Exhibit 10.2

GUARANTY OF MASTER LEASE

GUARANTY OF MASTER LEASE (this “Guaranty”) made as of May 30, 2014, by THE
ENSIGN GROUP, INC., a Delaware corporation (“Guarantor”), to each of the
entities identified as “Landlord” on Schedule 1 attached hereto (collectively,
“Landlord”).

R E C I T A L S

A. Landlord has been requested by each of the entities identified as “Tenant” on
Schedule 1 attached hereto (collectively, “Tenant”), to enter into a Master
Lease dated as of the date hereof (the “Lease”), whereby Landlord would lease to
Tenant, and Tenant would rent from Landlord, those certain skilled nursing and
senior-housing facilities described on Schedule 1 attached hereto and made a
part hereof, as more particularly described in the Lease (the “Premises”).

B. Tenant is an indirect subsidiary of Guarantor and Guarantor will derive
substantial economic benefit from the execution and delivery of the Lease.

C. Guarantor acknowledges that Landlord would not enter into the Lease unless
this Guaranty accompanied the execution and delivery of the Lease.

D. Guarantor hereby acknowledges receipt of a copy of the Lease.

NOW, THEREFORE, in consideration of the execution and delivery of the Lease and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Guarantor covenants and agrees as follows:

1. DEFINITIONS. Defined terms used in this Guaranty and not otherwise defined
herein have the meanings assigned to them in the Lease.

2. COVENANTS OF GUARANTOR.

(a) Guarantor absolutely, unconditionally and irrevocably guarantees, as a
primary obligor and not merely as a surety: (i) the full and prompt payment of
all Base Rent and Additional Rent and all other rent, sums and charges of every
type and nature payable by Tenant under the Lease, whether due by acceleration
or otherwise, including costs and expenses of collection (collectively, the
“Monetary Obligations”), and (ii) the full, timely and complete performance of
all covenants, terms, conditions, obligations, indemnities and agreements to be
performed by Tenant under the Lease, including any indemnities or other
obligations of Tenant that survive the expiration or earlier termination of the
Lease (all of the obligations described in clauses (i) and (ii), are
collectively referred to herein as the “Obligations”). If Tenant defaults under
the Lease, Guarantor will, without notice or demand, promptly pay and perform
all of the Obligations, and pay to Landlord, when and as due, all Monetary
Obligations payable by Tenant under the Lease, together with all damages, costs
and expenses to which Landlord is entitled pursuant to any or all of the Lease,
this Guaranty and applicable Legal Requirements.

(b) Guarantor agrees with Landlord that (i) any action, suit or proceeding of
any kind or nature whatsoever (an “Action”) commenced by Landlord against
Guarantor to collect Base Rent and Additional Rent and any other rent, sums and
charges due under the Lease for any month or months shall not prejudice in any
way Landlord’s rights to collect any such amounts due for any subsequent month
or months throughout the Term in any subsequent Action, (ii) Landlord may, at
its option, without prior notice or demand, join Guarantor in any Action against
Tenant in connection with or based upon either or both of the Lease and any of
the Obligations, (iii) Landlord may seek and obtain recovery against Guarantor
in an Action against Tenant or in any independent Action against Guarantor
without Landlord first asserting, prosecuting, or exhausting any remedy or claim
against Tenant or any other guarantor or against any security of Tenant held by
Landlord under the Lease, (iv) Landlord may (but shall not be required to)
exercise its rights against each of Guarantor and Tenant concurrently, and
(v) Guarantor will be conclusively bound by a judgment entered in any Action in
favor of Landlord against Tenant, as if Guarantor were a party to such Action,
irrespective of whether or not Guarantor is entered as a party or participates
in such Action.

 

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(c) Any default or failure by Guarantor to perform any of its Obligations under
this Guaranty shall be deemed an immediate Event of Default by Tenant under the
Lease.

(d) Guarantor agrees that, in the event of the rejection or disaffirmance of the
Lease by Tenant or Tenant’s trustee in bankruptcy, pursuant to bankruptcy law or
any other law affecting creditors’ rights, Guarantor will, if Landlord so
requests, assume all obligations and liabilities of Tenant under the Lease, to
the same extent as if Guarantor was a party to such document and there had been
no such rejection or disaffirmance; and Guarantor will confirm such assumption,
in writing, at the request of Landlord upon or after such rejection or
disaffirmance. Guarantor, upon such assumption, shall have all rights of Tenant
under the Lease to the fullest extent permitted by law.

