Document:

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                                                                   EXHIBIT 10.10

                                                                 LOAN NO. 20-365

                                    GUARANTY

             THIS GUARANTY dated as of the 1st day of January, 2002 (the
"GUARANTY") is made by ASSISTED LIVING CONCEPTS, INC., a Nevada corporation
("Guarantor"), for the benefit of HELLER HEALTHCARE FINANCE, INC., a Delaware
corporation, in its capacity as Agent for the Lenders (as Agent and Lenders are
defined in the Loan Agreement described below).

                                    RECITALS

             A. FINANCIAL ACCOMMODATIONS. ALC Ohio, Inc., ALC Pennsylvania,
Inc., ALC Iowa, Inc., ALC Nebraska, Inc. and ALC New Jersey, Inc., each a Nevada
corporation and Texas ALC Partners, LP, a Texas limited partnership
(collectively, "Borrower"), Agent and Lenders are the parties to that certain
Loan Agreement dated February 20, 2001, as amended by that certain First
Amendment to Loan Documents dated as of June 29, 2001 and that certain Second
Amendment to Loan Documents dated as of October 3, 2001 (collectively, the "Loan
Agreement") pursuant to which Lenders agreed to extend financial accommodations
to Borrower.

             B. INDUCEMENT. To induce Lenders to extend to Borrower the
financial accommodations set forth in the Loan Agreement, Guarantor executed a
guaranty dated February 20, 2001 (the "Original Guaranty") in a form
substantially similar to this Guaranty. In connection with the funding of the
Takeout Loan, Guarantor is now willing to execute this Guaranty in order to
re-affirm its obligations under the Original Guaranty and modify Recitals A and
B as set forth herein.

             In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Guarantor hereby agrees as follows:

1.       DEFINED TERMS

             All capitalized terms used herein and not otherwise defined shall
have the meanings assigned to such terms in the Loan Agreement.

2.       THE GUARANTY

             2.1 GUARANTY OF OBLIGATIONS. Guarantor unconditionally and
absolutely guarantees to Agent and Lenders the full and prompt payment and
performance when due, whether at maturity or earlier, by reason of acceleration
or otherwise, and at all times thereafter, of the indebtedness, liabilities and
obligations of every kind and nature of Borrower to Agent and/or Lenders arising
under or in any way relating to the Loan Agreement or any of the other Loan
Documents, howsoever created, incurred or evidenced, whether direct or indirect,
absolute or contingent, now or hereafter existing, due or to

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become due, and howsoever owned, held or acquired by Agent and/or Lenders
(collectively, the "Obligations"). Without limitation to the foregoing, the
Obligations shall include (a) all reasonable attorneys' and paralegals' fees,
including the cost of inside attorneys and paralegals, costs and expenses and
all court costs and costs of appeal incurred by Agent and/or Lenders in
collecting any amount due Agent and/or Lenders under this Guaranty or in
prosecuting any action against Borrower, Guarantor or any other guarantor with
respect to all or any part of the Obligations (collectively, the "Enforcement
Costs"), and (b) all interest, fees, costs and expenses due Agent and/or Lenders
after the filing of a bankruptcy petition by or against Borrower regardless of
whether such amounts can be collected during the pendency of the bankruptcy
proceedings.

             2.2 CONTINUING GUARANTY; GUARANTY OF PAYMENT. This Guaranty is a
continuing guaranty of the Obligations, and Guarantor agrees that the
obligations of Guarantor to Agent and/or Lenders hereunder shall be primary
obligations, shall not be subject to any counterclaim, set-off, abatement,
deferment or defense based upon any claim that Guarantor may have against Agent
and/or Lenders, Borrower or any other person or entity.

