EXHIBIT 10.1

FIRST AMENDMENT TO CREDIT AGREEMENT

THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), is made and entered
into as of August 22, 2008, among ASSISTED LIVING CONCEPTS, INC., a Nevada
corporation (the “Borrower”), the Lenders (as defined in the Credit Agreement
defined below), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware
corporation, for itself, as Lender, and as the administrative agent and
collateral agent for Lenders and L/C Issuers (as defined in the Credit Agreement
defined below) (in such capacity, the “Administrative Agent”).

W I T N E S S E T H:

WHEREAS, the Borrower, Lenders, L/C Issuers and the Administrative Agent are
parties to that certain Credit Agreement, dated as of November 10, 2006 (as
amended, restated, supplemented or otherwise modified from time to time, the
“Credit Agreement”), pursuant to which Lenders and L/C Issuers have committed to
extend credit to the Borrower from time to time upon the terms and conditions
set forth therein;

WHEREAS, the Borrower has requested that the Administrative Agent and Lenders
consent to the amendment of the Credit Agreement to clarify certain affirmative
covenants and permit the Borrower to incur additional secured Indebtedness to
the extent that such Indebtedness is not secured by a Lien on any Collateral,
and the Administrative Agent and Lenders are willing to amend the Credit
Agreement in accordance with the terms and conditions set forth herein; and

WHEREAS, the Borrower has delivered to the Administrative Agent a Facility
Increase Notice with respect to a proposed Facility Increase in the principal
amount of $20,000,000 to be provided by U.S. Bank National Association
(“August 2008 Facility Increase”) and has requested certain amendments to the
Credit Agreement in connection therewith;

WHEREAS, the Borrower, Lenders and the Administrative Agent desire to modify the
Credit Agreement in accordance with and subject to the terms and conditions set
forth herein.

NOW, THEREFORE, in consideration of the premises, the covenants and agreements
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, Lenders and the
Administrative Agent do hereby agree that capitalized terms used herein and not
otherwise defined herein shall have the meanings given such terms in the Credit
Agreement and further agree as follows:

1. Amendments to the Credit Agreement. Subject to the terms and conditions of
this Amendment, the Credit Agreement is hereby amended as follows:

(a) Section 1.1, Defined Terms, of the Credit Agreement is hereby amended by
deleting the definition of “Revolving Credit Commitment” in its entirety and
substituting in lieu thereof the following:

““Revolving Credit Commitment” means, with respect to each Revolving Credit
Lender, the commitment of such Lender to make Revolving Loans and acquire
interests in other Revolving Credit Outstandings, which commitment is in the
amount set forth opposite such Lender’s name on Schedule I under the caption
“Revolving Credit Commitment”, as amended to reflect Assignments and each
additional commitment by such Lender in the Revolving Credit Facility that is
made a part of the Facility Increase and as such amount may be reduced pursuant
to this Agreement. After giving effect to the August 2008 Facility Increase, the
aggregate amount of the Revolving Credit Commitments as of the First Amendment
Effective Date equals $120,000,000 and the Revolving Credit Commitments of the
Lenders shall be as set forth on Schedule I attached as Exhibit A to the First
Amendment.”

(b) Section 1.1, Defined Terms, of the Credit Agreement is hereby further
amended by inserting the following new definitions of “August 2008 Facility
Increase,” “First Amendment” and “First Amendment Effective Date” in proper
alphabetical order:

““August 2008 Facility Increase” means, that certain Facility Increase requested
by the Borrower in the principal amount of $20,000,000 pursuant to that certain
Facility Increase Notice dated as of August 22, 2008.”

“First Amendment” means that certain First Amendment to this Agreement, dated as
of the First Amendment Effective Date, by and among the Borrower and the
Lenders, as consented to by the Guarantors.”

“First Amendment Effective Date” means August 22, 2008.”

(c) Schedule I, Commitments, to the Credit Agreement is hereby amended by
deleting such Schedule in its entirety and substituting in lieu thereof
Schedule I attached as Exhibit A to this Amendment.

(d) Section 7.2(b), Compliance with Laws, Etc., of the Credit Agreement is
hereby amended by deleting such subsection in its entirety and substituting in
lieu thereof the following:

“(b) Each Group Member will maintain all certificates of need, provider numbers,
supplier numbers, and licenses necessary to conduct its business as currently
conducted, and take any steps required to comply with any such new or additional
requirements that may be imposed on providers of the types of services such
Group Member provides, except to the extent such failure to maintain or comply
could not reasonably be expected to have a Material Adverse Effect. If required,
all Medicaid and Medicare cost reports and claims will be properly filed, in all
material respects.”

