<PAGE>

                                                                     EXHIBIT 4.1

                       FIRST AMENDMENT TO RIGHTS AGREEMENT

         This Agreement ("Agreement"), dated as of November 4, 2004, by and
between Assisted Living Concepts, Inc., a Nevada corporation (the "Company"),
and American Stock Transfer & Trust Company, as Rights Agent (the "Rights
Agent"), constitutes the First Amendment to the Rights Agreement, effective as
of October 1, 2004 by and between the Company and the Rights Agent (the "Rights
Agreement").

                              W I T N E S S E T H:

         WHEREAS, the parties hereto desire to amend the Rights Agreement in
certain respects on the terms and conditions hereinafter set forth;

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

         1.       The Rights Agreement is hereby amended by:

         (a)      Adding the following sentence at the end of the definition of
                  "Acquiring Person" in Section 1 of the Rights Agreement:

                      "Notwithstanding any of the terms of the foregoing
                      definition, no Person shall become an "Acquiring Person"
                      as the result of the execution and delivery of, or the
                      consummation of the transactions contemplated by, the Plan
                      of Merger and Acquisition Agreement dated as of November
                      4, 2004, and any amendments thereto, (the "Merger
                      Agreement") by and among the Company, Extendicare Health
                      Services, Inc. ("Parent"), and ALC Acquisition, Inc.
                      ("Sub"), and any agreements, documents or instruments
                      executed or entered into by Company and Parent or
                      Acquisition in connection with the Merger Agreement
                      (collectively with the Merger Agreement, the "Transaction
                      Documents")."

         (b)      Adding the following sentence at the end of the definition of
                  "Share Acquisition Date" in Section 1 of the Rights Agreement:

                      "Notwithstanding any of the terms of the foregoing
                      definition, no "Share Acquisition Date" will occur as the
                      result of the execution and delivery of, or the
                      consummation of the transactions contemplated by, the
                      Transaction Documents, or any public announcement of any
                      of the foregoing."

<PAGE>

         (c)      Adding the following sentence at the end of the definition of
                  "Triggering Event" in Section 1 of the Rights Agreement:

                      "Notwithstanding any of the terms of the foregoing
                      definition, no "Triggering Event" will occur as the result
                      of the execution and delivery of, or the consummation of
                      the transactions contemplated by, the Transaction
                      Documents, or any public announcement of any of the
                      foregoing."

         (d)      Adding the following clause at the end of the definition of
                  "Distribution Date" immediately prior to the "(x)" in Section
                  3(a) of the Rights Agreement:

                      "; provided, however, that notwithstanding any of the
                      terms of the foregoing definition, no "Distribution Date"
                      will occur as the result of the execution and delivery of,
                      or the consummation of the transactions contemplated by,
                      the Transaction Documents"

         (e)      Adding the following sentence at the end of Section 7(a) of
                  the Rights Agreement:

                      "Notwithstanding anything in this Agreement to the
                      contrary, the Rights shall expire, and no holder of any
                      Rights shall be entitled to exercise such Rights,
                      immediately prior to the occurrence of the Effective Time
                      (as defined in the Merger Agreement), but only if the
                      Effective Time shall occur."

         (f)      Adding the following Section 35 to the Rights Agreement:

                      "Section 35. Termination. Immediately prior to the
                      occurrence of the Effective Time, but only if the
                      Effective Time shall occur, (a) this Agreement shall be
                      terminated and be without any further force or effect, (b)
                      none of the parties to the Rights Agreement will have any
                      rights, obligations or liabilities thereunder; provided,
                      however, Section 18 of this Agreement shall survive
                      termination of this Agreement, and (c) the holders of the
                      Rights shall not be entitled to any benefits, rights or
                      other interests under this Agreement, including, without
                      limitation, the right to purchase or otherwise acquire
                      Units or any other securities of the Company. As promptly
                      as is practicable following the termination of this
                      Agreement, the Company shall file with the Nevada
                      Secretary of State a certificate withdrawing the
                      Certificate of Designation concerning the Junior Preferred
                      Stock in accordance with the applicable provisions of the
                      Nevada Revised Statutes."

                                       2

<PAGE>

         2. The Company expressly acknowledges that the purpose and intent of
this Agreement is that the Rights Agreement and the Rights shall not apply to
the transactions contemplated by the Transaction Documents.

         3. All terms defined in the Rights Agreement that are used herein shall
have the meanings defined in the Rights Agreement, unless specifically defined
otherwise herein.

         4. The term "Agreement" or "Rights Agreement" as used in the Rights
Agreement shall mean the Rights Agreement, as amended by this Agreement, or as
it may from time to time be amended in the future by one or more other written
amendment or modification agreements entered into pursuant to the applicable
provisions of the Rights Agreement.

         5. This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.

         6. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of Nevada.

         7. Except as expressly herein amended, the terms and conditions of the
Rights Agreement shall remain in full force and effect.

         8. This Agreement is not intended to be, nor shall it be construed to
be, a novation.

         IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.

                                       ASSISTED LIVING CONCEPTS, INC.

                                       By: /s/ Edward A. Barnes
                                           -------------------------------------
                                       Name:   Edward A. Barnes
                                       Title:  Senior Vice President and CFO

                                       AMERICAN STOCK TRANSFER & TRUST COMPANY

                                       By: /s/ Herbert J. Lemmer
                                           -------------------------------------
                                       Name:   Herbert J. Lemmer
                                       Title:  Vice President

                                       3