Document:

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                                                                   EXHIBIT 10.21

                           MODIFICATION AND AMENDMENT
                             TO EMPLOYMENT AGREEMENT

EFFECTIVE DATE:       January 1, 2000

PARTIES:              Sandra Campbell ("EXECUTIVE")

AND                   Assisted Living Concepts, Inc. ("ALC" or the "COMPANY")

                                    RECITALS:

A. On or about December 31, 1997, the parties entered into the Employment
Agreement (the "AGREEMENT").

B. Pursuant to the Agreement, Executive was to receive a bonus on each
anniversary date of the Agreement during the term of the Agreement (the
"MANDATORY BONUS"). After the first anniversary, the Mandatory Bonus was to be
in an amount of not less than $45,000.

C. Pursuant to the Agreement, Executive was to receive the other benefits made
available to the Company's other senior executives. Other senior executives
receive car allowances or payments on leases of their personal automobiles.

D. Company and Executive desire that the Mandatory Bonus be re-characterized as
salary and, therefore, added to Executive's annual base salary effective January
1, 2000, and, further, that Executive be paid a car allowance, all as set forth
in this Modification and Amendment to Employment Agreement ("MODIFICATION AND
AMENDMENT").

       NOW, THEREFORE, for valuable consideration, the parties hereto agree as
follows:

                                   AGREEMENTS:

1. SECTION 4. (c) of the Agreement shall be modified and amended to delete
references to the Mandatory Bonuses; consequently, the first sentence of SECTION
4. (c) shall be deleted in its entirety and replaced by the following sentence:
" Executive shall participate in all health, retirement, Company-paid insurance,
sick leave, disability, expense reimbursement and other benefit programs which
ALC makes available to any of its senior executives, and shall be eligible for
bonuses in the discretion (as to bonuses) of the Board of Directors." The
remainder of Section 4. (c) shall remain unmodified.

2. SECTION 4. (a) of the Agreement shall be deleted in its entirety and replaced
by the following:

       "(a) ALC shall pay to Executive a base salary ("BASE SALARY") in an
       annual amount of not less than One Hundred Ninety Five Thousand Dollars
       ($195,000) per annum, paid in approximately equal installments at
       intervals in accordance with the then prevailing policy of the Company
       with respect to its senior executives generally, but in no event,

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       less frequently than monthly. ALC agrees to consider from time to time
       increases in such Base Salary in the discretion of the Board of
       Directors. Any increase, once granted by the Board of Directors, shall be
       deemed to automatically amend this Agreement to provide that thereafter
       Executive's Base Salary shall not be less than the annual amount to which
       the Base Salary has been increased."

3. ALC agrees to pay Executive a car allowance of at least $500 per month during
the term of the Agreement.

4. Neither ALC or Executive intend either expressly or impliedly to waive any
rights under the Agreement by agreeing to the terms and conditions hereunder.

5. Except as expressly modified and amended herein, the Agreement remains in
full force and effect. In the event of any inconsistencies between this
Modification and Amendment and the Agreement, this Modification and Amendment
shall govern.

6. By executing this Modification and Amendment, each party agrees that he has
read and fully understands this Modification and Amendment and has had the
opportunity to and/or has consulted with legal counsel with regard to it.

       IN WITNESS WHEREOF, the parties hereto execute this Modification and
Amendment on the date below written to be effective as of January 1, 2000.

"ALC" or the "COMPANY"                       "EXECUTIVE"

Assisted Living Concepts, Inc.               /s/ Sandra Campbell
                                             -----------------------------------
                                             Sandra Campbell, as an Individual
By: /s/ Keren Brown Wilson
    ------------------------------
                                             Date: 20 June, 2000
Its: President & CEO
    ------------------------------

Date: 21 July, 2000

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                                                                   EXHIBIT 10.22

                              EMPLOYMENT AGREEMENT

        This Employment Agreement (the "Agreement") is entered into effective
November 1, 2000, by and between Assisted Living Concepts, Inc., a Nevada
corporation (the "Company"), and W. James Nicol (the "Executive").

        WHEREAS the Company desires to employ the Executive effective as of
November 1, 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 President and
Chief Executive Officer 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") 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 otherwise provided in paragraph 10
of this Agreement.

        2. EMPLOYMENT PERIOD.

               (a) TERM. Executive's employment shall be on a month-to-month
basis.

               (b) INVOLUNTARY TERMINATION WITHOUT CAUSE. The Company may
terminate the Executive's employment without cause at any time by providing
Executive at least thirty (30) days advance notice in writing. During any such
notice period, the Executive's duties shall be transitionary in nature and he
will be free to devote up to fifty percent (50%) of his time in the pursuit of
employment or personal matters.

