SENIOR
UNSUBORDINATED AND UNSECURED NOTE
$55,000,000 January 27, 2005
FOR VALUE RECEIVED, the undersigned, Extendicare Health
Services, Inc., a Delaware corporation, 111 West Michigan Street,
Milwaukee, WI 53203-2903 (“Borrower”), promises to pay
to the order of Extendicare Holdings, Inc., a Wisconsin
corporation, 111 West Michigan Street, Milwaukee, WI 53203-2903
(“Lender”) or its assignee, the principal sum of
$55,000,000.00, together with interest thereon as hereinafter
provided.
1. RATE OF INTEREST
From the date hereof until the
Maturity Date, interest shall be charged on the outstanding
principal balance due at six percent (6%) per annum.
2. PAYMENTS
The Borrower shall pay to Lender
interest, quarterly in arrears, computed on the basis of a year
consisting of 360 days, but applied to the actual number of
days elapsed commencing on March 31, 2005 and each
June 30 th , September 31 st , and
December 31 st thereafter. In the event such quarter end
dates fall on a weekend or holiday, such payment shall be made on
the last business day preceding such quarter end date.
Commencing on March 1, 2005,
and on the first day of each month thereafter, and including a
payment due on January 1, 2010, Borrower shall make monthly
payments of interest only, in advance.
3. FINAL PAYMENT MATURITY DATE
Notwithstanding anything set forth
above, all sums due under this Note, both principal and interest,
if not sooner paid, shall be due and payable on January 1,
2010 (the “Maturity Date”).
4. PAYMENT DUE DATE/FAILURE TO PAY
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A.
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All payments due under this Note shall be made
without demand and received on the last day of each quarter as
provided; and
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B.
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In the event of a default as defined in this
Note, at the option of Lender, for so long as the default exists,
interest on the outstanding principal balance hereof shall accrue
and will be paid at the rate in effect from time to time hereunder
plus an additional 3% per annum, not to exceed, however, the
maximum rate permitted by law (“Default Interest
Rate”).
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5. INTEREST RATE COMPUTATION/APPLICATION OF
PAYMENTS
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A.
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All interest calculated under this Note shall
be computed on the basis of a year consisting of 360 days but
applied to the actual number of days elapsed (actual /360).
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B.
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All payments shall be applied first to the
payment of accrued interest; then to the payment of the principal
sum; provided, however, Lender may elect to apply such payments in
any other order it deems appropriate. Funds shall be deemed
received by the Lender on the next business day if not received by
2:00 P.M. local time at the location where payments hereunder are
to be made.
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6. PREPAYMENT
The principal amount may be prepaid
in whole or in part at any time [without premium or penalty]. No
partial payment shall change any due date or the amount of any
regularly scheduled installment of principal due. The
Borrower’s right to make prepayments of the principal of this
Note shall be subject to compliance by the Borrower with the terms
set forth in Section 7.9(c) of the Second Amended and Restated
Credit Agreement dated as of April 22, 2004 among the
Borrower, Extendicare Health Services, Inc., the several banks and
other financial institutions from time to time parties thereto,
certain agents and Lehman Commercial Paper Inc., as administrative
agent, as amended, supplemented or otherwise mod