             2.3 LIABILITY OF GUARANTOR NOT AFFECTED. This Guaranty shall remain
in full force and effect without regard to, and shall not be released,
discharged or affected in any way by, any circumstances or condition, including,
without limitation:

             (a) the attempt or the absence of any attempt by Agent and/or
         Lenders to obtain payment or performance by Borrower or any other
         guarantor (this being a guaranty of payment and performance and not of
         collection);

             (b) Agent's and/or Lenders' delay in enforcing Guarantor's
         obligations hereunder or of any other party under the Loan Documents,
         or any prior partial exercise by Agent and/or Lenders of any right or
         remedy hereunder or under any of the other Loan Documents;

             (c) any renewal, extension, substitution, modification, replacement
         of or indulgence with respect to, the Obligations, all of which Agent
         and/or Lenders is hereby authorized to make;

             (d) the fact that Borrower is not liable for the payment or
         performance of the Obligations, or any portion thereof, for any reason
         whatsoever, Guarantor being liable for the Obligations notwithstanding
         that Borrower may not be;

             (e) any sale, exchange, release, surrender or other disposition of,
         or realization upon, any collateral securing the Obligations, or any
         settlement or compromise of any guaranties of the Obligations, or any
         other obligation of any person or entity with respect to the Loan
         Documents;

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             (f) the acceptance by Agent and/or Lenders of any additional
         security for the Obligations;

             (g) the lack of validity or enforceability of, or Agent's and/or
         Lenders' waiver or consent with respect to, any provision of any
         instrument evidencing, securing or otherwise relating to the
         Obligations, or any part thereof, including without limitation the Loan
         Documents;

             (h) the failure by Agent and/or Lenders to take any steps to
         perfect, maintain, or enforce its security interests or remedies under
         the Loan Documents, or to preserve its rights to or protect any
         security or collateral, for the Obligations;

             (i) any voluntary or involuntary bankruptcy, insolvency,
         reorganization, arrangement, readjustment, assignment for the benefit
         of creditors, composition, receivership, liquidation, marshalling of
         assets and liabilities or similar event or proceedings with respect to
         Borrower or Guarantor, as applicable, or any of their respective
         properties (each, an "INSOLVENCY PROCEEDING"), or any action taken by
         Agent and/or Lenders, any trustee or receiver or by any court in any
         such proceeding;

             (j) the failure by Agent and/or Lenders to file or enforce a claim
         against the estate (either in an Insolvency Proceeding or other
         proceeding) of Borrower or Guarantor;

             (k) in any proceeding under Title 11 of the United States Code (11
         U.S.C. Section 101 et seq.), as amended (the "BANKRUPTCY CODE"): (i)
         any election by Agent and/or Lenders under Section 1111(b)(2) of the
         Bankruptcy Code, (ii) any borrowing or grant of a security interest by
         Borrower as debtor-in-possession under Section 364 of the Bankruptcy
         Code, (iii) the inability of Agent and/or Lenders to enforce the
         Obligations against Borrower by application of the automatic stay
         provisions of Section 362 of the Bankruptcy Code, or (iv) the
         disallowance, under Section 502 of the Bankruptcy Code, of all or any
         portion of Agent's and/or Lenders' claim(s) against Borrower for
         repayment of the Obligations;

             (l) the failure of Guarantor to receive notice of any intended
         disposition of the collateral for the Obligations;

             (m) any merger or consolidation of Borrower into or with any other
         entity, or any sale, lease or transfer of any of the assets of Borrower
         or Guarantor to any other person or entity;

             (n) any change in the ownership of Borrower, or any change in the
         relationship between Borrower and Guarantor or any termination of any
         such relationship;

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             (o) the death, incapacity, insanity, disability, dissolution or
         other change in states of Borrower or Guarantor;

             (p) the making of additional loans to Borrower, the increase or
         reduction of the maximum principal amount of the Obligations, the
         increase or reduction in the interest rate provided in the Notes, or
         any other modification, amendment, release or waiver of the terms of
         the Loan Documents;

             (q) the absence, impairment or loss of any right of reimbursement
         or subrogation or other right or remedy of Guarantor; and

             (r) any other circumstance which might otherwise constitute a legal
         or equitable discharge or defense of Borrower, Guarantor or any other
         guarantor.

                  Guarantor hereby expressly waives and surrenders any defense
to its liability under this Guaranty based upon any of the foregoing acts,
omissions, agreements, waivers or matters, whether or not Guarantor had notice
or knowledge of same. It is the purpose and intent of this Guaranty that the
obligations of Guarantor hereunder shall be absolute and unconditional under any
and all circumstances.