(e) If Landlord proposes to grant a mortgage on, or refinance any mortgage
encumbering the Premises, Guarantor shall make reasonable efforts to cooperate
in the process, and shall permit Landlord and the proposed mortgagee to meet
with Guarantor or, if applicable, officers of Guarantor and to discuss
Guarantor’s business and finances; provided that so long as no Event of Default
has occurred and is continuing such meetings shall not occur more frequently
than reasonably necessary, and in any event no more than once per year with
respect to any particular loan or financing. On request of Landlord, Guarantor
agrees to provide any such prospective mortgagee the information to which
Landlord is entitled hereunder, provided that if any such information is not
publicly available, such nonpublic information shall be made available on a
confidential basis. Guarantor agrees to execute, acknowledge and deliver
documents requested by the prospective mortgagee (such as a consent to the
financing, without further encumbering Guarantor’s or Tenant’s assets, a consent
to a collateral assignment of the Lease and of this Guaranty, estoppel
certificate, and a subordination, non-disturbance and attornment agreement),
customary for tenants and their guarantors to sign in connection with mortgage
loans to landlords, so long as such documents are in form then customary among
institutional (including, without limitation, agency) lenders (provided that
notwithstanding anything herein to the contrary the same do not (A) impose on
Tenant or Guarantor obligations which (i) increase Tenant’s or Guarantor’s
monetary obligations under this Lease or the Guaranty, (ii) materially and
adversely increase Tenant’s or Guarantor’s non-monetary obligations under this
Lease or the Guaranty, (B) diminish Tenant’s or Guarantor’s rights under this
Lease or the Guaranty or (C) require any actions that are not allowed under the
terms of the Existing Financings).

3. GUARANTOR’S OBLIGATIONS UNCONDITIONAL.

(a) This Guaranty is an absolute and unconditional guaranty of payment and of
performance, and not of collection, and shall be enforceable against Guarantor
without the necessity of the commencement by Landlord of any Action against
Tenant or any additional guarantor, and without the necessity of any notice of
nonpayment, nonperformance or nonobservance, or any notice of acceptance of this
Guaranty, or of any other notice or demand to which Guarantor might otherwise be
entitled, all of which Guarantor hereby expressly waives in advance. The
obligations of Guarantor hereunder are independent of the obligations of Tenant.

(b) This Guaranty shall apply notwithstanding any extension or renewal of the
Lease, or any holdover following the expiration or termination of the Term or
any renewal or extension of the Term.

(c) This Guaranty is a continuing guarantee and will remain in full force and
effect notwithstanding, and the liability of Guarantor hereunder shall be
absolute and unconditional irrespective of any or all of the following: (i) any
renewals, extensions, modifications, alterations or amendments of the Lease
(regardless of whether Guarantor consented to or had notice of same); (ii) any
releases or discharges of Tenant or any additional guarantor other than the full
release and complete discharge of all of the Obligations; (iii) Landlord’s
failure or delay to assert any claim or demand or to enforce any of its rights
against Tenant or any additional guarantor; (iv) any extension of time that may
be granted by Landlord to Tenant or any additional guarantor; (v) any assignment
or transfer of all of any part of Tenant’s interest under the Lease (whether by
Tenant, by operation of law, or otherwise); (vi) any subletting, concession,
franchising, licensing or permitting of the Premises; (vii) any changed or
different use of the Premises; (viii) any other dealings or matters occurring
between Landlord and Tenant; (ix) the taking by Landlord of any additional
guarantees, or the receipt by Landlord of any collateral, from Tenant or any

 

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other persons or entities; (x) the release by Landlord of any other guarantor;
(xi) Landlord’s release of any security provided under the Lease;
(xii) Landlord’s failure to perfect any landlord’s lien or other lien or
security interest available under applicable Legal Requirements; (xiii) any
assumption by any person of any or all of Tenant’s obligations under the Lease,
or Tenant’s assignment of any or all of its rights and interests under the
Lease, (xiv) the power or authority or lack thereof of Tenant to execute,
acknowledge or deliver the Lease; (xv) the existence, non-existence or lapse at
any time of Tenant as a legal entity or the existence, non-existence or
termination of any corporate, ownership, business or other relationship between
Tenant and Guarantor; (xvi) any sale or assignment by Landlord of either or both
of this Guaranty and the Lease (including, but not limited to, any direct or
collateral assignment by Landlord to any mortgagee); (xvii) the solvency or lack
of solvency of Tenant at any time or from time to time; or (xviii) any other
cause, whether similar or dissimilar to any of the foregoing, that might
constitute a legal or equitable discharge of Guarantor (whether or not Guarantor
shall have knowledge or notice thereof) other than payment and performance in
full of the Obligations. Without in any way limiting the generality of the
foregoing, Guarantor specifically agrees that (A) if Tenant’s obligations under
the Lease are modified or amended with the express written consent of Landlord,
this Guaranty shall extend only to such obligations as so amended or modified
without notice to, consideration to, or the consent of, Guarantor, and (B) this
Guaranty shall be applicable to any obligations of Tenant arising in connection
with a termination of the Lease, whether voluntary or otherwise. Guarantor
hereby consents, prospectively, to Landlord’s taking or entering into any or all
of the foregoing actions or omissions. For purposes of this Guaranty and the
obligations and liabilities of Guarantor hereunder, “Tenant” shall be deemed to
include any and all concessionaires, licensees, franchisees, department
operators, assignees, subtenants, permittees or others directly or indirectly
operating or conducting a business in or from the Premises, as fully as if any
of the same were the named Tenant under the Lease.

