EX-4.1






EXECUTION COPY




FIRST AMENDMENT




FIRST AMENDMENT, dated as of November 2, 2004 (this “Amendment”), to the Second
Amended and Restated Credit Agreement, dated as of April 22, 2004 (as amended, supplemented or
otherwise modified, the “Credit Agreement”), among EXTENDICARE HOLDINGS, INC., a Wisconsin
corporation (“Holdings”), EXTENDICARE HEALTH SERVICES, INC., a Delaware corporation (the
“Borrower”), the several banks and other financial institutions or entities from time to
time parties to the Credit Agreement, US BANK, NATIONAL ASSOCIATION, as syndication agent, GENERAL
ELECTRIC CAPITAL CORPORATION, RESIDENTIAL FUNDING CORPORATION and LASALLE BANK NATIONAL
ASSOCIATION, as co-documentation agents, and LEHMAN COMMERCIAL PAPER INC., as administrative agent
(in such capacity, the “Administrative Agent”).



W I T N E S S E T H:




WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make and have made loans
and other extensions of credit to the Borrower;



WHEREAS, pursuant to a purchase agreement (the “Purchase Agreement”) to be entered
into among Holdings, the Borrower and Assisted Living Concepts, Inc., a Delaware corporation
(“Assisted Living”), the Borrower intends to agreed to acquire all of the outstanding
Capital Stock of Assisted Living in exchange for consideration consisting of approximately
$140,000,000 in cash and the assumption of certain indebtedness of Assisted Living in an aggregate
principal amount of up to approximately $155,000,000;



WHEREAS, Holdings and the Borrower have requested that certain provisions of the Credit
Agreement be amended in the manner provided for in this Amendment; and



NOW THEREFORE, in consideration of the premises and mutual covenants contained herein, and for
other valuable consideration the receipt of which is hereby acknowledged, the parties hereto hereby
agree as follows:



SECTION 1. DEFINITIONS. Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit Agreement.



	 	 	 
	SECTION 2.AMENDMENTS TO THE CREDIT AGREEMENT.

	 
	 	 
	 

	 
	 	 
	2.1

	 	Amendments to Section 1.1 of the Credit Agreement.
	
 
	 	 







(a) Section 1.1 of the Credit Agreement is hereby amended by inserting the following new
definitions in the appropriate alphabetical order:




“First Amendment”: the amendment to this Agreement dated as of November
2, 2004.




“First Amendment Commitment Increase Effective Date”: the date on which
the conditions set forth in Section 4.1(b) of the First Amendment are waived or
satisfied.




“First Amendment Effective Date”: the date on which the conditions set
forth in Section 4.1(a) of the First Amendment are waived or satisfied.




“First Amendment Pricing Change Effective Date”: the date on which the
conditions set forth in Section 4.1(c) of the First Amendment are waived or
satisfied.




“Lender Consent Letter”: as defined in Section 4.1(a) of the First
Amendment.




“New Lender Supplement”: as defined in Section 4.1(b) of the First
Amendment.



(b) The definition of “Revolving Credit Commitment” in Section 1.1 of the Credit Agreement is
hereby amended by inserting the following sentence at the end thereof:




“The aggregate amount of the Total Revolving Credit Commitments as of the First
Amendment Commitment Increase Effective Date is $     [not in excess of
$200,000,000].”



2.2 Amendment to Section 2.1 of the Credit Agreement.  Section 2.1 of the Credit
Agreement is hereby amended by adding at the end thereof the following new paragraph (d):




“(d) On the First Amendment Commitment Increase Effective Date, (i) each
Lender shall make or increase the amount of its Revolving Credit Commitment in the
manner and by the amount, if any, set forth in such Lender’s Lender Consent Letter
or New Lender Supplement, as applicable and (ii) the Borrower shall make such
borrowings and repayments of Revolving Credit Loans such that, after giving effect
thereto, the percentage of the Total Revolving Extensions of Credit held by each
Lender will equal (as nearly as shall be practicable) the Revolving Credit
Percentage of such Lender. In the event that the any repayment made pursuant to
clause (ii) of the preceding sentence shall result in any Eurodollar Loans being
repaid on a date other than the last day of an Interest Period applicable thereto,
Borrower shall pay any amounts owing to any Lender pursuant to Section 2.16 as a
result of such payment.”



2.3 Amendment to Annex A (Pricing Grid). Annex A to the Credit Agreement is hereby
amended by deleting Annex A in its entirety and substituting in lieu thereof the pricing grid
attached to this First Amendment as Exhibit A. 



2.4 Amendment to Disclosure Schedules. The schedules to the Credit Agreement are
hereby amended by inserting as new Schedule 7.2(i) thereto the schedule attached to this First
Amendment as Exhibit B.



2.5 Amendment to Section 7.2 of the Credit Agreement. Section 7.2(i) of the Credit
Agreement is hereby amended by deleting clause (i) in its entirety and substituting the following
in lieu thereof:




“(i) Indebtedness listed on Schedule 7.2(i) and any refinancings, refundings,
renewals or extensions thereof (without any increase in the principal amount thereof
or any shortening of the maturity of any principal amount thereof); and”.



