Document:

EX-10.1

 Exhibit 10.1 

TRANSITION SERVICES AGREEMENT 

by and between 
 THE
ENSIGN GROUP, INC. 
 and 

THE PENNANT GROUP, INC. 

dated as of 

[            ], 2019 

  
 1 

 TABLE OF CONTENTS 

Page 
  

							
	 ARTICLE I DEFINITIONS
	  	 	4	 
			
	 Section 1.1
	  	Certain Definitions	  	 	4	 
	 Section 1.2
	  	Interpretation	  	 	6	 
		
	 ARTICLE II SERVICES
	  	 	7	 
			
	 Section 2.1
	  	Services	  	 	7	 
	 Section 2.2
	  	Additional Services	  	 	8	 
	 Section 2.3
	  	No Violations	  	 	9	 
	 Section 2.4
	  	Third-Party Providers	  	 	9	 
	 Section 2.5
	  	Independent Contractor	  	 	10	 
	 Section 2.6
	  	Employees and Representatives	  	 	10	 
	 Section 2.7
	  	Access	  	 	10	 
	 Section 2.8
	  	Service Coordinators; Disputes	  	 	11	 
		
	 ARTICLE III PAYMENT
	  	 	11	 
			
	 Section 3.1
	  	Pricing	  	 	11	 
	 Section 3.2
	  	Taxes	  	 	11	 
	 Section 3.3
	  	Billing and Payment	  	 	12	 
	 Section 3.4
	  	Budgeting and Accounting	  	 	13	 
		
	 ARTICLE IV DISCLAIMER OF REPRESENTATIONS AND WARRANTIES
	  	 	13	 
			
	 Section 4.1
	  	Disclaimer	  	 	13	 
	 Section 4.2
	  	As Is; Where Is	  	 	13	 
		
	 ARTICLE V INDEMNIFICATION; LIMITATION OF LIABILITY
	  	 	13	 
			
	 Section 5.1
	  	Indemnification by the Service-Providing Party	  	 	13	 
	 Section 5.2
	  	Limitation of Liability	  	 	14	 
	 Section 5.3
	  	Indemnification Procedure; Other Rights	  	 	14	 
		
	 ARTICLE VI FORCE MAJEURE
	  	 	14	 
			
	 Section 6.1
	  	General	  	 	14	 
	 Section 6.2
	  	Notice	  	 	15	 
	 Section 6.3
	  	Subcontractors; Fees	  	 	15	 
	 Section 6.4
	  	Limitations	  	 	15	 
		
	 ARTICLE VII TERM AND TERMINATION
	  	 	15	 
			
	 Section 7.1
	  	Term and Termination of Services	  	 	15	 
	 Section 7.2
	  	Effect of Termination	  	 	16	 
		
	 ARTICLE VIII CONFIDENTIALITY
	  	 	16	 
	 Section 8.1
	  	Confidentiality	  	 	16	 
	 Section 8.2
	  	System Security	  	 	17	 
		
	 ARTICLE IX MISCELLANEOUS
	  	 	17	 

  
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	 Section 9.1
	  	Further Assurances	  	 	17	 
	 Section 9.2
	  	Amendments and Waivers	  	 	18	 
	 Section 9.3
	  	Entire Agreement	  	 	18	 
	 Section 9.4
	  	Third-Party Beneficiaries	  	 	18	 
	 Section 9.5
	  	Notices	  	 	18	 
	 Section 9.6
	  	Counterparts; Electronic Delivery	  	 	18	 
	 Section 9.7
	  	Severability	  	 	18	 
	 Section 9.8
	  	Assignability; Binding Effect	  	 	19	 
	 Section 9.9
	  	Governing Law	  	 	19	 
	 Section 9.10
	  	Construction	  	 	19	 
	 Section 9.11
	  	Performance	  	 	19	 
	 Section 9.12
	  	Title and Headings	  	 	19	 
	 Section 9.13
	  	Exhibits	  	 	20	 
	 Section 9.14
	  	Effective Time	  	 	20	 

  

			
	Exhibit A – Ensign Transitional Services	  	A-1
		
	 Exhibit B – Pennant Transitional Services
	  	B-1
		
	 Exhibit C – Adjusted Hourly Rates
	  	C-1
		
	 Exhibit D – Business Associate Addendum
	  	D-1

  
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 TRANSITION SERVICES AGREEMENT 

THIS TRANSITION SERVICES AGREEMENT (as the same may be amended or supplemented from time to time, this “Agreement”) is
entered into as of [            ], 2019, by and between The Ensign Group, Inc., a Delaware corporation (“Ensign”), and The Pennant Group, Inc., a Delaware
corporation (“Pennant”). Ensign and Pennant are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used but not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Separation Agreement. 
 RECITALS 

WHEREAS, Ensign, through its direct and indirect Subsidiaries, owns the Ensign Business and the Pennant Business; 

WHEREAS, Ensign and Pennant have entered into a Master Separation Agreement, dated as of the date hereof (the “Separation
Agreement”), pursuant to which Ensign will be separated into two independent publicly-traded companies: (a) Pennant, which, following consummation of the transactions contemplated by the Separation Agreement, will own and conduct the
Pennant Business, and (b) Ensign, which, following the consummation of the transactions contemplated by the Separation Agreement, will own and conduct the Ensign Business; 

WHEREAS, in connection with the transactions contemplated by the Separation Agreement, (a) Pennant desires to procure certain services
from Ensign, and Ensign is willing to provide such services to Pennant and (b) Ensign desires to procure certain services from Pennant, and Pennant is willing to provide such services to Ensign, in each case during a transition period and on
the terms and subject to the conditions set forth in this Agreement; 
 WHEREAS, each Party desires to set forth in this Agreement the
principal terms and conditions pursuant to which it will, as applicable, provide or receive such services; and 
 WHEREAS, the execution of
this Agreement by the Parties is a condition precedent to the consummation of the transactions contemplated by the Separation Agreement. 

NOW, THEREFORE, in consideration of the foregoing premises and the mutual agreements contained herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 
 ARTICLE I

 DEFINITIONS 

Section 1.1 Certain Definitions. As used in this Agreement (including in Exhibit A), the following capitalized terms shall have
the following meanings, applicable both to the singular and the plural forms of the terms described: 
 “Additional
Interest” has the meaning set forth in Section 3.3(b). 
 “Additional Services” has the meaning set forth in
Section 2.2. 

  
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 “Additional Ensign Third-Party Providers” has the meaning set forth in
Section 2.4(b). 
 “Additional Pennant Third-Party Providers” has the meaning set forth in Section 2.4(c). 

“Additional Third-Party Providers” means the Additional Ensign Third-Party Providers and the Additional Pennant Third-Party
Providers collectively. 
 “Adjusted Hourly Rate” for an employee means such employee’s hourly rate as set forth on
Exhibit C. 
 “Agreement” has the meaning set forth in the preamble to this Agreement. 

“Bankruptcy Code” means 11 U.S.C. §§ 101 et seq., as amended. 

“Effective Time” means 12:01 a.m. (Eastern time) on
[            ], 2019. 
 “Ensign” has the meaning set
forth in the preamble to this Agreement. 
 “Ensign Known Third-Party Providers” has the meaning set forth in
Section 2.4(b). 
 “Ensign Service Costs” means the amounts to be paid by Pennant to Ensign for the Ensign Services
provided pursuant to this Agreement. 
 “Ensign Services” means the services identified in Exhibit A to be provided
by Ensign. 
 “Known Third-Party Providers” means the Ensign Known Third-Party Providers and the Pennant Known Third-Party
Providers collectively. 
 “Parties” has the meaning set forth in the preamble to this Agreement. 

“Party” has the meaning set forth in the preamble to this Agreement. 

“Payment Date” has the meaning set forth in Section 3.3(b). 

“Pennant” has the meaning set forth in the preamble to this Agreement. 

“Pennant Known Third-Party Providers” has the meaning set forth in Section 2.4(c). 

“Pennant Service Costs” means the amounts to be paid by Ensign to Pennant for Pennant Services provided pursuant to this
Agreement. 
 “Pennant Services” means the services identified in Exhibit A to be provided by Pennant. 

“Sales Taxes” has the meaning set forth in Section 3.2. 

“Security Regulations” has the meaning set forth in Section 8.2(a). 

“Separation Agreement” has the meaning set forth in the Recitals to this Agreement. 

  
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 “Service Coordinator” has the meaning set forth in Section 2.8. 

“Service-Providing Party” means either Ensign or Pennant, as applicable, providing the applicable Services to the
Service-Receiving Party. 
 “Service-Providing Party Group” means the Service-Providing Party and the Subsidiaries of the
Service-Providing Party, other than the other Party and the other Party’s Subsidiaries. 
 “Service-Receiving Party”
means either Ensign or Pennant, as applicable, receiving the applicable Services from the Service-Providing Party. 

“Service-Receiving Party Group” means the Service-Receiving Party and the Subsidiaries of the Service-Receiving Party, other
than the other Party and the other Party’s Subsidiaries. 
 “Service-Receiving Party’s Indemnitee” means if the
Service-Receiving Party is Ensign, the Ensign Indemnitee or if the Service-Receiving Party is Pennant, the Pennant Indemnitee. 

“Services” means the Ensign Services and Pennant Services collectively. 

“Systems” has the meaning set forth in Section 8.2(a). 

“Term” means the period from the Effective Time to the date of termination of Services under this Agreement pursuant to
Section 7.1(b) or (c). 
 “Third-Party Products and Services” has the meaning set forth in Section 2.4(a). 

“Third-Party Providers” has the meaning set forth in Section 2.4(a). 

Section 1.2 Interpretation. In this Agreement, unless the context clearly indicates otherwise: 

(a) words used in the singular include the plural and words used in the plural include the singular; 

(b) the words “include,” “includes” and “including” shall be deemed to be followed by the words “without
limitation”; 
 (c) the word “or” shall have the inclusive meaning represented by the phrase “and/or”; 

(d) relative to the determination of any period of time, “from” means “from and including,” “to” means “to
but excluding” and “through” means “through and including”; 
 (e) accounting terms used herein shall have the
meanings historically ascribed to them by Ensign and its Subsidiaries in its and their internal accounting and financial policies and procedures in effect immediately prior to the date of this Agreement; 

(f) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and
modified from time to time to the extent permitted by the provisions thereof and by this Agreement; 

  
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 (g) reference to any Law means such Law (including any and all rules and regulations
promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability; 

(h) references to any Person include such Person’s successors and assigns but, if applicable, only if such successors and assigns are
permitted by this Agreement; a reference to such Person’s “Affiliates” shall be deemed to mean such Person’s Affiliates following the Distribution under the Separation Agreement and any reference to a third party shall be deemed
to mean a Person who is not a Party or an Affiliate of a Party; 
 (i) if there is any conflict between the provisions of the main body of
this Agreement and Exhibit A or Exhibit B, as applicable, the provisions of the main body of this Agreement shall control unless explicitly stated otherwise in Exhibit A or Exhibit B, as applicable; 

(j) if there is any conflict between the provisions of this Agreement and the Separation Agreement, the provisions of this Agreement shall
control (but only with respect to the subject matter hereof) unless explicitly stated otherwise herein; and 
 (k) any portion of this
Agreement obligating a Party to take any action or to refrain from taking any action, as the case may be, shall mean that such Party shall also be obligated to cause its relevant Subsidiaries to take such action or to refrain from taking such
action, as the case may be. 
 ARTICLE II 

SERVICES 

Section 2.1 Services. 
 (a)
Ensign Services 
 (i) Except as set forth in Exhibit A, Ensign shall use commercially reasonable efforts to
provide (or to cause another applicable member of the Ensign Group to provide) to Pennant (or another applicable member of the Pennant Group) the Ensign Services in a manner, scope, nature, timeliness and quality consistent with the manner, scope,
nature, timeliness and quality in which such Ensign Services (i) were provided to Pennant (or such other applicable member of the Pennant Group) prior to the Effective Time by Ensign (or such other applicable member of the Ensign Group) and
(ii) are provided after the Effective Time by Ensign (or such other applicable member of the Ensign Group) for its own business. 

