FORM OF TANDEM STOCK OPTION/STOCK APPRECIATION RIGHTS AWARD AGREEMENT

Exhibit 10.3

FORM OF AWARD AGREEMENT
2007 Long-Term Equity-Based Compensation Program

Assisted Living Concepts, Inc.

TANDEM STOCK OPTION/STOCK APPRECIATION RIGHTS AWARD AGREEMENT

     This Tandem Stock Option/Stock Appreciation Rights Award Agreement (the “ Award Agreement ”) is entered into as of March 30, 2007, between Assisted Living Concepts, Inc. (“ ALC ”) and Employee. In consideration of the mutual promises and covenants made in this Award Agreement and the mutual benefits to be derived from this Award Agreement, ALC and the Employee agree as follows:

     THIS AWARD IS SUBJECT TO ALL TERMS AND CONDITIONS OF THE PLAN AND THIS AWARD AGREEMENT, INCLUDING, WITHOUT LIMITATION, THE DISPUTE RESOLUTION PROVISIONS SET FORTH IN SECTION 17 OF THIS AWARD AGREEMENT. BY SIGNING YOUR NAME BELOW, YOU WILL HAVE CONFIRMED YOUR ACCEPTANCE OF THE TERMS AND CONDITIONS OF THIS AWARD AGREEMENT.

1. Definitions. Capitalized terms used in this Award Agreement that are not defined in this Award Agreement have the meanings as used or defined in the Assisted Living Concepts, Inc. 2006 Omnibus Incentive Compensation Plan (the “Plan”) and is intended to be performance compensation under Section 162(m) of the Internal Revenue Code. As used in this Award Agreement, the following terms have the meanings set forth below:

     “ Business Day ” means a day that is not a Saturday, a Sunday or a day on which banking institutions are legally permitted to be closed in the City of New York.

     “ Committee ” means the Compensation/ Nominating/Governance Committee of the Board, or such other committee of the Board as may be designated by the Board from time to time to administer the Plan.

     “ Common Stock ” means Class A common stock of ALC, par value $0.01 per share.

     “ Determination Date ” means the date during the first quarter of 2008, as determined by the Committee, on which the Committee determines whether Performance Goals with respect to the Performance Period have been achieved.

     “ Fair Market Value ” means the closing market price per Share as reported on the New York Stock Exchange (or other relevant exchange) on the applicable date or, in the event there shall be no public market for the Shares on the applicable date, the fair market value of the Shares as determined in good faith by the Committee.

     “ Performance Period ” means the period from January 1, 2007 through December 31, 2007.

     “ Share ” means a share of Common Stock.

2. Grant of Award . This Award Agreement sets forth the terms and conditions of an award (the “ Award ”) under the Plan to the Employee as of the Grant Date of:

     a.  Stock Options . The right and option (the “ Stock Options ”) to purchase up to [ NUMBER OF OPTIONS/SARS ] Shares at the Exercise Price per Share, the Fair Market Value on the date hereof. Each Stock Option is a Nonqualified Stock Option. Unless earlier terminated pursuant to the terms of this Award Agreement, the Stock Options shall expire on the fifth anniversary of the Grant Date.

     b.  Stock Appreciation Rights . Each Stock Option includes a stock appreciation right (“ SAR ”) at the price per Share equal to the Exercise Price. The SAR constitutes an unfunded and unsecured promise of ALC to deliver (or cause to be delivered) to Employee a whole number of Shares, cash or a combination of Shares and Cash at the time such SAR vests and is exercised, as provided herein, equal in value to the excess, if any, of the Fair Market Value per Share over the Exercise Price per Share of the SAR. Fractional shares will not be delivered and the number of Shares to be delivered upon any exercise by you of SARs subject to this Award shall be rounded down to the nearest whole Share. The Committee has sole discretion to deliver such value in Shares, cash, or a combination of Shares and cash. Until such delivery, Employee has only the rights of a general unsecured creditor and no rights as a stockholder of ALC. Unless earlier terminated pursuant to the terms of this Award Agreement, the SARs shall expire on the fifth anniversary of the Grant Date.

     c.  Tandem Stock Option/Stock Appreciation Rights . An SAR with respect to a Share shall vest, become exercisable, and terminate at the same times and under the same terms as the Stock Option such Share is subject to. The exercise of a Stock Option with respect to any Share shall cause the related SAR to automatically terminate and the exercise of an SAR with respect to any Share shall cause the related Stock Option to automatically terminate. Only one Stock Option or one SAR, and not both, may be exercised with respect to any Share that is subject to a Stock Option under this Award Agreement. The tandem Stock Option and SAR rights with respect to a Share are referred to in this Award Agreement as the “ Stock Option/SAR .”