             2.4 RIGHTS OF AGENT AND/OR LENDERS. Agent and/or Lenders are hereby
authorized, without notice to or demand of Guarantor and without affecting the
liability of Guarantor hereunder, to take any of the following actions from time
to time: (a) increase or decrease the amount of, or renew, extend, accelerate or
otherwise change the time for payment of, or other terms relating to, the
Obligations, or otherwise modify, amend or change the terms of any promissory
note or other agreement evidencing, securing or otherwise relating to any of the
Obligations, including, without limitation, the making of additional advances
thereunder; (b) accept and apply any payments on or recoveries against the
Obligations from any source, and any proceeds of any security therefor, to the
Obligations in such manner, order and priority as Agent and/or Lenders may elect
in their sole discretion; (c) take, hold, sell, release or otherwise dispose of
all or any security for the Obligations or the payment of this Guaranty; (d)
settle, release, compromise, collect or otherwise liquidate the Obligations or
any portion thereof; (e) accept, hold, substitute, add or release any other
guaranty or endorsements of the Obligations; and (f) at any time after maturity
of the Obligations, appropriate and apply toward payment of the Obligations (i)
any indebtedness due or to become due from Agent and/or Lenders to Guarantor,
and (ii) any moneys, credits, or other property belonging to Guarantor at any
time held by or coming into the possession of Agent and/or Lenders or any
affiliates thereof, whether for deposit or otherwise.

             2.5 SUBORDINATION. All indebtedness now or hereafter owing by
Borrower to Guarantor, or any one of them, for borrowed money or otherwise is
hereby subordinated to the payment of the Obligations, and, subsequent to a
default hereunder or under any of the other Loan Documents, Guarantor shall not
accept payment of all or any portion of such

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subordinated indebtedness until satisfaction in full of the Obligations. All
security interests, liens and encumbrances which Guarantor, or any one of them,
now or hereafter may have upon any of the assets of Borrower, or any one of
them, are hereby subordinated to all security interests, liens and encumbrances
heretofore, now or hereafter granted to Agent and/or Lenders pursuant to the
Loan Documents.

3.       GUARANTOR'S WAIVERS

             3.1 STATUTES OF LIMITATION. Guarantor irrevocably waives all
statutes of limitation as a defense to any action or proceeding brought against
Guarantor by Agent and/or Lenders, to the fullest extent permitted by law.

             3.2 ELECTION OF REMEDIES. Guarantor irrevocably waives any defense
based upon an election of remedies made by Agent and/or Lenders or any other
election afforded to Agent and/or Lenders pursuant to applicable law, including,
without limitation, (a) any election to proceed by judicial or nonjudicial
foreclosure or by Uniform Commercial Code sale or by deed or assignment in lieu
thereof, or any election of remedies which destroys or otherwise impairs the
subrogation rights of the Guarantor or the rights of the Guarantor to proceed
against Borrower for reimbursement, or both, (b) the waiver by Agent and/or
Lenders, either by action or inaction of Agent and/or Lenders or by operation of
law, of a deficiency judgment against Borrower or Lessee, and (c) any election
pursuant to an Insolvency Proceeding.

             3.3 RIGHTS OF SUBROGATION AND OTHER RIGHTS. Guarantor irrevocably
waives (a) all rights at law or in equity to seek subrogation, contribution,
indemnification or any other form of reimbursement or repayment from Borrower or
any other person or entity now or hereafter primarily or secondarily liable for
any of the Obligations for any disbursements made by any Guarantor under or in
connection with this Guaranty, (b) all claims of any kind or type against
Borrower as a result of any payment made by Guarantor to Agent and/or Lenders,
and (c) any right to participate in any security now or hereafter held by Agent
and/or Lenders. In furtherance, and not in limitation, of the foregoing,
Guarantor agrees that any payment to Agent and/or Lenders pursuant to this
Guaranty shall be deemed a contribution to the capital of Borrower or other
obligated party and shall not constitute Guarantor a creditor of Borrower or
such other party. Guarantor further agrees that to the extent the waiver of its
rights of subrogation as set forth herein is found by a court of competent
jurisdiction to be void or voidable for any reason, any rights of subrogation
Guarantor may have against Borrower or against any collateral or security for
any of the Obligations shall be junior and subordinate to any rights Agent
and/or Lenders may have against Borrower and to all right, title and interest
Agent and/or Lenders may have in such collateral or security.

