Document:

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                                                                   EXHIBIT 10.25

                      THIRD AMENDMENT AND MODIFICATION OF
                            REIMBURSEMENT AGREEMENTS

        THIS THIRD AMENDMENT AND MODIFICATION OF REIMBURSEMENT AGREEMENTS (the
"Third Amendment") entered into as of the 12th day of March, 2001 by and between
ASSISTED LIVING CONCEPTS, INC., a Nevada corporation ("Borrower") and U.S. BANK
NATIONAL ASSOCIATION ("Bank") with reference to the following facts:

                                    RECITALS

        A. Pursuant to Reimbursement Agreement dated as of November 1, 1996 by
and between Borrower and Bank (the "Washington Reimbursement Agreement"), Bank
issued a letter of credit on behalf of Borrower in the total Stated Amount of
$8,667,671.20 (the "Washington Letter of Credit") to Norwest Bank Minnesota,
National Association, as Trustee under that certain Indenture of Trust dated as
of November 1, 1996, in connection with the issuance by the Washington State
Housing Finance Commission of $8,500,000 in aggregate principal amount of its
Variable Rate Demand Multifamily Revenue Bonds (Assisted Living Concepts, Inc.
Project), Series 1996 (the "Washington Bonds"). Borrower's obligations under the
Washington Reimbursement Agreement are secured, in part, by deeds of trust,
security agreements, assignments of leases and rents and fixture filings on 5
real properties located in the State of Washington legally described in Exhibit
B-1 through Exhibit B-5 to the Washington Reimbursement Agreement and by this
reference incorporated herein (collectively, "the Washington Properties") and
other security interests in other real and personal property owned by Borrower.

        B. Pursuant to Reimbursement Agreement dated as of July 1, 1997 by and
between Borrower and Bank (the "Idaho Reimbursement Agreement"), Bank issued a
letter of credit on behalf of Borrower in the total Stated Amount of $7,494,987
(the "Idaho Letter of Credit") to First Security Bank, N.A., as Trustee under
that certain Indenture of Trust dated as of July 1, 1997, in connection with the
issuance by the Idaho Housing and Finance Association of $7,350,000 in aggregate
principal amount of its Variable Rate Demand Housing Revenue Bonds (Assisted
Living Concepts, Inc. Project), Series 1997 (the "Idaho Bonds"). Borrower's
obligations under the Idaho Reimbursement Agreement are secured, in part, by
deeds of trust, security agreements, assignments of leases and rents and fixture
filings on 4 real properties located in the State of Idaho legally described in
Exhibit B-1 through Exhibit B-4 to the Idaho Reimbursement Agreement and by this
reference incorporated herein (collectively, the "Idaho Properties") and other
security interests in other real and personal property owned by Borrower.

      C. Pursuant to Reimbursement Agreement dated as of July 1, 1998 by and
between Borrower and Bank (the "Ohio Reimbursement Agreement"), Bank issued a
letter of credit on behalf of Borrower in the total Stated Amount of $13,480,779
(the "Ohio Letter of Credit") to PNC Bank, National Association, as Trustee
under that certain Indenture of Trust dated as of July 1, 1998, in connection
with the issuance by the Ohio Housing Finance Agency of $12,690,000 in aggregate
principal amount of its Variable Rate Demand Housing Revenue Bonds (Assisted
Living Concepts, Inc, Project) 1998 Series A-1 and $530,000 in aggregate

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principal amount of its Taxable Variable Rate Demand Housing Revenue Bonds
(Assisted Living Concepts, Inc. Project) 1998 Series A-2 (the "Taxable Bonds")
(collectively, the "Ohio Bonds"). Borrower's obligations under the Ohio
Reimbursement Agreement are secured, in part, by open-ended mortgages, security
agreements, assignment of leases and rents and fixture filings on 7 real
properties located in the State of Ohio legally described in Exhibit B-1 through
Exhibit B-7 to the Ohio Reimbursement Agreement and by this reference
incorporated herein (collectively, the "Ohio Properties") and other security
interests in other real and personal property owned by Borrower.