               (c) INVOLUNTARY TERMINATION WITH CAUSE. The Company may terminate
the Executive's employment for Cause by providing 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 willful violation of a
federal or state law or regulation applicable to the business

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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 disinterested
Board of Directors. No Severance Pay as defined in paragraph 11(a)(i) will be
paid to the Executive under this Agreement in the event 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.

               (d) DEATH. The Executive's employment will terminate in the event
of his death.

               (e) RESIGNATION WITHOUT CAUSE. The Executive may terminate his
employment by providing the Company at least thirty (30) days advance written
notice; provided that in such event, the Executive will cease performing any
duties and responsibilities immediately or at any time during such thirty (30)
day period, if so requested by the Company.

        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 Seal Beach, California and that no relocation is
contemplated. The Executive has agreed, however, to commute to Portland as is
reasonably necessary to perform his duties, provided that the Company shall
reimburse Executive for his reasonable travel expenses to and from his residence
in Seal Beach to Portland.

        4. BASE SALARY. For all services to be rendered by the Executive
pursuant to this Agreement, the Company agrees to pay the Executive a minimum
initial monthly base salary (the "Base Salary") of $30,000. This minimum Base
Salary may not be reduced without the express written consent of the Executive.
The Base Salary shall be paid in accordance with the Company's regular payroll
practices.

        5. BONUS. For each fiscal year during Executive's employment with the
Company under 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 an executive
officer's base salary annualized for the achievement of annual strategic and
operating plan goals and objectives. Executive shall be eligible to receive a
prorata share (one-sixth) of any Bonus under the Plan attributable to fiscal
year 2000. In the event the Executive's employment is terminated by the Company,
as described in paragraph 11(a)(i), then the Executive shall be entitled to
receive a portion of the Bonus, as provided under paragraph 11((b).

        6. EXPENSES. The Executive shall be entitled to reimbursement by the
Company for Executive's reasonable expenses for room, board and transportation
in Portland and 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

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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.

        7. 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. In
addition, the Executive will be entitled to receive an annual physical
examination at Company's expense, or at the Company's request, will take a
physical examination annually and provide the results to the Board of Directors.

        8. VACATIONS AND HOLIDAYS. In accordance with the Company's policies in
effect from time to time, the Executive shall be entitled to paid vacation time
in the amount of four weeks per year, prorated for each complete month of
service, and Company holidays. Executive's right to carryover accrued unused
vacation shall be governed by the Company's policy then in effect.

        9. INDEMNIFICATION. The Company shall enter into an Indemnification
Agreement with the Executive that shall provide the Executive in substantially
the same form as that attached hereto as Exhibit A and incorporated herein by
this reference 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.

        10. 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 Laguna Medical
Systems, Inc. and Renal Solutions, Inc., and as a Director of and consultant to
Counterpart Capital Corporation, all of which are privately held corporations,
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.

        11. TERMINATION BENEFITS. In the event the Executive's employment
terminates, then the Executive shall be entitled to receive Severance Pay, if
any, and other benefits as follows:

               (a) SEVERANCE.

                      (i) INVOLUNTARY TERMINATION WITHOUT CAUSE. If the Company
terminates the Executive's employment other than for Cause, or Executive's death
or disability, then Executive shall be entitled to payment of the total amount
of $120,000 ("Severance Pay"), which Severance Pay shall be paid to Executive in
periodic installments in accordance with the

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Company's regular payroll practices over a period of four (4) months; subject to
Executive signing, delivering and abiding by a Separation Agreement and Release,
substantially in the form attached hereto as Exhibit B and incorporated herein
by this reference; and provided, however, that even if Executive satisfies the
foregoing condition precedent to receipt of Severance Pay, the Company's
obligations hereunder shall cease upon a breach by the Executive of his
obligations under paragraphs 12, 14 and 16 hereof.

                      (ii) OTHER TERMINATION. In the event the Executive's
employment terminates for Cause or due to Executive's death or disability or
Executive's voluntary resignation, then the Executive shall not be entitled to
receive any Severance Pay or any other benefits, except as may be provided in
the Company's severance and benefit plans and policies at the time of such
termination.

               (b) BONUSES. In the event the Executive's employment is
terminated by the Company as described in paragraph 11(a)(i) 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.

        12. 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, a form of which is attached hereto as Exhibit
C and incorporated herein by this reference.

        13. 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.

        14. ARBITRATION. Except as provided in paragraph 16(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

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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 there over.
Punitive damages shall not be awarded.

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.

        15. 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.

