ASSISTED LIVING CONCEPTS, INC. DEFERRED COMPENSATION PLAN EFFECTIVE JANUARY 1, 2005, AS AMENDED AND RESTATED DECEMBER 16, 2008

EXHIBIT 10.5

ASSISTED LIVING CONCEPTS, INC.

DEFERRED COMPENSATION PLAN

EFFECTIVE JANUARY 1, 2005, AS AMENDED AND RESTATED DECEMBER 16, 2008

ARTICLE I

INTRODUCTION

     This document governs the terms and provisions of the Assisted Living Concepts, Inc. Deferred Compensation Plan following the merger of the Assisted Living Concepts, Inc. Deferred Salary Plan into the Assisted Living Concepts, Inc. Deferred Compensation Plan. This document shall govern the operation of those prior separate plans from and after January 1, 2005, which plans had in turn replaced the prior separate Extendicare Health Services, Inc. Deferred Compensation Plan as amended and restated effective January 1, 2005 as applicable to employees of Assisted Living Concepts, Inc. and the prior Extendicare Health Services, Inc. Deferred Salary Plan as amended and restated effective January 1, 2005 with respect to employees of Assisted Living Concepts, Inc. No benefits shall be payable to Assisted Living Concepts, Inc. employees under the terms of the Extendicare Health Services, Inc. Deferred Compensation Plan or Extendicare Health Services, Inc. Deferred Salary Plan, as amended and restated effective as of January 1, 2005, but, instead, the benefits previously provided by those plans are provided for herein. This document applies only to amounts earned or first vested after calendar year 2004. For periods prior to calendar year 2005, Extendicare Health Services, Inc. and its participating affiliates have maintained the Extendicare Health Services, Inc. Deferred Compensation Plan and Extendicare Health Services, Inc. Deferred Salary Plan by means of a series of individual deferred compensation agreements with covered executives. Amounts earned and vested prior to January 1, 2005, including past and future interest credited thereon, shall remain subject to the terms of those individual agreements as previously in effect (the “Frozen Agreements”) but no further amounts shall be earned and vested under the Frozen Agreements which have been assigned by Extendicare Health Services, Inc. to, and assumed by, Assisted Living Concepts, Inc. All amounts credited under the Frozen Agreements prior to January 1, 2005 which were not yet vested as of January 1, 2005 and all deferrals to the Deferred Compensation Plan and Deferred Salary Plan for periods on or after January 1, 2005 (whether at the election of participants or otherwise) shall be governed by the terms and provisions of this document. Nothing in this document shall apply to amounts earned and vested prior to 2005 and past and future interest credited thereon. This document is intended to comply with the provisions of Section 409A of the Internal Revenue Code and shall be interpreted accordingly. If any provision or term of this document would be prohibited by or inconsistent with the requirements of Section 409A of the Code, then such provision or term shall be deemed to be reformed to comply with Section 409A of the Code.

ARTICLE II

DEFINITIONS

     The following definitions shall be applicable throughout the Plan:

     2.1 “ Account ” means the combination of the Participant’s Deferral Account and Matching Account.

     2.2 “ Administrator ” means the committee designated by the Corporation’s Board of Directors under Plan Section 7.1, which shall be responsible for administering and interpreting the Plan.

     2.3 “ Beneficiary ” means the person, persons, or entity designated by the Participant to receive any benefits payable under the Plan on or after the Participant’s death. Each Participant shall be permitted to name, change or revoke the Participant’s designation of a Beneficiary in writing on a form and in the manner prescribed by the Corporation; provided, however, that the designation on file with the Corporation at the time of the Participant’s death shall be controlling. Should a Participant fail to make a valid Beneficiary designation or leave no named Beneficiary surviving, any benefits due shall be paid to such Participant’s spouse, if living; or if not living, then any benefits due shall be paid to such Participant’s estate.

     2.4 “ Code ” means the Internal Revenue Code of 1986, including any subsequent amendments.