(ii) For those Ensign Services provided to Pennant prior to the Effective Time, Pennant shall use the Ensign Services for
substantially the same purposes and in substantially the same manner (including as to volume, amount, level or frequency, as applicable) as such Ensign Services have been used immediately prior to the Effective Time; provided that Exhibit
A shall control the scope of and any limitation on the Ensign Services to be provided (to the extent set forth therein) including any Ensign Services that were not previously provided to Pennant prior to the Effective Time, unless otherwise
agreed in writing. 

  
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 (b) Pennant Services 

(i) Except as set forth in Exhibit B, Pennant shall use commercially reasonable efforts to provide (or to cause another
applicable member of the Pennant Group to provide) to Ensign (or another applicable member of the Ensign Group) the Pennant Services in a manner, scope, nature, timeliness and quality consistent with the manner, scope, nature, timeliness and quality
in which such Pennant Services (i) were provided to Ensign (or such other applicable member of the Ensign Group) prior to the Effective Time by Pennant (or such other applicable member of the Pennant Group) and (ii) are provided after the
Effective Time by Pennant (or such other applicable member of the Pennant Group) for its own business. 
 (ii) For those
Pennant Services provided to Ensign prior to the Effective Time, Ensign shall use the Pennant Services for substantially the same purposes and in substantially the same manner (including as to volume, amount, level or frequency, as applicable) as
such Pennant Services have been used immediately prior to the Effective Time; provided that Exhibit B shall control the scope of and any limitation on the Pennant Services to be provided (to the extent set forth therein) including any
Pennant Services that were not previously provided to Ensign prior to the Effective Time, unless otherwise agreed in writing. 
 (c) The
Parties acknowledge the transitional nature of the Services and agree to cooperate in good faith and to use commercially reasonable efforts to effectuate a smooth transition of the Services from the Service-Providing Party to the Service-Receiving
Party (or its designee). In addition, the Service-Providing Party shall consider requests for service in good faith and shall use commercially reasonable efforts to provide any such service under this Section 2.1; provided that no member
of the Service-Providing Party Group shall be obligated to perform any services if such member, in its reasonable judgment, does not have adequate resources to perform such services or if the provision of such services would interfere with the
operation of the Ensign Business or Pennant Business, as applicable. 
 Section 2.2 Additional Services. If the
Service-Receiving Party reasonably determines that additional transition services not listed in Exhibit A or Exhibit B, as applicable, are necessary after the Effective Time, the Service-Receiving Party shall provide written notice to
the Service-Providing Party requesting the Service-Providing Party (i) to provide additional (including as to volume, amount, level or frequency, as applicable) or different services that the Service-Providing Party is not expressly obligated
to provide under this Agreement, if such services are of the type and scope provided by any member of the Service-Providing Party Group (including any employee of any member of the Service-Providing Party Group) for the Service-Receiving Party prior
to the Effective Time, or (ii) expand the scope of any applicable Service (such additional, different or expanded services, the “Additional Services”). The Service-Providing Party shall consider such request in good faith and
shall use commercially reasonable efforts to provide any such Additional Service; provided that no member of the Service-Providing Party Group shall be obligated to perform any Additional Services if such member, in its reasonable judgment,
does not have adequate resources to perform such Additional Services or if the provision of such Additional Services would interfere with the operation of the Ensign Business or Pennant Business, as 

  
 8 

 
applicable. The Service-Providing Party shall notify the Service-Receiving Party within ten (10) calendar days of receipt of such request as to whether it will or will not provide the
Additional Services. If the Service-Providing Party agrees to provide Additional Services pursuant to this Section 2.2, then the Parties shall in good faith negotiate the terms of a supplement to Exhibit A or Exhibit B, as
applicable, which will describe in reasonable detail the Additional Services, project scope, term, price and payment terms to be charged for such Additional Services. Once agreed to in writing, the supplement to Exhibit A or Exhibit B,
as applicable, shall be deemed part of this Agreement as of such date, and the Additional Services shall be deemed the applicable “Services” provided hereunder, in each case, subject to the terms and conditions of this Agreement. 

Section 2.3 No Violations. Notwithstanding anything to the contrary in this Agreement, no Service-Providing Party (nor any member
of its respective Group) shall be required to perform the applicable Services hereunder or to take any actions relating thereto that conflict with or violate any applicable Law or any material Contract, sublicense, authorization, certification or
permit. 
 Section 2.4 Third-Party Providers. 

(a) The Service-Providing Party shall use commercially reasonable efforts to obtain any required consents, licenses or approvals of the
providers (“Third-Party Providers”) of any products or services required to be used in providing any applicable Services pursuant to this Agreement (“Third-Party Products and Services”). The Parties understand and
agree that provision of any applicable Services requiring the use of any Third-Party Products and Services shall be subject to receipt of any required consents, licenses or approvals of the applicable Third-Party Providers; provided that if any
third-party consents, licenses or approvals are not obtained pursuant to the foregoing, the Service-Providing Party will, to the extent reasonably practicable, continue to use commercially reasonable efforts to provide (or to cause another
applicable member of the Ensign Group or Pennant Group, as applicable, to provide) services that are substantially similar to the applicable Services for which such consent, license or approval was sought but not obtained; provided, however, that
nothing in this Section 2.4(a) shall obligate any Service-Providing Party (or another applicable member of the Ensign Group or Pennant Group, as applicable) to violate any applicable Law or breach any of its contractual obligations to third
parties in order to provide the applicable Services hereunder. 
 (b) With respect to the Ensign Services, (i) Pennant hereby consents
to Ensign’s use of any Third-Party Provider(s) named in Exhibit A with respect to such Ensign Services (“Ensign Known Third-Party Providers”) and (ii) if, after the date of this Agreement, Ensign reasonably
determines that it requires the use of Third-Party Providers in addition to the Ensign Known Third-Party Providers (“Additional Ensign Third-Party Providers”) in providing such Ensign Services, the use of such Additional Ensign
Third-Party Providers shall require the written consent of Pennant’s Service Coordinator and, subject to Section 2.4(d), such consent will not be unreasonably withheld, conditioned or delayed. 

(c) With respect to the Pennant Services, (i) Ensign hereby consents to Pennant’s use of any Third-Party Provider(s) named in
Exhibit B with respect to such Pennant Services (“Pennant Known Third-Party Providers”) and (ii) if, after the date of this Agreement, Pennant reasonably determines that it requires the use of Third-Party Providers in
addition to the Pennant Known Third-Party Providers (“Additional Pennant Third-Party Providers”) in providing such Pennant Services, the use of such Additional Pennant Third-Party Providers shall require the written consent of
Ensign’s Service Coordinator and, subject to Section 2.4(d), such consent will not be unreasonably withheld, conditioned or delayed. 
  

  
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 (d) Notwithstanding the foregoing, in those instances in which the use of Third-Party
Products and Services will require payment of additional consideration by a Service-Receiving Party and the payment of such additional consideration is not contemplated by this Agreement (including Exhibit A or Exhibit B, as
applicable) or has not been previously agreed by the Parties, then (i) the Service-Providing Party will provide the Service-Receiving Party with thirty (30) calendar days’ prior written notice detailing the amount of such additional
consideration and (ii) the Service-Receiving Party will then have the option to (A) procure its own Third-Party Products and Services at its own expense or (B) authorize the Service-Providing Party to incur the required additional
consideration on its behalf and at the Service-Receiving Party’s expense and such additional consideration will be deemed an applicable Service Cost under this Agreement. 

Section 2.5 Independent Contractor. Each Service-Providing Party hereto (and each applicable member of the Service-Providing Party
Group) shall act under this Agreement solely as an independent contractor, and not as an agent, of the other Party (and each applicable member of the Service-Providing Party Group). 

Section 2.6 Employees and Representatives. Unless otherwise agreed in writing, each employee and representative of the
Service-Providing Party (or a member of the Service-Providing Party Group) that provides Services to the Service-Receiving Party (or a member of the Service-Receiving Group) pursuant to this Agreement (a) shall be deemed for all purposes to be
an employee or representative of Service-Providing Party (or a member of the Service-Providing Party Group) and not an employee or representative of Service-Receiving Party (or a member of the Service-Receiving Group) and (b) shall be under the
direction, control and supervision of the Service-Providing Party (or such member of the Service-Providing Party Group), and Service-Providing Party (or a member of the Service-Providing Party Group) shall have the sole right to exercise all
authority with respect to the employment (including termination of employment) and assignment of such employee or representative and shall have the sole responsibility to pay for all personnel and other related expenses, including salary or wages,
of such employee or representative. 
 Section 2.7 Access. The Service-Receiving Party shall provide (or cause any applicable
member of the Service-Providing Party to provide) the Service Providing Party (or any applicable member of the Service-Providing Party Group) such reasonable access to the employees, representatives, facilities and books and records of the
Service-Receiving Party (or such member of the Service-Receiving Party Group) as the Service-Providing Party (or such member of the Service-Providing Party Group) shall reasonably request in order to enable the Service-Providing Party (or such
member of the Service-Receiving Party Group) to provide any applicable Services required under this Agreement. Any member of the Service-Providing Party Group, receiving access pursuant to this Section 2.7 must conform with and abide by the
confidentiality and security provisions in Article VIII, as applicable. 

  
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 Section 2.8 Service Coordinators; Disputes. Each Party shall appoint a
representative to act as the primary contact with respect to the provision of the Services (each such person, a “Service Coordinator”). The initial Service Coordinator for Pennant shall be Derek Bunker, and the initial Service
Coordinator for Ensign shall be Pat Ikerd. The Service Coordinators shall meet as expeditiously as possible to resolve any dispute under this Agreement (including, but not limited to, any disputes relating to payments under Article III), and any
dispute that is not resolved by the Service Coordinators within thirty (30) calendar days shall be deemed a Dispute under the Separation Agreement and shall be resolved in accordance with the dispute resolution procedures set forth in Article X
of the Separation Agreement. When a disputed amount has been resolved, either by mutual agreement of the Parties or by a final decision by a court of competent jurisdiction, the Party owing any amount to another Party shall pay such amount owed to
such other Party within five (5) Business Days following such resolution. Each Party may treat an act of the other Party’s Service Coordinator as being authorized by such other Party without inquiring whether such Service Coordinator had
authority to so act; provided that no Service Coordinator shall have authority to amend this Agreement. Each Party shall advise the other Party promptly in writing of any change in its respective Service Coordinator, setting forth the name of
the replacement Service Coordinator, and stating that the replacement Service Coordinator is authorized to act for such Party in accordance with this Section 2.8. 