        16. 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
operation of free-standing assisted living residences, primarily located in
small-to-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 Executive's
employment under this Agreement (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 time Executive is employed
under this Agreement and for a period of six (6) 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, 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 six (6) months 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.

               (b) RIGHTS AND REMEDIES UPON BREACH. If the Executive breaches,
or threatens to commit a breach of, any of the provisions of Section 16(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

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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.

        17. 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 Severance Pay described in paragraph 11(a)(i), subject to the terms and
conditions therein.

        18. 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,

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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.

        19. 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:    W. James Nicol
                                       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:  Sandra Campbell
                                       Senior Vice President and General Counsel

                                       with a copy to:  Drew Q. Miller
                                       Chief Financial Officer

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.

        20. 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.

        21. 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.

        22. 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.

        23. 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,

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        24. FACSIMILE TRANSMISSION AND SIGNATURES. Facsimile transmission of any
signed original document, and retransmission of any signed facsimile
transmission, shall be the same as delivery of an original document. At the
request of either party, the parties will confirm facsimile transmitted
signatures by signing an original documents.

        25. INTEGRATION. This Agreement represents the final and 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"

________________, 2000               By: ______________________________________
                                         Drew Q. Miller, Senior Vice President
                                         and Chief Financial Officer

________________, 2000               By: ______________________________________
                                         John M. Gibbons, Member of the
                                         Compensation Committee of the
                                         Board of Directors

                                     "EXECUTIVE"

________________, 2000               __________________________________________
                                     W. James Nicol

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                                    EXHIBIT A

                            INDEMNIFICATION AGREEMENT

        This INDEMNIFICATION AGREEMENT is made and entered into as of the ____
day of __________, 2000 by and between _______________ ("Indemnitee") and
Assisted Living Concepts, Inc. a Nevada corporation and its affiliates
(collectively, the "Company").

                                    RECITALS

        A. The Company has recognized the difficulty that publicly held
corporations are having in attracting and retaining qualified directors,
officers and key employees as a result of the increasing risk of claims and
actions against them arising out of their association with the Company.

        B. Indemnitee is an officer, director and/or key employee of the
Company.

        C. Indemnitee is willing to serve, to continue to serve and to take on
additional service for or on behalf of the Company.

        D. In view of the mutual desire of the parties that Indemnitee render
valuable services to the Company, the parties have agreed to enter into this
Indemnification Agreement.

        THEREFORE IT IS AGREED:

        1. Definitions. The following definitions shall apply to this Agreement:

               1.1 "Act" shall be the Nevada Corporation Act, NRS Sections
78.010-.795, and all amendments thereto hereinafter enacted.

               1.2 "Expenses" shall include, without limitation, expenses of
investigations, judicial or administrative proceedings or appeals and attorneys'
fees and disbursements and any expenses of establishing a right to
indemnification under this Agreement.

               1.3 "Liability" means the obligation to pay a judgment,
settlement, penalty, fine, including an excise tax assessed with respect to an
employee benefit plan, or reasonable Expenses incurred with respect to a
Proceeding.

               1.4 "Party" includes an individual who was, is or is threatened
to be made a named defendant or respondent in a proceeding.

                                      A-1
<PAGE>   11

               1.5 "Proceeding" means any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative and whether formal or informal.

        2. Indemnification. The Company shall indemnify Indemnitee against
Liability and Expenses actually and necessarily incurred by him or her in any
Proceeding in which he or she is made a Party by reason of being or having been
a director, officer or key employee of the Company, except in relation to
matters as to which indemnification is prohibited by the Act; but such
indemnification shall not be deemed exclusive of any other rights to which
Indemnitee may be entitled under any bylaw or agreement of the Company, general
or specific action of the Company's board of directors, vote of the Company's
shareholders or otherwise.

        3. Procedure for Indemnification. After the final disposition of any
Proceeding in which Indemnitee may be entitled to indemnification pursuant to
this Agreement, Indemnitee may send to the Company a written request for
indemnification. The Company shall, in accordance with the provisions of the Act
regarding determination and authorization of indemnification, make a finding
whether the indemnification requested is permitted by the laws of the state of
Nevada no later than 60 days following receipt by the Company of such request.
The Company shall cause the indemnification requested to be authorized and paid
unless the Company finds that the indemnification requested is not so permitted.
Indemnitee shall be given an opportunity to be heard and to present evidence in
connection with the consideration of the party or parties determining
Indemnitee's right to indemnification under the Act. If the Company does not
authorize indemnification hereunder, Indemnitee shall have the right to seek
court-ordered indemnification in accordance with the provisions of the Act. In
any such action, neither the making of, nor the failure to make, any finding by
the Company that indemnification of the Indemnitee is proper or not proper in
the circumstances shall be a defense to such action or create a presumption that
the Indemnitee has not met the standard of conduct required by the Act. In
making its determination and in any court proceeding, the Company shall have the
burden of proving that Indemnitee has not met the standard of conduct required
by the Act to entitle Indemnitee to indemnification.