2.6 Amendment to Section 7.3 of the Credit Agreement. Section 7.3(j) of the Credit
Agreement is hereby amended by deleting clause (j) in its entirety and substituting the following
in lieu thereof:




“(j) Liens in existence on the First Amendment Effective Date securing
Indebtedness permitted by Section 7.2(i), provided that no such Lien is spread to
cover any additional Property after the First Amendment Effective Date and that the
amount of Indebtedness secured thereby is not increased;”.



SECTION 3. OPTION TO BORROW TERM LOANS. The Lenders hereby agree that the Borrower
may at any time add one or more term loan facilities to the Credit Agreement in an aggregate
principal amount which, together with the aggregate principal amount of the Revolving Credit
Commitments then in effect, does not exceed $250,000,000. In the event that the Borrower wishes to
borrow, and one or more banks, financial institutions or entities reasonably acceptable to the
Administrative Agent is willing to provide, such term loans, the Lenders agree to enter into any
amendments and modifications to the Credit Agreement which are necessary to establish the terms and
conditions applicable to such term loans and otherwise approved by the Required Lenders. No Lender
shall have any obligation to participate in any term loans to be made in accordance with this
Section unless it agrees to do so in its sole discretion.




SECTION 4. CONDITIONS PRECEDENT; CONDITION SUBSEQUENT.



4.1 Effectiveness of the Amendment. The amendments to the Credit Agreement described
in this First Amendment shall become effective as follows:



(a) All amendments to the Credit Agreement described herein (other than the amendments
described in Section 2.1(a) hereof with respect to the definitions “Lender Consent Letter” and “New
Lender Supplement” and in Section 2.1(b), 2.2 and 2.3 hereof) shall become effective on and as of
the date (the “First Amendment Effective Date”) on which:




(i) the Administrative Agent shall have received (A) an executed counterpart of this
Amendment, duly executed and delivered by a duly authorized officer of each of Holdings and
the Borrower, (B) Lender Consent Letters (or facsimile transmissions thereof), substantially
in the form of Exhibit C hereto (“Lender Consent Letters”), executed by the Required
Lenders and (C) an Acknowledgement and Consent, substantially in the form of Exhibit D
hereto, executed by each Loan Party other than the Borrower;




(ii) the Borrower shall have acquired Assisted Living pursuant to the Purchase
Agreement, and no provision of the Purchase Agreement shall have been waived, amended,
supplemented or otherwise modified in a manner materially adverse to the Lenders without the
consent of the Administrative Agent. All governmental and material third party approvals
necessary in connection with such acquisition and the continuing operations of Holdings and
its Subsidiaries (including any new Subsidiaries acquired by the Borrower pursuant to the
Purchase Agreement) and in connection with the financing related thereto shall have been
obtained and be in full force and effect, and all applicable waiting periods shall have
expired without any action being taken or threatened by any competent authority that would
restrain, prevent or otherwise impose adverse conditions on such acquisition or the related
financing;




(iii) the Borrower shall have paid to each Lender executing a Lender Consent Letter
with respect to this First Amendment on or prior to 5:00 pm, New York City time, on November
2, 2004 an amendment fee equal to 0.125% of the aggregate of such Lender’s Revolving Credit
Commitment (without giving effect to any increase in such Lender’s Revolving Credit
Commitment effected pursuant to Section 2.2 hereof); and




(iv) the Borrower shall have paid all fees required to be paid, and all expenses for
which invoices have been presented, relating to the preparation and delivery of this
Amendment and the transactions contemplated hereby (including fees, disbursements and other
charges of counsel to the Administrative Agent).



(b) The amendments to the Credit Agreement described in Section 2.1(a) hereof with respect to
the definitions “Lender Consent Letter” and “New Lender Supplement” and in Section 2.1(b) and 2.2
hereof shall become effective on and as of the date (the “First Amendment Commitment Increase
Effective Date”) on which:




(i) the First Amendment Effective Date shall have occurred (or shall occur
contemporaneously with the occurrence to the First Amendment Commitment Increase Effective
Date);




(ii) the Administrative Agent shall have received (A) an executed Lender Consent
Letter (or a facsimile transmission thereof) from each Lender electing to increase its
existing Revolving Credit Commitment, specifying the amount of such Lender’s increase and
(B) an executed New Lender Supplement (or facsimile transmissions thereof), substantially in
the form of Exhibit F hereto (a “New Lender Supplement”), from each institution
electing to become a Lender hereunder and to provide a Revolving Credit Commitment;