     2.5 “ Corporation ” means Assisted Living Concepts, Inc., and each of its affiliates which has adopted the Plan or may adopt the Plan; provided, however, that for purposes of the power to amend or terminate the Plan or take any other action under or with respect to the Plan, except for the payment of benefits, the term “Corporation” shall refer only to Assisted Living Concepts, Inc.

     2.6 “ Deferral Account ” means the account credited from time to time with bookkeeping amounts equal to the portions of a Participant’s compensation deferred pursuant to Section 3.2 and interest credited on such amounts in accordance with Article IV.

     2.7 “ Effective Date ” means January 1, 2005.

     2.8 “ ERISA ” means the Employee Retirement Income Security Act of 1974, including any subsequent amendments.

     2.9 “ Matching Account ” means the account credited from time to time with bookkeeping amounts equal to matching contributions on behalf of the Participant pursuant to Section 3.6 and interest credited on such amounts in accordance with Article IV. The Matching Account shall also hold those matching contributions (and interest credited thereon) which had been credited to the account of the Participant under a Frozen Agreement prior to 2005 which were not vested prior to 2005.

     2.10 “ Participant ” means a key management or highly compensated employee designated as eligible to participate in the Plan for a Plan Year under Section 3.1 (who shall be known as “Active Participants” for such Plan Year) and any person who previously participated in the Plan and is entitled to benefits.

     2.11 “ Plan ” means the Assisted Living Concepts, Inc. Deferred Compensation Plan, as set forth herein, and as may be amended from time to time.

     2.12 “ Plan Year ” means the calendar year.

     2.13 “ Separation from Service ”

     (a) In General . The Participant shall have a Separation from Service with the Corporation if the Participant dies, retires, or otherwise has a termination of employment with the Corporation. However, for purposes of this Section 2.13, the employment relationship is treated as continuing intact while the individual is on military leave, sick leave, or other bona fide leave of absence if the period of such leave does not exceed six months, or if longer, so long as the individual retains a right to reemployment with the Corporation under an applicable statute or by contract. For purposes of this paragraph (a) of this Section 2.13, a leave of absence constitutes a bona fide leave of absence only if there is a reasonable expectation that the Participant will return to perform services for the Corporation. If the period of leave exceeds six months and the individual does not retain a right to reemployment under an applicable statute or by contract, the employment relationship is deemed to terminate on the first date immediately following such six-month period. Notwithstanding the foregoing, where a leave of absence is due to any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months, where such impairment causes the Participant to be unable to perform the duties of his or her position of employment or any substantially similar position of employment, a 29-month period of absence may be substituted for such six-month period.

     (b) Termination of Employment . Whether a termination of employment has occurred is determined based on whether the facts and circumstances indicate that the Corporation and Participant reasonably anticipated that no further services would be performed after a certain date or that the level of bona fide services the Participant would perform after such date (whether as an employee or as an independent contractor) would permanently decrease to no more than 20 percent of the average level of bona fide services performed (whether as an employee or an independent contractor) over the immediately preceding 36-month period (or, the full period of services to the Corporation if the Participant has been providing services to the Corporation less than 36 months). Facts and circumstances to be considered in making this determination include, but are not limited to, whether the Participant continues to be treated as an employee for other purposes (such as continuation of salary and participation in employee benefit programs), whether similarly situated service providers have been treated consistently, and whether the Participant is permitted, and realistically available, to perform services for other service recipients in the same line of business. The Participant is presumed to have Separated from Service where the level of bona fide services performed decreases to a level equal to 20 percent or less of the average level of services performed by the employee during the immediately preceding 36-month period. The Participant will be presumed not to have Separated from Service where the level of bona fide services performed continues at a level that is 50 percent or more of the average level of service performed by the Participant during the immediately preceding 36-month period. No presumption applies to a decrease in the level of bona fide services performed to a level that is more than 20 percent and less than 50 percent of the average level of bona fide services performed during the immediately preceding 36-month period. The presumption is rebuttable by demonstrating that the Corporation and the Participant reasonably anticipated that as of a certain date the level of bona fide services would be reduced permanently to a level less than or equal to 20 percent of the average level of bona fide services provided during the immediately preceding 36-month period or the full period of services to the Corporation if the Participant has been providing services to the Corporation less than 36 months (or that the level of bona fide services would not be so