        4. Procedure for Advancement of Expenses. The Company shall pay for or
reimburse the reasonable Expenses incurred by Indemnitee as a result of being
Party to a Proceeding in advance of final disposition of the Proceeding promptly
upon receipt of a written request for payment of such Expenses that is in
accordance with the requirements of the Act for such written statements. Such
written statement shall also include or be accompanied by documentation of the
Expenses incurred certified true and correct by Indemnitee. When available, such
documentation of expenses shall include copies of bills or statements evidencing
the Expenses incurred. If the requirements of this Section 4 are met, the
Company shall pay the amount requested promptly notwithstanding the absence of a
final disposition of the Proceeding.

                                      A-2
<PAGE>   12

        5. Partial Indemnity. If Indemnitee is entitled under any provision of
this Agreement to indemnification by the Company for some or a portion of the
Expenses or Liability incurred by Indemnitee in the preparation, investigation,
defense, appeal or settlement of any Proceeding but not, however, for the total
amount thereof, the Company shall indemnify Indemnitee for the portion of such
Expenses or Liability to which Indemnitee is entitled in accordance with this
Agreement.

        6. Insurance. The Company may, but shall not be required to, purchase
and keep in force during the term of this Agreement a policy or policies of
liability insurance on behalf of Indemnitee against Liability and Expenses
incurred in any Proceeding. Nothing herein shall be construed to prohibit
Indemnitee from maintaining his or her own policy of liability insurance.

        7. Exclusions. The Company shall not be liable to make any payment
hereunder:

               7.1 If it shall be finally adjudicated that such payment is
prohibited by law;

               7.2 On account of any Proceeding brought under Section 16(b) of
the Securities Exchange Act of 1934, as such law is amended from time to time,
or under any similar law that replaces Section 16(b), in which judgment is
rendered against Indemnitee for an accounting for profits made from the purchase
or sale by Indemnitee of the securities of the Company;

               7.3 For Liability or Expenses in any Proceeding brought by
Indemnitee against the Company unless (i) the Proceeding is brought as a
Proceeding for indemnity under this Agreement, (ii) Indemnitee is successful in
whole or in part in a Proceeding or (iii) the indemnification is included in a
settlement of the Proceeding or is awarded by a court;

               7.4 To the extent payment is actually made to Indemnitee under a
valid, enforceable and collectible insurance policy, whether provided by the
Company or by Indemnitee (the "Insurance Policy"), by or out of a fund created
by the Company and under the control of a trustee or otherwise (the "Fund") or
from other sources provided by the Company ("Other Sources"); or

               7.5 For amounts paid in settlement of a claim effected without
the Company's prior written consent, which consent shall not be unreasonably
withheld.

If Indemnitee shall become obligated or required to pay any amount that the
Company would be obligated to pay hereunder except for the exclusion in Section
7.4, the Company shall advance such amount to Indemnitee if payment is not
reasonably expected to be made under the Insurance Policy, by the Fund or from
Other Sources prior to the time that Indemnitee must make such payment,
provided, however, that Indemnitee shall

                                      A-3
<PAGE>   13

immediately pay over to the Company, from the funds Indemnitee later receives
under the Insurance Policy, from the Fund or from Other Sources, an amount equal
to the amount advanced.

        8. Defense of Claim. If any Proceeding asserted or commenced against
Indemnitee is also asserted or commenced against the Company, the Company shall
be entitled to participate in the Proceeding at its own expense and, except as
otherwise provided herein below, to the extent that it may wish the Company
shall be entitled to assume the defense thereof. After notice from the Company
to Indemnitee of its election to assume the defense of any such Proceeding,
Indemnitee shall have the right to employ Indemnitee's own counsel in such
Proceeding, but the Expenses of such counsel incurred after notice from the
Company to Indemnitee of its assumption of the defense thereof shall be the
Expenses of Indemnitee, and the Company may not be obligated to Indemnitee under
this Agreement for any Expenses subsequently incurred by Indemnitee in
connection therewith other than the reasonable costs of investigation, travel
and lodging Expenses arising out of Indemnitee's participation in the defense of
such Proceeding unless (i) otherwise authorized by the Company, (ii)
Indemnitee's counsel shall have reasonably concluded, and so notified the
Company in writing, that there may be a conflict of interest between the Company
and Indemnitee in the conduct of the defense of such Proceeding or (iii) the
Company shall not in fact have employed counsel to assume the defense of such
Proceeding. If the Company may be obligated for some or all of the Expenses of
Indemnitee under this Section 8, the determination of Indemnitee's entitlement
to indemnification shall be made in accordance with Section 3.