(d) Guarantor hereby expressly agrees that the validity of this Guaranty and the
obligations of Guarantor hereunder shall in no way be terminated, affected,
diminished or impaired by reason of the assertion or the failure to assert by
Landlord against Tenant or any additional guarantor, of any of the rights or
remedies reserved to Landlord pursuant to the provisions of the Lease or any
additional guaranty or by relief of Tenant from any of Tenant’s obligations
under the Lease or otherwise by (i) the release or discharge of Tenant or any
additional guarantor in any state or federal creditors’ proceedings,
receivership, bankruptcy or other proceeding; (ii) the impairment, limitation or
modification of the liability of Tenant or the estate of Tenant in bankruptcy,
or of any remedy for the enforcement of Tenant’s liability under the Lease,
resulting from the operation of any present or future provision of the United
States Bankruptcy Code (11 U.S.C. § 101 et seq., as amended), or from other
statute, or from the order of any court; or (iii) the rejection, disaffirmance
or other termination of the Lease in any such proceeding. This Guaranty shall
continue to be effective if at any time the payment of any amount due under the
Lease or this Guaranty is rescinded or must otherwise be returned by Landlord
for any reason, including, without limitation, the insolvency, bankruptcy,
liquidation or reorganization of Tenant, Guarantor or otherwise, all as though
such payment had not been made, and, in such event, Guarantor shall pay to
Landlord an amount equal to any such payment that has been rescinded or
returned.

4. WAIVERS OF GUARANTOR.

(a) Without limitation of the foregoing, Guarantor waives (i) notice of
acceptance of this Guaranty, protest, demand and dishonor, presentment, and
demands of any kind now or hereafter provided for by any statute or rule of law,
(ii) notice of any actions taken by Landlord or Tenant under the Lease or any
other agreement or instrument relating thereto, (iii) notice of any and all
defaults by Tenant in the payment of Base Rent and Additional Rent or other
rent, charges or amounts, or of any other defaults by Tenant under the Lease,
(iv) all other notices, demands and protests, and all other formalities of every
kind in connection with the enforcement of the Obligations, omission of or delay
in which, but for the provisions of this Section 4, might constitute grounds for
relieving Guarantor of its obligations hereunder, (v) any requirement that
Landlord protect, secure, perfect, insure or proceed against any security
interest or lien, or any property subject thereto, or exhaust any right or take
any action against Tenant or any other person or entity (including any
additional guarantor or Guarantor) or against any collateral, and (vi) the
benefit of any statute of limitations affecting Guarantor’s liability under this
Guaranty.

(b) GUARANTOR HEREBY WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY ANY PERSON OR ENTITY WITH RESPECT TO ANY MATTER
WHATSOEVER ARISING OUT OF OR IN ANY WAY CONNECTED WITH: THIS GUARANTY; THE
LEASE; ANY LIABILITY OR OBLIGATION OF TENANT IN ANY MANNER RELATED TO THE

 