        D. Pursuant to Amendment and Modification of Reimbursement Agreements
dated as of August 18, 1999 (the "Modification"), the Bank agreed to forbear and
waive certain defaults by Borrower under the Washington Reimbursement Agreement,
the Idaho Reimbursement Agreement and the Ohio Reimbursement Agreement and the
Related Documents (as defined in each Reimbursement Agreement) in exchange for
the modification and restructure of the Borrower's obligations to the Bank as
set forth in the Modification. The Washington Reimbursement Agreement, the Idaho
Reimbursement Agreement and the Ohio Reimbursement Agreement, each as modified
by the Modification and the Second Amendment (defined below), are hereinafter
referred to collectively as the "Reimbursement Agreements." The Washington
Properties, the Idaho Properties, the Ohio Properties and all other facilities
owned or leased by the Borrower that are financed with the proceeds of a Bank
credit enhanced bond issue, including, but not limited to, all facilities
financed by the Washington State Housing Finance Commission's Variable Rate
Demand Multifamily Revenue Bonds (LTC Properties, Inc. Project), Series 1995 are
hereinafter referred to individually as a "Bond Financed Property" and
collectively as the "Bond Financed Properties."

        E. As part of the modification and restructure of the Borrower's
obligations to the Bank under the Reimbursement Agreements set forth in the
Modification, the Borrower deposited $8,300,000 in cash collateral with the Bank
(the "Cash Collateral"), which Cash Collateral constitutes security for any and
all indebtedness of Borrower to the Bank, including, but not limited to the
Borrower's obligations under the Reimbursement Agreements and the Related
Documents. The Bank has since released $4,000,000 of the Cash Collateral to
Borrower pursuant to the terms of Section 3.B of the Modification. The Bank
continues to hold $4,300,000 of the Cash Collateral pursuant to the terms of
Section 3.C of the Modification.

      F. Pursuant to Second Amendment and Modification of Reimbursement
Agreements dated as of July 28, 2000 (the "Second Amendment") Bank agreed to
forbear and waive certain defaults by Borrower under the Reimbursement
Agreements in exchange for the modification and restructure of Borrower's
obligations to the Bank as set forth in the Second Amendment. As part of the
Second Amendment, the Borrower granted Bank, as security for the Borrower's
obligations to the Bank under the Reimbursement Agreements and other Related
Documents, a first lien deed of trust, security agreement, assignment of leases
and rents and fixture filings on three assisted living facilities located in the
State of Washington owned and operated by Borrower and legally described in
Exhibits A through C to the Second Amendment (individually, an "Additional
Property" and collectively, the "Additional Properties") (the "Additional
Properties Deed of Trust"), a first lien assignment of leases and cash
collateral with respect to the Additional Properties (the "Additional Properties
Assignment of Leases") and other real and

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personal property security interests. The Additional Properties constitute
security for any and all indebtedness of Borrower to Bank, including, but not
limited to, Borrower's obligations under the Reimbursement Agreements and the
Related Documents.

        G. Borrower has requested that Bank waive Bank's right to declare an
Event of Default under the Reimbursement Agreements and Related Documents (as
defined in the Reimbursement Agreements) by reason of Borrower's failure to
comply with certain financial covenants and Bank is willing to waive Bank's
right to declare an Event of Default under the Reimbursement Agreements on the
express condition that Borrower agree to further modify and restructure
Borrower's obligations under the Reimbursement Agreements and Related Documents
on the terms and conditions hereinafter set forth.

        NOW, THEREFORE, in consideration of the foregoing recitals and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

                                    AGREEMENT

        1. Incorporation of Recitals. Each recital set forth above is
incorporated into this Third Amendment as though fully set forth herein. Unless
the context clearly provides otherwise, all capitalized terms not otherwise
defined herein shall have the same meaning as set forth in the Modification or
if not defined therein as defined in the Second Amendment, or the Reimbursement
Agreements.

