Document:

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                        Assisted Living Concepts, Inc.

                              EMPLOYMENT AGREEMENT

     This Employment Agreement (the "Agreement") is entered into effective March
16, 2000, by and between Assisted Living Concepts, Inc., a Nevada corporation
(the "Company"), and Drew Q. Miller (the "Executive").

     WHEREAS the Company desires to employ the Executive effective as of March
16, 2000 (the "Effective Date"), and the Executive desires to accept employment
with the Company, on the terms and conditions set forth below.

     NOW, THEREFORE, in consideration of the foregoing recital and the
respective covenants and agreements of the parties contained in this document,
the Company and the Executive agree as follows:

     1.   Employment and Duties.   The Executive will serve as Senior Vice
President, Chief Financial Officer and Treasurer of the Company.  The duties and
responsibilities of the Executive shall include the duties and responsibilities
as set forth in the Company's Bylaws from time to time in effect and such other
duties and responsibilities as the board of directors of the Company (the "Board
of Directors") or as the Chief Executive Officer of the Company may from time to
time reasonably assign the Executive, in all cases to be consistent with the
Executive's corporate offices and positions.  The Executive shall also serve as
an officer and/or director of affiliates of the Company, without additional
compensation, if requested to do so by the Company.  The Executive shall devote
his full time to the business of the Company and shall faithfully perform the
executive duties assigned to him to the best of his ability but may devote
reasonable time to other business affairs (not in conflict with the business of
the Company) as provided in paragraph 11.

     2.   Employment Period.

          (a)  Initial Term. The term of Executive's employment shall be for a
period of two years beginning March 16, 2000, and ending March 15, 2002 (the
"initial term"). The Company shall give notice to the Executive on or before
September 15, 2001 if it intends to terminate the Agreement at the end of the
initial term. If such notice is not given, the term of the Agreement shall be
extended as set forth below in paragraph 2 (b).

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          (b)  Evergreen Extension of Agreement. If the Company does not give
notice to the Executive on or before September 15, 2001 that it intends to
terminate the Agreement at the end of the initial tem, the Agreement shall
extend automatically each March 15 for additional terms of 1 year unless the
Company gives notice to the Executive on or before September 15 of any
additional term year that it intends to terminate the Agreement the following
March 15.

     The term of this Agreement shall be the period of time provided in
paragraphs 2(a) and 2(b) hereof and herein shall be referred to as the "Term."

          (c)  Involuntary Termination. The Company may terminate the
Executive's employment at any time. If the Company terminates the Executive's
employment for any reason other than Cause or Disability, each as defined below,
the provisions of paragraphs 12(a)(i), 12(b) and 12(c) shall apply. Upon
termination of the Executive's employment with the Company, the Executive's
rights under any applicable benefit plans shall be determined under the
provisions of those plans.

          (d)  Death. The Executive's employment will terminate in the event of
his death. The Company shall have no obligation to pay or provide any
compensation or benefits under this Agreement on account of the Executive's
death except as contemplated in paragraph 12 (a)(iii). The Executive's rights
under any applicable benefit plans of the Company in the event of the
Executive's death will be determined under the provisions of those plans.

          (e)  Disability. The Company may terminate the Executive's employment
for Disability by giving the Executive sixty (60) days advance notice in
writing. For all purposes under this agreement, "Disability" shall mean that the
Executive, at the time notice is given, has been unable to substantially perform
his duties under this Agreement for a period of not less than ninety (90) days
due to physical or mental illness. The determination of the Executive's
Disability hereunder shall be made by a two-thirds (2/3) majority of the
Company's Board of Directors and shall be based upon advice from such medical
professionals and upon such medical and other records as the Company's Board of
Directors may deem appropriate. In the event that the Executive resumes the
performance of substantially all of his duties hereunder before the termination
of his employment under this subparagraph (e) becomes effective, the notice of
termination shall automatically be deemed to have been revoked. No compensation
or benefits will be paid or provided to the Executive under this Agreement on
account of termination for Disability, or for periods following the date when
such a termination of employment is effective. The Executive's rights under any
applicable benefit plans of the Company shall be determined under the provisions
of those plans.

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          (f)  Cause. The Company may terminate the Executive's employment for
cause by giving the Executive notice in writing. For all purposes under this
Agreement, "Cause" shall mean (i) willful failure by the Executive to perform
his duties hereunder, other than a failure resulting from the Executive's
complete or partial incapacity due to physical or mental illness or impairment,
(ii) gross negligence by the Executive in performing his duties hereunder, other
than negligence resulting from the Executive's complete or partial incapacity
due to physical or mental illness or impairment, (iii) a willful act by the
Executive which constitutes gross misconduct and which is injurious to the
Company, (iv) a violation of a federal or state law or regulation applicable to
the business of the Company. No act or failure to act by the Executive shall be
considered "willful" unless committed without good faith and without a
reasonable belief that the act or omission was in the Company's best interest.
The determination of Cause hereunder shall be made by a majority of the
Company's Board of Directors. No Compensation or benefits will be paid or
provided to the Executive under this Agreement on account of a termination for
Cause. Executive's rights under any applicable benefit plans of the Company
shall be determined under the provisions of those plans.