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PREMISES; ANY CLAIM OF INJURY OR DAMAGE IN ANY WAY RELATED TO THE LEASE AND/OR
THE PREMISES; ANY ACT OR OMISSION OF TENANT, ITS AGENTS, EMPLOYEES, CONTRACTORS,
SUPPLIERS, SERVANTS, CUSTOMERS, CONCESSIONAIRES, FRANCHISEES, PERMITTEES OR
LICENSEES; OR ANY ASPECT OF THE USE OR OCCUPANCY OF, OR THE CONDUCT OF BUSINESS
IN, ON OR FROM THE PREMISES. GUARANTOR SHALL NOT IMPOSE ANY COUNTERCLAIM OR
COUNTERCLAIMS OR CLAIMS FOR SET-OFF, RECOUPMENT OR DEDUCTION OF RENT IN ANY
ACTION BROUGHT BY LANDLORD AGAINST GUARANTOR UNDER THIS GUARANTY. GUARANTOR
SHALL NOT BE ENTITLED TO MAKE, AND HEREBY WAIVES, ANY AND ALL DEFENSES AGAINST
ANY CLAIM ASSERTED BY LANDLORD OR IN ANY SUIT OR ACTION INSTITUTED BY LANDLORD
TO ENFORCE THIS GUARANTY OR THE LEASE. IN ADDITION, GUARANTOR HEREBY WAIVES,
BOTH WITH RESPECT TO THE LEASE AND WITH RESPECT TO THIS GUARANTY, ANY AND ALL
RIGHTS WHICH ARE WAIVED BY TENANT UNDER THE LEASE, IN THE SAME MANNER AS IF ALL
SUCH WAIVERS WERE FULLY RESTATED HEREIN. THE LIABILITY OF GUARANTOR UNDER THIS
GUARANTY IS PRIMARY AND UNCONDITIONAL.

(c) Guarantor expressly waives any and all rights to defenses arising by reason
of (i) any “one-action” or “anti-deficiency” law or any other law that may
prevent Landlord from bringing any action, including a claim for deficiency,
against Guarantor before or after Landlord’s commencement or completion of any
action against Tenant; (ii) ANY ELECTION OF REMEDIES BY LANDLORD (INCLUDING,
WITHOUT LIMITATION, ANY TERMINATION OF THE LEASE) THAT DESTROYS OR OTHERWISE
ADVERSELY AFFECTS GUARANTOR’S SUBROGATION RIGHTS OR GUARANTOR’S RIGHTS TO
PROCEED AGAINST TENANT FOR REIMBURSEMENT; (iii) any disability, insolvency,
bankruptcy, lack of authority or power, death, insanity, minority, dissolution,
or other defense of Tenant, of any other guarantor (or any other Guarantor), or
of any other person or entity, or by reason of the cessation of Tenant’s
liability from any cause whatsoever, other than full and final payment in legal
tender and performance of the Obligations; (iv) any right to claim discharge of
any or all of the Obligations on the basis of unjustified impairment of any
collateral for the Obligations; (v) any change in the relationship between
Guarantor and Tenant or any termination of such relationship; (vi) any
irregularity, defect or unauthorized action by any or all of Landlord, Tenant,
any other guarantor (or Guarantor) or surety, or any of their respective
officers, directors or other agents in executing and delivering any instrument
or agreements relating to the Obligations or in carrying out or attempting to
carry out the terms of any such agreements; (vii) any assignment, endorsement or
transfer, in whole or in part, of the Obligations, whether made with or without
notice to or consent of Guarantor; (viii) the recovery from Tenant or any other
Person (including without limitation any other guarantor) becomes barred by any
statute of limitations or is otherwise prevented; (ix) the benefits of any and
all statutes, laws, rules or regulations applicable in the State of California
which may require the prior or concurrent joinder of any other party to any
action on this Guaranty; (x) any release or other reduction of the Obligations
arising as a result of the expansion, release, substitution, deletion, addition,
or replacement (whether or not in accordance with the terms of the Lease) of the
Premises; or (xi) any neglect, delay, omission, failure or refusal of Landlord
to take or prosecute any action for the collection or enforcement of any of the
Obligations or to foreclose or take or prosecute any action in connection with
any lien or right of security (including perfection thereof) existing or to
exist in connection with, or as security for, any of the Obligations, it being
the intention hereof that Guarantor shall remain liable as a principal on the
Obligations notwithstanding any act, omission or event that might, but for the
provisions hereof, otherwise operate as a legal or equitable discharge of
Guarantor. Guarantor hereby waives all defenses of a surety to which it may be
entitled by statute or otherwise. Without limiting the generality of the
foregoing or any other provision hereof, Guarantor hereby expressly waives any
and all benefits which might otherwise be available to Guarantor under
California Civil Code Sections 2809, 2810, 2819, 2939, 2845, 2848, 2849,
2850,2855, 2899 and 3433.