        2. Waiver of Right to Declare an Event of Default. In exchange for the
further modification and restructure of Borrower's obligations to Bank under the
Reimbursement Agreements on the terms and conditions hereinafter set forth, Bank
will waive Bank's right to declare an Event of Default under the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements) by reason of the Borrower's failure to comply with the cash flow
coverage covenant set forth in Section 7.01(G)(iii)(a) of each of the
Reimbursement Agreements at the corporate level for the quarter ending December
31, 2000 and Borrower's anticipated failure to comply with such covenant for the
quarter ending March 31, 2001 and the Bank's right to declare an Event of
Default under the Reimbursement Agreements and the Related Documents by reason
of the Borrower's failure to maintain the difference between Current Assets less
Current Liabilities at a number greater than or equal to $1,000,000 as set forth
in Section 7.01(G)(i) of each of the Reimbursement Agreements for the quarters
ending September 30, 2000 and December 31, 2000. As of the date of this Third
Amendment Bank has not received written notice from any person or entity of the
occurrence of any other event that would constitute an Event of Default under
the Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements).

        3. Modification and Restructure of Reimbursement Agreements. In exchange
for the waiver of the Bank's right to declare an Event of Default under the
Reimbursement Agreements by reason of the Borrower's failure to comply with the
cash flow coverage covenant set forth in Section 7.01(G)(iii)(a) of the
Reimbursement Agreements at the corporate level for the quarter ending December
31, 2000 and Borrower's anticipated failure to comply with such

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covenant for the quarter ending March 31, 2001 and the Bank's right to declare
an Event of Default under the Reimbursement Agreements and the Related Documents
by reason of the Borrower's failure to maintain the difference between Current
Assets less Current Liabilities at a number greater than or equal to $1,000,000
as set forth in Section 7.01(G)(i) of each of the Reimbursement Agreements for
the quarters ending September 30, 2000 and December 31, 2000, each of the
Reimbursement Agreements are modified as follows:

               A.     Section 7.01(G) of each of the Reimbursement Agreements
is amended to read as follows:

                      (i)    The difference between Current Assets less Current
Liabilities shall be greater than or equal to -($5,500,000), measured quarterly
commencing June 30, 2001. The difference between Current Assets less Current
Liabilities for the quarters ending December 31, 2000 and March 31, 2001 shall
be greater than or equal to -($9,500,000). For purposes of this calculation,
Current Liabilities will exclude payments due under construction draw requests
that have committed takeout financing and current portion of the class action
litigation settlement stemming from the restatement of Borrower's financial
statements for the years ended December 31, 1996 and 1997 and the first three
quarters of fiscal year 1998.

                      (ii)   Tangible Net Worth plus Subordinated Debentures
(defined below) shall be greater than or equal to $175,000,000, measured
quarterly.

                      (iii)  The Cash Flow Coverage Ratio will be a two-tier
test, either of which if not in compliance will cause an Event of Default under
the Reimbursement Agreements:

                             (a)    The Borrower's ratio of Net Income (which
shall exclude any restructuring, extraordinary or changes in accounting charges)
+ Interest Expenses + Depreciation & Amortization divided by Interest Expense +
pro-rata (for the quarter) scheduled principal payments on all Indebtedness +
pro-rata (for the quarter) annual fees relating to the U.S. Bank Bonds and U.S.
Bank Letters of Credit shall be greater than or equal to 1.25:1.00. This will be
measured quarterly (Company-Wide Test); and

                             (b)    Each of the group of Washington Properties,
the group of Idaho Properties and the group of Ohio Properties shall
independently maintain a financial performance level such that the sum of their
quarterly Net Income + Interest Expense + Depreciation & Amortization shall
exceed the sum of Interest Expense + pro-rata (for the quarter) scheduled
principal payments on the Washington Bonds, the Idaho Bonds and/or the Ohio
Bonds, as applicable + pro-rata (for the quarter) annual fees relating to the
Washington Bonds, the Idaho Bonds and/or the Ohio Bonds, as applicable and the
Washington Letter of Credit, Idaho Letter of Credit and/or Ohio Letter of Credit
by 1.25 times, measured quarterly. This covenant will be measured quarterly
beginning March 31, 2001 for the group of Washington Properties, September 30,
2001 for the group of Idaho Properties and September 30, 2001 for the group of
Ohio Properties. (Individual U.S. Bank Bond Properties' Test).