(e) Section 8.1(c), Indebtedness, of the Credit Agreement is hereby amended by
deleting such subsection in its entirety and substituting in lieu thereof the
following:

“(c) Indebtedness consisting of (A) secured Indebtedness (other than the
Obligations) and related Guaranty Obligations of any Group Member in respect of
such Indebtedness, (B) Capitalized Lease Obligations (other than with respect to
a lease entered into as part of a Sale and Leaseback Transaction),
(C) Indebtedness of any Person assumed in connection with any Permitted
Acquisitions; provided that (i) such Indebtedness is not created in anticipation
of any such Acquisition, and (ii) the amount of such Indebtedness is not
increased and (D) purchase money Indebtedness, in each case incurred by any
Group Member to finance the acquisition, repair, improvement or construction of
fixed or capital assets of such Group Member, together with any Permitted
Refinancing of any Indebtedness permitted hereunder in reliance upon this
Section 8.1(c); provided that the principal amount of such Indebtedness does not
exceed the lower of the cost or fair market value of the property so acquired or
built or of such repairs or improvements financed, whether directly or through a
Permitted Refinancing, with such Indebtedness (each measured at the time such
acquisition, repair, improvement or construction is made); provided, however,
that (i) the aggregate outstanding principal amount of all such Indebtedness in
this Section 8.1(c) does not exceed $175,000,000 at any time, and (ii) no
Indebtedness in this Section 8.1(c) is secured by Collateral on which any Lender
has a Lien;”

(f) Section 8.2(d), Liens, of the Credit Agreement is hereby amended by deleting
such subsection in its entirety and substituting in lieu thereof the following:

“(d) Liens on the property of the Borrower or any of its Subsidiaries securing
Indebtedness permitted hereunder in reliance upon Section 8.1(c); provided,
however, that with respect to Liens securing Indebtedness incurred pursuant to
Section 8.1(c)(D), (i) such Liens exist prior to the acquisition of, or attach
substantially simultaneously with, or within 90 days after, the acquisition,
repair, improvement or construction of, such property financed, whether directly
or through a Permitted Refinancing, by such Indebtedness and (ii) such Liens do
not extend to any property of any Group Member other than the property (and
proceeds thereof) acquired or built, or the improvements or repairs, financed,
whether directly or through a Permitted Refinancing, by such Indebtedness;
provided, however, that in the case of Indebtedness permitted pursuant to
Section 8.1(c), Liens securing such Indebtedness may attach to property of any
Group Member so long as such property is not Collateral otherwise subject to a
Lien in favor of any Lender;”

2. Facility Increase. The Administrative Agent and the Required Lenders hereby
waive the requirement in Section 2.1(b)(i)(B), Facility Increase, of the Credit
Agreement pursuant to which the August 2008 Facility Increase may only be
effective ten (10) Business Days after delivery of a Facility Increase Notice
requesting such Facility Increase to the Administrative Agent. Furthermore, the
Borrower, the Administrative Agent and the Lenders hereby agree that the
Facility Increase Effective Date for the August 2008 Facility Increase shall be
the date hereof.

3. Conditions Precedent to Effectiveness of this Amendment. This Amendment shall
be effective upon the satisfaction or waiver of the following:

(a) all of the representations and warranties of the Credit Parties under
Article 4 of the Credit Agreement which are made as of the date hereof pursuant
to Section 5(a) hereof, shall be true and correct in all material respects;

(b) receipt by the Administrative Agent of one or more counterparts of this
Amendment duly executed and delivered by the Borrower, Required Lenders and the
Administrative Agent and confirmed by each Guarantor;

(c) all conditions precedent under Section 3.3 of the Credit Agreement,
including, but not limited to, receipt by the Administrative Agent of any
documents required under such Section; provided however, that notwithstanding
any provision to the contrary in the Credit Agreement, the Administrative Agent
and the Lenders hereby agree and acknowledge that the Borrower may pay a fee
directly to U.S. Bank National Association in consideration of the August 2008
Facility Increase in an aggregate amount not to exceed $50,000;

(d) receipt by the Administrative Agent of the duly executed signature pages of
the Borrower, each Lender participating in the August 2008 Facility Increase and
each other Lender with Revolving Loans outstanding as of the date hereof to
those certain assignments entered into in accordance with Section 2.1(b)(iv) of
the Credit Agreement, pursuant to which, after giving effect to such
assignments, the outstanding Revolving Loans of the Lenders shall be as set
forth in Annex A attached hereto;

(e) receipt by the Administrative Agent of a Mortgaged Property Report in form
and substance satisfactory to the Administrative Agent; and

(f) receipt of any other documents or instruments that the Administrative Agent
may reasonably request, certified by an officer of the Borrower if so requested.