ARTICLE III 
 PAYMENT

 Section 3.1 Pricing. 

(a) All Ensign Services provided by Ensign (or another applicable member of the Ensign Group) shall be charged to Pennant at the fees for such
Ensign Services determined in accordance with Exhibit A, and the Ensign Service Costs shall be payable by Pennant in the manner set forth in Section 3.3. 

(b) All Pennant Services provided by Ensign (or another applicable member of the Ensign Group) shall be charged to Ensign at the fees for such
Pennant Services determined in accordance with Exhibit B, and the Pennant Service Costs shall be payable by Ensign in the manner set forth in Section 3.3. 

Section 3.2 Taxes. The Parties acknowledge that fees charged for Services may be subject to goods and service taxes, value added
taxes, sales taxes or similar taxes (collectively, “Sales Taxes”). With respect to all Services provided under this Agreement, (a) the Service-Providing Party shall be liable for reporting and paying the Sales Taxes or any
other applicable taxes imposed on fees received for providing such Services and shall provide the Service-Receiving Party evidence of any such payment for taxes paid on fees received for providing such Services reasonably promptly following payment
thereof and (b) the Service-Receiving Party shall reasonably promptly reimburse the Service-Providing Party for the amount of such taxes paid on fees received for providing such Services. The Service-Receiving Party shall be liable for any
applicable use taxes imposed on the applicable Services received. 

  
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 Section 3.3 Billing and Payment. 

(a) With respect to Pennant as the Service-Providing Party, within twenty (20) calendar days and with respect to Ensign as the
Service-Providing Party, within twenty-five (25) calendar days after the end of each month, the Service-Providing Party will invoice the Service-Receiving Party for the applicable Service Costs on a monthly basis, in arrears, for the prior
month just ended. The invoice shall set forth in reasonable detail for the period covered by such invoice (i) the Services rendered, (ii) the Service Costs for each type of Service provided, (iii) the amount of such Service Costs that
have been offset by Service Costs due to the other Party pursuant to Section 3.3(d) and (iv) such additional information as may be reasonably requested by the Service-Receiving Party. 

(b) The Service-Receiving Party agrees to pay all of the applicable Service Costs that are not settled pursuant to an offset again amounts owed
pursuant to Section 3.3(d) on or before thirty (30) calendar days after the date on which an invoice for Service Costs is delivered to the Service-Receiving Party (the “Payment Date”) by check or wire transfer of
immediately available funds to an account designated in writing from time to time by the Service-Providing Party. If the Service-Receiving Party fails to pay any monthly payment on or before the Payment Date, the Service-Providing Party shall
provide written notice to the Service-Receiving Party of such failure promptly following the Payment Date and if the Service-Receiving Party fails to pay any monthly payment within fifteen (15) calendar days of delivery of such written notice,
the Service-Receiving Party shall be obligated to pay, in addition to the amount due pursuant to such invoice, interest on such amount at a rate per annum equal to 5% calculated from the Payment Date (“Additional Interest”). Unless
otherwise agreed in writing between the Parties, all payments made pursuant to this Agreement shall be made in U.S. dollars. 
 (c)
Notwithstanding the foregoing, if the Service-Receiving Party in good faith disputes any invoiced charge, payment of such disputed charge shall be made only after mutual resolution of such dispute pursuant to Section 2.8. The Service-Receiving
Party agrees to notify the Service-Providing Party promptly, and in no event later than the relevant Payment Date, of any disputed charge. Additional Interest shall not accrue on any amount in dispute, and no default shall be alleged until after the
relevant Payment Date. 
 (d) Prior to the Service-Receiving Party making a payment of any amounts due pursuant to this Section 3.3, the
Service-Receiving Party may offset against such payment any amounts owed by the Service-Providing Party to the Service-Receiving Party that has not been disputed pursuant to Section 3.3(c) pursuant to this Section 3.3. 

(e) In addition to the offset right provided in Section 3.3(d) for amounts owed to each other, the Service-Receiving Party may offset
against any amount owed to the Service-Providing Party as a result of amounts paid to third parties for goods or services that the Service-Receiving Party determines in its reasonable discretion were provided to the Service-Providing Party. Prior to
any such payment to third parties, the Service-Receiving Party intending to make such payment shall notify the Service-Providing Party promptly and with sufficient detail to ascertain the appropriate party responsible for such payment. If the
Service-Receiving Party does not provide such notice, it shall be liable for any losses incurred as a result of any incorrect payment made to third parties. 

  
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 (f) During the term of this Agreement, each Party shall keep such books, records and
accounts as are reasonably necessary to verify the calculation of the fees and related expense for Services provided hereunder. The Service-Providing Party shall provide documentation supporting any amounts invoiced pursuant to this Section 3.3
as the Service-Receiving Party may from time to time reasonably request. The Service-Receiving Party shall have the right to review such books, records and accounts at any time during normal business hours upon reasonable written notice, and the
Service-Receiving Party agrees to conduct any such review in a manner so as not to unreasonably interfere with the Service-Providing Party’s normal business operations. 

Section 3.4 Budgeting and Accounting. Upon reasonable request, each Party will cooperate with the other Party with respect to
budgeting and accounting matters relating to the Services. 
 ARTICLE IV 

DISCLAIMER OF REPRESENTATIONS AND WARRANTIES 

Section 4.1 Disclaimer. 

(a) EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.1, PENNANT ACKNOWLEDGES AND AGREES THAT ENSIGN (AND EACH MEMBER OF THE ENSIGN GROUP) MAKES NO
REPRESENTATIONS OR WARRANTIES (INCLUDING WARRANTIES OF MERCHANTABILITY, ADEQUACY OR FITNESS FOR A PARTICULAR PURPOSE) OR GUARANTIES OF ANY KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO ANY SERVICES PROVIDED HEREUNDER. 

(b) EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.1, ENSIGN ACKNOWLEDGES AND AGREES THAT PENNANT (AND EACH MEMBER OF THE PENNANT GROUP) MAKES NO
REPRESENTATIONS OR WARRANTIES (INCLUDING WARRANTIES OF MERCHANTABILITY, ADEQUACY OR FITNESS FOR A PARTICULAR PURPOSE) OR GUARANTIES OF ANY KIND, EXPRESS OR IMPLIED, STATUTORY OR OTHERWISE, WITH RESPECT TO ANY SERVICES PROVIDED HEREUNDER. 

Section 4.2 As Is; Where Is. EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, THE SERVICES (AND ANY RELATED PRODUCTS) TO BE
PROVIDED UNDER THIS AGREEMENT ARE FURNISHED AS IS, WHERE IS, WITH ALL FAULTS. 
 ARTICLE V 

INDEMNIFICATION; LIMITATION OF LIABILITY 

Section 5.1 Indemnification by the Service-Providing Party. The Service-Providing Party hereby agrees to indemnify, defend and
hold harmless the Service-Receiving Party Indemnitees from and against any and all Losses relating to, arising out of or resulting from the Service-Providing Party’s gross negligence or willful misconduct in the performance of its obligations
hereunder, or material breach of this Agreement, other than to the extent such Losses are attributable to the gross negligence, willful misconduct or material breach of this Agreement by any member of the Service-Receiving Party’s Group. 

  
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 Section 5.2 Limitation of Liability. 

(a) IN NO EVENT SHALL ANY MEMBER OF THE SERVICE PROVIDING PARTY’S GROUP, NOR ANY DIRECTOR, OFFICER, MANAGER, EMPLOYEE OR AGENT THEREOF, BE
LIABLE, WHETHER IN CONTRACT, IN TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY) OR OTHERWISE TO THE SERVICE-RECEIVING PARTY (OR ANY SERVICE-RECEIVING PARTY’S INDEMNITEES) FOR ANY EXEMPLARY, PUNITIVE, INDIRECT, REMOTE OR SPECULATIVE DAMAGES AS
A RESULT OF ANY BREACH, PERFORMANCE OR NON-PERFORMANCE BY SUCH PERSON UNDER THIS AGREEMENT, WHETHER OR NOT SUCH PERSON HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, EXCEPT TO THE EXTENT ANY SUCH AMOUNT IS PAID TO A THIRD PARTY BY THE
SERVICE-RECEIVING PARTY OR ANY OF ITS AFFILIATES. 
 (b) THE SERVICE-PROVIDING PARTY’S TOTAL LIABILITY TO THE SERVICE-RECEIVING PARTY
UNDER THIS AGREEMENT FOR ANY CLAIM SHALL NOT EXCEED, IN THE AGGREGATE, AN AMOUNT EQUAL TO THE TOTAL AMOUNT PAID BY THE SERVICE-RECEIVING PARTY FOR THE APPLICABLE SERVICES UNDER THIS AGREEMENT. 

Section 5.3 Indemnification Procedure; Other Rights. All claims for indemnification pursuant to Section 5.1 shall be made in
accordance with the procedures set forth in Section 9.4 of the Separation Agreement and shall be subject to Sections 9.2 through 9.10 of the Separation Agreement. 

ARTICLE VI 
 FORCE
MAJEURE 
 Section 6.1 General. If the Service-Providing Party (or any member of the Service-Providing Party Group) is
prevented from or delayed in complying, in whole or in part, with any of the terms or provisions of this Agreement by reason of fire, flood, storm, earthquake, strike, walkout, lockout or other labor trouble or shortage, delays by unaffiliated
suppliers or carriers, shortages of fuel or energy sources, power, raw materials or components, equipment failure, any law, order, proclamation, regulation, ordinance, demand, seizure or requirement of any Governmental Authority, riot, civil
commotion, acts of war (declared or undeclared), rebellion, act of terrorism, nuclear or other accident, explosion, casualty, pandemic, act of God, or act, omission or delay in acting by any Governmental Authority or by the Service-Receiving Party
(or any member of the Service-Receiving Party Group) or any other cause, whether or not of a class or kind listed in this sentence, which is beyond the reasonable control of Service-Providing Party (or any other applicable member of the
Service-Providing Party Group), then upon notice to Service-Receiving Party pursuant to Section 6.2, the affected provisions and/or other requirements of this Agreement shall be suspended during the period of such disability and, unless
otherwise set forth herein to the contrary, Service-Providing Party (and any applicable member of the Service-Providing Party Group) shall have no liability to Pennant (or any member of the Service-Receiving Party Group) in connection therewith. The
Service-Receiving Party shall not be required to pay any fees applicable to any period during which the Service-Providing Party’s performance is excused pursuant to this Section 6.1 and the applicable Services contemplated to be provided
hereunder are not actually performed. 