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                      (iv)   Borrower shall at all times maintain minimum cash
balances (excluding amounts that have been restricted but not excluding
Regulatory Cash Collateral), which cash balances shall be measured at the end of
each month or fiscal quarter, as applicable:

<TABLE>
<CAPTION>

                Month/Fiscal Quarter                 Minimum Cash Balance Requirement
               ---------------------                 --------------------------------
<S>                                                  <C>
                     July, 2000                               $    5,500,000
                    August, 2000                              $    5,000,000
                   September, 2000                            $    5,500,000
                    October, 2000                             $    6,000,000
                   November, 2000                             $    1,000,000
                   December, 2000                             $    3,000,000
                   March 31, 2001                             $   11,000,000
                    June 30, 2001                             $    8,000,000
          September 30, 2001 and quarterly                    $   11,000,000
                     thereafter
</TABLE>

The Minimum Cash Balance Requirement will no longer be required when the Ohio
Housing Financing Agency, Variable Rate Demand Housing Revenue Bonds (Assisted
Living Concepts, Inc.) Series 1998 Series A-1 have been retired and the Ohio
Letter of Credit has been surrendered to the Bank.

                      (v)    So long as there is no Event of Default under the
Reimbursement Agreements or any of the Related Documents, and no event that with
the giving of notice, the passage of time, or both, would constitute an Event of
Default under the Reimbursement Agreements or any of the Related Documents,
Borrower may make regularly scheduled installments of interest only payments
payable on May 1 and November 1 of each year on Borrower's Convertible
Subordinated Debentures due May, 2003, issued in the original principal amount
of $75,000,000 and Borrower's Convertible Subordinated Debentures due November,
2002, issued in the original principal amount of $86,250,000 (collectively, the
"Subordinated Debentures"). Except as set forth in subsection (vi) below, there
shall be no payments of principal, no prepayments of interest or principal, and
no refinancing, refunding, repurchase, retirement, modification, restructure or
redemption of the Subordinated Debentures without the prior written consent of
the Bank, which consent shall not be unreasonably withheld.

                      (vi)   Bank approves the Borrower's repurchase for cash
 of up to $25,000,000 in face value of the Subordinated Debentures before
maturity.

               B.     Article VII of each of the Reimbursement Agreements is
hereby amended to add the following new Section 7.01(AA) immediately following
Section 7.01(Z):

                      7.01(AA)      Notices of Regulatory Actions.

                             (i) Borrower shall provide Bank promptly, and in
               any event within five (5) business days following receipt by
               Borrower, with copies of all notices, letters, audits, inspection
               reports, directives, requests for information, pleadings,
               administrative or other proceedings seeking license

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               revocation or suspension, the appointment of a receiver or
               interim manager or operator for any Bond Financed Property or any
               Additional Property, any stop placement or limitation on
               admission of residents to any Bond Financed Property or any
               Additional Property, requests for hearing, show cause orders, and
               other communications received by Borrower from any federal or
               state regulatory agency that has jurisdiction over the Borrower
               or any of the Bond Financed Properties or any of the Additional
               Properties or their operations (individually, "Regulatory Agency"
               and collectively, "Regulatory Agencies"), together with copies of
               all notices, letters, responses, actions, pleadings and other
               communication by Borrower or its counsel to such Regulatory
               Agencies related to the above regulatory actions and/or
               sanctions. For purposes of this Section 7.01(AA), Borrower shall
               include Borrower and any Affiliate or Subsidiary thereof,
               including, without limitation, all partnerships, limited
               liability companies or corporations in which Borrower is a
               general partner, manager, member or shareholder thereof.