3.4 DEMANDS AND NOTICES. Guarantor irrevocably waives all presentments, demands
for performance, protests, notices of protest, notices of dishonor, notices of
acceptance of this Guaranty and of the existence, creation or incurring of new
or additional Obligations, notices of defaults by Borrower or any other person
liable for the

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Obligations and demands and notices of every kind that may be required to be
given by any statute or rule or law.

             3.5 BORROWER INFORMATION. Guarantor irrevocably waives (a) any duty
of Agent and/or Lenders to advise Guarantor of any information known to Agent
and/or Lenders regarding the financial condition of Borrower (it being the
obligation of Guarantor to keep informed regarding such condition), and (b) any
defense based on any claim that Guarantor's obligations exceed or are more
burdensome than those of Borrower.

             3.6 LIMITATION OF LIABILITY. Guarantor irrevocably waives any
impairment, modification, change, release or limitation of the liability of, or
stay of actions or lien enforcement proceedings against, Borrower or Guarantor,
their property, or their estate in bankruptcy, resulting from the operation of
any provision of the state or federal bankruptcy laws, or from the decision of
any court.

             3.7 LACK OF DILIGENCE. Guarantor irrevocably waives any and all
claims or defenses based upon lack of diligence in: (a) collection of any
Obligations; (b) protection of any collateral or other security for the
Indebtedness or Obligations; or (c) realization upon the other Loan Documents.

             3.8 OTHER DEFENSES. Guarantor irrevocably waives any other
defenses, set-offs or counterclaims which may be available to Borrower, or any
other Guarantor if there are more than one, and any and all other defenses now
or at any time hereafter available to Guarantor (including without limitation
those given to sureties) at law or in equity.

4.       REPRESENTATIONS AND WARRANTS

             Guarantor represents and warrants to Agent and Lenders as follows:

             4.1 EXISTENCE: AUTHORITY; EXECUTION. (a) Guarantor is a duly
organized corporation, validly existing, and in good standing under the laws of
the state of its incorporation or formation and qualified to do business in the
states in which any of its material assets exist; and (b) this Guaranty has been
duly and validly authorized, executed and delivered and constitutes the binding
obligation of Guarantor, enforceable in accordance with its terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or limiting creditor's rights generally
or by equitable principles relating to enforceability.

             4.2 FINANCIAL STATEMENTS. All financial statements and other
financial information furnished or to be furnished to Agent and/or Lenders (a)
are or will be true and correct in all material respects and do or will fairly
represent the financial condition of Guarantor (including all contingent
liabilities), and (b) were or will be prepared in accordance with generally
accepted accounting principles, or such other accounting principles as may be
reasonably acceptable to Agent at the time of their preparation, consistently
applied. There has been no material adverse change in Guarantor's financial
condition since the dates of the statements most recently furnished Agent.

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             4.3 NO DEFAULTS. There is no existing event of default, and no
event has occurred which with the passage of time and/or the giving of notice or
both will constitute an event of default, under any agreement to which Guarantor
is a party, which event of default could reasonably be expected to have a
material adverse effect on Guarantor's ability to perform the Obligations under
this Guaranty, and neither the execution and delivery of this Guaranty nor
compliance with the terms and provisions hereof will violate any presently
existing provision of law or any presently existing regulation, order, writ,
injunction or decree of any court or governmental department, commission, board,
bureau, agency or instrumentality, which violation could reasonably be expected
to have a material adverse effect on Guarantor's ability to perform the
Obligations under this Guaranty, or constitute a default under, any agreement to
which Guarantor is a party or by which Guarantor is bound, which default could
reasonably be expected to have a material adverse effect on Guarantor's ability
to perform the Obligations under this Guaranty.