        9. Change in Control.

               9.1 The Company agrees that, if there is a Change in Control (as
hereinafter defined) of the Company, then with respect to all matters thereafter
arising concerning the rights of Indemnitee to indemnification and Expense
advances under this Agreement, the Company shall seek legal advice only from
special, independent counsel selected by the Company with the consent of
Indemnitee, which consent shall not be unreasonably withheld, with respect to
matters arising out of this Agreement, including but not limited to the right of
Indemnitee to indemnification hereunder. Such counsel shall, among other things,
render its written opinion to the Company and Indemnitee as to whether and to
what extent Indemnitee would be permitted to be indemnified under the Act and as
to the amount of reasonable indemnification. Such written opinion shall be
binding upon the Company and Indemnitee. The Company shall agree to pay the
reasonable fees of such special counsel and to indemnify fully such counsel
against any and all expenses, including attorney fees, claims, liabilities and
damages arising out of or relating to this Agreement or its engagement pursuant
hereto.

               9.2 For the purpose of this Section 9, a "Change in Control"
shall be deemed to have occurred if:

                                      A-4
<PAGE>   14

                      9.2.1 Any "person," as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934 (the "1934 Act"), other than a
trustee or other fiduciary holding securities under an employee benefit plan of
the Company or a corporation owned, directly or indirectly, by the stockholders
of the Company in substantially the same proportion as their ownership of the
Company, becomes the "Beneficial Owner," as defined in Rule 13d-3 under the 1934
Act, directly or indirectly, of securities of the Company representing
twenty-five percent (25%) or more of the combined voting power of the Company's
then outstanding voting securities ("Voting Stock");

                      9.2.2 During any period of twenty-four (24) consecutive
months, not including any period prior to the execution of this Agreement,
individuals who at the beginning of such period constitute the board of
directors of the Company and any new director, other than a director designated
by a person who has entered into an agreement with the Company to effect a
transaction described in Section 9.2.1 or 9.2.3, whose election was approved by
a vote of at least two-thirds (2/3rds) of the shares entitled to vote, cease for
any reason to constitute a majority of the board; or

                      9.2.3 The stockholders of the Company (i) approve a merger
or consolidation of the Company with any other corporation, other than a merger
or consolidation that would result in the Voting Stock outstanding immediately
prior thereto continuing to represent, either by remaining outstanding or by
being converted into Voting Stock of the surviving entity, at least seventy
percent (70%) of the combined voting power of the Voting Stock of the Company or
such surviving entity outstanding immediately after such merger or
consolidation, (ii) approve a plan of complete liquidation of the Company or
(iii) approve an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets.

        10. Potential Change in Control.

               10.1 In the event of a Potential Change in Control (as
hereinafter defined), the Company shall, upon written request by Indemnitee,
create a trust (the "Trust") for the benefit of Indemnitee and from time to time
upon written request of Indemnitee shall fund the Trust in an amount sufficient
to satisfy any and all Expenses reasonably anticipated at the time of each such
request to be incurred in connection with investigating, preparing for and
defending any Proceeding for which Indemnitee may be entitled to indemnification
under this Agreement, and any and all Liability for which Indemnitee is entitled
to indemnification hereunder from time to time actually paid, reasonably
anticipated or proposed to be paid. The amount or amounts to be deposited in the
Trust pursuant to the foregoing funding obligations shall be determined in
accordance with the provisions of the Act with regard to determination and
authorization of indemnification.

               10.2 The terms of the Trust shall provide that upon a Change in
Control:

                      10.2.1 The Trust shall not be revoked or the principal
thereof invaded without the prior written consent of Indemnitee;

                                      A-5
<PAGE>   15

                      10.2.2 The trustee of the Trust (the "Trustee") shall
advance, within two (2) business days of a written request by Indemnitee in
accordance with the requirements of Section 4, any and all Expenses to
Indemnitee, and Indemnitee hereby agrees to reimburse the Trust under the
circumstances under which Indemnitee would be required to reimburse the Company
pursuant to the Act and Section 4;

                      10.2.3 The Trust shall continue to be funded by the
Company in accordance with the funding obligation set forth above;

                      10.2.4 The Trustee shall promptly pay to Indemnitee all
amounts for which Indemnitee shall be entitled to indemnification pursuant to
this Agreement or otherwise; and

                      10.2.5 All unexpended funds in the Trust shall revert to
the Company upon a final determination by the special counsel established in
accordance with Section 9 or a court of competent jurisdiction, as the case may
be, that Indemnitee has been fully indemnified under the terms of this
Agreement.