  
 14 

 Section 6.2 Notice. Upon becoming aware of a disability causing a delay in the
performance or preventing performance of any Services to be provided by Service-Providing Party (or another member of the Service-Providing Party Group) under this Agreement, Service-Providing Party shall promptly notify Service-Receiving Party in
writing of the existence of such disability and the anticipated duration of the disability, if then known. 
 Section 6.3
Subcontractors; Fees. The Service-Receiving Party shall have the right, but not the obligation, to hire or engage one or more subcontractors to perform the applicable Services affected by the disability for the duration of the period during
which such disability delays or prevents the performance of such Services by the Service-Providing Party, it being agreed that the fees paid or payable under this Agreement with respect to the applicable Services affected by the disability shall be
reduced (or refunded, if applicable) on a dollar-for-dollar basis for all amounts paid by the Service-Receiving Party to such subcontractors; provided that the Service-Providing Party shall not be responsible for the amount of fees charged by
any such subcontractors to perform such Services to the extent they exceed the fees payable under this Agreement for such Services. 

Section 6.4 Limitations. Each Party shall use its commercially reasonable efforts to promptly remove any disability under
Section 6.1 as soon as possible; provided that nothing in this Article VI will be construed to require the settlement of any lawsuit or other legal proceeding, strike, walkout, lockout or other labor dispute on terms which, in the reasonable
judgment of the affected Party, are contrary to its interest. It is understood that the settlement of a lawsuit or other legal proceeding, strike, walkout, lockout or other labor dispute will be entirely within the discretion of the affected Party.

 ARTICLE VII 

TERM AND TERMINATION 

Section 7.1 Term and Termination of Services. 

(a) Subject to Section 7.1(c), Section 6.1 and except as otherwise set forth in Exhibit A or Exhibit B, as applicable,
each of the Services shall be provided for the term specified in Section 7.1(b); provided that the Service-Receiving Party shall have the right to terminate one or more of the applicable Services that it receives under this Agreement at
the end of a designated month by giving the Service-Providing Party the longer of (a) at least thirty (30) calendar days’ prior written notice of such termination or (b) in the case of any Service that the Service-Providing Party
incurs an expense from an unrelated third-party, the period of time required to terminate such third-party expense, but in no event longer than ninety (90) days unless the Service-Providing Party, in its reasonable judgment, determines that a
longer period of time is commercially reasonable. The Parties shall cooperate with each other in good faith in their efforts to reasonably effect early termination of such Services, including, where applicable, partial termination, and to agree in
good faith upon appropriate reduction of the charges hereunder in connection with such early termination. 
 (b) Except as set otherwise
forth in Exhibit A or Exhibit B, as applicable, the provision of Services under this Agreement shall terminate upon the earlier of (a) the cessation of all Services pursuant to Section 7.1(a), or (b) the 24 month
anniversary of the Effective Time, plus the total period of any extensions made by the Service-Providing Party pursuant to the following proviso; 

  
 15 

 
provided that the Service-Receiving Party may, at its option, extend the period for any Service (i) for up to an additional two (2) months, on the same terms and conditions (including
with respect to fees) as such Service was provided during the initial term for such Service, and (ii) thereafter, for up to an additional three (3) months, on the same terms and conditions as previously provided, except the Fees for such
Service provided during such extension period shall be increased by twenty percent (20%). Thereafter, any extension to term of Service for any Service shall be at the Service-Providing Party’s sole discretion. This Agreement, except for
Section 2.1 and Section 2.2, shall survive the termination of Services, and any such termination shall not affect any payment obligation for Services rendered prior to termination. 

(c) Notwithstanding the foregoing: (i) the Parties may terminate the provision of the applicable Services under this Agreement by mutual
written consent and (ii) the Parties each reserve the right to immediately terminate the provision of the applicable Services under this Agreement by written notice to the other Party in the event that such other Party shall have
(A) applied for or consented to the appointment of a receiver, trustee or liquidator; (B) admitted in writing an inability to pay debts as they mature; (C) made a general assignment for the benefit of creditors; or (D) filed a
voluntary petition, or have filed against it a petition, for an order of relief under the Bankruptcy Code. 
 Section 7.2 Effect of
Termination. 
 (a) Termination or expiration of the applicable Services under this Agreement shall not release a Party from any
liability or obligation which already has accrued as of the effective date of such termination or expiration, and shall not constitute a waiver or release of, or otherwise be deemed to adversely affect, any rights, remedies or claims, which a Party
may have hereunder at law, equity or otherwise or which may arise out of or in connection with such termination or expiration. 
 (b) As
promptly as practicable following termination of any Service, and the payment by the Service-Receiving Party of all amounts owing hereunder, the Service-Providing Party shall return all reasonably available material, inventory and other property of
the Service-Receiving Party Group held by the Service-Providing Party Group and shall deliver copies of all of the Service-Receiving Party Group’s records maintained by the Service-Providing Party Group with regard to such Service in the
Service-Providing Party’s standard format and media. The Service-Providing Party shall deliver such property and records to such location or locations as reasonably requested by the Service-Receiving Party. Arrangements for shipping, including
the cost of freight and insurance, and the reasonable cost of packing incurred by the Service-Providing Party shall be borne by the Service-Receiving Party. 

ARTICLE VIII 

CONFIDENTIALITY 

Section 8.1 Confidentiality. Each Party agrees that the specific terms and conditions of this Agreement and any information
conveyed or otherwise received by or on behalf of a Party in conjunction herewith shall be Confidential Information subject to the confidentiality provisions (and exceptions thereto) set forth in Section 8.7 of the Separation Agreement. 

  
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 Section 8.2 System Security. 

(a) If the Service-Providing Party (or a member of the Service-Providing Party Group) is given access to the computer systems or software
(collectively, “Systems”) of the Service-Receiving Party (or a member of the Service-Receiving Party Group) in connection with the provision of any Services, The Service-Providing Party shall comply (or cause such member of the
Service-Providing Party Group to comply) with all of the system security policies, procedures and requirements (collectively, “Security Regulations”) of the Service-Receiving Party (or such member of the Service-Receiving Party
Group), and shall not (or shall cause such member the Service-Providing Party Group not to) tamper with, compromise or circumvent any security or audit measures employed by the Service-Receiving Party (or such member of the Service-Receiving Party
Group). The Service-Providing Party shall (or shall cause such member of the Service-Providing Party Group to) access and use only those Systems of the Service-Receiving Party (or such member of the Service-Receiving Party Group) for which it has
been granted the right to access and use. 
 (b) The Service-Providing Party shall use commercially reasonable efforts to ensure that only
those of its personnel (or the personnel of such member of the Service-Providing Party Group) who are specifically authorized to have access to the Systems of the Service-Receiving Party (or such member of the Service-Receiving Party Group) gain
such access, and use commercially reasonable efforts to prevent unauthorized access, use, destruction, alteration or loss of information contained therein, including notifying its personnel (or the personnel of such member of its Group) of the
restrictions set forth in this Agreement and of the Security Regulations. 
 (c) The Parties acknowledge that the Service-Providing Party may
receive or otherwise have access to information of the Service-Receiving Party that is considered “protected health information” under the Health Insurance Portability and Accountability Act of 1996, as amended and implemented through
regulation (“HIPAA”). The Parties further acknowledge and agree that this may cause the Service-Providing Party to satisfy the definition of a “business associate” under HIPAA. To address the requirements of HIPAA, the
Parties agree to comply with the Business Associate Addendum attached hereto as Exhibit D and incorporated herein by reference. 

ARTICLE IX 

MISCELLANEOUS 

Section 9.1 Further Assurances. Subject to the limitations or other provisions of this Agreement, (a) each Party shall, and
shall cause the other members of its Group to, use commercially reasonable efforts (subject to, and in accordance with applicable Law) to take promptly, or cause to be taken promptly, all actions, and to do promptly, or cause to be done promptly,
and to assist and cooperate with the other Party in doing, all things reasonably necessary, proper or advisable to carry out the intent and purposes of this Agreement, including using commercially reasonable efforts to perform all covenants and
agreements herein applicable to such Party or any member of its Group and (b) neither Party will, nor will either Party allow any other member of its Group to, without the prior written consent of the other Party, take any action which would
reasonably be expected to prevent or materially impede, interfere with or delay the provision of any Services hereunder during the Term. Without limiting the generality of the foregoing, where the cooperation of third parties would be necessary in
order for a Party to completely fulfill its obligations under this Agreement, such Party shall use commercially reasonable efforts to cause such third parties to provide such cooperation. 

  
 17 

 Section 9.2 Amendments and Waivers. 

(a) Subject to Section 11.1 of the Separation Agreement and Section 2.2 of this Agreement, this Agreement may not be amended except
by an agreement in writing signed by both Parties. 
 (b) Any term or provision of this Agreement may be waived, or the time for its
performance may be extended, by the Party entitled to the benefit thereof and any such waiver shall be validly and sufficiently given for the purposes of this Agreement if it is in writing signed by an authorized representative of such Party. No
delay or failure in exercising any right, power or remedy hereunder shall affect or operate as a waiver thereof; nor shall any single or partial exercise thereof or any abandonment or discontinuance of steps to enforce such a right, power or remedy
preclude any further exercise thereof or of any other right, power or remedy. The rights and remedies hereunder are cumulative and not exclusive of any rights or remedies that either Party would otherwise have. 

Section 9.3 Entire Agreement. This Agreement, the Separation Agreement, the other Ancillary Agreements, and the Exhibits and
Schedules referenced herein and therein and attached hereto or thereto, constitute the entire agreement and understanding between the Parties with respect to the subject matter hereof and supersede all prior negotiations, agreements, commitments,
writings, courses of dealing and understandings with respect to the subject matter hereof. 
 Section 9.4 Third-Party
Beneficiaries. Except as provided in Article V relating to Pennant Indemnitees, this Agreement is solely for the benefit of the Parties and shall not be deemed to confer upon third parties any remedy, claim, liability, reimbursement, cause of
action or other right in excess of those existing without reference to this Agreement. 
 Section 9.5 Notices. All notices,
requests, permissions, waivers and other communications hereunder shall be provided in accordance with the provisions of Section 12.8 of the Separation Agreement. 

Section 9.6 Counterparts; Electronic Delivery. This Agreement may be executed in multiple counterparts, each of which when
executed shall be deemed to be an original, but all of which together shall constitute one and the same agreement. Execution and delivery of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic means
shall be deemed to be, and shall have the same legal effect as, execution by an original signature and delivery in person. 

Section 9.7 Severability. If any term or other provision of this Agreement or the Exhibits attached hereto is determined by a
nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to either Party. Upon such determination 

  
 18 

 
that any term or other provision is invalid, illegal or incapable of being enforced, the court, administrative agency or arbitrator shall interpret this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the fullest extent possible. If any sentence in this Agreement is so broad as to be unenforceable, the provision
shall be interpreted to be only so broad as is enforceable. 
 Section 9.8 Assignability; Binding Effect. The rights and
obligations of each Party under this Agreement shall not be assignable, in whole or in part, directly or indirectly, whether by operation of law or otherwise, by such Party without the prior written consent of the other Party (such consent not to be
unreasonably withheld, conditioned or delayed) and any attempt to assign any rights or obligations under this Agreement without such consent shall be null and void. Notwithstanding the foregoing, either Party may assign its rights and obligations
under this Agreement to any of their respective Affiliates provided that no such assignment shall release such assigning Party from any liability or obligation under this Agreement. This Agreement shall be binding upon and inure to the benefit of
the Parties and their successors and permitted assigns. 
 Section 9.9 Governing Law. This Agreement shall be governed by, and
construed and enforced in accordance with, the substantive laws of the State of Delaware, without regard to any conflicts of law provisions thereof that would result in the application of the laws of any other jurisdiction. 