                             (ii) Borrower shall notify Bank in writing
               promptly, and in any event within five (5) business days,
               following the commencement of any litigation by any Regulatory
               Agency against Borrower, or the commencement of any
               administrative or other proceeding by any Regulatory Agency
               seeking license revocation or suspension, the appointment of a
               receiver or interim manager or operator for any Bond Financed
               Property or any Additional Property, imposition of civil or
               criminal fines, fees, penalties or assessments, any stop
               placement or limitation on admission of residents to any Bond
               Financed Property or any Additional Property or any other action
               by such Regulatory Agency that would limit the ability of
               Borrower to maximize occupancy of such property or the income
               generated therefrom or the services offered to residents of such
               Bond Financed Property or such Additional Property (individually
               and collectively, "Regulatory Action").

                             (iii) Within five (5) days following the
               commencement of any such Regulatory Action against Borrower with
               respect to any Bond Financed Property or any Additional Property,
               Borrower shall deposit Five Hundred Thousand Dollars ($500,000)
               in cash collateral with the Bank (individually and collectively,
               the "Regulatory Cash Collateral"). Such Regulatory Cash
               Collateral shall constitute security for any and all indebtedness
               of Borrower to Bank, including, but not limited to, Borrower's
               obligations under the Reimbursement Agreements and the Related
               Documents. Borrower shall execute such documents as Bank may
               request to perfect the Bank's security interests in the
               Regulatory Cash Collateral.

                             (iv) Bank will release the Regulatory Cash
               Collateral with respect to each Bond Financed Property or
               Additional Property to Borrower, provided there is no event of
               default under the Reimbursement Agreements or any of the Related
               Documents and no event that with the giving of notice,

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               the passage of time or both would constitute an Event of Default
               under the Reimbursement Agreements or any of the Related
               Documents within five (5) business days following the date that
               the Regulatory Action with respect to each Bond Financed Property
               or Additional Property has been settled, dismissed or resolved to
               the satisfaction of both the Regulatory Agency and the reasonable
               satisfaction of Bank.

        4. Confirmation. The Reimbursement Agreements and each of the Related
Documents (as defined in the Reimbursement Agreements) are each hereby modified
to provide that the term "Reimbursement Agreement" or "Reimbursement Agreements"
shall mean the Reimbursement Agreement or the Reimbursement Agreements, as
modified by this Third Amendment. Borrower hereby confirms, subject to this
Third Amendment, each of the covenants, agreements and obligations of Borrower
set forth in the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements). Borrower acknowledges and agrees that,
if and to the extent that the Bank has not heretofore required strict compliance
with the performance by Borrower of such covenants, agreements and obligations,
such action or inaction shall not constitute a waiver of, or otherwise affect in
any manner, Bank's rights and remedies under any of the Reimbursement
Agreements, as amended hereby, or any of the Related Documents (as defined in
the Reimbursement Agreements), including the right to require performance of
such covenants, agreements and obligations strictly in accordance with the terms
and provisions thereof except as waived herein. Each Deed of Trust or, with
respect to the Ohio Properties, Mortgage which secures the Borrower's
obligations under any Reimbursement Agreement is hereby modified to provide that
such Deed of Trust or Mortgage secures such Reimbursement Agreement as modified
hereby. Borrower represents and warrants that (i) upon execution of this Third
Amendment, and (ii) the satisfaction of all of the terms and conditions set
forth in this Third Amendment, including, but not limited to, payment of the
restructuring fee and other costs and expenses set forth in Section 14 of this
Third Amendment, Borrower will not be in default in the performance of any of
the obligations, terms, covenants, conditions, representations, warranties or
other provisions set forth in the Reimbursement Agreements or any of the Related
Documents (as defined in the Reimbursement Agreements). Borrower has no
knowledge of any defenses, offsets or claims which may be asserted by Borrower,
or by anyone claiming by or through Borrower, to the indebtedness owed by
Borrower to Bank under the Reimbursement Agreements or any of the Related
Documents (as defined in the Reimbursement Agreements) or to the performance of
any of the obligations, terms, covenants, conditions, representations,
warranties or other provisions set forth in the Reimbursement Agreements or any
of the Related Documents (as defined in the Reimbursement Agreements).