               10.3 The Trustee shall be selected by Indemnitee with the consent
of the Company, which consent shall not be unreasonably withheld, and all
reasonable expenses, fees and other disbursements of the Trustee in connection
with the establishment and administration of the Trust shall be paid by the
Company.

               10.4 Nothing in this Section 10 shall relieve the Company of any
of its obligations under this Agreement.

               10.5 A "Potential Change in Control" shall be deemed to have
occurred if: (i) the Company enters into an agreement, the consummation of which
would result in the occurrence of a Change in Control; (ii) any person,
including the Company, publicly announces an intention to take or to consider
taking actions that, if consummated, would constitute a Change in Control; (iii)
any person, other than a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or a corporation owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their ownership of stock of the Company, who is or becomes the
beneficial owner, directly or indirectly, of stock of the Company representing
nine and one-half percent (9.5%) or more of the combined voting power of the
Company's then outstanding Voting Stock, increases his or her beneficial
ownership of such stock by five (5) percentage points or more over the
percentage so owned by such person; or (iv) the board of directors adopts a
resolution to the effect that, for purposes of this Agreement, a Potential
Change in Control has occurred.

        11. Nonexclusivity and Continuation of Rights. The indemnification
provided by this Agreement shall not be deemed exclusive of any other rights
consistent with the laws of the state of Nevada to which Indemnitee may be
entitled under the Company's articles of

                                      A-6
<PAGE>   16

incorporation, bylaws or any other agreement, vote of shareholders or otherwise,
both as to action in Indemnitee's official capacity and as to action in another
capacity while holding office or while employed by or acting as agent for the
Company, and shall continue notwithstanding that Indemnitee may have ceased to
be connected with the Company.

        12. Heirs, Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the heirs, successors and assigns of the Company and
Indemnitee.

        13. Severability. Wherever possible, each provision in this Agreement
shall be interpreted in such manner as to be effective and valid under the laws
of the state of Nevada, but if any provision of this Agreement shall be
invalidated by any court of competent jurisdiction, such provision shall be
ineffective only to the extent of such prohibition or invalidity without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.

        14. Subrogation. In the event of payment under this Agreement, the
Company shall be subrogated to the extent of such payment to all of the rights
of recovery of Indemnitee, who shall execute all documents required and shall do
all acts necessary to secure such rights, including the execution of such
documents necessary to enable the Company effectively to bring suit to enforce
such rights.

        15. Modification and Amendment. No amendment, modification, termination
or claimed waiver of any of the provisions hereof shall be valid unless in
writing and signed by both of the parties hereto.

        16. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand and receipted for by the party to whom said notice or other
communication shall have been directed or mailed by certified or registered mail
with postage prepaid, on the third business day after the date on which it is so
mailed:

If to Indemnitee:                     If to the Company:

W. James Nicol                        Assisted Living Concepts, Inc.
249 Sixth Street                      Attn:  General Counsel
Seal Beach, CA 90740                  11835 NE Glenn Widing Drive, Bldg E
                                      Portland, OR 97220

or to such other address as may have been furnished to the other party.

        17. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the state of Nevada.

                                      A-7
<PAGE>   17

        18. Counterparts. This Agreement may be executed in one or more separate
counterparts, each of which, once they are executed, shall be deemed to be an
original. Such counterparts shall be and constitute one and the same instrument.

        19. Facsimile Transmission and Signatures. Facsimile transmission of any
signed original document, and retransmission of any signed facsimile
transmission, shall be the same as delivery of an original document. At the
request of either party, the parties will confirm facsimile transmitted
signatures with an original document.

        IN WITNESS WHEREOF, the parties hereto have executed this
Indemnification Agreement as of the date first hereinabove written.

INDEMNITEE                                Assisted Living Concepts, Inc.
                                          a Nevada corporation

_________________________                 By___________________________________
W. James Nicol                            Title:

                                      A-8
<PAGE>   18

                                    EXHIBIT B

                    FORM OF SEPARATION AGREEMENT AND RELEASE

        This Separation Agreement and Release ("AGREEMENT") is made and entered
into as of this _____ day of ______________, ______, by and between Assisted
Living Concepts, Inc. and one or more of its Affiliates (collectively,
"COMPANY"), and ______________________ ("EMPLOYEE") in order to provide the
terms and conditions of Employee's termination of employment, to fully and
completely resolve any and all issues that Employee may have in connection with
Employee's employment with Company or the termination of that employment, and to
promote an amicable long-term relationship between Company and Employee.

