Document:

<PAGE>

                         DEFERRED COMPENSATION AGREEMENT

         AGREEMENT made this _________ day of _____________________, 20__ by and
between EXTENDICARE HEALTH SERVICES, INC., a Delaware corporation, with offices
at 111 West Michigan Street, Milwaukee, Wisconsin 53203 (hereinafter, inclusive
of its direct and indirect subsidiaries, the "Corporation"), and
___________________________________________________ (hereinafter referred to as
the "Participant").

                                   WITNESSETH:

                  WHEREAS, an employment relationship does exist between the
Corporation and the Participant; and

                  WHEREAS, the Corporation desires to enter into a Deferred
Compensation Agreement with the Participant, so as to further the long-term
growth and earnings of the Corporation by offering long-term incentives in
addition to current compensation to those management or highly compensated
employees of the Corporation who are or will be largely responsible for such
growth;

                  NOW, THEREFORE, in consideration of the premises and covenants
and agreements herein set forth, and for other good, valuable and sufficient
consideration, receipt of which is hereby acknowledged, the Corporation and the
Participant covenant and agree as follows:

                                    ARTICLE I

                                   DEFINITIONS

Section 1.1 "Deferred Compensation Account" means a book reserve established by
the Corporation in the name of the Participant to which funds will be credited
as provided for in this Agreement.

Section 1.2 "Deferred Compensation Committee" means those individuals, whose
numbers shall be no fewer than three (3), which shall be selected by the
Corporation to administer the provisions of this agreement on its behalf. In the
event that the individual covered by this agreement is also a member of the
Deferred Compensation Committee, such individual will not participate on behalf
of the corporation in administering the provisions of this agreement.

Section 1.3 "Plan" means this Deferred Compensation Agreement as it may be
amended from time to time (hereinafter sometimes the "Agreement").

<PAGE>

Section 1.4 "Total and Permanent Disability" means that Participant is found, on
the basis of a written medical opinion, furnished by a licensed physician
appointed by the corporation, to be incapable of engaging in the participant's
regular occupation with the Corporation at the location where the Participant
last worked, and that, to a reasonable medical probability, such incapacity will
continue to exist during the remainder of the Participant's life.

                                   ARTICLE II

                          DEFERRED COMPENSATION ACCOUNT

Section 2.1 The Participant shall hereinafter be entitled to designate for
deferral up to ten percent (10%) of the Participant's base salary for services
rendered after the execution of this Agreement. Such deferred salary shall be
credited to the Deferred Compensation Account.

Section 2.2 The Corporation agrees to contribute to the deferred Compensation
Account an amount equal to fifty percent (50%) of the Participant's Deferred
Compensation contribution, subject to the investing provisions set forth in
Article III hereof. Corporate Contributions shall be credited to the Deferred
Compensation Account as the Participant's Contributions are credited to the
Deferred Compensation Account.

Section 2.3  All funds credited to the Deferred Compensation Account shall be
increased by an amount equal to the interest that would have been earned on
funds represented by the Deferred Compensation Account credited monthly on the
last day of each month (based on each month's average of the Prime Interest Rate
of the First Wisconsin National Bank of Milwaukee applied to the average
Deferred Compensation account balance each month).

                                   ARTICLE III

                                     VESTING

Section 3.1 The right of the Participant or any other person to payment of
deferred compensation from funds credited to the Deferred Compensation Account
as a result of the Corporation's contributions, and increased on that portion of
the Deferred Compensation Account created by the Corporation's contribution
pursuant to Article II, Section 2.2 are subject to the vesting provisions of
this Article.

Section 3.2 While the Corporation's contributions shall be credited to the
Deferred Compensation account as shall the interest factor thereon, such
contributions and the interest factor thereon shall not begin vesting until this
Agreement has been in full force and effect for two (2) continuous years without
suspension of the Participant from the Plan as herein provided for.