        5. Validity. Except as specifically modified and amended by this Third
Amendment, all of the terms, covenants, conditions and provisions of the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements) shall remain in full force and effect. Nothing herein
shall be deemed or construed to be an impairment of the lien of each Deed of
Trust or, with respect to the Ohio Properties, each Mortgage and the lien of
each Deed of Trust or each Mortgage shall remain a first lien against the
Washington Properties, the Idaho Properties, the Ohio Properties, or the
Additional

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Properties as applicable, described in such Deed of Trust or, with respect to
the Ohio Properties, such Mortgage.

        6. Bankruptcy. Borrower hereby represents and warrants that Borrower has
not filed for relief under any chapter of Title 11 of the United States Code, as
amended (hereinafter referred to as the "Bankruptcy Code") at any time prior to
the date of this Third Amendment, and that it has not been subject to an
involuntary petition under the Bankruptcy Code. Borrower further represents and
warrants that as of the date of this Third Amendment (i) Borrower is and
reasonably believes it will continue to be able to pay all of its creditors in a
timely manner; (ii) Borrower will not be rendered insolvent as a result of
entering into this Third Amendment and reasonably believes it will continue to
have assets which are reasonable in relation to its business; and (iii) the
agreements made and obligations provided for herein, were not made or incurred
with any intent, actual or otherwise, to hinder, delay or defraud any person or
entity. Borrower waives its right pursuant to Bankruptcy Code Section 1121(d) to
seek any extension of the exclusive period in which it may file a plan for
reorganization and seek approval thereof. The foregoing representations and
warranties are a material inducement for Bank to agree to enter into this Third
Amendment. Nothing in this Section 6 shall be deemed in any way to limit or
restrict any of Bank's rights to seek in the bankruptcy court any relief (or
take any other action) that Bank, in Bank's sole discretion, may deem
appropriate in the event that a case under the Bankruptcy Code is commenced by
or against Borrower, and in particular, Bank shall be free to move for an
immediate vacation of the automatic stay under Section 362 of the Bankruptcy
Code, and Borrower agrees not to resist or oppose any such motion. Bank shall
also be free to move to terminate the exclusive period under Section 1121 of the
Bankruptcy Code and/or to dismiss the filed bankruptcy case.

        7.     Release of Claims.

               (a) Release of All Claims. Borrower, on behalf of itself, its
affiliates and their respective successors and assigns (collectively, the
"Releasing Parties"), hereby release and forever discharge Bank and all of
Bank's officers, directors, employees, agents, attorneys, advisors, participants
and their respective successors and assigns (collectively, the "Released
Parties") from any and all claims, demands, debts, liabilities, contracts,
obligations, accounts, torts, causes of action or claims for relief of whatever
kind or nature, whether known or unknown, whether suspected or unsuspected,
which the Releasing Parties may have or which may hereafter be asserted or
accrue against Released Parties, or any of them, resulting from or in any way
relating to any act or omission done or committed by Released Parties, or any of
them, prior to the date hereof.

               (b) Complete Defense. This release by Releasing Parties shall
constitute a complete defense to any claim, cause of action, defense, contract,
liability, indebtedness or obligation released pursuant to this release. Nothing
in this release shall be construed as (or shall be admissible in any legal
action or proceeding as) an admission by Bank or any other Released Party that
any defense, indebtedness, obligation, liability, claim or cause of action
exists which is within the scope of those hereby released.