          (g)  Resignation Due to Change in Control or Diminution in Duties. In
the event that there is a Change in Control of the Company (as defined in
paragraph 6(b) hereof) or in the event that the Company materially reduces the
scope and/or authority of the Executive's duties with the Company, then the
Executive may terminate his employment by giving the Company thirty (30) days
advance written notice. In such event, the provisions of paragraph 12(a)(ii)
shall apply and the Executive's rights under any applicable benefit plans of the
Company shall be determined under the provisions of those plans.

          (h)  Resignation without Cause. The Executive may terminate his
employment for reasons other than those referred to in paragraph 2(g) hereof by
giving the Company forty-five (45) days advance written notice; provided that in
such event, the Executive will cease his employment immediately or at any time
during such forty-five (45) day period, if so requested by the Company. In such
event the provisions of paragraph 12(a)(iii) shall apply and the Executive's
rights under any applicable benefit plans of the Company shall be determined
under the provisions of those plans.

     3.   Place of Employment.  The Executive's services shall be performed at
the Company's principal executive offices at Portland, Oregon and the Executive
understands that he is expected to travel extensively in carrying out his duties
with the Company.  The parties hereby acknowledge that the Executive's primary
residence currently is in Cowan Heights, California but that he has agreed to
move such residence to the Portland, Oregon area as soon as possible. The
Company has agreed to pay, or reimburse the Executive, for all ordinary and
reasonable expenses incurred in moving his household to the Portland area and to
pay or reimburse the Executive to move his primary residence back to Southern
California in the event of any termination hereunder other than for Cause or
resignation without Cause pursuant to paragraph 2(h).

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     4.   Base Salary. For all services to be rendered by the Executive pursuant
to this Agreement, the Company agrees to pay the Executive an initial annual
base salary (the "Base Salary") of $190,000. The Base Salary shall be paid in
periodic installments in accordance with the Company's regular payroll
practices. The Company agrees to review Executive's Base Salary at least
annually as of the anniversary of his employment and to make such increases
therein as the Board of Directors, in its sole discretion, may approve.

     5.   Bonus.  For each fiscal year during the term of this Agreement, the
Executive will be eligible to receive an annual bonus (the "Bonus") based upon
an Executive Incentive Compensation Plan (the "Plan") to be developed by
executive management of the Company and approved and adopted by the Board of
Directors.  This Plan will include the terms, conditions and formula for
computing bonuses for the Company's executive officers for each fiscal year; it
being understood that the Company's expectation is to pay bonuses of at least
twenty percent (20%) of Base Salary for the achievement of annual strategic and
operating plan goals and objectives.

     6.   Stock Options.

          (a)  Initial Option. As of the execution date hereof, the Company has
granted the Executive options (the "Executive Options") to purchase 150,000
shares of the Company's Common Stock (the "Executive Option Shares") at the
closing price as reported on the American Stock Exchange for shares traded on
the day of that grant.  Such options shall expire in ten years from the date of
grant.  The Executive Options shall vest as described in paragraph 6(b) below
and shall be subject to such other terms and conditions as described in
paragraph 6(c) below.

          (b)  Vesting. The Executive Option Shares shall vest and become
exercisable with respect to one thirty-sixth (1/36) of the shares upon
completion by the Executive of one (1) continuous month of employment with the
Company or its parent or subsidiary companies, or of service on the Company's
Board of Directors, measured from the date of grant, and with respect to one
thirty-sixth (1/36) of the shares for each complete month of employment or
service over the remainder of the thirty-six (36) month vesting period. In the
event of a Change of Control (as defined below), the unvested portion of the
Executive Options shall automatically accelerate, and the Executive shall have
the right to exercise all or any portion of the Executive Options, in addition
to any portion of the Executive Options exercisable prior to such event. For
purposes of this Agreement, the term "Change of Control" shall mean the
occurrence of any of the following events subsequent to the Effective Date:

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               (i)   Any "person" (such as the term is used in Section 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act"))
is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Exchange Act), directly or indirectly, of securities of the Company representing
fifty percent (50%) or more of the total voting power represented by the
Company's then outstanding voting securities; or

               (ii)  Any merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would result in the
voting securities of the Company immediately prior thereto continuing to
represent fifty percent (50%) or more of the total voting power represented by
the Company's then outstanding voting securities (either by remaining
outstanding or by being converted into voting securities of the Company or such
other surviving entity outstanding immediately after such merger or
consolidation); or

               (iii) A majority of the directors of the Company which were not
nominated by the Company's management (or were nominated by management pursuant
to an agreement with person that acquired sufficient voting securities of the
Company to de facto control it) are elected to the Board of Directors by the
Company's shareholders; or

               (iv)  The shareholders of the Company approve a plan of complete
liquidation of the Company or an agreement for the sale or disposition by the
Company of all or substantially all the Company's assets.