                                      -2-

<PAGE>

Section 3.3 The Participant's right to the attainment of that portion of the
Deferred Compensation represented by Corporation's contributions shall vest as
follows:

<TABLE>
<CAPTION>

               Completed Years
                of Continuous
               Employment With
               The Corporation
                 From Date of                           Percentage
                This Agreement                            Vested
                --------------                            ------

<S>                                                      <C>
                      2                                   10%

                      3                                   25%

                      4                                   40%

                      5                                   55%

                      6                                   70%

                      7                                   85%

                      8                                  100%
</TABLE>

Section 3.4 Notwithstanding the above, if the Participant's employment is
terminated by reason of Participant's death or Total and Permanent Disability,
the Participant or the Participant's beneficiary, shall be entitled to receive
the entire amount of the Deferred Compensation Account otherwise payable
according to the terms hereof, including all of the funds contributed by the
Corporation pursuant to Article II, Section 2.2 hereof, and the interest factor
thereon.

Section 3.5 For purposes of meeting the vesting criteria set forth above, the
Participant shall be credited with continuous employment time during any excused
periods of absence from employment taken with the advanced approval of the
Corporation if, during such periods the Participant does not work for Services
of the United States of America and the Participant returns to the Participant's
employment with the Corporation immediately after termination of such military
service.

                                      -3-

<PAGE>

                                   ARTICLE IV

                        PAYMENT OF DEFERRED COMPENSATION

Section 4.1 In the event that employment of the Participant with the Corporation
is terminated for any reason, including retirement, death or Total and Permanent
Disability, the Company shall pay to the Participant or the Participant's
beneficiary upon written notice to the Corporation, from the Deferred
Compensation Account:

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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                                    ARTICLE V

                             BENEFICIARY DESIGNATION

Section 5.1 The beneficiary referred to in this Agreement may be designated or
changed (meaning the alternate beneficiary, if the beneficiary dies before the
Participant) by the Participant, without the consent of any prior beneficiary,
on a form to be provided by the Corporation, and delivered to the Corporation by
the Participant before the Participant's death. If no such beneficiary shall
have been designated, or if no designated beneficiary shall survive the
Participant, payments due hereunder shall be payable to the Participant's estate
or according to the applicable laws of descent and distribution.

Section 5.2 If any beneficiary designated pursuant to the terms of this
Agreement shall pass away within twenty-four (24) hours immediately following
the death of the Participant, all benefits payable under this Agreement shall be
paid as if such beneficiary had died prior to the Participant.

                                   ARTICLE VI

                                     FUNDING

Section 6.1 Title to and beneficial ownership of any assets, whether cash or
investments, which the Corporation may designate to pay the Deferred
Compensation account shall at all times remain in the Corporation, and the
Participant and the Participant's designated beneficiary shall not have any
property interests whatsoever in any of the specific assets of the Corporation.
Subject to the other provisions of this Article, the Corporation's obligation
under this Agreement shall be an unfunded and

                                      -4-
<PAGE>

unsecured promise to pay. The Corporation shall not be obligated under any
circumstances to fund its obligations under this Agreement, but the Corporation
may, in its sole and exclusive discretion, elect to fund all or any portion of
the Deferred Compensation Account. If the Corporation shall elect such funding
the manner and continuance of same shall be determined in the sole and absolute
discretion of the Corporation. The Corporation may also determine to provide for
funding of the Deferred Compensation Account issuing same and the amounts
thereof, shall be determined in the sole and absolute discretion of the
Corporation. In the event of use of life insurance, the Participant hereby
agrees to submit to whatever medical examinations may be required, and the
Participant further agrees to supply by the insurance company(ies) to whom the
Corporation applies for such insurance. Such policies of insurance may also be
canceled at any time, for any reason, in the sole and absolute discretion of the
Corporation.

                                   ARTICLE VII

                         SUSPENSION AND WITHDRAWAL FROM

                                    THE PLAN

Section 7.1 The Participant may request in writing to the Deferred Compensation
Committee that all or a portion of the vested balances in the Participant's
Deferred Compensation Account contributed by the Participant including interest
thereon, may be withdrawn from the Deferred Compensation Account in the event of
"hardship" being demonstrated by the Participant. Hardship is construed to mean
unforeseen events or circumstances arising subsequent to the date of this
agreement that could result in an adverse affect on the overall well being of
the Participant or the Participant's immediate family that could be alleviated
by virtue of having such amounts available to the Participant. The decision as
to whether the hardship request will be approved will be evaluated by the
Deferred Compensation Committee taking into consideration both the Participant's
request and the Corporation's financial situation before deciding on whether or
not to approve such payment.

