EX-10.1






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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