        In consideration of the mutual promises and conditions contained herein,
the parties agree as follows:

        1. Separation. Employee has been [is currently] employed at Company as
Employee. Employee shall have no further job responsibilities at Company
_______________ and Employee's employment shall be terminated effective as of
such date.

        2. Payment to Employee. Pursuant to the Employment Agreement entered
into between the parties and subject to certain conditions precedent set forth
therein, Company agrees to provide a Severance Amount to Employee as set forth
in paragraph 11(a)(i) of the Employment Agreement; provided, however, that
Employee must execute and not revoke this Agreement.

        3. Release of Claims. In return for the benefits conferred under the
Employment Agreement and this Agreement (which Employee acknowledges Company has
no legal obligation to provide if Employee does not enter into this Agreement),
Employee, on behalf of Employee and Employee's heirs, executors, administrators,
successors and assigns, hereby releases and forever discharges Company and its
past, present and future affiliates, future parent companies, subsidiaries,
predecessors, successors and assigns, and each of their past, present and future
shareholders, officers, directors, employees, agents and insurers, from any and
all claims, actions, causes of action, disputes, liabilities or damages, of any
kind, which may now exist or hereafter may be discovered, specifically
including, but not limited to, any and all claims, disputes, actions, causes of
action, liabilities or damages, arising from or relating to Employee's
employment with Company, or the termination of such employment, except for any
claim for payment or performance pursuant to the terms of this Agreement. This
release includes, but is not limited to, any claims that Employee might have for
reemployment or reinstatement or for additional compensation or benefits and
applies to claims that Employee might have under either federal, state or local
law dealing with employment, contract, tort, wage and hour, or civil rights
matters, including, but not limited to, Title VII of the Civil Rights Act of
1964, the Age

                                      B-1
<PAGE>   19

Discrimination in Employment Act, the Americans with Disabilities Act, the
Family and Medical Leave Act, similar state laws, and any regulations under such
laws. This release shall not affect any accrued rights Employee may have under
any medical insurance, workers compensation or retirement plan because of
Employee's prior employment with Company. EMPLOYEE ACKNOWLEDGES AND AGREES THAT
THROUGH THIS RELEASE EMPLOYEE IS GIVING UP ALL RIGHTS AND CLAIMS OF EVERY KIND
AND NATURE WHATSOEVER, KNOWN OR UNKNOWN, CONTINGENT OR LIQUIDATED, THAT EMPLOYEE
MAY HAVE AGAINST COMPANY AND THE OTHER PERSONS NAMED ABOVE, EXCEPT FOR THE
RIGHTS SPECIFICALLY EXCLUDED ABOVE.

        4. Confidentiality. Employee agrees to keep this Agreement and each of
its terms, including without limitation the Severance Amount, and the fact that
Employee has received such Amount, strictly confidential. Employee may only
disclose the terms of this Agreement only to Employee's attorney or accountant,
or as required by law. Employee understands that Company may be required to
publicly disclose the terms of this Agreement.

        5. No Disparagement. Employee shall not make any disparaging or
derogatory remarks of any nature whatsoever about Company, its officers,
directors or employees, or its services and/or products (if any), either
publicly or privately, unless required to do so by law.

        6. No Admission of Liability. This Agreement shall not be construed as
an admission of liability or wrongdoing by Company because no admission is
intended. Employee understands and agrees that this Agreement shall not be
offered as evidence by Employee in any proceeding, whether administrative or
otherwise.

        7. Employment Agreement. Employee reaffirms Employee's acknowledgements
and obligations under paragraph 16 of the Employment Agreement executed by
Employee in conjunction with Employee's employment at Company. The terms of such
Employment Agreement are incorporated herein by this reference. Employee agrees
to strictly comply with the terms of the Employment Agreement.

        8. Return of Property. Employee agrees to and hereby represents that
Employee has returned to Company all of Company's property and all materials
containing confidential information of Company that were in Employee's
possession or under Employee's control.

        9. Miscellaneous.

               9.1 Final and Entire Agreement. This document constitutes the
        entire, final, and complete agreement and understanding of the parties
        with respect to the subject matter hereof and supersedes and replaces
        all written and oral agreements and understandings heretofore made or
        existing by and

                                      B-2
<PAGE>   20

        between the parties or their representatives with respect thereto, other
        than the Employment Agreement executed between the parties. There have
        been no representations or commitments by Company to make any payment or
        perform any act other than those expressly stated herein.