Section 9.10 Construction. This Agreement shall be construed as if jointly drafted by the Parties and no rule of construction or
strict interpretation shall be applied against either Party. The Parties represent that this Agreement is entered into with full consideration of any and all rights which the Parties may have. The Parties have relied upon their own knowledge and
judgment. The Parties have had access to independent legal advice, have conducted such investigations they thought appropriate, and have consulted with such other independent advisors as they deemed appropriate regarding this Agreement and their
rights and asserted rights in connection therewith. The Parties are not relying upon any representations or statements made by the other Party, or such other Party’s employees, agents, representatives or attorneys, regarding this Agreement,
except to the extent such representations are expressly set forth or incorporated in this Agreement. The Parties are not relying upon a legal duty, if one exists, on the part of the other Party (or such other Party’s employees, agents,
representatives or attorneys) to disclose any information in connection with the execution of this Agreement or its preparation, it being expressly understood that neither Party shall ever assert any failure to disclose information on the part of
the other Party as a ground for challenging this Agreement. 
 Section 9.11 Performance. Each Party shall cause to be performed,
and hereby guarantees the performance of, all actions, agreements and obligations set forth herein to be performed by any Subsidiary or Affiliate of such Party. 

Section 9.12 Title and Headings. Titles and headings to Sections and Articles are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation of this Agreement. 

  
 19 

 Section 9.13 Exhibits. Exhibit A attached hereto is incorporated herein
by reference and shall be construed with and as an integral part of this Agreement to the same extent as if the same had been set forth verbatim herein. 

Section 9.14 Effective Time. This Agreement shall be effective as of the Effective Time. 

[Signature Page Follows] 

  
 20 

 IN WITNESS WHEREOF, the Parties have caused this Agreement to be executed by their
respective officers as of the date first set forth above. 
  

			
	THE ENSIGN GROUP, INC.
		
	By:	 	  

		 	Name:
		 	Title:
	
	THE PENNANT GROUP, INC.
		
	By:	 	  

		 	Name:
		 	Title:EX-10.2

 Exhibit 10.2 

TAX MATTERS AGREEMENT 

THIS TAX MATTERS AGREEMENT is dated as of
[                    ], 2019, by and among The Ensign Group, Inc. (“Ensign”), a Delaware corporation, by and on behalf of
itself and each Affiliate of Ensign (as determined after the Distribution), and The Pennant Group, Inc., a Delaware corporation, and currently a direct, subsidiary of Ensign (“SpinCo”), by and on behalf of itself and each Affiliate
of SpinCo (as determined after the Distribution). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Master Separation Agreement, dated as of
[                    ], 2019 (the “Separation Agreement”). 

RECITALS 
 WHEREAS, Ensign
is the common parent of an affiliated group whose includible corporations join in the filing of a consolidated U.S. federal income Tax Return (the “Ensign Consolidated Group”); 

WHEREAS, as of the date of this Agreement, SpinCo is a subsidiary of Ensign and a member of the Ensign Consolidated Group; 

WHEREAS, the board of directors of Ensign has determined that it is advisable and in the best interests of Ensign and its stockholders to
reorganize the assets and liabilities of Ensign into two separate, publicly traded companies: (i) Ensign which, following consummation of the transactions contemplated herein and in the Separation Agreement, will own and conduct, directly or
indirectly, post-acute services businesses, including skilled nursing, senior living, and other ancillary operations (the “Distributing Business”); and (ii) SpinCo which, following consummation of the transactions contemplated
herein and in the Separation Agreement, will own and conduct, directly or indirectly, the home health and hospice agencies business, the senior living business and any other business directly conducted by any member of the Pennant Group (as defined
in the Separation Agreement) as of or prior to the date of the Separation Agreement (the “Controlled Business”); 

WHEREAS, on the Distribution Date and immediately prior to the Distribution, SpinCo will distribute the Pennant Cash Payment to Ensign
pursuant to Section 2.1(a)(iii) of the Separation Agreement; 
 WHEREAS, on the Distribution Date, Ensign will distribute all of its
outstanding shares of SpinCo to the holders of Ensign common stock pursuant to the Distribution; 
 WHEREAS, it is the intention of the
Parties that the Contribution and the Distribution together qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code, and that the Pennant Cash Payment satisfies the requirements of Section 361(b) of the Code
such that no gain is recognized upon receipt of the Pennant Cash Payment by Ensign in connection with any Contribution; 
 WHEREAS, in
contemplation of the Reorganization and the Distribution, Ensign and SpinCo desire to set forth their agreement as to the rights and obligations of Ensign, SpinCo, and their respective Affiliates with respect to the responsibility, handling and
allocation of federal, state and local Taxes, and various other Tax matters. 

 NOW, THEREFORE, in consideration of the foregoing and the terms, conditions, covenants, and
provisions of this Agreement, Ensign, SpinCo, and their respective Affiliates (as determined after the Distribution) mutually covenant and agree as follows: 

ARTICLE I 
 DEFINITIONS

 “Active Business” means each of the Distributing Business and the Controlled Business, in each case taken as a
whole. 
 “Adjustment” means an adjustment of any item of income, gain, loss, deduction, credit or any other item affecting
Taxes of a taxpayer pursuant to a Final Determination. 
 “Affiliate” has the meaning set forth in the Separation
Agreement. 
 “After Tax Amount” means any additional amount necessary to reflect (through a
gross-up mechanism) the hypothetical Tax consequences of the receipt or accrual of any payment required to be made under this Agreement (including payment of an additional amount or amounts hereunder and the
effect of the deductions available for interest paid or accrued and for Taxes such as state and local income Taxes), determined by using the highest marginal corporate Tax rate (or rates, in the case of an item that affects more than one Tax) for
the relevant taxable period (or portion thereof). 
 “Agreement” means this Tax Matters Agreement, including any schedules,
exhibits, and appendices attached hereto. 
 “ASC 740-10” means Financial
Accounting Standard Board Accounting Standard Codification Subtopic 740-10, Income Taxes, including any amended or successor version. 

“Benefited Party” has the meaning prescribed in Section 2.05(c). 

“Code” means the Internal Revenue Code of 1986, as amended. 

“Contribution” means the contribution by Ensign of the assets described in Article II of the Separation Agreement to SpinCo
in exchange for (i) the assumption or incurrence, as applicable, by SpinCo and certain of its Subsidiaries of the Pennant Liabilities, and (ii) the issuance by SpinCo to Ensign of shares of SpinCo Common Stock, all as more fully described
in the Separation Agreement and the Ancillary Agreements. 
 “Controlled Business” has the meaning set forth in the
recitals. 
 “Deferred Tax Assets” means, as of a given date, the amount of deferred Tax benefits that would be recognized
as assets on a business enterprise’s balance sheet computed in accordance with GAAP. 
 “Deferred Tax Liabilities”
means, as of a given date, the amount of deferred Tax liabilities that would be recognized as liabilities on a business enterprise’s balance sheet computed in accordance with GAAP. 

  
 2 

 “Deferred Taxes” means, as of a given date, the amount of Deferred Tax
Assets, less the amount of Deferred Tax Liabilities. 
 “Distributing Business” has the meaning set forth in the recitals.

 “Distribution” has the meaning set forth in the Separation Agreement. 

“Employee Matters Agreement” means that certain Employee Matters Agreement between the Parties, entered into as of the date
hereof. 
 “Ensign Consolidated Group” has the meaning set forth in the recitals. 

“Ensign Employee SpinCo Award” has the meaning set forth in Section 2.04(a). 

“Ensign Group” means all entities that are Affiliates of Ensign immediately after the Distribution, and entities that become
Affiliates thereafter. 
 “Ensign Representation Letter” means an officer’s certificate in which certain
representations, warranties and covenants are made on behalf of Ensign and its Affiliates in connection with the issuance of the Tax Opinion. 

“Equity Award” means employee restricted stock, employee stock options, or deferred compensation granted, awarded or
otherwise paid to a service provider by Ensign or a member of the SpinCo Group, as the case may be. 
 “Final
Determination” shall mean the final resolution of liability for any Tax for a taxable period, including any related interest, penalties or other additions to tax, (i) by a decision, judgment, decree, or other order by a court of
competent jurisdiction, which has become final and unappealable; (ii) by a final settlement with the IRS, closing agreement or accepted offer in compromise under Section 7121 or Section 7122 of the Code, or comparable agreement under
the Law of other jurisdictions; (iii) by any allowance of a Refund in respect of an overpayment of Tax, but only after the expiration of all periods during which such Refund may be recovered (including by way of offset) by the jurisdiction
imposing such Tax; or (iv) by any other final resolution, including by reason of the expiration of the applicable statute of limitations or the execution of a pre-filing agreement with the IRS or other
Taxing Authority. 
 “GAAP” means United States generally accepted accounting principles as in effect on the Distribution
Date. 
 “Income Taxes” means any Taxes based upon, measured by, or calculated with respect to: (i) net income or
profits or net receipts (including, but not limited to, any capital gains, minimum Tax or any Tax on items of Tax preference, but not including sales, use, real or personal property, or transfer or similar Taxes) or (ii) multiple bases
(including corporate or franchise, doing business and occupation taxes) if one or more bases upon which such Tax may be based, measured by, or calculated with respect to, is described in clause (i). 

“Indemnified Party” has the meaning prescribed in Section 6.02. 

  
 3 

 “Indemnifying Party” has the meaning prescribed in Section 6.02. 

“IRS” means the United States Internal Revenue Service. 

“Liability Issue” has the meaning prescribed in Section 5.03(b). 

“Non-Income Taxes” means any Taxes other than Income Taxes. 

“Notified Action” has the meaning prescribed in Section 4.03(a). 

“Party” means each of Ensign and SpinCo. 

“Person” has the meaning set forth in the Separation Agreement. 

“Post-Distribution Period” means any tax year or other taxable period beginning after the Distribution Date and, in the case
of any Straddle Period, that part of the tax year or other taxable period that begins at the beginning of the day after the Distribution Date. 

“Pre-Distribution Period” means any tax year or other taxable period that ends on or
before the Distribution Date and, in the case of any Straddle Period, that part of the tax year or other taxable period through the end of the day on the Distribution Date. 

“Pre-Distribution Period Adjustment” means any Adjustment after the Distribution Date
with respect to a Pre-Distribution Period (a “Pre-Distribution Period Adjustment”). 