             4.4 NO LITIGATION. There are no actions, suits or proceedings
pending or, to the best of Guarantor's knowledge, threatened against the
Guarantor before any court or any governmental, administrative, regulatory,
adjudicatory or arbitrational body or agency of any kind which, if decided
adversely, would materially and adversely affect performance by the Guarantor of
Guarantor's obligations pursuant to and as contemplated by the terms and
provisions of this Guaranty.

             4.5 ACCURACY. Neither this Guaranty nor any document, financial
statement, credit information, certificate or written statement heretofore
furnished or required herein to be furnished to Agent and/or Lenders by
Guarantor contains any untrue statement of fact or omits to state a fact
material to this Guaranty.

5.       EVENTS OF DEFAULT

                  Upon the occurrence of any of the following events, Agent
and/or Lenders may, without notice to Borrower or Guarantor, declare any or all
of the Obligations, whether or not then due, immediately due and payable by
Guarantor under this Guaranty, and Agent and/or Lenders shall be entitled to
enforce the obligations of Guarantor hereunder.

             5.1 DEFAULT BY BORROWER. Borrower shall default in the payment or
performance of any of the Obligations guarantied hereby, after giving effect to
any applicable notice and cure provisions set forth in the Loan Documents.

             5.2 FAILURE TO PERFORM. Guarantor fails to perform any of its
obligations under this Guaranty or any agreement under which security is given
herefor, or this Guaranty is revoked or terminated by Guarantor, or any
representation or warranty made or given by Guarantor to Agent and/or Lenders
proves to be false or misleading in any material respect.

             5.3 INSOLVENCY PROCEEDING. The making by Guarantor of any
assignment for the benefit of creditors, or a trustee or receiver being
appointed for Guarantor or for any property of Guarantor, or Guarantor becoming
insolvent or the subject of any Insolvency Proceeding and, in the case of such a
proceeding being commenced against Guarantor, such

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proceeding is not dismissed within thirty (30) days following the commencement
date thereof.

             5.4 DISSOLUTION. Guarantor dies, dissolves or liquidates, or the
business of Guarantor is suspended or terminated for any reason.

6.       MISCELLANEOUS

             6.1 REVIVAL AND REINSTATEMENT. If at any time all or any part of
any payment theretofore applied by Agent and/or Lenders to any of the
Obligations is or must be rescinded or returned by Agent and/or Lenders for any
reason whatsoever (including, without limitation, the insolvency, bankruptcy or
reorganization of Borrower), such Obligations shall, for the purposes of this
Guaranty, to the extent such payment is or must be rescinded or returned, be
deemed to have continued in existence, notwithstanding such application by Agent
and/or Lenders, and this Guaranty shall continue to be effective or be
reinstated, as the case may be, as to such Obligations, and Guarantor shall be
fully liable therefore, all as though such application by Agent and/or Lenders
had not been made.

             6.2 NO MARSHALING. Agent and Lenders have no obligation to marshal
any assets in favor of Guarantor, or against or in payment of (a) any of the
Obligations, or (b) any other obligation owed to Agent and/or Lenders by
Guarantor, Borrower or any other person.

             6.3 NO MODIFICATION, WAIVER OR RELEASE WITHOUT WRITING. Except as
may otherwise be expressly set forth herein, this Guaranty may not be modified,
amended, revised, revoked, terminated, changed or varied in any way whatsoever,
nor shall any waiver of any of the provisions of this Guaranty be binding upon
Agent or Lenders, except as expressly set forth in a writing duly executed by
Agent and Lenders. No waiver by Agent or Lenders of any default shall operate as
a waiver of any other default or the same default on a future occasion, and no
action by Agent or Lenders permitted hereunder shall in any way affect or impair
Agent's or Lenders' rights or the obligations of Guarantor under this Guaranty.