5. SUBORDINATION; SUBROGATION.

(a) Guarantor subordinates to and postpones in favor of the Obligations (i) any
present and future debts and obligations of Tenant to Guarantor (the
“Indebtedness”), including: (A) salary, bonuses, and other payments pursuant to
any employment arrangement; (B) fees, reimbursement of expenses and other
payments pursuant to any independent contractor arrangement; (C) principal and
interest pursuant to any Indebtedness; (D) distributions payable to any
partners, members or shareholders of Guarantor or Affiliates of Guarantor;
(E) lease payments pursuant to any leasing arrangement; (F) any management fees;
and (G) all rights, liens and security interests of Guarantor, whether now or
hereafter arising, in any assets of the Tenant, and (ii) any liens or security

 

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interests securing payment of the Indebtedness. Guarantor shall have no right to
possession of any assets of Tenant or to foreclose upon any such asset, whether
by judicial action or otherwise, unless and until the Obligations have been paid
and performed in full. Guarantor agrees that Landlord shall be subrogated to
Guarantor with respect to Guarantor’s claims against Tenant and Guarantor’s
rights, liens and security interest, if any, in any of Tenant’s assets and
proceeds thereof until all of the Obligations have been paid and performed in
full.

(b) After the occurrence of an Event of Default and until such Event of Default
is cured or after the commencement of any bankruptcy or insolvency proceeding by
or against Tenant and until such proceeding is dismissed, Guarantor shall not:
(i) make any distributions or other payments to any partners, parent entities,
or Affiliates of Guarantor (other than to Tenant); or (ii) directly or
indirectly ask for, sue for, demand, take or receive any payment, by setoff or
in any other manner, including the receipt of a negotiable instrument, for all
or any part of the Indebtedness owed by Tenant, or any successor or assign of
Tenant, including a receiver, trustee or debtor in possession (the term “Tenant”
shall include any such successor or assign of Tenant) until the Obligations have
been paid in full; however, if Guarantor receives such a payment, Guarantor
shall immediately deliver the payment to Landlord for credit against the then
outstanding balance of the Obligations, whether matured or unmatured.
Notwithstanding anything in this Section 5 to the contrary, after an Event of
Default has occurred and is outstanding, Guarantor may make cash contributions
to Tenant.

(c) Guarantor shall not be subrogated, and hereby waives and disclaims any claim
or right against Tenant by way of subrogation or otherwise, to any of the rights
of Landlord under the Lease or otherwise, or in the Premises, which may arise by
any of the provisions of this Guaranty or by reason of the performance by
Guarantor of any of its Obligations hereunder. Guarantor shall look solely to
Tenant for any recoupment of any payments made or costs or expenses incurred by
Guarantor pursuant to this Guaranty. If any amount shall be paid to Guarantor on
account of such subrogation rights at any time when all of the Obligations shall
not have been paid and performed in full, Guarantor shall immediately deliver
the payment to Landlord for credit against the then outstanding balance of the
Obligations, whether matured or unmatured.

(d) Without limiting the foregoing, Guarantor hereby waives any and all
benefits, rights and defenses it may have to subrogation, reimbursement,
indemnification, and contribution and any other rights and defenses that are or
may become available to Guarantor, in each case, by reason of California Civil
Code Sections 2787 to 2855, inclusive.

6. REPRESENTATIONS AND WARRANTIES OF GUARANTOR. Guarantor represents and
warrants that:

(a) Guarantor is a corporation; has all requisite power and authority to enter
into and perform its obligations under this Guaranty; and this Guaranty is valid
and binding upon and enforceable against Guarantor without the requirement of
further action or condition.

(b) The execution, delivery and performance by Guarantor of this Guaranty does
not and will not (i) contravene any applicable Legal Requirements, the
organizational documents of Guarantor, if applicable, any order, writ,
injunction, decree applicable to Guarantor, or any contractual restriction
binding on or affecting Guarantor or any of its properties or assets, or
(ii) result in or require the creation of any lien, security interest or other
charge or encumbrance upon or with respect to any of its properties or assets.

(c) No approval, consent, exemption, authorization or other action by, or notice
to, or filing with, any governmental authority is necessary or required in
connection with the execution, delivery or performance by, or enforcement
against, Guarantor of this Guaranty or any other instrument or agreement
required hereunder.

(d) There is no action, suit or proceeding pending or threatened against or
otherwise affecting Guarantor before any court or other governmental authority
or any arbitrator that may materially adversely affect Guarantor’s ability to
perform its obligations under this Guaranty.

(e) Guarantor’s principal place of business is 27101 Puerta Real, Suite 450,
Mission Viejo, California 92691.

 

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(f) Tenant is indirectly owned and controlled by Guarantor.

(g) Guarantor has derived or expects to derive financial and other advantages
and benefits directly or indirectly, from the making of the Lease and the
payment and performance of the Obligations. Guarantor hereby acknowledges that
Landlord will be relying upon Guarantor’s guarantee, representations, warranties
and covenants contained herein.