          (c)  Option Provisions. The Executive Options shall provide that if
the Executive shall cease to be employed by the Company or its parent or
subsidiary companies, then the Executive Options shall expire twelve (12) months
after the date of termination. To the extent the Executive Options are unvested
as of the date of termination, there shall be no further vesting after the date
of termination. If the Executive shall die or become permanently and totally
disabled within the meaning of Section 22 (e) (3) of the Internal Revenue Code
of 1986, as amended, prior to the expiration of the Executive Options, then his
estate, personal representative, or beneficiary shall have the right to exercise
the Executive Options within twelve (12) months from the date of his death or
the commencement of such disability.

          (d)  Registration of Common Stock underlying the Executive Options.
The Company agrees that the Common Stock underlying the Executive Options shall
be salable concurrent with the Executive's exercise, in whole or in part, of the
Executive Options under an applicable Registration Statement to be filed by the
Company with respect to the Company's Stock Plan, or other applicable
Registration Statement if issued outside of the Stock Plan and that it shall
cause such Registration Statements to be in effect at the time that the
Executive exercise his Executive Options.

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     7.   Expenses.  The Executive shall be entitled to reimbursement by the
Company for all reasonable, ordinary and necessary travel, entertainment and
other expenses incurred by the Executive during the term of this Agreement (in
accordance with the policies and procedures established by the Company for its
senior executive officers) in the performance of his duties and responsibilities
under this Agreement; provided, however, that the Executive shall properly
account for such expenses in accordance with the Company's policies and
procedures.

     8.   Benefits.  The Executive shall be entitled to participate in employee
benefit plans or programs of the Company, if any, to the extent that his
position, tenure, salary, age, health and other qualifications make him eligible
to participate, subject to the rules and regulations applicable thereto;
provided, however, that the Company will use its best efforts to obtain a waiver
from the insurer of any waiting period provision in the Company's Group Health
Insurance Program and that such waiver does not adversely affect the tax status
of the Company's Group Health Insurance Program, with the result that the
Executive will be covered by such Program commencing on the Effective Date.  In
addition the Executive shall be entitled to receive an annual physical
examination at Company expense; or at the Company's request, will take a
physical examination annually and provide the results to the Company.

     9.   Vacations and Holidays.  The Executive shall be entitled to paid
vacation time in the amount of four weeks per year and Company holidays in
accordance with the Company's policies in effect from time to time.  Vacation
accrued but unused in one year must be used in the next or it will be forfeited.

     10.  Indemnification.  The Company shall enter into an Officers and
Directors Indemnification Agreement with the Executive that shall provide the
Executive with the maximum amount of protection allowed under the laws of Nevada
to the extent that such protection is not inconsistent with the Company's
Certificate of Incorporation or Bylaws with respect to such subject matter.

     11.  Other Activities.  The Executive shall devote substantially all of his
working time and efforts during the Company's normal business hours to the
business and affairs of the Company and to the diligent and faithful performance
of the duties and responsibilities duly assigned to him pursuant to this
Agreement, except for vacations, holidays and sickness.  The Executive may,
however, devote a reasonable amount of his time, in general after the regular
business hours of the Company, to civic, community or charitable activities and,
with the prior written approval of the Board of Directors, to serve as a
director of other corporations and other types of businesses or public
activities not expressly mentioned in this paragraph.  The Company hereby
approves the Executive's continuing to serve as a director of the Nile Group,
Inc. and Advantage Behavioral Health, Inc. and its subsidiaries so long as such
companies do not engage in a business which is competitive with the Company's
business and so long as such activities do not unreasonably interfere with the
Executive's duties hereunder.

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     12.  Termination Benefits.  In the event the Executive's employment
terminates, then the Executive shall be entitled to receive severance and other
benefits as follows:

          (a)  Severance.

               (i)   Involuntary Termination. If the Company terminates the
Executive's employment other than for Death, Disability or Cause, then in lieu
of any severance benefits to which the Executive may otherwise be entitled under
any Company severance plan or program, the Executive shall be entitled to
payment of his entire unpaid Base Salary for the remaining term of this
Agreement, which Base Salary shall be paid to him in periodic installments in
accordance with the Company's regular payroll practices; provided, however, that
the Company's obligations hereunder shall cease upon a breach by the Executive
of his obligations under paragraphs 13, 14, 17 and 19 hereof.