             6.4 ASSIGNMENT; SUCCESSORS AND ASSIGNS. Guarantor may not assign
Guarantor's obligations or liability under this Guaranty. Subject to the
preceding sentence, this Guaranty shall be binding upon the parties hereto and
their respective heirs, executors, successors, representatives and assigns and
shall inure to the benefit of the parties hereto and their respective successors
and assigns. Subject to the Loan Agreement, Agent and/or Lenders may, without
notice to anyone, sell or assign the Obligations, the Notes or other Loan
Documents or any part thereof, or grant participations therein, and in any such
event each and every assignee or holder of, or participant in, all or any of the
Obligations shall have the right to enforce this Guaranty, by suit or otherwise
for the benefit of such assignee, holder, or participant, as fully as if herein
by name specifically given such right, but Agent and/or Lenders shall have an
unimpaired right, prior and superior to that of any such assignee, holder or
participant, to enforce this Guaranty for the benefit of Agent and/or Lenders.

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             6.5 INTEGRATION. This Guaranty is the entire agreement of Guarantor
with respect to the subject matter of this Guaranty, provided that this Guaranty
shall not in any way limit or abrogate the obligations of Guarantor under the
other Loan Documents, including, without limitation, the Hazardous Materials
Indemnity Agreement dated February 20, 2001.

             6.6 RIGHTS CUMULATIVE. All of Agent's and/or Lenders' rights under
this Guaranty and the other Loan Documents are cumulative. The exercise of any
one right does not exclude the exercise of any other right given in this
Guaranty or the other Loan Documents or any other right of Agent and/or Lenders
not set forth in this Guaranty or the other Loan Documents. If there is more
than one Guarantor hereunder, Agent and/or Lenders may exercise their rights and
remedies against any one or more of such Guarantors and the failure of Agent
and/or Lenders to proceed against one or more of such Guarantors shall not
affect the liability of the Guarantor under this Guaranty.

             6.7 SEVERABILITY. Whenever possible each provision of this Guaranty
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Guaranty shall be prohibited by or
invalid under such law, such provision shall be ineffective to the extent of
such prohibition or invalidity, without invalidating the remainder of such
provision or the remaining provisions of this Guaranty.

             6.8 MATERIAL INDUCEMENT; CONSIDERATION. Guarantor acknowledges and
agrees that Agent and Lenders are specifically relying upon the representations,
warranties, agreements and waivers contained herein and that such
representations, warranties, agreements and waivers constitute a material
inducement to Agent and Lenders to accept this Guaranty and to enter into the
Loan Agreement and the transaction contemplated therein. Guarantor further
acknowledges that it expects to benefit from Lenders' extension of financing
accommodations to Borrower because of its relationship to Borrower, and that it
is executing this Guaranty in consideration of that anticipated benefit.

             6.9 INDEMNIFICATION. Guarantor agrees to indemnify, pay and hold
Agent and Lenders and their respective officers, directors, employees, agents,
and attorneys (collectively called the "INDEMNITEES") harmless from and against
any and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, claims, costs, expenses and disbursements of any kind or
nature whatsoever (including the reasonable fees and disbursements of counsel
for such Indemnitees in connection with any investigative, administrative or
judicial proceeding commenced or threatened, whether or not such Indemnitee
shall be designated a party thereto) that may be imposed on, incurred by, or
asserted against that Indemnitee, in any manner relating to or arising out of
this Guaranty or the exercise of any right or remedy hereunder or under the
other documents pertaining to the Obligations (the "INDEMNIFIED LIABILITIES");
provided that Guarantor shall have no obligation to an Indemnitee under this
subsection with respect to Indemnified Liabilities arising from the gross
negligence or willful misconduct of that Indemnitee as determined by a court of
competent jurisdiction. To the extent that the undertaking to indemnify, pay and
hold harmless set forth in the preceding sentence may be unenforceable because
it is

                                      -9-
<PAGE>

violative of any law or public policy, Guarantor shall contribute the
maximum portion that it is permitted to pay and satisfy under applicable law to
the payment and satisfaction of all Indemnified Liabilities incurred by the
Indemnitees or any of them.

             6.10 COUNTERPARTS. This Guaranty may be executed in counterparts,
each of which shall be deemed an original, but all of which, when taken
together, shall be deemed one and the same agreement.

             6.11 GOVERNING LAW. This Guaranty shall be governed by and
construed in accordance with the internal laws of the State of Illinois, without
regard to conflicts of law provisions.