reduced). For example, the Participant may demonstrate that the Corporation and the Participant reasonably anticipated that the Participant would cease providing services, but that, after the original cessation of services, business circumstances such as termination of the Participant’s replacement caused the Participant to return to employment. Although the Participant’s return to employment may cause the Participant to be presumed to have continued in employment because the Participant is providing services at a rate equal to the rate at which the Participant was providing services before the termination of employment, the facts and circumstances in this case would demonstrate that at the time the Participant originally ceased to provide services, the Corporation reasonably anticipated that the Participant would not provide services in the future. For purposes of this paragraph (b), for periods during which the Participant is on a paid bona fide leave of absence (as defined in paragraph (a) of this Section 2.13) and has not otherwise terminated employment pursuant to paragraph (a) of this Section 2.13, the Participant is treated as providing bona fide services at a level equal to the level of services that the Participant would have been required to perform to receive the compensation paid with respect to such leave of absence. Periods during which the Participant is on an unpaid bona fide leave of absence (as defined in paragraph (a) of this Section 2.13) and has not otherwise terminated employment pursuant to paragraph (a) of this Section 2.13, are disregarded for purposes of this paragraph (b) of this Section 2.13 (including for purposes of determining the applicable 36-month (or shorter) period).

     (c) Asset Purchase Transactions . Where as part of a sale or other disposition of assets by the Corporation as seller to an unrelated service recipient (buyer), a Participant of the Corporation would otherwise experience a Separation from Service with the Corporation, the Corporation and the buyer may retain the discretion to specify, and may specify, whether a Participant providing services to the Corporation immediately before the asset purchase transaction and providing services to the buyer after and in connection with the asset purchase transaction has experienced a Separation from Service, provided that the asset purchase transaction results from bona fide, arm’s length negotiations, all service providers providing services to the Corporation immediately before the asset purchase transaction and providing services to the buyer after and in connection with the asset purchase transaction are treated consistently (regardless of position at the Corporation) for purposes of applying the provisions of any nonqualified deferred compensation plan, and such treatment is specified in writing no later than the closing date of the asset purchase transaction. For purposes of this paragraph (c), references to a sale or other disposition of assets, or an asset purchase transaction, refer only to a transfer of substantial assets, such as a plant or division or substantially all the assets of a trade or business.

     (d) Dual Status . If a Participant provides services both as an employee of the Corporation and as an independent contractor of the Corporation, the Participant must separate from service both as an employee and as an independent contractor to be treated as having Separated from Service. If a Participant ceases providing services as an independent contractor and begins providing services as an employee, or ceases providing services as an employee and begins providing services as an independent contractor, the Participant will not be considered to have a Separation from Service until the Participant has ceased providing services in both capacities. Notwithstanding the foregoing, if a Participant provides services both as an employee of the Corporation and a member of the board of directors of the Corporation, the services provided as a director are not taken into account in determining whether the Participant has a Separation from Service as an employee for purposes of this Plan unless this Plan is aggregated with any

plan in which the Participant participates as a director under IRS Regulation Section 1.409A-1(c)(2)(ii).

     2.14 “ Unforeseeable Emergency ” means a severe financial hardship to a Participant resulting from an illness or accident of the Participant or the Participant’s spouse, beneficiary or dependent (as defined in Section 152(a) of the Code, without regard to Section 151 (b)(1), (b)(2) and (d)(1)(B)), loss of the Participant’s property due to casualty (including the need to rebuild a home following damage to a home not otherwise covered by insurance, for example, as a result of a natural disaster), or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. For example, the imminent foreclosure of or eviction from the Participant’s primary residence may constitute an Unforeseeable Emergency. In addition, the need to pay for medical expenses, including non-refundable deductibles, as well as for the costs of prescription drug medication, may constitute an Unforeseeable Emergency. Finally, the need to pay for funeral expenses of a spouse, beneficiary or a dependent (as defined in Code section 152(a), without regard to Section 151 (b)(1), (b)(2) and (d)(1)(B)), may also constitute an Unforeseeable Emergency. Except as otherwise provided above, the purchase of a home and the payment of college tuition are not Unforeseeable Emergencies. Whether a Participant is faced with an Unforeseeable Emergency is to be determined based on the relevant facts and circumstances of each case.