Section 7.2 In the event of a withdrawal under the provisions of Section 7.1,
the Participant shall be deemed to be suspended from plan eligibility for a
period of one (1) year. During such suspension period, the Participant's
Deferred Compensation Account shall not be credited with any additional
contributions from the Corporation, and the Participant may not make any
contributions to the Deferred Compensation Account; however, interest shall
continue to accrue on the remaining balance.

Section 7.3 In the event that a withdrawal from the Deferred Compensation
Account is made as provided in this Article, the Corporation shall make payment
to the Participant within three (3) business days after receipt of notice of
approval from the Deferred Compensation Committee.

                                      -5-

<PAGE>

                                  ARTICLE VIII

                                   ARBITRATION

Section 8.1 Any controversy or claim arising out of or relating to this
Agreement and any amendments thereto, or the breach thereof, shall be settled by
arbitration in the city of Milwaukee, Wisconsin, in accordance with The
Wisconsin Arbitration Act, Chapter 788, Wis. Stats. The arbitration panel shall
consist of one (1) member selected by the Participant or the Participant's
beneficiary, another selected by the corporation, and a third member selected by
the first two appointed members. A judgement upon the arbitration award may be
entered by the Circuit Court in and for Milwaukee County, Wisconsin.

                                   ARTICLE IX

                         NON-TRANSFERABILITY OF INTEREST

Section 9.1 This Agreement, and the parties rights and obligations hereunder,
shall be binding upon and inure to be the benefit of their successors, assigns,
personal representatives, heirs, and beneficiaries. Neither the Participant, nor
any other person entitled to payments pursuant to this Agreement, shall have any
right to commute, encumber, pledge, hypothecate, sell or otherwise transfer any
of such Participant's or beneficiaries' rights or interests under this
Agreement, except as expressly provided for, without the express prior written
consent of the Corporation, which consent may in the Corporation's sole and
absolute discretion be withheld.

                                    ARTICLE X

                                  MISCELLANEOUS

Section 10.1 Any contribution of the Corporation to the Deferred Compensation
Account shall not be deemed salary or other compensation to the Participant for
the purpose of computing the benefits to which the Participant may be entitled
under any pension plan or other arrangement of the Corporation for the benefit
of the Participant, nor shall any Participant's deferred amount serve to reduce
base compensation for such purpose.

Section 10.2 The benefits payable under this Agreement shall be independent of,
and in addition to, any other benefits or compensation, whether by salary, bonus
or otherwise, payable under any employment agreements that now exist or may
hereafter exist between the Corporation and the Participant. This Agreement does
not involve a reduction in salary or the foregoing of any increase of future
salary by the Participant, nor shall this Agreement in any way affect or reduce
any existing compensation or other benefits of the Participant.

                                      -6-

<PAGE>

Section 10.3 This Agreement shall not be deemed to constitute a contract of
employment, express or implied, between the parties hereto, nor shall any
provision hereof restrict the right of the Corporation to discharge the
Participant for cause or any other reason; nor shall this Agreement restrict the
right of the Participant to terminate Participant's employment with the
Corporation.

Section 10.4 Notices hereunder shall be given in writing and sent by U.S. mail,
postage prepaid, return receipt requested, and addressed to the respective party
or beneficiary at the address first given above, or otherwise given in writing
to the party giving the Notice.

Section 10.5 The terms of this Agreement shall be construed in accordance with
and governed by the laws of the State of Wisconsin.

Section 10.6 The provisions in this Agreement providing for further
contributions of the corporation to the Deferred Compensation Account or for
deferral of further income of the Participant may be revoked or amended at any
time from that time forward but only by written notice of the Corporation to the
Participant.

Section 10.7 This Agreement may be executed in counterpart by each of the
parties, and when so executed by each of the parties, it shall be deemed to be
the Agreement of the parties, and such counterparts shall constitute one and the
same instrument.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement,
the Corporation having signed same by a duly authorized officer thereof, all as
of the day and year first written above.

                                            CORPORATION: EXTENDICARE HEALTH
                                            SERVICES, INC.