     d.  Award Subject to Performance-Based Vesting . Except as otherwise provided in any individual employment agreement between you and ALC or any of its Affiliates (an “ Employment Agreement ”), the vesting of your rights with respect to Stock Options/SARs is contingent on the attainment of performance goals set forth on Exhibit A to this Award Agreement (the “ Performance Goals ”). Accordingly, unless otherwise provided in your Employment Agreement, your rights with respect to Stock Options/SARs subject to this Award Agreement will not become vested on the

Determination Date unless the Committee determines that the Performance Goals with respect to the Performance Period have been attained. Furthermore, pursuant to Section 14 and except as otherwise provided in your Employment Agreement, in order for your rights with respect to any Stock Option or SAR to become vested on the Determination Date, you must be employed by ALC or an Affiliate on the Determination Date. If, on the Determination Date, the Committee determines in its sole discretion that your rights with respect to any Stock Options/SARs under this Award Agreement remain unvested, your rights with respect to such Stock Options/SARs shall immediately terminate, and you will be entitled to no further payments or benefits with respect thereto.

     e.  Number of Vested Stock Options/SARs Dependent Upon Level of Performance . If the Committee determines that the threshold level Performance Goal specified in Exhibit A has been attained for the Performance Period, the Committee will then determine the whole number of Stock Options/SARs that vest on the Determination Date, up to the maximum number listed on the first page of this Award Agreement, using the formula set forth in Exhibit A.

     f.  Exercisability Subject to Time Vesting . Unless earlier terminated, any Stock Options/SARs that the Committee determines to be vested as of the Determination Date shall become exercisable as follows: one-third of the Shares covered thereby (rounded up to the next whole Share) on March 30, 2008, an additional one-third of such Shares (rounded up to the next whole Share) on March 30, 2009, and the remainder of such Shares on March 30, 2010, subject in each case to the prior termination of the Stock Option/SAR.

     g.  Exercisability Upon Death, Disability or Change of Control . Notwithstanding the foregoing, the Stock Options/SARs, to the extent outstanding, shall become immediately vested and fully exercisable upon (a) a Change of Control or (b) a Termination of Employment due to death or Disability. For purposes of this Award Agreement, Disability means (1) “Disability” as defined in your Employment Agreement, or (2) if there is no such employment or similar agreement or it does not define “Disability,” permanent and total disability as determined under ALC’s long-term disability plan applicable to Employee. For purposes of this Award Agreement, Termination of Employment means the termination of Employee’s employment with, or performance of services for, ALC and any of its Subsidiaries or Affiliates. A participant employed by, or performing services for, a Subsidiary or an Affiliate shall also be deemed to incur a Termination of Employment if the Subsidiary or Affiliate ceases to be such a Subsidiary or an Affiliate, as the case may be, and the participant does not immediately thereafter become an employee of, or service-provider for, ALC or another Subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among ALC and its Subsidiaries and Affiliates shall not be considered Terminations of Employment.

3. The Plan. This Award is made pursuant to the Plan, all the terms of which are hereby incorporated in this Award Agreement. In the event of any conflict between the terms of the Plan and the terms of this Award Agreement, the terms of this Award Agreement shall govern; provided , however , that, notwithstanding the foregoing, it is understood that the provisions of Section 6(i)(vi)(D) of the Plan, including but not limited to the concept of “negative discretion” shall not be applicable to the Stock Options/SARs.

In the event of any conflict between the terms of this Award Agreement and the terms of any Employment Agreement, the terms of your Employment Agreement will govern.

4. Exercise of the Stock Options .

     a. Stock Options as to which the Employee is vested, which have become exercisable, and which have not terminated may be exercised by delivery to the Secretary of ALC of a written or electronic notice, complying with the applicable procedures established by the Committee or ALC, stating the number of whole Shares to be purchased pursuant to this Award Agreement and the date on which the Employee wants to exercise the Stock Option and accompanied by payment of the full purchase price of the Shares to be purchased.

     b. The full purchase price of the Stock Option (the Exercise Price multiplied by the number of Stock Options exercised) shall be paid in cash, by wire transfer, or by certified check or bank draft payable to the order of ALC, by exchange of Shares of unrestricted Common Stock of ALC already owned by the Employee (that have been purchased on the open market by the Employee and held for at least six months p