               (ii)  Resignation; Change in Control; Diminution in Duties. If
the Executive terminates his employment by resignation pursuant to paragraph
2(g) hereof as a result of a Change in Control of the Company (as defined in
paragraph 6 (b) hereof) or as a result of the Board of Directors materially
reducing the scope and/or authority of the Executive's duties as Chief Financial
Officer and Treasurer of the Company, then in lieu of any severance benefits to
which the Executive may otherwise be entitled under any Company severance plan
or program, the Executive shall be entitled to payment of his entire unpaid Base
Salary for the remaining term of this Agreement, which Base Salary shall be paid
to him in periodic installments in accordance with the Company's regular payroll
practices; provided, however, that the Company's obligations hereunder shall
cease upon a breach by the Executive of his obligations under paragraphs 13, 14,
17 and 19 hereof.

               (iii) Other Termination.  In the event the Executive's employment
terminates for any reason other than as described in paragraph 12(a)(i) or
12(a)(ii) above, including by reason of the Executive's death or disability or
resignation pursuant to paragraph 2(h) hereof, then the Executive shall not be
entitled to receive any severance payment or any other benefits, except as are
provided in the Company's severance and benefit plans and policies at the time
of such termination.

          (b)  Options. In the event the Executive's employment is terminated by
the Company as described in paragraph 12(a)(i) above or by the Executive as
described in paragraph 12(a)(ii) above, then the Executive shall be deemed
vested in the unvested portion of the Executive Options and the Executive
Options shall become immediately exercisable with respect to all shares subject
thereto. In the event the Executive's employment is terminated for reasons other
than as described in paragraphs 12(a)(i) and 12(a)(ii), then the unvested
portion of the Executive Options shall not vest and the Executive's interest
therein shall immediately cease.

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          (c)  Bonuses. In the event the Executive's employment is terminated by
the Company as described in paragraph 12(a)(i) or by the Executive as described
in paragraph 12(a)(ii) above, then the Executive shall be entitled to receive a
portion of the Bonus, computed under the Company's Executive Incentive
Compensation Plan referred to in paragraph 5, which Bonus will be determined,
after the end of the fiscal year, by multiplying the amount of the Bonus which
would have become payable to the Executive had he remained employed until the
end of the fiscal year, by a fraction, the numerator of which will be the number
of days the Executive was employed by the Company in such fiscal year, and the
denominator of which shall be the number of days in the fiscal year. In the
event the Executive's employment terminates for any other reason, then the
Executive shall not be entitled to any Bonus which has not accrued as of such
date.

     13.  Proprietary Information.  The Executive shall not, without the prior
written consent of the Company, disclose or use for any purpose (except in the
course of his employment under this Agreement and in furtherance of the business
of the Company) any confidential information or proprietary data of the Company.
As an express condition of the Executive's employment with the Company, the
Executive agrees to execute confidentiality agreements as requested by the
Company, including but not limited to the Company's standard form of employee
proprietary information agreement.

     14.  Absence of Conflict.  The Executive represents and warrants that his
employment by the Company as described herein shall not conflict with and will
not be constrained by any prior employment or consulting agreement or
relationship.

     15.  Arbitration.   Except as provided in paragraph 17(b)(1) any dispute or
controversy of any kind arising under or in connection with this Agreement shall
be settled exclusively by binding arbitration in Portland, Oregon, in accordance
with the rules of the American Arbitration Association then in effect by an
arbitrator selected by both parties within ten (10) days after either party has
notified the other in writing that it desires a dispute between them to be
settled by arbitration.  In the event the parties cannot agree on such
arbitrator within such ten (10) day period, each party shall select an
arbitrator and inform the other party in writing of such arbitrator's name and
address within five (5) days after the end of such ten (10) day period and the
two arbitrators so selected shall select a third arbitrator within fifteen (15)
days thereafter; provided, however, that in the event of a failure by either
party to select an arbitrator and notify the other party of such selection
within the time period provided above, the arbitrator selected by the other
party shall be the sole arbitrator of the dispute.  Each party shall pay his or
its own attorneys fee and expenses associated with such arbitration, including
the expense of any arbitrator selected by such party and the Company will pay
the expenses of the jointly selected arbitrator.  The decision of the arbitrator
or a majority of the panel of arbitrators shall be binding upon the parties and
judgment in accordance with that decision may be entered in any court having
jurisdiction thereover.  Punitive damages shall not be awarded.

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BY AGREEING TO SUBMIT A DISPUTE OR CONTROVERSY TO ARBITRATION, THE PARTIES
UNDERSTAND THAT THEY WILL NOT ENJOY THE BENEFITS OF A JURY TRIAL.  ACCORDINGLY,
THE PARTIES HERETO EXPRESSLY AGREE TO WAIVE THE RIGHT TO A JURY TRIAL.

     16.  Applicable Law.  This Agreement shall be governed by and construed in
accordance with the laws of the State of Oregon as applied to agreements between
Oregon residents entered and to be performed entirely within Oregon.