ARTICLE III

PARTICIPATION AND DEFERRALS

     3.1 Determination of Participants . Within a reasonable period of time prior to the beginning of a Plan Year or at any time during a Plan Year, the Administrator will designate employees who will be eligible to become Active Participants in the Plan for that Plan Year (or the remainder of such Plan Year). The Plan Administrator shall also designate whether an individual is a Group A Participant or Group B Participant. An employee designated as an Active Participant for a Plan Year shall remain an Active Participant until the employee’s Separation from Service or the Administrator or the Board of Directors of the Corporation takes action to terminate such employee’s participation effective on the first day of any Plan Year subsequent to the date of such action by the Administrator or the Board. Participation in deferral elections may be terminated, participation in matching contributions may be terminated or both may be terminated by such action.

     3.2 Deferral Elections . An Active Participant may elect to defer up to 10% of his or her base salary during a Plan Year by completing and filing such forms as required by the Corporation prior to the first day of the Plan Year for which the base salary is earned. Compensation deferred shall be retained by the Corporation credited to the Participant’s Deferral Account pursuant to Section 4.1 and paid in accordance with the terms and conditions of the Plan. An employee who is not already eligible to participant in any other deferred compensation plan of the account balance type who becomes an Active Participant for the first time during a Plan Year (for example, an employee designated by the Administrator upon hire or promotion) may make an election to defer base salary for services to be performed subsequent to the election within 30 days after the effective date of participation. The Participant’s base salary shall be determined before reduction by any elective deferrals to this Plan or to a plan described in Code Sections 402(g)(3), 125 and 132(f)(4). A Participant’s deferral election may provide for a specified level of deferral to be taken from each of his base salary payments during the year or, instead, may specify that the amount of deferrals shall be taken out disproportionately in accordance with

specific directions provided by the Participant at the time of the deferral election; provided, however, that the amounts taken out pursuant to a disproportionate deferral election shall never in the aggregate exceed 10% of the Participant’s “assumed annual base salary”. A Participant’s “assumed annual base salary” shall be the annual base salary which would be payable to him during the Plan Year if his base salary in effect on the first day of the Plan Year remained in effect throughout the Plan Year.

     3.3 Annual Elections . An Active Participant’s deferral election under Section 3.2 shall be irrevocable for the entirety of a Plan Year. An Active Participant must make a separate deferral election for each Plan Year in accordance with the procedures described in Section 3.2 above.

     3.4 Unforeseeable Emergency . In the event that a Participant makes application for a hardship distribution under Section 6.3 and the Administrator determines that an Unforeseeable Emergency exists, all deferral elections otherwise in effect under this Article III and any other nonqualified deferred compensation plan of the account balance type shall immediately terminate upon such determination. To resume deferrals thereafter, a Participant must make an election satisfying the provisions of Section 3.2 as those provisions apply to someone who is already an Active Participant in the Plan.

     3.5 401(k) Hardship . Any deferral elections in effect under this Article III shall be cancelled as required due to a hardship distribution described in IRS Regulation Section 1.401(k)-1(d)(3) or any successor thereto. To resume deferrals after the required suspension period, a Participant must make an election satisfying the provisions of Section 3.2 as those provisions apply to someone who is already an Active Participant in the Plan.

     3.6 Matching Contributions . At the same time the Corporation credits elective deferral contributions made pursuant to Section 3.2 to the Deferral Account of a Group A Participant, the Corporation shall credit Matching Contributions in an amount