4. Conditions Subsequent. The Borrower shall deliver to the Administrative Agent
in form and substance satisfactory to the Administrative Agent (or take such
action as described below):

(a) on or prior to September 22, 2008, a duly executed opinion of Texas counsel
reasonably acceptable to the Administrative Agent in respect of Texas ALC
Partners II, LP addressed to the Administrative Agent, the L/C Issuers and the
Lenders and addressing such matters as the Administrative Agent may reasonably
request and in form and substance substantially similar to the legal opinion
delivered on the Closing Date;

(b) on or prior to October 10, 2008, any further documents and take any further
action that the title company may require to (i) increase the  title insurance
coverage amounts for the title insurance policies for the Mortgaged Properties
to cover the August 2008 Facility Increase and (ii) preserve the priority of the
Liens of the existing Mortgages encumbering the Mortgaged Properties with
respect to the August 2008 Facility Increase; and

(c) on or prior to August 28, 2008, certificates attesting to the good standing
of each of the Borrower, ALC Operating, LLC, ALC Properties II, Inc. and ALC
Real Estate, LLC in the State of Pennsylvania and, on or prior to November 19,
2008, to the extent appropriate in Pennsylvania and delivered on or prior to the
Closing Date for such entities, related tax certificates.

Notwithstanding anything in the Credit Agreement or any of the other Loan
Documents to the contrary, the Borrower’s failure to perform any of the
obligations described above shall not constitute a Default or Event of Default
unless such failure continues beyond the applicable deadline (as such deadline
may be extended by Administrative Agent in its discretion) for the delivery of
such document (or taking of such action) as set forth above.

5. Representations And Warranties. Each Loan Party hereby further represents and
warrants with and to the Administrative Agent and Lenders as follows:

(a) Representations and Warranties. Each of the representations and warranties
contained in the Loan Documents is true and correct in all material respects on
and as of the date hereof, except for any representation and warranty that
relates by its terms only to a specified date (in which case, it shall be true
on and as of such date) and, in this connection, the Borrower and each other
Loan Party represents that, before and after giving effect to the August 2008
Facilities Increase, it is solvent within the meaning of Section 4.6 of the
Credit Agreement and no Default or Event of Default exists and is continuing.

(b) Binding Effect of Documents. This Amendment and the other Loan Documents
have been duly executed and delivered to the Administrative Agent and Lenders by
such Loan Party and are in full force and effect, as modified hereby.

(c) No Conflict, Etc. The execution and delivery and performance of this
Amendment by such Loan Party will not violate any law, rule, regulation or order
or contractual obligation or organizational document of such Loan Party and will
not result in, or require, the creation or imposition of any Lien on any of its
properties or revenues.

6. Provisions Of General Application.

(a) Effect of this Amendment. Nothing in this Amendment is intended (or shall be
construed) to constitute the consent of the Administrative Agent or any Lender
to any other transaction or the waiver by the Administrative Agent of any
Default or Event of Default. Except for the amendments set forth in Section 1
and the consent set forth in Section 2 of this Amendment, no other changes or
modifications to the Loan Documents are intended or implied and in all other
respects the Loan Documents are hereby specifically ratified, restated and
confirmed by all parties hereto as of the effective date hereof. To the extent
of conflict between the terms of this Amendment and the other Loan Documents,
the terms of this Amendment shall control. The Credit Agreement and this
Amendment shall be read and construed as one agreement. The Administrative Agent
and the Lenders reserve the right, in their discretion, to exercise any or all
of their rights and remedies under the Credit Agreement and the other Loan
Documents as a result of any Default or Event of Default which may be continuing
on the date hereof or any Default or Event of Default which may occur after the
date hereof, and nothing in this Amendment, and no delay on the part of the
Administrative Agent or any Lender in exercising any such right or remedy, shall
be construed as a waiver of any such right or remedy.

(b) Strict Compliance. The Administrative Agent and Lenders hereby notify the
Borrower and each other Loan Party that, effective from and after the date of
this Amendment, the Administrative Agent and Lenders intend to enforce all of
the provisions of the Loan Documents and that the Administrative Agent and
Lenders expect that the Borrower and each other Loan Party will strictly comply
with the terms of the Loan Documents from and after this date.

(c) Costs and Expenses. In addition to, and not in limitation of, any other
provision contained in the Loan Documents with respect thereto, the Borrower
absolutely and unconditionally agrees to pay to the Administrative Agent and
Lenders, on demand by the Administrative Agent or such Lender, at any time and
as often as the occasion therefore may require, whether or not all or any of the
transactions contemplated by this Amendment are consummated, all fees and
disbursements of any counsel to the Administrative Agent and Lenders and
allocated costs of internal counsel in connection with the preparation,
negotiation, execution, or delivery of this Amendment and any agreements
delivered in connection with the transactions contemplated hereby and expenses
which shall at any time be incurred or sustained by the Administrative Agent or
Lenders or any of their respective directors, officers, employees, the
Administrative Agent or assigns as a consequence of or in any way in connection
with the preparation, negotiation, execution, or delivery of this Amendment and
any agreements prepared, negotiated, executed or delivered in connection with
the transactions contemplated hereby.