                                      -8-
<PAGE>   9

        8. No Continuing Waiver. No waiver of any of the provisions of the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) shall be deemed, or shall constitute, a continuing
waiver of any of the provisions of the Reimbursement Agreements or any of the
Related Documents (as defined in the Reimbursement Agreements) nor shall any
provision of this Third Amendment be deemed, or constitute, a waiver of any
other provision, whether or not similar, nor shall any waiver constitute a
continuing waiver. No waiver of any of the provisions of the Reimbursement
Agreements shall be binding unless executed in writing by the party making the
waiver. Nothing contained in this Third Amendment or in any ongoing discussions
or negotiations between Borrower or Bank shall directly or indirectly (i) create
any obligation to make any further extension of credit; (ii) create any
obligation to make any further forbearance or waiver or defer any enforcement
action by Bank as a result of the occurrence of an Event of Default under the
Reimbursement Agreements or any of the Related Documents (as defined in the
Reimbursement Agreements) which is not described in Section 2 of this Third
Amendment or with respect to any Event of Default which is described in Section
2 of this Third Amendment beyond the dates set forth in Section 2 of this Third
Amendment; (iii) constitute a consent or waiver of any past, present or future
Event of Default or other violation of any provision of the Reimbursement
Agreements or any of the Related Documents (as defined in the Reimbursement
Agreements) except to the extent expressly set forth in Section 2 of this Third
Amendment; (iv) constitute a course of dealing or other basis for altering any
of Borrower's obligations to Bank under the Reimbursements Agreements or any of
the Related Documents (as defined in the Reimbursement Agreements). Bank
expressly reserves all of its rights, powers and remedies under the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements).

        9. Reaffirmation of Representations and Warranties. Borrower does hereby
reaffirm to Bank each of the representations, warranties, covenants and
agreements made by Borrower set forth in each of the Reimbursement Agreements
with the same force and effect as if each were separately stated herein and made
again as of the date hereof. This reaffirmation shall not in any way limit,
derogate or abrogate the representations, warranties, covenants and agreements
made by Borrower as set forth in the Reimbursement Agreements. Borrower further
represents and warrants to Bank that with the exception of the Events of Default
as described in Section 2 of this Third Amendment, Borrower is in compliance
with all of the terms, covenants, representations, warranties and agreements
made by Borrower in the Reimbursement Agreements and each of the Related
Documents (as defined in the Reimbursement Agreements). There is no Event of
Default under and no event that with the giving of notice, the passage of time,
or both, would constitute an Event of Default under any of the Reimbursement
Agreements, or any of the Related Documents (as defined in the Reimbursement
Agreements).

        10.    Time is of the Essence.  Time is of the essence of this Third
Amendment.

        11.    Binding Effect.  This Third Amendment shall be binding upon
Borrower and its successors and permitted assigns and shall inure to the
benefit of Bank and its successors and assigns.

        12.    Prior Agreements.  The Reimbursement Agreements and each of the
Related Documents (as defined in the Reimbursement Agreements), including this
Third Amendment

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<PAGE>   10

and the documents attached as exhibits to or referred to in this Third Amendment
(i) integrate all the terms and conditions mentioned in or incidental to the
Reimbursement Agreements and each of the Related Documents (as defined in the
Reimbursement Agreements), (ii) supersede all oral negotiations and prior and
other writings with respect to the subject matter thereof, and (iii) are
intended by the parties as the final expression of the agreement with respect to
the terms and conditions set forth in this Third Amendment modifying and
restructuring the Reimbursement Agreements and each of the Related Documents (as
defined in the Reimbursement Agreements) and as the complete and exclusive
statement of the terms agreed to by the parties. If there is any conflict
between the terms, conditions and provisions of this Third Amendment and those
of any of the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements), the terms, conditions and provisions
of this Second Amendment shall prevail.

        13. No Rights Conferred on Others. Nothing contained in this Third
Amendment, the Reimbursement Agreements or any of the Related Documents (as
defined in the Reimbursement Agreements) shall be construed as giving any
person, other than the parties hereto, any right, remedy or claim under or in
respect of this Third Amendment except for the rights granted to the Released
Parties in Section 7 hereof.

        14. Costs and Expenses. Bank's agreement to forbear and waive certain
Events of Default under the Reimbursement Agreements is expressly conditioned
upon payment to Bank of a non-refundable restructuring fee of $34,700, of which
$15,000 has been paid. Borrower shall reimburse Bank for all fees, costs and
expenses incurred by Bank in the negotiation, preparation and administration of
the modification and restructuring of the Reimbursement Agreements and other
Related Documents contemplated by this Third Amendment. Such fees and costs
include, but are not limited to, outside counsel attorney fees and costs,
inspection fees, UCC searches, filing and recording fees, and the costs incurred
to satisfy all terms of this Third Amendment. All such costs and expenses shall
be paid upon execution of this Third Amendment.

