be  materially  and  adversely  affected by the  inclusion  of the
  Registrable Securities requested to be included (I) 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 the  Employee  and
  each other person  registering  securities of the Company  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 (II) 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 (I) above or, 2) if the actions  described  in clause (I)
  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,  the  Company  may  withdraw  any
  registration  statement  referred to in this Paragraph  17(A) without  thereby
  incurring  any  liability  to Employee.  The Company  shall not be required to
  register  shares of  Registrable  Securities of Employee after the Company has
  filed two (2) registration  statements which included  Registrable  Securities
  and such registration statements have become effective, remained effective for
  the period of distribution, and the transaction described therein were closed.
                  B) If and whenever the Company is required by Paragraph  17(A)
  to effect a piggy back  registration,  the Company shall as  expeditiously  as
                           i) prepare and file with the Securities and Exchange
  Commission ("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 the Company may postpone
     the filing,  effectiveness,  supplementing  or amending of the registration
     statement  for up to 90 days if, in the good faith opinion of the Company's
     Board of Directors,  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
     the Company to make public  disclosure of information the public disclosure
     of which would have a material adverse effect upon the Company.  During any
     time that the Company defers  amending or  supplementing  the  registration
     statement,   the  holders  of  Registrable   Securities  shall  discontinue
     disposing of Registrable Securities;
                           ii)      subject to the proviso in subparagraph (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  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 Employee 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
                           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 the Employee or, in
     the case of an  underwritten  public  offering,  the  managing  underwriter
     reasonably shall request,  provided however, that the Company 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 of the Company is then listed or quoted;
                           vi)     notify Employee 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 Employee,  the
     Company 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 the
     Employee  and  may be  delivered  to the  purchasers  of  such  Registrable
     Securities in compliance with the Securities Act;
                           vii)     notify the Employee 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 the
     Company 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,  the Company will  promptly use its
     best reasonable efforts to obtain the lifting of such order; and
                           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,  Employee will furnish
     to  the  Company  in  writing  such  information  with  respect  to it as a
     stockholder as reasonably shall be necessary in order to assure  compliance
     with federal and applicable state securities laws.
         In connection  with each  registration  pursuant to Paragraph 17 hereof
     covering an underwritten public offering, the Company and Employee 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  selected  in the  manner  herein  provided  in such  form  and
     containing such provisions as are customary in the securities  business for
     such an arrangement between such underwriter and companies of the Company's
     size and investment stature.
                  C) All  expenses  incurred  by the Company in  complying  with
     Paragraph 17 hereof,  including,  without limitation,  all registration and
     filing  fees,  printing  expenses,  fees and  disbursements  of counsel and
     independent  public   accountants  for  the  Company,   fees  and  expenses
     (including  counsel fees) incurred in connection  with complying with state
     securities  or  "blue  sky"  laws,  fees  of the  National  Association  of
     Securities  Dealers,  Inc.,  transfer  taxes,  fees of transfer  agents and
     registrars,  costs of insurance,  and fees and disbursements of one counsel
     for  the  Employee  but   excluding  any  Selling   Expenses,   are  called
     "Registration Expenses." All underwriting discounts and selling commissions
     applicable  to the  sale of  Registrable  Securities  are  called  "Selling
                           i)    The Company shall pay all Registration Expenses
     attributable  to the  shares  of  Registrable  Securities  included  in the
     registration in connection with each registration statement under Paragraph
     17 hereof.
                           ii)      All Selling Expenses in connection with each
     such registration  statement  applicable to Registrable  Securities sold by
     Employee shall be borne by the Employee.
                  D) Subject to applicable  law, the Company will indemnify each
  underwriter, the Employee and each person controlling any of them, against all
  claims,  losses,  damages and liabilities,  including legal and other expenses
  reasonably  incurred,  arising out of any untrue  statement of a material fact
  contained in the registration  statement,  or any omission to state a material
  fact required to be stated in the registration  statement or necessary to make
  the statements not misleading,  or arising out of any violation by the Company
  of the  Securities  Act,  any  state  securities  or  "blue-sky"  laws  or any
  applicable  rule or  regulation.  This  indemnification  will not apply to any
  claims,  losses,  damages or liabilities to the extent that they may have been
  caused by an untrue statement or omission based upon information  furnished in
  writing to the  Company  by such  underwriter,  the  Employee  or  controlling
  person,  respectively,  expressly for use in the registration statement.  With
  respect to such untrue  statement or omission in the information  furnished in
  writing to the  Company by the  Employee,  the  Employee  will  indemnify  the
  underwriters,  the  Company,  its  directors  and  officers,  and each  person
  controlling  any of them  against any  losses,  claims,  damages,  expenses or
  liabilities to which any of them may become subject as a result of such untrue
  statement or omission.
                  E)  The  registration   rights  of  the  Employee  under  this
  Agreement may be transferred to any trust,  family partnership or other family
  entity  formed by Employee to hold shares of common stock and to any member of
  the family of the Employee.
                  F) In the event of any merger, consolidation or share exchange
  pursuant to which the Company is not the  surviving or resulting  corporation,
  the  Company's  obligations  under this  Paragraph 17 shall be assumed by such
  surviving or resulting corporation.
         18.  CANCELLATION OF PRIOR EMPLOYMENT  AGREEMENT.  Employee and Company
  hereby agree that the Employment  Agreement,  dated November 1, 1996,  between
  Employee and Company shall be, upon execution and delivery of this  Agreement,
  canceled and of no further force and effect.
         IN WITNESS  WHEREOF,  the parties have executed  this  Agreement on the
  date set forth above to be effective as of the date  specified in the preamble
  of this Agreement.
                                              CAPITAL SENIOR LIVING CORPORATION,
                                              a Delaware corporation
  14160 Dallas Parkway, #300
  Dallas, TX  75240                           By:  /s/ James A. Stroud
                                                   James A. Stroud, Chairman
  41 Willow Road
  Woodsburgh, NY  11598                       /s/ Lawrence A. Cohen
                                              Lawrence A. Cohen