Witness  _____________________              By  ________________________________
                                                                  Vice President
Witness  _____________________
                                            PARTICIPANT:  ______________________

Witness  _____________________

Witness  _____________________

                                      -7-

<PAGE>

                          BENEFICIARY DESIGNATION FORM

The following beneficiary and alternative beneficiary are hereby designated by
the undersigned Participant to receive such payments as may be due on or
following the death of such Participant pursuant to a Deferred Compensation
Agreement dated ______________________, 20___, between the Participant and
Extendicare Health Services, Inc.

                       Primary Beneficiary:_____________________________________
                                                                            Name

                                           _____________________________________
                                                                    Relationship

                                           _____________________________________
                                                                         Address

                       Alternate Beneficiary:___________________________________
                                                                            Name

                                            ____________________________________
                                                                    Relationship

                                            ____________________________________
                                                                         Address

The primary beneficiary and alternate beneficiary named above are hereby
designated as primary and alternate beneficiary pursuant to the above-referenced
Deferred Compensation Agreement. In the event that the primary beneficiary (if a
person, as opposed to my estate or trustee) has passed away prior to my death,
then, and only in such event, my alternate beneficiary shall be entitled to the
benefit of the provisions of such Deferred Compensation Agreement.

                                                Dated:_________________, 20_____
Witness  ________________________

Witness  ________________________

                                                ________________________________
                                                                     Participant

Receipt Acknowledged this ________
day of __________________, 20____.

EXTENDICARE HEALTH SERVICES, INC.

By  _____________________________

     Its _________________________

                                      -8-

<PAGE>

                      DEFERRED COMPENSATION PAYMENT OPTIONS

         The following payment options are available to individuals
participating in a deferred compensation agreement with the Company. One of
these options must be selected at the time of entering into a deferred
compensation agreement.

(1)      A single distribution within thirty (30) days of termination of
         employment of the Participant with the Company; or

(2)      Five (5) annual installments each equal to one-fifth (1/5) of the total
         value of the Deferred Compensation Account with the first of such
         installments to be paid on the first day of the first month following
         the Participant's termination date. The interest factor provided for in
         article II, Section 2.3 shall continue to accrue on the balance
         remaining in the Deferred compensation Account from time to time, and
         the total amount payable to the Participant annually shall be
         pro-ratably increased annually by the appreciation in the Deferred
         Compensation Account due to the accrued interest factor; or

(3)      Ten (10) annual installments each equal to one-tenth (1/10) of the
         total value of the Deferred Compensation Account with the first of such
         installments to be paid on the first day of the first month following
         the Participant's termination date. The interest factor provided for in
         Article II, Section 2.3 shall continue to accrue on the balance
         remaining in the Deferred Compensation Account from time to time, and
         the total amount payable to the Participant annually shall be
         pro-ratably increased annually by the appreciation in the Deferred
         Compensation 'Account due to the accrued interest factor; or

(4)      Twenty (20) annual installments each equal to one-twentieth (1/20) of
         the total value of the Deferred Compensation Account with the first of
         such installments to be paid on the first day of the first month
         following the Participant's termination date. The interest factor
         provided for in Article II, Section 2.3 shall continue to accrue on the
         balance remaining in the Deferred Compensation Account from time to
         time, and the total amount payable to the Participant annually shall be
         pro-ratably increased annually by the appreciation in the Deferred
         Compensation Account due to the accrued interest factor.

[NOTE: The option selected by Participant is to be included in Article IV,
Section 4.1 of the Plan.]

                                      -9-
<PAGE>

                        EXTENDICARE HEALTH SERVICES, INC.

                       DEFERRED COMPENSATION AUTHORIZATION

********************************************************************************

                   Name:  _____________________________________

                 Address: _____________________________________

                          _____________________________________

                          _____________________________________

********************************************************************************

I wish to participate in the Deferred Compensation Program offered by
Extendicare Health Services, Inc. Please defer __________% (please indicate the
percent to be deferred, not to exceed 10%) of my base salary on a:

      Please circle one:                Semi-Monthly Basis         Monthly Basis

      Other (Specify) __________________________________________

I understand that I am able to defer up to and including 10% of my base salary.

