ASSISTED LIVING CONCEPTS INC
GUARANTY
<DOCUMENT>
<TYPE>EX-10.2
<SEQUENCE>3
<FILENAME>0003.txt
<DESCRIPTION>GUARANTY
<TEXT>

<PAGE>

                                                                    EXHIBIT 10.2

                                                                 Loan No. 20-365

                                   GUARANTY

          THIS GUARANTY dated as of the 20th day of February, 2001 (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, together with certain affiliates of such parties which are now or
hereafter become parties to the Loan Agreement defined below (collectively,
"Borrower"), Agent and Lenders are concurrently herewith entering into that
certain Loan Agreement (the "Loan Agreement") of even date herewith pursuant to
which Lenders shall extend financial accommodations to Borrower.

          B.  Inducement.  To induce Lenders to extend to Borrower the financial
              ----------
accommodations set forth in the Loan Agreement, Guarantor is willing to execute
and deliver this Guaranty.

          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 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
<PAGE>

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;

          (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

                                      -2-
<PAGE>

     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;

          (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

                                      -3-
<PAGE>

     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 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.

                                      -4-
<PAGE>

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 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

                                      -5-
<PAGE>

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.

          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

                                      -6-
<PAGE>

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 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.

                                      -7-
<PAGE>

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.

          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 of even date herewith.

                                      -8-
<PAGE>

          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 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.

                                      -9-
<PAGE>

          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.

          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

                                      -10-
<PAGE>

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-
</TEXT>
</DOCUMENT>