             6.12 JOINT AND SEVERAL OBLIGATIONS. If this Guaranty is executed by
more than one Guarantor then all of the covenants, obligations, agreements,
indemnities, representations and warranties of the Guarantors contained herein
shall be joint and several.

             6.13 VENUE. GUARANTOR HEREBY CONSENTS TO THE JURISDICTION OF ANY
STATE OR FEDERAL COURT LOCATED WITHIN THE COUNTY OF COOK, STATE OF ILLINOIS AND
IRREVOCABLY AGREES THAT, SUBJECT TO AGENT'S ELECTION, ALL ACTIONS OR PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS GUARANTY SHALL BE LITIGATED IN SUCH COURTS.
GUARANTOR EXPRESSLY SUBMITS AND CONSENTS TO THE JURISDICTION OF THE AFORESAID
COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS. GUARANTOR HEREBY WAIVES
PERSONAL SERVICE OF ANY AND ALL PROCESS AND AGREES THAT ALL SUCH SERVICE OF
PROCESS MAY BE MADE UPON GUARANTOR BY CERTIFIED OR REGISTERED MAIL, RETURN
RECEIPT REQUESTED, ADDRESSED TO GUARANTOR, AT THE ADDRESS SET FORTH IN THIS
AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE TEN (10) DAYS AFTER THE SAME HAS
BEEN POSTED.

             6.14 WAIVER OF JURY TRIAL. GUARANTOR, AND BY THEIR ACCEPTANCE OF
THIS GUARANTY, AGENT AND LENDERS, HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING BASED UPON, OR RELATED TO, THE SUBJECT
MATTER OF THIS GUARANTY AND THE BUSINESS RELATIONSHIP THAT IS BEING ESTABLISHED.
THIS WAIVER IS KNOWINGLY, INTENTIONALLY AND VOLUNTARILY MADE BY GUARANTOR, AND
BY GUARANTOR'S ACCEPTANCE OF THIS GUARANTY, AGENT, LENDERS AND GUARANTOR
ACKNOWLEDGE THAT NEITHER AGENT, LENDERS NOR ANY PERSON ACTING ON BEHALF OF AGENT
OR LENDERS HAS MADE ANY REPRESENTATIONS OF FACT TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR HAS TAKEN ANY ACTIONS WHICH IN ANY WAY MODIFY OR NULLIFY ITS EFFECT.

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             6.15 WAIVERS. THE WAIVERS SET FORTH IN THIS GUARANTY (INCLUDING,
WITHOUT LIMITATION, SECTIONS 6.13 AND 6.14 ABOVE) ARE KNOWINGLY, INTENTIONALLY,
AND VOLUNTARILY MADE BY GUARANTOR, AND GUARANTOR ACKNOWLEDGES THAT NEITHER
AGENT, LENDERS NOR ANY PERSON ACTING ON BEHALF OF THEM, HAS MADE ANY
REPRESENTATIONS OF FACT TO INDUCE THESE WAIVERS OR IN ANY WAY TO MODIFY OR
NULLIFY THEIR EFFECT. GUARANTOR FURTHER ACKNOWLEDGES THAT IT HAS BEEN
REPRESENTED (OR HAS HAD THE OPPORTUNITY TO BE REPRESENTED) IN THE SIGNING OF
THIS GUARANTY AND IN THE MAKING OF THESE WAIVERS BY INDEPENDENT LEGAL COUNSEL,
SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO DISCUSS
THESE WAIVERS WITH COUNSEL.

                                      -11-
<PAGE>

                  The undersigned has duly executed this Guaranty as of the date
and year first above written.

                                      ASSISTED LIVING CONCEPTS, INC.,
                                      a Nevada corporation

                                      By:    /s/ DREW Q. MILLER
                                             ----------------------
                                      Name:  Drew Q. Miller
                                      Its:   Senior Vice President,
                                             Chief Financial
                                             Officer and Treasurer

                                      -12-<PAGE>
                                                                   Exhibit 10.16

                               FIRST AMENDMENT TO
                    AMENDED AND RESTATED EMPLOYMENT AGREEMENT

        THIS FIRST AMENDMENT TO AMENDED AND RESTATED EMPLOYMENT AGREEMENT (this
"Amendment") is entered into as of January 2, 2002, by and between Assisted
Living Concepts, Inc., a Nevada corporation (the "Company"), and W. James Nicol
(the "Executive"). All capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to such terms in the Agreement (as defined
below).