“Proposed Acquisition Transaction” means a transaction or series of transactions (i) as a result of which any of the
Parties would merge or consolidate with any other Person, or (ii) as a result of which any Person or any group of Persons would (directly or indirectly) acquire, or have the right to acquire (through an option or otherwise), from any of the
Parties or any of their Affiliates and/or one or more holders of their stock, respectively, any amount of stock of any of the Parties that would, when combined with any other changes in ownership of the stock of such Party, result in a shift of more
than 35% of (a) the value of all outstanding shares of stock of such Party as of the Distribution Date, or (b) the total combined voting power of all outstanding shares of voting stock of such Party as of the Distribution Date.
Notwithstanding the foregoing, a Proposed Acquisition Transaction shall not include (i) the adoption by a Party of, or the issuance of stock pursuant to, a stockholder rights plan or (ii) transactions that satisfy Safe Harbor VIII
(relating to acquisitions in connection with a person’s performance of services, which shall include, for the avoidance of doubt, Equity Awards granted to employees of members of the Ensign Group and the SpinCo Group) or Safe Harbor IX
(relating to acquisitions by a retirement plan of an employer) of Treasury Regulations Section 1.355-7(d). For purposes of determining whether and to what extent a transaction constitutes an indirect
acquisition for purposes of the first sentence of this definition, any recapitalization or other action resulting in a shift of voting power or any redemption or repurchase of shares of stock shall be treated as an indirect acquisition of shares of
stock by the benefitted or non-exchanging stockholders. Notwithstanding the previous sentence, the effect of any such recapitalization, other action, or redemption or repurchase (directly or indirectly) of
shares shall take into account any applicable IRS private letter ruling received by one or more of the Parties with respect thereto. This definition and the application thereof is intended to monitor compliance with Section 355(e) of the Code
and the Treasury Regulations promulgated thereunder and shall be interpreted accordingly by the Parties in good faith. 

  
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 “Refunds” has the meaning prescribed in Section 2.05(a). 

“Representation Letters” means the Ensign Representation Letter (or Letters) and the SpinCo Representation Letter (or
Letters). 
 “Restricted Period” means the period beginning at the Effective Time and ending on the two-year anniversary of the day after the Distribution Date. 
 “Separation Agreement”
has the meaning set forth in the recitals. 
 “Separation Taxes” means any federal, state, and local Income Tax imposed on
or assessed against Ensign or the Ensign Consolidated Group in connection with the Contribution and Distribution that would not have occurred had the Contribution and Distribution not occurred. 

“SpinCo Consolidated Group” an affiliated group whose common parent is SpinCo, the includible corporations of which join with
SpinCo in the filing of a consolidated U.S. federal income Tax Return. 
 “SpinCo Group” means SpinCo and Affiliates of
SpinCo immediately after the Distribution, and entities that become Affiliates thereafter. 
 “SpinCo Representation
Letter” means an officer’s certificate in which certain representations, warranties, and covenants are made on behalf of SpinCo and its Affiliates in connection with the issuance of the Tax Opinion. 

“SpinCo Separate Tax Return” means any Tax Return that is (i) required under applicable Law to be filed by any member of
the SpinCo Group, and that does not include any member of the Ensign Group, for a Pre-Distribution Period or a Straddle Period or (ii) identified on Schedule A, in each case, whether or not such Tax
Return is timely filed. 
 “Straddle Period” means any taxable period beginning on or before the Distribution Date and
ending after the Distribution Date. 
 “Tax” and “Taxes” means any income, gross income, gross receipts,
profits, capital stock, franchise, withholding, payroll, social security, workers’ compensation, unemployment, disability, property, ad valorem, value added, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer,
import, export, alternative minimum, estimated or other tax (including any fee, assessment, or other charge in the nature of or in lieu of any tax), imposed by any governmental entity or political subdivision thereof, and any interest, penalty,
additions to tax, or additional amounts in respect of the foregoing. 
 “Tax Attributes” means net operating losses,
capital losses, investment tax credit carryovers, earnings and profits, foreign tax credit carryovers, overall foreign losses, previously taxed income, separate limitation losses, deductions, credits or other comparable items, and assets basis, that
could affect a Tax liability for a past or future taxable period. 

  
 5 

 “Taxing Authority” means any national, municipal, governmental, state,
federal or other body, or any quasi-governmental or private body, having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS). 

“Tax Controversy” has the meaning prescribed in Section 5.01(a). 

“Tax Detriment” means, without double counting, the sum of (i) the amount of the increase in the Tax liability of an
entity (or of the consolidated or combined group of which it is a member), whether temporary or permanent, for any taxable period that arises, or may arise in the future, as a result of any adjustment to, or addition or deletion of, a Tax Item in
the computation of the Tax liability of the entity (or the consolidated or combined group of which it is a member), and (ii) the amount by which the entity’s (or consolidated or combined group of which it is a member) Deferred Taxes are
increased as a result of such adjustment, addition, or deletion. 
 “Tax-Free Status of the
Transactions” means the tax-free treatment accorded to certain of the Transactions as set forth in the Tax Opinion. 

“Tax Item” means any item of income, gain, loss, deduction, credit, recapture of credit, or any other item (including the
basis or adjusted basis of property) which increases or decreases Income Taxes paid or payable in any taxable period. 
 “Tax
Opinion” means the opinion rendered by Kirkland & Ellis LLP, with respect to certain Tax aspects of the Contribution and Distribution. 

“Tax Proceeding” means any audit, assessment of Taxes, pre-filing agreement, other
examination by any Taxing Authority, proceeding, appeal of a proceeding or litigation relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations. 

“Tax Return” means any return, report, certificate, form, filing, questionnaire or other document required to be filed,
including requests for extensions of time, filings made with estimated Tax payments, claims for Refund or amended returns, any related or supporting information or schedule attached thereto that may be filed for any taxable period with any Taxing
Authority in connection with any Tax or Taxes (whether or not a payment is required to be made with respect to such filing). 

“Treasury Regulations” means the final and temporary (but not proposed) income tax regulations promulgated under the Code, as
such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). 
 “Unqualified
Tax Opinion” means a “will” opinion, without substantive qualifications, of a nationally recognized law or accounting firm, which firm is reasonably acceptable to Ensign, to the effect that a transaction will not affect the Tax-Free Status of the Transactions. 

  
 6 

 ARTICLE II 

RESPONSIBILITY FOR TAXES 

2.01 Responsibility and Indemnification for Taxes. 

(a) From and after the Distribution Date, without duplication, each of Ensign and SpinCo shall be responsible for, and shall pay its respective
share of the liability for Taxes of Ensign, SpinCo, and their respective Affiliates, as provided in this Agreement. Ensign and its Affiliates shall indemnify and hold harmless SpinCo and its Affiliates from and against any Taxes for which Ensign is
responsible pursuant to this Agreement, and SpinCo and its Affiliates shall indemnify and hold harmless Ensign and its Affiliates from and against any Taxes for which SpinCo is responsible pursuant to this Agreement. 

(b) For the avoidance of doubt, all references to Taxes or Tax liabilities in this Agreement refer to the actual amounts of Taxes paid or due
and do not apply to (i) the utilization, elimination, or adjustment of any Tax Attribute, or (ii) items or adjustments to items shown solely on a Party’s balance sheet or other financial statement. There shall be no adjustments,
payments, or obligations among the Parties made pursuant to this agreement for any gains or losses with respect to amounts shown on a Party’s balance sheet or other financial statements and not specifically allocated herein, including but not
limited to ASC 740-10 reserves, Deferred Tax Assets, Deferred Tax Liabilities, and other Tax accounting entries. 

(c) Payments to Taxing Authorities and between the Parties, as the case may be, shall be made in accordance with the provisions of this
Agreement. 
 2.02 Responsibility for Taxes. 

(a) Generally 
 (i)
Ensign. 
 Except as set forth in Sections 2.02(a)(ii) and 2.02(b), Ensign shall be responsible for: 

(A) all Tax liability imposed on members of the Ensign Group or the SpinCo Group for all
Pre-Distribution Periods; 
 (B) all Tax liability imposed on members of the Ensign
Group for all Post-Distribution Periods; and 
 (C) 85% of any Pre-Distribution
Period Adjustment. 
 (ii) SpinCo. 

Except as set forth in Section 2.02(b), SpinCo shall be responsible for: 

(A) all Tax liability imposed with respect to any SpinCo Separate Tax Return; 

  
 7 

 (B) all Tax liability imposed on members of the SpinCo Group for all
Post-Distribution Periods; and 
 (C) 15% of any Pre-Distribution Period Adjustment.

 (iii) Straddle Period Taxes. 

Subject to Section 2.03, the responsibility for any Tax incurred in a Straddle Period shall be allocated between the Pre-Distribution Period and the Post-Distribution Period as if the relevant Person or Persons closed its financial accounting records as of the Distribution Date and determined the Tax attributable to the Pre-Distribution Period by applying the method of tax accounting that has historically been used for the business of such Person or Persons. 

(b) Separation Taxes 

(i) Ensign. 
 Ensign
shall be responsible for: 
 (A) 50% of all Separation Taxes not due to any act, failure to act, or omission identified in
this subsection (b) on the part of any member of the SpinCo Group or the Ensign Group, or any Separation Tax liability arising out of or in connection with the accuracy of any description of events, facts, or circumstances on or prior to the
Distribution Date as contained in or made in connection with the Tax Opinion or other Ancillary Agreements, including any misrepresentation or omission by Ensign or SpinCo contained in any such document with respect to any period prior to the
Distribution, but excluding in each case for this purpose any statement concerning a Party’s plan or intention with respect to actions or operations after the Distribution Date, 

(B) 100% of all Separation Taxes arising out of, based upon, or relating or attributable to any breach by Ensign of any
representation, warranty, covenant, or obligation contained in this Agreement, any other Ancillary Agreement, the Tax Opinion, any Ensign Representation Letter, or otherwise made by Ensign in connection with the Distribution, but excluding for this
purpose the breach of any representations (including those described in Section 4.01(b)(i)) not concerning a Party’s plan or intention with respect to actions or operations after the Distribution Date, and 

(C) 100% of all Separation Taxes arising from any event following the Distribution involving the stock or assets of Ensign or
any of its Affiliates which causes the Distribution to be a Taxable event to Ensign as a result of the application of Section 355(e) of the Code or a similar provision of state or local Tax Law. 

(ii) SpinCo. 
 SpinCo
shall be responsible for: 

  
 8 

 (A) 50% of any Separation Taxes that are not due to any act, failure to act,
or omission identified in this subsection (b) on the part of any member of the SpinCo Group or the Ensign Group, or any Separation Tax liability arising out of or in connection with the accuracy of any description of events, facts, or
circumstances on or prior to the Distribution Date as contained in or made in connection with the Tax Opinion or other Ancillary Agreements, including any misrepresentation or omission by Ensign or SpinCo contained in any such document with respect
to any period prior to the Distribution, but excluding in each case for this purpose any statement concerning a Party’s plan or intention with respect to actions or operations after the Distribution Date, 

(B) 100% of all Separation Taxes arising out of, based upon, or relating or attributable to any breach by SpinCo of any
representation, warranty, covenant, or obligation contained in this Agreement, any other Ancillary Agreement, the Tax Opinions, any SpinCo Representation Letter, or otherwise made by SpinCo in connection with the Distribution, but excluding for this
purpose the breach of any representations (including those described in Section 4.01(a)(i)) not concerning a Party’s plan or intention with respect to actions or operations after the Distribution Date, and 

(C) 100% of all Separation Taxes arising from any event post-Distribution involving the stock or assets of SpinCo or any of its
Affiliates which causes the Distribution to be a Taxable event to Ensign as a result of the application of Section 355(e) of the Code or a similar provision of state or local Tax Law. 