     17.  Certain Covenants of the Executive.

          (a)  Covenants Against Competition. The Executive acknowledges that
(i) the principal business of the Company and its affiliates involves the
development and operation of free-standing assisted living residences, primarily
located in small middle market rural and suburban communities, the provision of
personal care and support services to meet the needs of its residents and other
related businesses which the Company and its affiliates currently operate and
which the Company and its affiliates may become involved with during the Term
(collectively, the "Company Business"); (ii) the Company Business is national in
scope; (iii) the Executive's work for the Company will bring him into close
contact with many confidential affairs not readily available to the public; and
(iv) the Company would not enter into this Agreement but for the agreements and
covenants of the Executive contained herein. In order to induce the Company to
enter into this Employment Agreement, the Executive covenants and agrees that:

               (1)   Non-Compete. During the term and for a period of twelve
(12) months following the termination (whether for cause of otherwise) of the
Executive's employment with the Company or any of its affiliates (the
"Restricted Period"), the Executive shall not, in the United States of America
or in any foreign country, directly or indirectly, (i) engage in the Company
Business for his own account; (ii) enter the employ of, or render any services
to, any persons engaged in such activities; or (iii) become interested in any
person engaged in the Company Business, directly or indirectly, as an
individual, partner, shareholder, officer, director, principal, agent, employee,
trustee, consultant or in any other relationship or capacity; provided, however,
that the Executive may own, directly or indirectly, solely as an investment,
securities of any person which are traded on any national securities exchange or
NASDAQ if the Executive (a) is not a controlling person of, or a member of a
group which controls such person or (b) does not, directly or indirectly, own 1%
or more of any class of securities of such person.

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               (2)   Confidential Information. During and after the Restricted
Period, the Executive shall keep secret and retain in strictest confidence, and
shall not use for the benefit of himself or others except in connection with the
business and affairs of the Company, all confidential matters of the Company and
its affiliates. Such confidential matters include, without limitation, trade
secrets, customer lists, subscription lists, details of consultant contracts,
pricing policies, operational methods, marketing plans or strategies, product
development techniques or plans, business acquisition plans, new personnel
acquisition plans, methods of manufacture, technical processes, designs and
design projects, inventions and research projects of the Company and its
affiliates, learned by the Executive heretofore or hereafter that are
sufficiently secret to have the possibility, whether or not realized, of
deriving economic value from not being generally known to other persons who can
obtain economic value from their disclosure or use, and the Executive shall not
disclose them to anyone outside of the Company and its affiliates, either during
or after employment, by the Company or any of its affiliates, except as required
in the course of performing duties hereunder or with the Company's express
written consent. The Executive's obligations pursuant to this Employment
Agreement shall not extend to matters which are within the public domain or
hereafter enter the public domain through no fault or action or failure to act,
whether directly or indirectly, on the part of the Executive.

               (3)   Property of the Company. All memoranda, notes, lists,
records and other documents (and all copies thereof) made or compiled by the
Executive or made available to the Executive concerning the business of the
Company or any of its affiliates shall be the Company's property and shall be
delivered to the Company promptly upon the termination of the Executive's
employment with the Company or any of its affiliates or at any other time on
request.

               (4)   Employees of the Company. During the Restricted Period, the
Executive shall not, directly or indirectly, hire, solicit or encourage to leave
the employment of the Company or any of its affiliates, any employee of the
Company or its affiliates or hire any such employee who has left the employment
of the Company or any of its affiliates within one year of the termination of
such employee's employment with the Company or any of its affiliates.

               (5)   Consultants and Independent Contractors of the Company.
During the Restricted Period, the Executive shall not, directly or indirectly,
hire, solicit or encourage to cease to work with the Company or any of its
affiliates, any consultant, sales representative or other person then under
contract with the Company or any of its affiliates.

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          (b)  Rights and Remedies Upon Breach.  If the Executive breaches, or
threatens to commit a breach of, any of the provisions of Section 17(a) (the
"Restrictive Covenants"), the Company shall have the following rights and
remedies, each of which rights and remedies shall be independent of the other
and severally enforceable, and all of which rights and remedies shall be in
addition to, and not in lieu of, any other rights and remedies available to the
Company under law or in equity:

               (1)   Specific Performance. The right and remedy to have the
Restrictive Covenants specifically enforced by any court having equity
jurisdiction, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Company and its
affiliates and that money damages will not provide an adequate remedy to the
Company. The Parties further agree that the Company's claim for specific
performance shall not be a claim which is covered by the parties' agreement to
arbitrate as set forth in paragraph 15.

               (2)   Accounting. The right and remedy to require the Executive
to account for and pay over to the Company all compensation, profits, monies,
accruals, increments or other benefits (collectively, "Benefits") derived or
received by the Executive as a result of any transactions constituting a breach
of any of the Restrictive Covenants, and the Executive shall account for and pay
over such Benefits to the Company.