(h) All reports, statements (financial or otherwise), certificates and other
data furnished by or on behalf of Guarantor to Landlord in connection with this
Guaranty or the Lease are: true and correct, in all material respects, as of the
applicable date or period provided therein; do not omit to state any material
fact or circumstance necessary to make the statements contained therein not
misleading; and fairly represent the financial condition of Guarantor as of the
respective date thereof; and no material adverse change has occurred in the
financial condition of Guarantor since the date of the most recent of such
financial statements.

7. NOTICES. Any consents, notices, demands, requests, approvals or other
communications given under this Guaranty shall be in writing and shall be given
as provided in the Lease, as follows or to such other addresses as either
Landlord or Guarantor may designate by notice given to the other in accordance
with the provisions of this Section 7:

 

If to Guarantor:    If to Landlord:   

The Ensign Group, Inc.

27101 Puerta Real, Suite 450

Mission Viejo, California 92691

Attn: Chad Keetch

  

c/o CareTrust REIT, Inc.

27101 Puerta Real, Suite 400

Mission Viejo, CA 92691

Attn: William M. Wagner

  

8. CONSENT TO JURISDICTION. Guarantor hereby (a) consents and submits to the
jurisdiction of the courts of the State of California and the federal courts
sitting in the State of California with respect to any dispute arising, directly
or indirectly, out of this Guaranty, (b) waives any objections which the
undersigned may have to the laying of venue in any such suit, action or
proceeding in either such court, (c) agrees to join Landlord in any petition for
removal to either such court, and (d) irrevocably designates and appoints Tenant
as its authorized agent to accept and acknowledge on its behalf service of
process with respect to any disputes arising, directly or indirectly, out of
this Guaranty. The undersigned hereby acknowledges and agrees that Landlord may
obtain personal jurisdiction and perfect service of process through Tenant as
the undersigned agent, or by any other means now or hereafter permitted by
applicable law. Nothing above shall limit Landlord’s choice of forum for
purposes of enforcing this Guaranty.

9. CERTAIN ADDITIONAL COVENANTS.

(a) Financial Deliveries. Guarantor shall deliver the following information to
Landlord:

(i) As soon as available, and in any event within 120 days after the close of
each calendar year, in hard copy and electronic format, in form satisfactory to
Landlord, and presented on a consolidated, complete financial statements
prepared for such year with respect to Guarantor and, if applicable, its
Consolidated Subsidiaries (as defined below), including a balance sheet as of
the end of such year, together with related statements of operations, cash flows
and changes in equity for such calendar year, prepared in accordance with GAAP
applied on a consistent basis. Such financial statements shall be audited by
Pricewaterhouse Coopers, Deloitte, Ernst & Young, KPMG or such other
nationally-recognized accounting firm. Together with Guarantor’s financial
statements, Guarantor shall furnish to Landlord a certificate, executed by
Guarantor or, if applicable, Guarantor’s CEO (or equivalent) (a) certifying as
of the date thereof whether to the best of Guarantor’s knowledge there exists an
event or circumstance which constitutes an Event of Default under the Lease and
if such Event of Default exists, the nature thereof, the period of time it has
existed and the action then being taken to remedy the same, and (b) certifying
that the information contained in such financial statements is true and correct
in all material respects and complies with the provisions of this Section 9. As
used herein, “Consolidated Subsidiary” shall mean, with respect to Guarantor,
any subsidiary or other entity the accounts of which would be consolidated with
those of Guarantor in its consolidated financial statements if such statements
were prepared as of such date.

 

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(ii) As soon as available and in any event within 60 days after the end of each
calendar quarter, in form satisfactory to Landlord, an unaudited consolidated
balance sheet of Guarantor and, if applicable, its Consolidated Subsidiaries,
together with the related consolidated and consolidating statements of
operations for such quarter and for the portion of the calendar year ended at
such quarter and a consolidated statement of cash flows for the portion of the
year at the end of such quarter, all of which shall be prepared on a comparative
basis with the same periods of the previous year (to the extent available) in
accordance with GAAP. Together with Guarantor’s interim financial statements,
Guarantor shall furnish to Landlord a certificate, executed by Guarantor or, if
applicable, Guarantor’s CFO (or equivalent) (a) certifying as of the date
thereof whether to the best of Guarantor’s knowledge there exists an event or
circumstance which constitutes a default or Event of Default under the Lease and
if such default or Event of Default exists, the nature thereof, the period of
time it has existed and the action then being taken to remedy the same, (b) and
certifying that the information contained in such financial statements is true
and correct in all material respects.