__________________________________          ______________________
Signature                                   Date<PAGE>

                                EXTENDICARE INC.

                              AMENDED AND RESTATED
                   SUBORDINATE VOTING SHARE STOCK OPTION PLAN

Definitions

1.       In this Plan:

         (a)      "Shares" means Subordinate Voting Shares of the Corporation;

         (b)      "employment" means a service as a director or an officer of,
                  or full-time employment with, the Corporation or any
                  affiliated corporation and includes retirement from any such
                  service or employment and "employee" has a corresponding
                  meaning;

         (c)      "affiliated corporation" means at any time any company or
                  corporation at such time designated as such by the directors
                  of the Corporation;

         (d)      "termination of employment" means termination of employment
                  for any reason other than death or retirement, but does not
                  include a change of employment between the Corporation and any
                  affiliated corporation or between two affiliated corporations;

         (e)      "Offer" means an offer (whether or not approved or recommended
                  by the directors) to purchase Shares made to all or
                  substantially all holders of Shares;

         (f)      "option year" with respect to any option granted pursuant
                  hereto means any period of 12 months commencing on the date of
                  granting of such option or any anniversary thereof; and

         (g)      "grantee" means an employee to whom an option has been
                  granted.

Grant of Options and Option Price

2.       Options to purchase Shares may be granted from time to time hereafter
         in the discretion of the directors to such employees as the directors
         shall from time to time determine. The number of Shares covered by each
         option shall be fixed by the directors at the time of granting thereof
         which aggregate number shall not exceed the number provided for in
         section 3 of the Plan. Subject to regulatory approval, the price per
         Share at which the Shares may be purchased shall be fixed by the
         directors at the time of the grant of such option but shall be not less
         than the price per Share which is equal to the closing price (or if no
         closing price, the simple average of the bid ask price) per Share
         quoted on The Toronto Stock Exchange on the trading day prior to the
         date on which the option is granted.

<PAGE>

                                      -2-

Shares Subject to Option

3.       Options may be granted to purchase an aggregate of up to but not
         exceeding 5,769,400 authorized but unissued Shares, provided that any
         and all options which are granted shall be subject to adjustment
         pursuant to the provisions of section 8 hereof. The aggregate number of
         Shares reserved for issuance to any one person will not exceed 5% of
         the aggregate of the issued and outstanding Shares and common shares of
         the Corporation outstanding from time to time (on a non-diluted basis).
         For the purposes of this section 3, reference to any "one person" shall
         include associates of such person in the event such person is an
         insider of the Corporation with the result that the aggregate number of
         Shares reserved for issuance to any one insider together with such
         insider's associates shall not exceed 5% of the aggregate of the issued
         and outstanding Shares and common shares of the Corporation outstanding
         from time to time (on a non-diluted basis). The terms "associate" and
         "insider" shall have the meanings assigned to them in the Securities
         Act (Ontario), as amended from time to time, except that persons who
         fall within the definition of "insider" solely by virtue of being a
         director or senior officer of a subsidiary of the Corporation shall not
         be considered insiders for the purposes hereof. Shares in respect of
         which options have been granted but have been terminated or expire and
         are unexercised are available for subsequent options.

Term of Options

4.       Every option shall be irrevocable until the expiry of:

         (a)      five option years commencing on the date of granting thereof;

         (b)      270 days following the death of the grantee;

         (c)      90 days following the termination of employment of the
                  grantee; or

         (d)      the period specified in a notice given pursuant to section 8
                  hereof;

         whichever shall first occur.

Exercise of Options

5.       Subject to the provisions of sections 3 and 4 hereof, the directors may
         in their discretion determine that the maximum aggregate number of
         Shares purchasable pursuant to any option on any date during the term
         thereof shall depend on the number of complete option years elapsed
         during such term prior to such date and shall be a percentage of the
         total number of Shares covered thereby. Such determination shall be
         made at the time of the grant of the option. The maximum aggregate
         number of Shares purchasable pursuant to any option after the death or
         termination of employment of the grantee shall not exceed the number
         which were purchasable on the date of death or termination of
         employment of the grantee, as the case may be.