          (c)  Severability of Covenants. If any court determines that any of
the Restrictive Covenants, or any parts thereof, are invalid or unenforceable,
the remainder of the Restrictive Covenants shall not thereby be affected and
shall be given full effect, without regard to the invalid portions.

          (d)  "Blue-Penciling".  If any court construes any of the Restrictive
Covenants, or any part thereof, to be unenforceable because of the duration of
such provision or the area covered thereby, such court shall have the power to
reduce the duration or area of such provision and, in its reduced form, such
provision shall then be enforceable and shall be enforced.

          (e)  Enforceability in Jurisdictions. The parties intend to and hereby
confer jurisdiction to enforce the Restrictive Covenants upon the courts of any
jurisdiction within the geographical scope of such Restrictive Covenants. If the
courts of any one or more of such jurisdictions hold the Restrictive Covenants
wholly unenforceable by reason of the breadth of such scope or otherwise, it is
the intention of the parties that such determination not bar or in any way
affect the Company's right to the relief provided above in the courts of any
other jurisdiction within the geographical scope of such Restrictive Covenants,
as to breaches of such Restrictive Covenants in such other respective
jurisdictions, such Restrictive Covenants as they relate to each jurisdiction
being, for this purpose, severable into diverse and independent covenants.

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     18.  Successors.  The Company will require any successor (whether direct or
indirect, by purchase, merger, consolidation or otherwise) to all or
substantially all of the business and/or assets of the Company to expressly
assume and agree to perform this Agreement in the same manner and to the same
extent that the Company would be required to perform it if no such succession
had taken place.  Failure of the Company to obtain such assumption agreement
prior to the effectiveness of any such succession shall entitle the Executive to
the benefits described in paragraphs 12 (a)(i), 12(b) and 12(c) of this
Agreement, subject to the terms and conditions therein.

     19.  Assignment.  This Agreement and all rights under this Agreement shall
be binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective personal or legal representatives, executors,
administrators, heirs, distributees, devisees, legatees, successors and assigns.
This Agreement is personal in nature, and, except as provided in paragraph 18
hereof, neither of the parties to this Agreement shall, without the written
consent of the other, assign or transfer this Agreement or any right or
obligation under this Agreement to any other person or entity.  If the Executive
should die while any amounts are still payable to the Executive hereunder, all
such amounts, unless otherwise provided herein, shall be paid in accordance with
the terms of this Agreement to the Executive's devisee, legatee, or other
designee or, if there be no such designee, to the Executive's estate.

     20.  Notices.  For purposes of this Agreement, notices and other
communications provided for in this Agreement shall be in writing and shall be
delivered personally or sent by United States certified mail, return receipt
requested, postage prepaid, addressed as follows:

          If to the Executive:    Drew Q. Miller
                                  C/O Assisted Living Concepts, Inc
                                  11835 NE Glenn Widing Drive, Bldg. E.
                                  Portland, Oregon 97220-9057

          If to the Company:      Assisted Living Concepts, Inc.
                                  11835 NE Glenn Widing Drive, Bldg. E.
                                  Portland, Oregon 97220-9057

                                  Attention: Keren Brown Wilson
                                  President and Chief Executive Officer

                                  with a copy to:  Sandra Campbell
                                  Senior Vice President, General Counsel

or to such other address or the attention of such other person as the recipient
party has previously furnished to the other party in writing in accordance with
this paragraph.  Such notices or other communications shall be effective upon
delivery or, if earlier, three (3) days after they have been mailed as provided
above.

                                       12
<PAGE>

     21.  Waiver.  Failure or delay on the part of either party hereto to
enforce any right, power or privilege hereunder shall not be deemed to
constitute a waiver thereof.  Additionally, a waiver by either party of a breach
of any promise hereof by the other party shall not operate as or be construed to
constitute a waiver of any subsequent breach by such other party.

     22.  Severability.  Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective, valid and enforceable
under applicable law, but if any provision of this Agreement is held to be
invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will
not affect any other provision or any other jurisdiction, but this Agreement
will be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.

     23.  Right to Advice of Counsel.  The Executive acknowledges that he has
consulted with counsel and is fully aware of his rights and obligations under
this Agreement.

     24.  Counterparts.  This Agreement may be executed in one or more
counterparts, none of which need contain the signature of more than one party
hereto, and each of which shall be deemed to be an original, and all of which
together shall constitute a single agreement,

     25.  Integration.  This Agreement represents the entire agreement and
understanding between the parties as to the subject matter hereof and supersedes
all prior or contemporaneous agreements whether written or oral.  No waiver,
alteration or modification of any of the provisions of this Agreement shall be
binding unless in writing and signed by duly authorized representatives of the
parties hereto.

     IN WITNESS WHEREOF, each of the parties has executed this Agreement, in the
case of the Company by its duly authorized officer, on the day set opposite its
name below.