(c) Transfer Taxes. Notwithstanding anything to the contrary herein, all transfer, documentary, sales, use, stamp, registration and
other such similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement, the Separation
Agreement or the Ancillary Agreements (“Transfer Taxes”) shall be paid by SpinCo, and the Party required under applicable Law to file Tax Returns with respect to Transfer Taxes will file all necessary Tax Returns, and, if required
by applicable Law, the non-preparing Party will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation; provided, however, that if the non-preparing Party fails to join in the execution of any such Tax Returns and other documentation then the Party obligated to file such Tax Returns shall be authorized to execute such Tax Returns and other
documentation on behalf of the non-preparing Party. 
 2.03 Allocation of Certain Income
Taxes and Income Tax Items. 
 (a) If Ensign, SpinCo, or any of their respective Affiliates is permitted but not required under
applicable federal, state, or local Tax Laws to treat the Distribution Date as the last day of a taxable period, then, in accordance with Section 2.02(a)(iii), the parties shall treat such day as the last day of a taxable period under such
applicable Tax Law, and shall file any elections necessary or appropriate to such treatment; provided that this Section 2.03(a) shall not be construed to require Ensign or SpinCo to change its taxable year. 

  
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 (b) If applicable Law does not require or permit Ensign, SpinCo, or any of their respective
Affiliates, as the case may be, to close its taxable year on the Distribution Date, then the allocation of income or deductions required to determine any Taxes or other amounts attributable to the portion of the Straddle Period ending on, or
beginning after, the Distribution Date shall be made by means of a closing of the books and records of the SpinCo Group as of the close of the Distribution Date; provided that (i) exemptions, allowances, or deductions that are calculated on an
annual or periodic basis shall be allocated between such portions in proportion to the number of days in each such portion, and (ii) property Taxes or other Non-Income Taxes that are calculated on an
annual or periodic basis and not assessed with respect to a transaction or series of transactions shall be allocated to the portion of the Straddle Period ending on the Distribution Date and the portion of the Straddle Period beginning after the
Distribution Date in proportion to the number of days in each such portion; provided, however, notwithstanding anything herein to the contrary, each Party and its Affiliates will remain solely responsible for any and all Taxes for which they are
responsible under any lease of property from the other Party or any of its Affiliates. 
 (c) Tax Attributes arising in a Pre-Distribution Period shall be allocated to the Ensign Group and SpinCo Group in accordance with the Code and Treasury Regulations (and any applicable state, local, and
non-U.S. Laws). Ensign and SpinCo shall jointly determine the allocation of such Tax Attributes arising in Pre-Distribution Periods as soon as reasonably practicable
following the Distribution Date, and hereby agree to compute all Taxes for Post-Distribution Periods consistently with that determination unless otherwise required by a Final Determination. 

(d) The Parties agree that, in connection with the Distribution, Ensign’s current and accumulated earnings and profits will be allocated
between Ensign and SpinCo based on their relative fair market values at the time of the Distribution in accordance with Treasury Regulation § 1.312-10. 

2.04 Treatment of Equity Awards. 

(a) To the extent permitted by law (and subject to Section 2.04(g)), Ensign (or the appropriate Ensign Affiliate) shall be entitled to and
shall claim all federal income Tax deductions or other Tax benefits resulting from the grant of any Equity Awards prior to the Distribution to an employee of Ensign (or the appropriate Ensign Affiliate), including with respect to any SpinCo
Restricted Stock (as defined in the Employee Matters Agreement) issued to employees of Ensign pursuant to the SpinCo Equity and Incentive Plan (as defined in the Employee Matters Agreement) (such Equity Awards, the “Ensign Employee SpinCo
Awards”). 
 (b) To the extent permitted by law (and subject to Section 2.04(g)), SpinCo (or the appropriate SpinCo Affiliate)
shall be entitled to and shall claim all federal income Tax deductions or other Tax benefits resulting from the grant of any Equity Awards prior to the Distribution to an employee of SpinCo (or the appropriate SpinCo Affiliate). 

(c) To the extent permitted by law, with respect to Equity Awards granted after the Distribution Date, the Party that grants the award shall be
entitled to claim any Tax deduction or other benefit resulting from the grant and/or vesting of the award (including any dividends accrued or paid with respect to such award). 

  
 10 

 (d) If, pursuant to a Final Determination, all or any part of a Tax deduction claimed by
Ensign pursuant to Section 2.04(a) is disallowed, then, to the extent permitted by law, SpinCo (or the appropriate SpinCo Affiliate) shall claim such Tax deduction. If SpinCo (or its Affiliate) realizes a Tax benefit from the claiming of such
Tax deduction, SpinCo shall pay the amount of such Tax benefit to Ensign net of any Tax Detriment suffered by SpinCo or its Affiliate in connection therewith. If, pursuant to a Final Determination, all or any part of a Tax deduction claimed by
SpinCo pursuant to Section 2.04(b) is disallowed, then, to the extent permitted by law, Ensign (or the appropriate Ensign Affiliate) shall claim such Tax deduction. Except in the case of an Ensign Employee SpinCo Award, if Ensign (or its
Affiliate) realizes a Tax benefit from the claiming of such Tax deduction, Ensign shall pay the amount of such Tax benefit to SpinCo net of any Tax Detriment suffered by Ensign or its Affiliate in connection therewith. 

(e) Upon the vesting and settlement of an Ensign Equity Award settled in Ensign common stock or paid by Ensign (including any dividends accrued
or paid with respect thereto) the holder of which is an employee of SpinCo or a member of the SpinCo Group, Ensign shall timely transfer such Ensign common stock or such amounts to the employing entity of such holder; and the employing entity shall
be solely responsible for ensuring (i) the settlement of such Ensign Equity Awards (including the payment of any dividends accrued or paid or other amounts with respect thereto, as applicable), and (ii) the withholding of all applicable
Taxes and the prompt remittance of such withheld amounts, along with the employer’s portion of any applicable payroll Taxes due with respect to the exercise or vesting and settlement of such Equity Award (including any dividends accrued or paid
with respect thereto), to the appropriate Taxing Authority. 
 (f) Upon the vesting and settlement of a SpinCo Equity Award settled in SpinCo
common stock or paid by SpinCo (including any dividends accrued or paid with respect thereto) the holder of which is an employee of Ensign or a member of the Ensign Group (including, for the avoidance of doubt, any Ensign Employee SpinCo Awards),
SpinCo shall timely transfer such Spinco common stock or such amounts to the employing entity of such holder; and the employing entity shall be solely responsible for ensuring (i) the settlement of such Spinco Equity Awards (including the
payment of any dividends accrued or paid or other amounts with respect thereto, as applicable), and (ii) the withholding of all applicable Taxes and prompt remittance of such withheld amounts, along with the employer’s portion of any
applicable payroll Taxes due with respect to the exercise or vesting and settlement of such Equity Award (including any dividends accrued or paid with respect thereto), to the appropriate Taxing Authority. 

(g) The Parties hereto acknowledge and agree that, except to the extent otherwise required by applicable Law and subject to Section 83 of
the Code, (A) SpinCo shall be treated for U.S. federal (and applicable state and local) income Tax purposes as issuing the Ensign Employee SpinCo Awards to Ensign (or its applicable Affiliate) in respect of services provided by Ensign (or such
Affiliate), and (B) Ensign (or such Affiliate) shall in turn be treated for U.S. federal (and applicable state and local) income Tax purposes as delivering such Ensign Employee SpinCo Awards to such employee as compensation in respect of
services provided to Ensign. Notwithstanding the foregoing or anything herein to the contrary, to the extent SpinCo (or its Affiliate) realizes a Tax benefit from the claiming of a Tax deduction with respect to an Ensign Employee SpinCo Award,
SpinCo shall pay the amount of such Tax benefit to Ensign net of any Tax Detriment suffered by SpinCo or its Affiliate in connection therewith. 

  
 11 

 2.05 Tax Refunds. 

(a) Except as otherwise provided herein, the benefit of any Tax credits, Tax Attributes, and any refund or credit of any overpayment of Taxes
or estimated Tax liabilities (“Refunds”), including any corresponding benefit arising out of or related to any Tax liability that is the subject of this Agreement, will remain with the party entitled to the benefit under applicable
Tax Law, as modified by any applicable audit agreements or past practice of Ensign and its Affiliates. No payments shall be made between the Parties to account for such adjustment. 

(b) Except as provided in Section 2.06, Ensign shall be entitled to all Refunds for Taxes for which Ensign is responsible pursuant to
Article II, and SpinCo shall be entitled to all Refunds for Taxes for which SpinCo is responsible pursuant to Article II (including, for the avoidance of doubt, Ensign and SpinCo’s respective share of any Refund with respect to a Pre-Distribution Period Adjustment). A Party receiving a Refund to which the other Party is entitled pursuant to this Agreement shall pay the amount to which such other Party is entitled within ten twenty
(20) days after the receipt of the Refund. 
 (c) In the event of an Adjustment relating to Taxes for which one Party is responsible
pursuant to Article II which would have given rise to a Refund but for an offset against the Taxes for which the other Party is or may be responsible pursuant to Article II (the “Benefited Party”), then the Benefited Party shall pay
to the other Party, within twenty (20) days of the Final Determination of such Adjustment an amount equal to the lesser of (i) the amount of such hypothetical Refund or (ii) the amount of such reduction in the Taxes of the Benefited
Party, in each case, plus interest at the rate set forth in Section 6621(a)(1) of the Code on such amount for the period from the filing date of the Tax Return that would have given rise to such Refund to the payment date. 

(d) Notwithstanding Section 2.05(a), to the extent that a Party applies or causes to be applied an overpayment of Taxes as a credit toward
or a reduction in Taxes otherwise payable (or a Taxing Authority requires such application in lieu of a Refund) and such overpayment of Taxes, if received as a Refund, would have been payable by such Party to the other Party pursuant to this
Section 2.05, such Party shall pay such amount to the other Party no later than the due date of the Tax Return for which such overpayment is applied to reduce Taxes otherwise payable. 

(e) To the extent that the amount of any Refund under this Section 2.05 or Section 2.06(b), as applicable, is later reduced by a
Taxing Authority or in a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 2.05 or Section 2.06(b), as applicable, and an appropriate adjusting payment shall be made.

 2.06 Carrybacks. 

(a) The carryback of any loss, credit, or other Tax Attribute from any Post-Distribution Period shall be in accordance with the provisions of
the Code and Treasury Regulations (and any applicable state, local, or non-U.S. Law). 