        15. Governing Law. This Third Amendment and the rights and obligations
of the parties hereunder shall in all respects be governed by, and construed and
enforced in accordance with the laws of the State of Washington. If any court of
competent jurisdiction determines any provision of this Third Amendment or any
of the Reimbursement Agreements or any of the Related Documents (as defined in
the Reimbursement Agreements) to be invalid, illegal or unenforceable, that
portion shall be deemed severed from the rest, which shall remain in full force
and effect as though the invalid, illegal or unenforceable portion had never
been a part hereof or of the Reimbursement Agreements or any of the Related
Documents (as defined in the Reimbursement Agreements).

        16. Voluntary Agreement. The Borrower acknowledges that the Borrower is
represented by legal counsel of the Borrower's choice, is fully aware of the
terms contained in this Third Amendment, and has voluntarily and without
coercion or duress of any kind entered into this Third Amendment and the
documents executed in connection with this Third Amendment.

                                      -10-
<PAGE>   11

      17. Counterparts. This Third Amendment may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.

                                      -11-
<PAGE>   12

      18. NOTICE RE ORAL COMMITMENTS. ORAL AGREEMENTS OR ORAL COMMITMENTS TO
LOAN MONEY, EXTEND CREDIT, OR TO FORBEAR FROM ENFORCING REPAYMENT OF A DEBT ARE
NOT ENFORCEABLE UNDER WASHINGTON LAW.

      IN WITNESS WHEREOF, the parties have executed this Amendment as of the day
and year first above written.

"Bank"                                        "Borrower"

U.S. BANK NATIONAL ASSOCIATION                ASSISTED LIVING CONCEPTS, INC.,
                                              a Nevada corporation

By      /s/Brian Boatman                      By      /s/ Drew Q. Miller
   ---------------------------------                -----------------------
Name    Brian Boatman                         Name    Drew Q. Miller
     -------------------------------                -----------------
Title   A.V.P.                                Title   CFO & Treasurer
      ------------------------------                -----------------

                                      -12-Exhibit 4.2

	

Chase Manhattan International
Limited
Trinity Tower
9 Thomas More Street
London E1W 1YT

18 April 2000

Reuters Group PLC
85 Fleet Street
London EC4P 4AJ 

Reuters Investments Limited
85 Fleet
Street
London EC4P 4AJ 

Dear Sirs 

Syndicated Credit
Facility dated 4 December 1997 between Reuters Group Limited (subsequently
re-registered as Reuters Group PLC) (as Parent), Reuters Investments
Limited (as Original Borrower), Chase Manhattan PLC (as Arranger), certain
financial institutions (as Banks) and Chase Manhattan International Limited (as
Agent) (the “Facility Agreement”). 

We refer to the Facility
Agreement. Terms defined in the Facility Agreement have the same meaning in this
letter. 

We hereby agree that the
following amendments be made to the Facility Agreement: 

	1 		A
new paragraph (k) shall be added to the definition of “Permitted Encumbrance” which shall
read as follows:

		“(k) 		any
Encumbrance arising from any repo or similar sale and purchase agreement entered into by
any member of the Group; and”

	2 		The
current paragraph (k) of the definition of “Permitted Encumbrance” shall be renumbered
paragraph (l).

	

This letter may be signed
in any number of counterparts. 

	

It is intended that this
letter takes effect as a Deed not withstanding the fact that a party may only
execute this letter under hand. 

Please acknowledge your
acceptance of the terms of this letter by signing and returning the enclosed
copy of this letter. 

This letter is governed by
English Law. 

Yours faithfully

For and on behalf of

Chase
Manhattan International Limited
(in its capacity as Agent (and acting on behalf of the Majority Banks))

Accepted and agreed to as
of the date first above written. 

———————————————————

Executed as a Deed and delivered by

Reuters Group PLC acting by a director
 and the Secretary 

———————————————————

Executed as a Deed and delivered by

Reuters Investments Limited acting by a director
and the Secretary

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