Date Agreement Executed      "COMPANY"

October 10, 2000        By: /s/ Keren Brown Wilson
                            -----------------------------------
                            Keren Brown Wilson, President & CEO

September 26, 2000      By: /s/ Bradley G. Razook
                            -----------------------------------
                            Bradley G. Razook, Chairman
                            Compensation Committee

                                       13
<PAGE>

                        "EXECUTIVE"

October 11, 2000        /s/ Drew Q. Miller
                        ---------------------------------------
                        Drew Q. Miller

                                       14<PAGE>

                                                                    EXHIBIT 10.1

                                 LOAN AGREEMENT
                                 ==============

      LOAN AGREEMENT ("Agreement"), dated as of August 18, 2000, by and between
                       ---------
Image Entertainment, Inc., a California corporation (the "Company"), and Martin
                                                          -------
W. Greenwald, an individual ("Greenwald").
                              ---------

                                    Recitals
                                    --------

      A.    On July 3, 2000, July 20, 2000, August 3, 2000, and August 18, 2000,
            Greenwald borrowed sums in the amount of $40,000, $15,000, $2,300,
            and $70,000, respectively, from the Company to cover "margin calls"
            relative to the Company's common stock from brokers from whom he had
            borrowed.

      B.    On August 18, 2000, the Company's Board of Directors determined that
            it would be in the Company's best interest to consolidate the
            principal amounts and the accrued interest of the loans, said amount
            totaling $127,980.20.

      C.    The Company desires to lend to Greenwald and Greenwald desires to
            borrow from the Company $127,980.20, on the terms and conditions set
            forth herein.

      NOW, THEREFORE, in consideration of the mutual covenants contained herein,
the parties hereby agree as follows:

      1.    The Loan. Subject to the terms and conditions hereof, the Company
            --------
            hereby agrees to loan (the "Loan") to Greenwald $127,980.20,
                                        ----
            representing the aggregate borrowings and accrued interest at
            August 18, 2000, as set forth on EXHIBIT A, attached hereto and
            incorporated herein by this reference.

      2.    The Note.  The Loan made by the Company shall be evidenced by a
            --------
            promissory note in the form of EXHIBIT B (the "Note"), attached
                                                           ----
            hereto and incorporated herein by this reference.

      3.    Optional Prepayments.  Greenwald may at any time and from time to
            --------------------
            time upon three (3) days advance notice to the Company, prepay the
            Loan, in whole or in part, without premium or penalty. Any such
            prepayment shall be applied first to interest and then to principal.

      4.    The Interest Rate.  The Loan shall bear interest (the "Interest
            -----------------                                      ---------
            Rate") at a rate equal to the Company's then borrowing rate plus
            ----
            .5% (currently 10.75%). Interest shall be calculated on the basis of
            a 365-day year for the actual days elapsed.

      5.    The Payment Date. The full unpaid principal amount of the Loan and
            ----------------
            accrued interest thereon shall be due and payable in full on the
            earlier of June 30, 2001 or the date on which Greenwald's fiscal
            2001 annual performance bonus (if any) is due. Greenwald expressly
            acknowledges and agrees that the Company has the right to deduct the
            amount of the monies due hereunder from any monies owing to
            Greenwald as his fiscal 2001 annual performance bonus.

                                        1
<PAGE>

      6.    The Collateral.  As security for repayment of the Loan, Greenwald
            --------------
            hereby agrees to pledge to the Company 39,379 shares of the
            Company's common stock held by Greenwald. Greenwald shall retain all
            voting and other rights of a holder of the shares during the term of
            this Agreement, unless Greenwald defaults of any of the provisions
            hereof in which event all of Greenwald's rights in and to the
            pledged shares shall immediately cease. Greenwald hereby represents
            and warrants that he has unencumbered title to the pledged shares
            and that the pledge of said shares is not and will not be in
            contravention of any agreement or understanding to which Greenwald
            may be a party.

      7.    Miscellaneous.
            -------------

            (a)   Amendments and Waivers. Neither this Agreement, the Note or
                  ----------------------
                  any other loan document, nor any terms hereof or thereof may
                  be amended, supplemented or modified except in an instrument
                  executed by the parties.

            (b)   Costs and Expenses.  Greenwald agrees to pay or reimburse
                  ------------------
                  the Company for all of its costs and expenses incurred in
                  connection with the enforcement of any rights under this
                  Agreement, the Note or any other loan documents, including,
                  without limitation, the reasonable fees and disbursements of
                  outside counsel.

            (c)   No Waiver; Cumulative Remedies.  No failure to exercise and
                  ------------------------------
                  no delay in exercising, on the part of the Company, any right,
                  remedy, power or privilege hereunder or under any other loan
                  document shall operate as a waiver thereof; nor shall any
                  single or partial exercise of any right, remedy, power or
                  privilege hereunder preclude any other or further exercise
                  thereof or the exercise of any other right, remedy, power or
                  privilege. The rights, remedies, powers and privileges herein
                  provided are cumulative and not exclusive of any rights,
                  remedies, powers and privileges provided by law.