<PAGE>

                                      -3-

6.       Subject to the provisions hereof, any option shall be exercisable at
         any time and from time to time during the term thereof with respect to
         all or any lesser number of the Shares covered thereby by written
         notice given to the Corporation in the form attached to the option
         agreement specifying the number of Shares in respect of which the
         option is being so exercised at such time, accompanied by payment in
         full for such Shares at the price per Share specified in the option.

7.       No option shall be exercisable except by the grantee or the legal
         personal representative or representatives of the grantee.

Corporate Reorganizations

8.       If any of the following events occur:

         (a)      the Corporation is reorganized, liquidated or dissolved;

         (b)      the Corporation is amalgamated, merged or consolidated with
                  another corporation;

         (c)      the Shares are consolidated, subdivided or otherwise changed,
                  or further Shares are issued by way of stock dividends;

         (d)      the directors propose that the Corporation take steps to
                  complete any of the events referred to in subsections (a), (b)
                  or (c) of this section 8; or

         (e)      an Offer is made;

         the directors may, in their sole discretion, subject to regulatory
         approval, make any or all of the following adjustments or take any or
         all of the following actions in order to preserve as nearly as may be
         possible the original scope and intent of this agreement:

         (A)      adjust outstanding options to cover a different class and
                  number of shares of the Corporation or of another issuer,
                  adjust the number of Shares covered by the options, and/or
                  adjust the exercise price of the options;

         (B)      by written notice to each grantee, require that such grantee's
                  option shall be terminated after the time specified in such
                  notice (which in no event shall be shorter than 30 days
                  following the giving of such notice), unless exercised within
                  the time specified in such notice;

         (C)      advance the dates upon which any or all outstanding options
                  shall be exercisable, without regard to whether the options
                  have otherwise vested in accordance with its terms; or

         (D)      make any other adjustments, or take any other action, as the
                  directors in their sole discretion shall deem appropriate.

         The directors shall give notice to the grantee designating such
         adjustments or actions whereupon this agreement shall, without further
         act or formality, be amended accordingly. Any adjustments or actions
         taken by the directors under this section 8 shall be final and binding
         for all purposes of this agreement.

<PAGE>

                                      -4-

Evidence of Options

9.       Every option granted pursuant hereto shall be embodied in a written
         instrument substantially in the form of the option agreement annexed
         hereto as Exhibit I which agreement is incorporated into this Plan.

Amendment or Discontinuance of Plan

10.      Subject to regulatory approval, the directors may amend or discontinue
         the Plan at any time but, subject to section 8, no such amendment may
         increase the aggregate maximum number of Shares that may be subject to
         option under the Plan, change the manner of determining the minimum
         option price, extend the option period under any option beyond 10
         years, extend the period during which options may be granted or,
         without the consent of the grantee, alter or impair any option
         previously granted to a grantee under the Plan.

Interpretation

11.      The Plan shall be construed according to the laws of the Province of
         Ontario. The Plan shall also comply with the requirements of The
         Toronto Stock Exchange and the Montreal Exchange (collectively, the
         "Exchanges"). In the event of any differences arising between the
         provisions of the Plan and the requirements of the Exchanges, the
         requirements of the Exchanges shall apply.

Liability

12.      No director, officer or employee of the Corporation or any affiliate or
         associated company shall be personally liable for any act taken or
         omitted in good faith in connection with the Plan.

Effective Date

13.      The Plan, as amended to give effect to articles of amendment of the
         Corporation dated April 25, 1996, shall be effective from December 13,
         1995.

                    WITNESS the adoption of this Plan by the Corporation.

                                             By: _______________________________

                                             By: _______________________________

<PAGE>

                                                                       EXHIBIT 1

                                OPTION AGREEMENT

                            SUBORDINATE VOTING SHARES

                  AGREEMENT made as of the [DAY] day of [MONTH, YEAR].