        WHEREAS, the Company and the Executive are parties to that certain
Amended and Restated Employment Agreement (the "Agreement"), dated as of January
1, 2001.

        WHEREAS, the Company and the Executive desire to amend, modify or
restate certain provisions of the Agreement, effective as of the date hereof.

        NOW, THEREFORE, in consideration of the mutual premises set forth herein
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:

        1. Section 2 of the Agreement is hereby amended and restated in its
entirety as follows:

               "2. EMPLOYMENT PERIOD. The Executive's employment with the
        Company hereunder shall be at-will and shall not be for any definite
        term. Accordingly, either the Executive or the Company may terminate the
        Executive's employment hereunder, with or without cause, at any time by
        providing the other party 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."

        2. The following second sentence of Section 5 of the Agreement shall be
deleted in its entirety:

               "In the event that the Executive resigns for Good Reason or the
        Executive's employment is terminated by the Company as described in
        paragraph 11(a)(i), the Executive shall be entitled to receive the
        Bonuses, if any, to the extent provided in paragraph 11(b)."

        3. Section 11 of the Agreement shall be amended and restated in its
entirety as follows:

               "11.   TERMINATION BENEFITS; CONSUMMATION OF RESTRUCTURING.

               (a) SEVERANCE PAYMENT. In the event that the Executive's
        employment with the Company terminates for any reason, the Company shall
        pay the Executive a lump-sum cash payment in the amount of $185,878.86,
        subject to such withholding
<PAGE>
                                                                   Exhibit 10.16

        and other normal employee deductions as may be required by law (the
        "Severance Payment"). The Company shall make the Severance Payment as
        soon as practicable (but in no event more than 10 days) after the date
        on which the Executive's employment terminates. Such payment shall be in
        addition to all other amounts to which the Executive may be entitled
        hereunder. Notwithstanding the foregoing, the Executive's right to
        receive the Severance Payment shall be subject to the 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 the Severance
        Payment, the Company's obligations hereunder shall cease upon a breach
        by the Executive of his obligations under paragraphs 12, 14 and 16
        hereof.

               (b) CONSUMMATION OF RESTRUCTURING. The Company hereby
        acknowledges and agrees that the Restructuring (as defined below) was
        consummated on or before June 30, 2002 and that the Executive remained
        continuously employed by the Company through the date on which the
        Restructuring was consummated. Accordingly, the Company and the
        Executive acknowledge and agree that the Executive is entitled to
        receive, and has appropriately received, the Bonuses under Section 5
        hereof. For purposes of this Agreement, "Restructuring" shall mean a
        restructuring of the Company's 6% Debentures due 2002 and 5.625%
        Debentures due 2003 pursuant to a prepackaged, prenegotiated or other
        plan of reorganization pursuant to Chapter 11 of the United States
        Code."

        4. The second sentence of Section 17 of the Agreement shall be amended
and restated in its entirety as follows:

               "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), subject to the terms
        and conditions therein."

        5. This Amendment shall be and is hereby incorporated in and forms a
part of the Agreement. Except as set forth in this Amendment, the Agreement
shall remain unmodified and in full force and effect.

                            [SIGNATURE PAGE FOLLOWS]

                                       2
<PAGE>
                                                                   Exhibit 10.16

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first written above.

                                      "COMPANY"

                                      ASSISTED LIVING CONCEPTS, INC.,
                                      a Nevada corporation

                                  By: /s/ LEONARD TANNENBAUM
                                      ---------------------------------
                                      Leonard Tannenbaum
                                      Chairman, Comp Committee Director

                                      "EXECUTIVE"

                                      /s/ WM. JAMES NICOL
                                      ---------------------------------
                                      Wm. James Nicol

                                       3

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