            (d)   Successors and Assigns. This Agreement shall be binding upon
                  ----------------------
                  and inure to the benefit of the Company and its successors and
                  assigns; Greenwald may not assign or transfer any of his
                  rights or obligations under this Agreement without the prior
                  written consent of the Company.

            (e)   Counterparts. This Agreement may be executed by one or mof the
                  ------------
                  parties to this Agreement on any number of separate
                  counterparts, and all of said counterparts taken together
                  shall be deemed to constitute one and the same instrument.

            (f)   Severability.  Any provision of this Agreement which is
                  ------------
                  prohibited or unenforceable in any jurisdiction shall, as to
                  such jurisdiction, be ineffective to the extent of such
                  prohibition or unenforceability without invalidating the
                  remaining provisions hereof, and any such prohibition or
                  unenforceability in any jurisdiction shall not invalidate or
                  render unenforceable such provision in any other jurisdiction.

            (g)   Integration.  This Agreement, the Note and any other loan
                  -----------
                  document represent the agreement of the parties with respect
                  to the subject matter hereof, and there are no

                                        2
<PAGE>

                  promises, undertakings, representations or warranties by
                  the Company relative to the subject matter hereof not
                  expressly set forth or referred to herein, the Note or any
                  other loan document.

            (h)   Governing Law.  This Agreement and the Note and the rights
                  -------------
                  and obligations of the parties under this Agreement and the
                  Note shall be governed by, and construed and interpreted in
                  accordance with, the law of the State of California.

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers this
18th day of August, 2000.

                              "Greenwald":
                               ---------

                              /S/ MARTIN W. GREENWALD
                              ------------------------------------------
                              MARTIN W. GREENWALD, an individual

                              The "Company":
                                   -------

                              Image Entertainment, Inc.

                              By:  /S/ JEFF M. FRAMER
                                   -------------------------------------
                                   Name:  Jeff M. Framer
                                   Title: Chief Financial Officer

                                        3
<PAGE>

                                    EXHIBIT A
                                    =========

    Loan Date       Loan Amount   Accrued Interest* Principal & Interest
    ---------       -----------   ----------------  --------------------

   July 3, 2000      $40,000.00         $541.92          $40,541.92
  July 20, 2000      $15,000.00         $128.12          $15,128.12
 August 3, 3000       $2,300.00          $10.16           $2,310.16
August 18, 2000      $70,000.00           $0.00          $70,000.00
                    ----------           -----          ----------

                   $127,300.00         $680.20         $127,980.20

------------
* interest rate: 10.75% per year

                                        4
<PAGE>

                                   EXHIBIT B
                                   =========

                                 PROMISSORY NOTE
                                 ---------------

$127,980.20                                              As of August 18, 2000

      FOR VALUE RECEIVED, the undersigned, MARTIN W. GREENWALD, an individual
("Greenwald"), promises to pay to Image Entertainment, Inc., a California
  ---------
corporation (the "Company"), at the Company's principal offices located at 9333
                  -------
Oso Avenue, Chatsworth, CA, 91311, in immediately available funds, the principal
amount of One Hundred Twenty-Seven Thousand, Nine Hundred Eighty Dollars and
Twenty Cents ($127,980.20), together with interest on principal amount hereof at
the Company's borrowing rate on the due date plus .5% per annum (the "Loan").
                                                                      ----
The entire outstanding balance of principal and all interest accrued hereunder
shall be due and payable on the earlier of (a) June 30, 2001 or the date on
                                -------
which Greenwald's fiscal 2001 annual performance bonus (if any) is due.

      All or any portion of the foregoing principal or interest may at any time
or times be prepaid without premium or penalty. Each payment shall be credited
first on interest then due and then on principal. All sums payable hereunder
shall be in lawful money of the United States of America. If action is
instituted on this Promissory Note to enforce any provision hereof or to collect
any amounts due hereunder, the prevailing party shall be entitled to all
reasonable attorneys' fees and costs.

      Greenwald hereby waives presentment, protest and demand, notice of
protest, and of dishonor and nonpayment of this Promissory Note. The right to
plead any and all statutes of limitations as a defense to this obligation or any
agreement to pay the same is hereby expressly waived by Greenwald to the extent
permitted by law.

      This Promissory Note shall be governed and interpreted in accordance with
the laws of the State of California. This Promissory Note may only be changed,
modified or amended in writing by the mutual consent of holder and maker hereof.
The provisions of this Promissory Note may only be waived in or by a writing
signed by the party against whom enforcement of any waiver is sought.

      IN WITNESS WHEREOF, Greenwald has caused this Promissory Note to be
executed as of the date hereof.

                              /S/ MARTIN W. GREENWALD
                              ------------------------------------------
                              MARTIN W. GREENWALD, an individual

                                        5

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