B E T W E E N:

                EXTENDICARE INC., a company incorporated under the laws of
                Canada,

                    (hereinafter called the "Corporation")

                                                             OF THE FIRST PART

                                     - and -

                        [GRANTEE'S NAME HERE]

                of the City of [CITY], in the State/Province of [STATE/PROVINCE]

                (hereinafter called the "Grantee")

                                                              OF THE SECOND PART

WHEREAS:

(a)      the directors of the Corporation have provided for the granting to
         directors, officers and employees of the Corporation or any designated
         affiliated corporation thereof of options to purchase Subordinate
         Voting Shares of the Corporation; and

(b)      pursuant to a resolution dated [MONTH, DAY, YEAR] (the "date of
         grant"), the directors of the Corporation have granted to the Grantee
         an option to purchase the number of Subordinate Voting Shares of the
         Corporation hereinafter referred to and have fixed the times when and
         the price per Subordinate Voting Share at which such Subordinate Voting
         Shares may be purchased;

<PAGE>

                                      -2-

                  WITNESSETH as follows:

Definitions

1.       In this agreement:

         (a)      "Shares" means Subordinate Voting Shares of the Corporation;

         (b)      "employment" means service as a director or an officer of, or
                  full-time employment with, the Corporation or any affiliated
                  corporation and includes retirement from any such service or
                  employment;

         (c)      "affiliated corporation" means at any time any company or
                  corporation at such time designated as such by the directors
                  of the Corporation;

         (d)      "termination of employment" means termination of employment
                  for any reason other than death or retirement, but does not
                  include a change of employment between the Corporation and any
                  affiliated corporation or between two affiliated corporations;

         (e)      "Offer" means an offer (whether or not approved or recommended
                  by the directors) to purchase Shares made to all or
                  substantially all holders of Shares; and

         (f)      "option year" means any period of 12 months commencing on the
                  date of the grant or any anniversary thereof.

Grant of Option and Option Price

2.       The Corporation hereby confirms the grant to the Grantee of an option
         (the "Option") to purchase from the Corporation up to [# OF SHARES]
         presently unissued Shares, at the price of [$XX] per Share being not
         less than the price per Share which is equal to the closing price (or
         if no closing price, the simple average of the bid and ask price) per
         Share quoted on The Toronto Stock Exchange on the trading day prior to
         the date of grant, upon and subject to the terms and conditions
         hereinafter set out.

Term of Option

3.       The term of the Option shall be from the date hereof until the expiry
         of:

         (a)      five option years commencing on the date of grant of the
                  Option;

         (b)      270 days following the death of the Grantee;

<PAGE>

                                      -3-

         (c)      90 days following the termination of employment of the
                  Grantee; or

         (d)      the period specified in a notice given pursuant to section 7;

         whichever shall first occur.

Exercise of Option

4.       The maximum aggregate number of Shares which may be purchased pursuant
         to the Option on any date during the term thereof shall depend on the
         number of complete option years elapsed during such term prior to such
         date, and shall be a percentage of the total number of Shares referred
         to in section 2 ascertained by reference to the following table:

<TABLE>
<CAPTION>

           Option Years Elapsed                             Percentage
           --------------------                             ----------
<S>                                                         <C>
                     1                                          25
                     2                                          50
                     3                                          75
                     4                                         100
</TABLE>

         provided, however, that:

(a)      the maximum aggregate number of Shares which may be purchased pursuant
         to the Option after the death or termination of employment of the
         Grantee shall in no event exceed the number which could be so purchased
         in accordance with the foregoing provisions of this section 4 on the
         date of such death or termination, as the case may be; and

(b)      except as provided in subsection (a) of this section 4, there shall be
         no restriction on the number of the Shares referred to in section 2
         which may be purchased during the period specified in a notice given
         pursuant to section 7.

5.       Subject to the provisions hereof, the Option shall be exercisable at
         any time and from time to time during the term thereof with respect to
         all or any lesser number of the Shares referred to in section 2 by
         written notice given to the Corporation in the form attached to this
         agreement specifying the number of Shares in respect of which the
         Option is being so exercised at such time, accompanied by payment in
         full for such Shares at the price per Share specified in section 2,
         whereupon the purchase pursuant to the Option of the Shares so
         specified shall be deemed for all purposes to have been completed and
         the Option exercised to such extent.

<PAGE>

                                      -4-

6.       The Option shall be exercisable only by the Grantee or the legal
         personal representative or representatives of the Grantee.