Upon the delivery of any financial information by or on behalf of Guarantor
pursuant to this Section 9 from time to time during the Term, Guarantor shall be
deemed (unless Guarantor specifically states otherwise in writing) to
automatically represent and warrant to Landlord that the financial information
delivered to Landlord is true, accurate and complete, presents fairly the
results of operations of Guarantor for the respective periods covered thereby,
reflects accurately the books and records of account of Guarantor as of such
dates and for such periods, and that there has been no adverse change in the
financial condition of Guarantor since the date of the then applicable financial
information.

So long as Guarantor is required to file periodic reports under Section 13(a) or
Section 15(d) of the Exchange Act, notwithstanding anything to the contrary
contained in this Section 9, if Guarantor is required to deliver to Landlord a
particular financial statement by a specified date under the terms of this
Guaranty and Guarantor files such financial statement with the Securities and
Exchange Commission by such specified date, Guarantor shall be deemed to have
satisfied its obligation to deliver such financial statement to Landlord upon
its filing thereof with the Securities and Exchange Commission.

(b) Disclosure. Guarantor agrees that any financial statements of Guarantor and,
if applicable, its Consolidated Subsidiaries required to be delivered to
Landlord may, without the prior consent of, or notice to, Guarantor, be included
and disclosed, to the extent required by applicable law, regulation or stock
exchange rule, in offering memoranda or prospectuses, or similar publications in
connection with syndications, private placements or public offerings of
Landlord’s (or the entities directly or indirectly controlling Landlord)
securities or interests, and in any registration statement, report or other
document permitted or required to be filed under applicable federal and state
laws, including those of any successor to Landlord, and may also be disclosed to
any Facility Mortgagee and to lenders under credit facilities of Landlord or the
entities directly or indirectly controlling Landlord. Guarantor agrees to
provide such other reasonable financial and other information necessary to
facilitate a private placement or a public offering or to satisfy the SEC or
regulatory disclosure requirements.

(c) Review Right. Landlord shall have the right, from time to time during normal
business hours after three (3) Business Days prior oral or written notice to
Guarantor, itself or through any attorney, accountant or other agent or
representative retained by Landlord (“Landlord’s Representatives”), to examine
and audit all financial and other records and pertinent corporate documents of
Guarantor at the office of Guarantor or such other Person that maintains such
records and documents and to make such copies or extracts thereof as Landlord or
Landlord’s Representatives may request and Guarantor hereby agrees to reasonably
cooperate with any such examination or audit; provided, however, the cost of
such examination or audit shall be borne by Landlord, except during the
continuation of an Event of Default, in which case, the cost of any such
examination or audit shall be borne by Guarantor and shall be payable within
fifteen (15) days of Landlord’s written demand therefor; provided further that,
except during the continuation of an Event of Default, any such examination
shall not occur more than once in any calendar year.

 

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(d) Assignment; Sale of Assets; Change in Control. Without the prior consent of
Landlord, which consent may be withheld or granted in Landlord’s sole
discretion, Guarantor shall not assign (whether directly or indirectly), in
whole or in part, this Guaranty or any obligation hereunder or, through one or
more step transactions or tiered transactions, do, or permit to be done, any
activity, transaction or Transfer prohibited under Section 16.1 of the Lease, if
any. Notwithstanding anything else to the contrary herein or in the Lease, any
transfer of stock, partnership, membership or other equity interests of
Guarantor, transfer of assets, merger or other transaction, whether through one
or more step transactions or tiered transactions, in which management of
Guarantor retains at least 5% of the outstanding stock, partnership, membership
or other equity interests of Guarantor or its successor, shall not require
Landlord’s consent.

(e) Payment Method; Default Interest. Guarantor shall make any payments due
hereunder in immediately available funds by wire transfer to Landlord’s bank
account as notified by Landlord, unless Landlord agrees to another method of
payment of immediately available funds. If Guarantor does not pay an amount due
hereunder on its due date, Guarantor shall pay, on demand, interest at the
Agreed Rate on the amount due for a period ending on the full payment of such
amount, including the day of repayment, whether before or after any judgment or
award, to the extent permitted under applicable law.

10. FINANCIAL COVENANTS. Until the payment and performance in full of the
Obligations, Guarantor shall cause Tenant to comply with the terms of
Section 5.12.4 of the Lease.

11. MISCELLANEOUS.

(a) Guarantor further agrees that Landlord may, without notice, assign this
Guaranty in whole or in part. If Landlord disposes of its interest in the Lease,
“Landlord,” as used in this Guaranty, shall mean Landlord’s successors and
assigns.