(iii) the Administrative Agent shall have received, or shall be reasonably satisfied
that it shall receive within 30 days after the First Amendment Commitment Increase Effective
Date, (A) such executed amendments to the existing Mortgages as are necessary to cause such
Mortgages to continue to secure the Obligations to the same extent, and with the same
priority, as such Mortgages secured the Obligations of the Borrower and its Affiliates under
the Credit Agreement immediately prior to the First Amendment Commitment Increase Effective
Date, and (B) in respect of each of the existing mortgagee title insurance policies an
endorsement from the issuing title insurance company which shall (i) insure that the
Mortgage insured thereby (as amended) shall continue to be a valid first Lien on the
Mortgaged Property encumbered thereby as of the effective date of such existing mortgagee
title insurance policy, to the same extent and with the same priority as such existing
mortgagee title insurance policy insured the existing Mortgage, (ii) name the Administrative
Agent for the benefit of the Secured Parties as the insured thereunder; and (iii) be in form
and substance reasonably satisfactory to the Administrative Agent;




(iv) the Administrative Agent shall have received a legal opinion from Foley & Lardner,
counsel to the Borrower and its Subsidiaries, in form and substance reasonably satisfactory
to the Administrative Agent; and




(v) the Administrative Agent shall have received an executed officer certificate,
substantially in the form of Exhibit E hereto, from the Borrower.



(c) The amendments to the Credit Agreement described in Section 2.3 hereof shall become
effective on and as of the date (the “First Amendment Pricing Change Effective Date”) on
which:




(i) the First Amendment Effective Date and the First Amendment Commitment Increase
Effective Date shall have occurred (or shall occur contemporaneously with the occurrence to
the First Amendment Pricing Change Effective Date); and




(ii) the Administrative Agent shall have received (A) an executed Lender Consent
Letter (or a facsimile transmission thereof) from each Lender, specifying that such Lender
consents to the amendments to the pricing change effected by Section 2.3 hereof.



4.2 Delivery of Mortgage Amendments and Title Insurance Endorsements. The Borrower
agrees that any amendments to the Mortgages and endorsements to title insurance policies required
to be delivered by the Borrower pursuant to Section 4.1(b) (iii) of this Amendment that are not
delivered on or before the First Amendment Commitment Increase Effective Date shall be delivered to
the Administrative Agent within 30 days after the First Amendment Commitment Increase Effective
Date; and the Borrower agrees that any failure to make such deliveries within 30 days after the
First Amendment Commitment Increase Effective Date shall constitute an Event of Default.



SECTION 5. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On and as of the date hereof,
and after giving effect to this Amendment, (a) each of Holdings and the Borrower certifies that no
Default or Event of Default has occurred and is continuing and (b) each of Holdings and the
Borrower confirms, reaffirms and restates that the representations and warranties made by the Loan
Parties in the Loan Documents are true and correct in all material respects, except to the extent
such representations and warranties expressly relate to a specific earlier date, in which case such
representations and warranties were true and correct in all material respects as of such earlier
date.



SECTION 6. REFERENCE TO AND EFFECT ON THE LOAN DOCUMENTS. On and after the date on
which any amendment described herein becomes effective in accordance with the terms hereof, each
reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof” or words of like
import referring to the Credit Agreement, and each reference in the other Loan Documents to “the
Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement after giving effect to such
amendment. Except as expressly amended herein, all of the provisions of the Credit Agreement and
the other Loan Documents are and shall remain in full force and effect in accordance with the terms
thereof and are hereby in all respects ratified and confirmed. The execution, delivery and
effectiveness of this Amendment shall not be deemed to be a waiver of, or consent to, or a
modification or amendment of, any other term or condition of the Credit Agreement or any other Loan
Document or to prejudice any other right or rights which the Agents or the Lenders may now have or
may have in the future under or in connection with the Credit Agreement or any of the instruments
or agreements referred to therein, as the same may be amended from time to time.



SECTION 7. COUNTERPARTS. This Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts and all of said counterparts taken together shall be
deemed to constitute one and the same instrument. Delivery of an executed signature page of this
Amendment by facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Amendment signed by all the parties shall be
lodged with the Borrower and the Administrative Agent.



SECTION 8. PAYMENT OF EXPENSES. The Borrower agrees to pay or reimburse the
Administrative Agent for all of its reasonable out-of-pocket costs and expenses incurred in
connection with this Amendment and any other documents prepared in connection herewith and the
transactions contemplated hereby, including, without limitation, the reasonable fees and
disbursements of counsel to the Administrative Agent.



SECTION 9. GOVERNING LAW. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK.



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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly
executed and delivered by their respective duly authorized officers as of the day and year first
above written.




EXTENDICARE HOLDINGS, INC.




By:  /s/ Richard L. Bertrand 




	 	 	 	Name: Richard L. Bertrand

Title: Senior Vice President and

Chief Financial Officer






EXTENDICARE HEALTH SERVICES, INC.




By:  /s/ Richard L. Bertrand 




	 	 	 	Name: Richard L. Bertrand

Title: Senior Vice President and

Chief Financial Officer






LEHMAN COMMERCIAL PAPER INC.,


as Administrative Agent




By:  /s/ Tesha Spann 




	 	 	 	Name: Tesha Spann






Title: Authorized Signatory




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