Corporate Reorganizations

7.       If any of the following events occur:

         (a)      the Corporation is reorganized, liquidated or dissolved;

         (b)      the Corporation is amalgamated, merged or consolidated with
                  another corporation;

         (c)      the Shares are consolidated, subdivided or otherwise changed,
                  or further Shares are issued by way of stock dividends;

         (d)      the directors propose that the Corporation take steps to
                  complete any of the events referred to in subsections (a), (b)
                  or (c) of this section 7; or

         (e)      an Offer is made;

         the directors may, in their sole discretion, subject to regulatory
         approval, make any or all of the following adjustments or take any or
         all of the following actions in order to preserve as nearly as may be
         possible the original scope and intent of this agreement:

         (A)      adjust the Option to cover a different class and number of
                  shares of the Corporation or of another issuer, adjust the
                  number of Shares covered by the Options and/or adjust the
                  exercise price of the Option;

         (B)      by written notice to the Grantee (or the legal personal
                  representative of the Grantee, as appropriate), require that
                  the Option shall be terminated after the time specified in
                  such notice (which in no event shall be shorter than 30 days
                  following the giving of such notice), unless exercised within
                  the time specified in such notice;

         (C)      advance the dates upon which the Option shall be exercisable,
                  without regard to whether the Option has otherwise vested in
                  accordance with its terms; or

         (D)      make any other adjustments, or take any other action, as the
                  directors in their sole discretion shall deem appropriate.

         The directors shall give notice to the Grantee (or the legal personal
         representative of the Grantee, as appropriate), designating such
         adjustments or actions whereupon this agreement shall, without further
         act or formality, be amended accordingly. Any adjustments or actions
         taken by the directors under this section 7 shall be final and binding
         for all purposes of this agreement.

<PAGE>

                                      -5-

Notices

8.       Any notice to be given pursuant to the provisions hereof shall be
         deemed to have been validly given if reduced to writing and either
         mailed by prepaid ordinary post or delivered to the party to whom the
         same is to be given at the following applicable address:

         the Corporation                             Extendicare Inc.
                                                     Suite 700
                                                     3000 Steeles Ave. East
                                                     Markham, Ontario
                                                     L3R 9W2
                                                     Attention: Secretary
         the Grantee or
         the legal personal
         representative or
         representative of
         the Grantee

         or at such other address as the party to whom the same is to be given
         shall have theretofore designated by notice given in the manner
         specified in this section; and any such notice shall be deemed to have
         been given on the day of delivery thereof or on the day following the
         day of mailing thereof in Canada, as the case may be.

Applicable Law

12.      This agreement and the provisions hereof shall be governed by and
         construed according to the laws of the Province of Ontario.

The next page is page 6.

<PAGE>

                                      -6-

Signature page for the Option Agreement for [# OF SHARES] Subordinate Voting
Shares at [$XX] per share, made as of the [DAY] day of [MONTH, YEAR], to expire
[MONTH, DAY, YEAR]. Options vest over four years at 25% each year.

The agreement is between: Extendicare Inc. and [NAME OF GRANTEE] of the City of
[CITY], in the State/Province of [STATE/PROVINCE].

       IN WITNESS WHEREOF the parties hereto have executed the Option Agreement.

                                            EXTENDICARE INC.

                                            By: ______________________

                                                ______________________

                                            )
                                            )
_______________________________             )   ______________________
Witness to Grantee's Signature              )    Grantee

<PAGE>

                                      -7-

Signature page for the Option Agreement for [# OF SHARES] Subordinate Voting
Shares at [$XX] per share, made as of the [DAY] day of [MONTH, YEAR], to expire
[MONTH, DAY, YEAR]. Options vest over four years at 25% each year.

The agreement is between: Extendicare Inc. and [NAME OF GRANTEE] of the City of
[CITY], in the State/Province of [STATE/PROVINCE].

       IN WITNESS WHEREOF the parties hereto have executed the Option Agreement.

                                            EXTENDICARE INC.

                                            By: ______________________

                                                ______________________

                                            )
                                            )
_______________________________             )   ______________________
Witness to Grantee's Signature              )    Grantee

PLEASE DETACH AND RETURN IN THE SELF-ADDRESSED ENVELOPE TO [NAME],
VICE-PRESIDENT, HUMAN RESOURCES.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00044-of-00352.parquet"}]]