(b) Guarantor promises to pay all costs of collection or enforcement incurred by
Landlord in exercising any remedies provided for in the Lease or this Guaranty
whether at law or in equity. If any legal action or proceeding is commenced to
interpret or enforce the terms of, or obligations arising out of, this Guaranty,
or to recover damages for the breach thereof, the party prevailing in any such
action or proceedings shall be entitled to recover from the non-prevailing party
all attorneys’ fees and reasonable costs and expenses incurred by the prevailing
party. As used herein, “attorneys’ fees” shall mean the fees and expenses of
counsel to the parties hereto, which may include printing, photocopying,
duplicating and other expenses, air freight charges, and fees billed for law
clerks, paralegals, librarians and others not admitted to the bar but performing
services under the supervision of an attorney. The term “attorneys’ fees” shall
also include, without limitation, all such fees and expenses incurred with
respect to appeals, arbitrations and bankruptcy proceedings.

(c) Guarantor shall, from time to time within ten (10) days after receipt of
Landlord’s request, execute, acknowledge and deliver to Landlord a statement
certifying (i) that this Guaranty is unmodified and in full force and effect (or
if there have been modifications, that the same is in full force and effect as
modified and stating such modifications), (ii) the address of Guarantor to which
all notices and communications under this Guaranty shall be sent, and (iii) to
such other matters as may be reasonably requested by Landlord. Such certificate
may be relied upon by any prospective purchaser, lessor or lender of the
Premises.

(d) If any portion of this Guaranty shall be deemed invalid, unenforceable or
illegal for any reason, such invalidity, unenforceability or illegality shall
not affect the balance of this Guaranty, which shall remain in full force and
effect to the maximum permitted extent.

(e) The provisions, covenants and guaranties of this Guaranty shall be binding
upon Guarantor and its heirs, successors, legal representatives and assigns, and
shall inure to the benefit of Landlord and its successors and assigns, and shall
not be deemed waived or modified unless such waiver or modification is
specifically set forth in writing, executed by Landlord or its successors and
assigns, and delivered to Guarantor.

(f) Whenever the words “include”, “includes”, or “including” are used in this
Guaranty, they shall be deemed to be followed by the words “without limitation”,
and, whenever the circumstances or the context requires, the singular shall be
construed as the plural, the masculine shall be construed as the feminine and/or
the neuter and vice versa. This Guaranty shall be interpreted and enforced
without the aid of any canon, custom or rule of law requiring or suggesting
construction against the party drafting or causing the drafting of the provision
in question.

 

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(g) Each of the rights and remedies herein provided are cumulative and not
exclusive of any rights or remedies provided by law or in the Lease or this
Guaranty.

(h) The provisions of this Guaranty, and any claim, controversy or dispute
arising under or related to this Agreement, shall be governed by and interpreted
solely in accordance with the laws of the State of New York (including
Section 5-1401 of the New York General Obligations Law, but otherwise without
regard to conflicts of law principles).

(i) The execution of this Guaranty prior to execution of the Lease shall not
invalidate this Guaranty or lessen the Obligations of Guarantor hereunder.

(j) The Recitals set forth above are hereby incorporated by this reference and
made a part of this Guaranty. Guarantor hereby represents and warrants that the
Recitals are true and correct.

(k) Each entity or individual comprising Guarantor shall be jointly and
severally liable to Landlord for the faithful performance of this Guaranty.

(l) Notwithstanding anything else to the contrary herein, this Guaranty shall
terminate and Guarantor shall automatically be released from its guaranty
hereunder upon the earlier to occur of (i) payment in full of the Obligations
(other than contingent indemnification and expense reimbursement obligations
that are not yet due and payable) and (ii) one year of the termination of the
Lease, whether following the expiration of the Initial Term or any Renewal Term
or otherwise; provided that such termination and release shall not apply to this
clause (ii) with respect to Obligations for which claims or demands have been
made under this Guaranty prior to the end of such one year period, and which
Obligations have not been satisfied.

[Signature Page Follows]

 

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IN WITNESS WHEREOF, Guarantor has executed this Guaranty as of the day and year
first above written.

 

GUARANTOR:

THE ENSIGN GROUP, INC.,

a Delaware corporation

By:    

Name:    

Its:    

 

S-1

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SCHEDULE 1

LANDLORD ENTITIES; TENANT ENTITIES; FACILITY INFORMATION

 

Landlord   Tenant   Facility Name    Facility Address   

Primary

Intended Use

   No. of Beds/Units                                                           
                                                                                
 

Defined Terms

 

“SNF”    Skilled Nursing Facility “ALF”    Assisted Living Facility “ILF”   
Independent Living Facility “ALZ”    Alzheimer’s Care/Memory Care Facility

 

Schedule 1-1