(d) Binding Effect. This Amendment shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns.

(e) Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other document furnished in connection
with this Amendment shall survive the execution and delivery of this Amendment
and the other documents, and no investigation by the Administrative Agent or
Lenders or any closing shall affect the representations and warranties or the
right of the Administrative Agent and Lenders to rely upon them.

(f) Severability. Any provision of this Amendment held by a court of competent
jurisdiction to be invalid or unenforceable shall not impair or invalidate the
remainder of this Amendment.

(g) Reviewed by Attorneys. Each of the Borrower and each other Loan Party
represents and warrants to the Administrative Agent and Lenders that it
(i) understands fully the terms of this Amendment and the consequences of the
execution and delivery of this Amendment, (ii) has been afforded an opportunity
to have this Amendment reviewed by, and to discuss this Amendment and document
executed in connection herewith with, such attorneys and other persons as such
Loan Party may wish, and (iii) has entered into this Amendment and executed and
delivered all documents in connection herewith of its own free will and accord
and without threat, duress or other coercion of any kind by any Person. The
parties hereto acknowledge and agree that neither this Amendment nor the other
documents executed pursuant hereto shall be construed more favorably in favor of
one than the other based upon which party drafted the same, it being
acknowledged that all parties hereto contributed substantially to the
negotiation and preparation of this Amendment and the other documents executed
pursuant hereto or in connection herewith.

(h) Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF ILLINOIS.

(i) Counterparts. This Amendment may be executed in any number of counterparts,
but all of such counterparts shall together constitute but one and the same
agreement.

(j) Entire Agreement. The Credit Agreement as amended by this Amendment embodies
the entire agreement between the parties hereto relating to the subject matter
hereof and supersedes all prior agreements, representations and understandings,
if any, relating to the subject matter hereof.

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IN WITNESS WHEREOF, the parties have caused this Amendment to be duly executed
by their respective officers thereunto duly authorized, as of the date first
above written.

ASSISTED LIVING CONCEPTS, INC., a Nevada corporation

By:
Name: John Buono
Title: Senior Vice President, Chief Financial
Officer and Treasurer

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ADMINISTRATIVE AGENT AND LENDERS:
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, Swingline Lender and Lender
By:
 
Name: John Dale
Title: Its Duly Authorized Signatory

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CIBC, INC., as Lender

By:
Name:
Title:

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U.S. BANK NATIONAL ASSOCIATION, as Lender

By:
Name:
Title:

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CONSENT

Each of the undersigned Guarantors hereby (a) acknowledges, consents and agrees
to the terms of the foregoing First Amendment to Credit Agreement (the
“Amendment”), including without limitation, the amendments to the Credit
Agreement set forth therein, and (b) agrees and confirms that its obligations
under the Guaranty Agreement to which it is a party will continue in full force
and effect and extend to all Obligations under and as defined in the Credit
Agreement as amended and modified by the Amendment.

IN WITNESS WHEREOF, the undersigned have executed this Consent as of the 22nd
day of August, 2008.

ALC OPERATING, LLC, a Wisconsin limited liability company

By:
Name: John Buono
Title: Treasurer

ALC REAL ESTATE, LLC, a Wisconsin limited liability

company

By:
Name: John Buono
Title: Treasurer

ALC IOWA, INC., a Nevada corporation

By:
Name: John Buono
Title: Treasurer

ALC INDIANA, INC., a Nevada corporation

By:
Name: John Buono
Title: Treasurer

ALC OHIO, INC., a Nevada corporation

By:
Name: John Buono
Title: Treasurer

ALC NEBRASKA, INC., a Nevada corporation

By:
Name: John Buono
Title: Treasurer

ALC PROPERTIES II, INC., a Nevada corporation

By:
Name: John Buono
Title: Treasurer

CARRIAGE HOUSE ASSISTED LIVING, INC., a Delaware

corporation

By:
Name: John Buono
Title: Treasurer

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HOME AND COMMUNITY CARE, INC., a Nevada corporation

By:
Name: John Buono
Title: Treasurer

TEXAS ALC PARTNERS II, LP, a Texas limited partnership

By: Texas ALC II, Inc., a Nevada corporation,

its General Partner

By:
Name: John Buono
Title: Treasurer

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