               9.2 Waiver. No waiver of any provision of this Agreement shall be
        deemed, or shall constitute a wavier of any other provision, whether or
        not similar, nor shall any waiver constitute a continuing waiver. No
        waiver shall be binding unless executed in writing by the parties making
        the waiver.

               9.3 Binding Effect. All rights, remedies, and liabilities herein
        given to or imposed upon the parties shall extend to, inure to the
        benefit of and bind, as the circumstances may require, the parties and
        their representative heirs, personal representatives, administrators,
        successors and assigns.

               9.4 Amendment. No supplement, modification or amendment of this
        Agreement shall be valid, unless the same is in writing and signed by
        both parties.

               9.5 Attorneys Fees. If it becomes necessary to enforce this
        Agreement, or any part hereof, the prevailing party shall be entitled to
        recover its reasonable attorney fees and costs incurred therein,
        including all attorneys fees and costs on appeal and otherwise.

               9.6 Governing Law. This Agreement and the rights of the parties
        hereunder shall be governed, construed and enforced in accordance with
        the laws of the State of Oregon, without regard to its conflict of law
        principles. Any suit or action arising out of or in connection with this
        Agreement, or any breach hereof, shall be brought and maintained in the
        Circuit Court of the State of Oregon for the County of Multnomah. The
        parties hereby irrevocably submit to the jurisdiction of such court for
        the purpose of such suit or action and hereby expressly and irrevocably
        waive, to the fullest extent permitted by law, any claim that any such
        suit or action has been brought in an inconvenient forum.

               9.7 Employee Given 21 Days to Consider Agreement. Employee
        acknowledges that Company advised Employee in writing to consult with an
        attorney before signing this Agreement and that Employee has had at
        least 21 days to consider whether to execute this Agreement.

               9.8 Revocation. Employee may revoke this Agreement by written
        notice delivered to the President or Chief Executive Officer of the
        Company within seven (7) days following the date Employee signed the

                                      B-3
<PAGE>   21

        Agreement. If not revoked under the preceding sentence, this Agreement
        becomes effective and enforceable after the seven-day period has
        expired.

EMPLOYEE ACKNOWLEDGES THAT EMPLOYEE HAS FREELY AND VOLUNTARILY EXECUTED THIS
AGREEMENT, WITH A COMPLETE UNDERSTANDING OF ITS TERMS AND PRESENT AND FUTURE
EFFECTS.

"EMPLOYEE"                                  ASSISTED LIVING CONCEPTS, INC. on
                                            behalf of itself, and the Affiliated
                                            Companies

______________________________              By: _______________________________
                                            Title: ____________________________

Date:_________________________              Date:______________________________

                                      B-4
<PAGE>   22

                                    EXHIBIT C

               EMPLOYEE NON-DISCLOSURE OF CONFIDENTIAL INFORMATION

During the term of Employee's employment and afterwards, unless authorized in
writing by Assisted Living Concepts, Inc. and its affiliates, herein known as
"Company," Employee shall not disclose any Confidential Information, defined
below, to any person nor shall Employee use Confidential Information for any
purpose at any time, except for the purpose of performing Employee's job duties
on behalf of or as directed by the Company.

All Confidential Information which comes into Employee's possession or is
generated by Employee during Employee's employment by the Company shall be and
remain the exclusive property of the Company, and Employee agrees to return all
such documents and tangible property of the Company on termination of Employee's
employment or at such earlier time as the Company may request.

Information received by Employee shall not be considered Confidential
Information to the extent that (i) the information, as shown by competent
evidence, was already known to Employee from sources outside of the Company at
the time Employee received it from the Company; or (ii) the information is or
becomes, through no fault of Employee, general knowledge in the public domain.

The term "Confidential Information" shall be deemed to include, but shall not be
limited to, the profiles and demographics of residents in the Companies
facilities, costs of care, employee matters, and compliance issues, as well as
the architectural plans and specifications, methods, techniques, financing,
formats, specifications, procedures, business and financial information, systems
and knowledge of and experience in the operation and/or franchising of assisted
living residences, all of which may hereafter be improved, further developed, or
otherwise modified by Company from time to time.

Employee acknowledges and agrees that any breach of the covenants and agreements
contained in this Agreement will cause irreparable injury to Company for which
there is and shall be no adequate remedy at law. Accordingly, Employee hereby
consents to the issuance by any court of competent jurisdiction of an injunction
in favor of Company enjoining any such breach or violation of the covenants or
agreements contained herein; provided, that no request for or receipt of any
such injunction by Company shall be considered an election of remedies or waiver
of any right to assert any other remedies Company may have against Employee,
either at law or in equity.

_____________________, 2000              _____________________________________
Date                                     W. James Nicol

                                      C-1

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