  
 12 

 (b) (i) Subject to Section 2.06(c) and (d), in the event that any
member of the SpinCo Group realizes any loss, credit, or other Tax Attribute in a Post-Distribution Period of such member, such member may elect to carry back such loss, credit, or other Tax Attribute to a
Pre-Distribution Period or Straddle Period of Ensign. Ensign shall cooperate with SpinCo and such member in seeking from the appropriate Taxing Authority any Refund that reasonably would result from such
carryback (including by filing an amended Tax Return) at SpinCo’s cost and expense; provided, that Ensign shall not be required to seek such Refund, and SpinCo and such member shall not be permitted to seek such Refund, in each case to the
extent that such Refund would reasonably be expected to materially adversely impact Ensign (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been
used), in each case without the prior written consent of Ensign, which consent shall not be unreasonably withheld or delayed. SpinCo (or such member) shall be entitled to any Refund realized by any member of the Ensign Group or the SpinCo Group
resulting from such carryback. 
 (ii) Subject to Section 2.06(c) and (d), in the event that any member of the Ensign
Group realizes any loss, credit or other Tax Attribute in a Post-Distribution Period of such member, such member may elect to carry back such loss, credit or other Tax Attribute to a Pre-Distribution Period or
Straddle Period of such member. SpinCo shall cooperate with Ensign and such member in seeking from the appropriate Taxing Authority any Refund that reasonably would result from such carryback (including by filing an amended Tax Return) at
Ensign’s cost and expense; provided, that SpinCo shall not be required to seek such Refund and Ensign and such member shall not be permitted to seek such Refund, in each case to the extent that such Refund would reasonably be expected to
materially adversely impact SpinCo (including through an increase in Taxes or a loss or reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), in each case without the prior written consent of
SpinCo, which consent shall not be unreasonably withheld or delayed. Ensign (or such member) shall be entitled to any Refund realized by any member of the SpinCo Group or the Ensign Group resulting from such carryback. 

(c) Except as otherwise provided by applicable Law, if any loss, credit or other Tax Attribute of the Ensign Business and the SpinCo Business
both would be eligible to be carried back or carried forward to the same Pre-Distribution Period (had such carryback been the only carryback to such taxable period), any Refund resulting therefrom shall be
allocated between Ensign and SpinCo proportionately based on the relative amounts of the Refunds to which the Ensign Business and the SpinCo Business, respectively, would have been entitled had such carryback been the only carryback to such taxable
period. 
 (d) To the extent the amount of any Refund under this Section 2.06 is later reduced by a Taxing Authority or a Tax
Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 2.06. 

2.07 Protective Section 336(e) Elections. 

(a) Ensign and SpinCo shall make a protective election with respect to SpinCo under Section 336(e) of the Code (and any similar election
under state or local Law) with respect to the Distribution in accordance with Treasury Regulations Section 1.336-2(h) and (j) (and any applicable provisions under state and local Law) and shall fully
cooperate in the timely completion 

  
 13 

 
and/or filings of such elections and any related filings or procedures (including filing or amending any Tax Returns to implement an election that becomes effective). This Section 2.07(a) is
intended to constitute a binding, written agreement to make an election under Section 336(e) of the Code with respect to the Distribution. 

(b) Notwithstanding anything to the contrary herein, in the event that the election contemplated in Section 2.07(a) is made and becomes
effective, then the Parties shall share in any Tax benefit derived as a result of such election in accordance with the Parties’ relative responsibility for such Taxes under this Article II, and payments shall be made between the Parties,
if necessary. 
 (c) Ensign and SpinCo shall cooperate in good faith in order to determine whether to make a protective election under
Section 336(e) of the Code (and any similar election under state or local Law) with respect to any subsidiary of SpinCo in accordance with Treasury Regulations Section 1.336-2(h) and (j) (and any
applicable provisions under state and local Law). 
 ARTICLE III 

TAX RETURNS AND INFORMATION EXCHANGE 

3.01 Tax Return Preparation Responsibility; Payment of Taxes Shown Thereon. 

(a) Except as provided in Section 3.01(c), Ensign shall prepare and timely file all Tax Returns for
Pre-Distribution Periods for Ensign and its Affiliates, including SpinCo and its Affiliates, and all Tax Returns for Straddle Periods for all members of the Ensign Group. In connection with each federal,
state, and local Tax Return that is required under this Agreement to be filed by Ensign for Pre-Distribution Periods or Straddle Periods, SpinCo shall timely furnish to Ensign such Tax information and
documents as Ensign may reasonably request. 
 (b) To the extent that there are separate state or local Tax Returns attributable to a member
of the Ensign Group required to be filed by members of the SpinCo Group with respect to Pre-Distribution Periods, SpinCo and Ensign shall cooperate in good faith to ensure that such returns are correctly filed
by the party required to file such Tax Returns under applicable Law. 
 (c) SpinCo and its Affiliates shall prepare and timely file all Tax
Returns for Straddle Periods for all members of the SpinCo Group, including any such Tax Return with respect to a Post-Distribution Period. If Ensign or any of its Affiliates is responsible under Section 2.02(a) for a portion of any Tax
reported on a Straddle Period Tax Return for any member of the SpinCo Group, SpinCo shall provide Ensign with a copy of such Tax Return at least thirty (30) days prior to its due date. Ensign shall notify SpinCo of any disagreement within 20
days of Ensign’s receipt of such Tax Return. Any dispute shall be resolved pursuant to the procedures provided by this Agreement. 
 (d)
Except at the written direction of Ensign or to the extent permitted pursuant to Section 2.06, after the date of the Distribution, SpinCo shall not file (or allow any SpinCo Affiliate to file) any amended Tax Return or refund claim for any Pre-Distribution Periods. 

  
 14 

 (e) Ensign (and its Affiliates) shall be responsible for remitting payment of any Taxes
shown on a Tax Return which Ensign (or any of its Affiliates) is responsible for filing. SpinCo (and its Affiliates) shall be responsible for remitting payment of any Taxes shown on a Tax Return which SpinCo (or any of its Affiliates) is responsible
for filing. 
 (f) If Ensign (or any of its Affiliates) remits a Tax payment, but SpinCo (or any of its Affiliates) is responsible pursuant
to Article II for all or a portion of the Tax shown on the applicable Tax Return, then SpinCo shall timely pay to Ensign that portion of the Tax for which SpinCo (or any of its Affiliates) is responsible. If SpinCo (or any of its Affiliates) remits
a Tax payment, but Ensign (or any of its Affiliates) is responsible pursuant to Article II for all or a portion of the Tax shown on the applicable Tax Return, then Ensign shall timely pay to SpinCo that portion of the Tax for which Ensign (or any of
its Affiliates) is responsible. Such payments shall be requested and made in accordance with the notice and payment provisions contained in Article VI. Nothing in this Section 3.01 shall affect the allocation of responsibility for Taxes as set
forth in Article II. 
 3.02 Certain Items Related to Tax Return Preparation. 

(a) All Tax Returns relating to a Pre-Distribution Tax Period shall be prepared and filed by the
specified party in a manner consistent with past Tax reporting practices of the Ensign Group or the SpinCo Group, as applicable. 
 (b)
Unless otherwise required by a Taxing Authority, the Parties hereby agree to prepare and file all Tax Returns, and to take all other actions, in a manner consistent with this Agreement, the Separation Agreement, the Ancillary Agreements, applicable
Law, the Tax Opinion, and any Representation Letter. All Tax Returns shall be filed on a timely basis (taking into account applicable extensions) by the party responsible for filing such Tax Returns under this Agreement; provided, that if a Tax
Return is to be signed by an officer of an entity different from the party responsible for filing such Tax Return, the appropriate Party shall have (or cause its Affiliate to have) the appropriate officer sign such Tax Return promptly after
presentation thereof for signature. 
 (c) Except as otherwise specifically provided for in this Agreement, each Party shall have the
exclusive right, in its reasonable discretion, with respect to any Tax Return for which it is responsible for the filing thereof pursuant to this Agreement, to determine (i) the manner in which such Tax Return shall be prepared and filed,
including the accounting methods, positions, conventions and principles of taxation to be used and the manner in which any Tax Item shall be reported; (ii) whether any extensions may be requested; (iii) the election(s) that will be made by
Ensign, SpinCo, or any of their Affiliates on such Tax Return; (iv) whether any amended Tax Return shall be filed; (v) whether any claim for Refund shall be made; (vi) whether any Refund shall be paid by way of refund or credited
against any liability for the related Tax; and (vii) whether to retain outside firms to prepare or review such Tax Returns; provided, that Ensign shall prepare all Tax Returns for which it has filing responsibility, to the extent such Tax
Returns reflect activities of the SpinCo Group, in a manner consistent with past Tax reporting practices with respect to such activities of the SpinCo Group, except as required by Law or regulation. 

  
 15 

 (d) As soon as reasonably practicable following the Distribution Date, and in any event
within 90 calendar days after filing the federal income Tax Return for the Ensign Consolidated Group for the tax year that includes the Distribution Date, Ensign shall notify SpinCo of the Tax Attributes associated with SpinCo and each of its
Affiliates, and the Tax bases of the assets and liabilities transferred to SpinCo in connection with the Distribution. Ensign shall advise SpinCo with respect to any Final Determination of Tax Adjustments relating to the Ensign Consolidated Group if
such Final Determination of Tax Adjustments may affect any Tax Attribute of any member of the SpinCo Group after the Distribution Date within 90 calendar days after such change is made or there is a Final Determination of such change. 

(e) Nothing in this Agreement shall be construed as a guarantee or representation of the existence or amount of any loss, credit, carryforward,
basis, or other Tax Item or Tax Attribute, whether past, present, or future, of Ensign, SpinCo, or their respective Affiliates. 
 ARTICLE
IV 
 TAX TREATMENT OF THE DISTRIBUTION 

4.01 Representations. 

(a) SpinCo. 

(i) Tax-Free Status. SpinCo hereby represents and warrants that it has no plan
or intention of taking any action, or failing or omitting to take any action, or knows of any circumstance, that could reasonably be expected to (i) cause the Contribution and the Distribution to fail to qualify as a reorganization within the
meaning of Sections 368(a)(1)(D) and 355 of the Code or (ii) cause any representation or factual statement made in this Agreement, the Separation Agreement, the Ancillary Agreements, the Tax Opinion, or any SpinCo Representation Letter, as
applicable, to be untrue in a manner that would have an adverse effect on the qualification of the Contribution and the Distribution as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or the tax treatment described
in the Tax Opinion of certain aspects of the Reorganization and the Distribution. 
 (ii) Plan or Series of Related
Transactions. 
 (A) SpinCo hereby represents and warrants that, to the knowledge of SpinCo and the management of SpinCo,
neither the Distribution nor any related transactions are part of a plan (or series of related transactions) pursuant to which a Person will acquire directly or indirectly stock representing a fifty-percent or greater interest (within the meaning of
Sections 355(d) and (e) of the Code) in SpinCo or any successor to SpinCo. 
 (B) SpinCo has no plan or intention to
participate in, facilitate, undertake, or otherwise permit any acquisition of SpinCo after the Distribution pursuant to which a direct or indirect acquisition of stock of SpinCo would occur, which would result in a direct or indirect acquisition of
stock representing a 50 percent or greater interest (within the meaning of Sections 355(d) and 355(e) of the Code) in SpinCo or any successor to SpinCo. 

  
 16 

 (C) SpinCo and its Affiliates have no plan or intention to redeem, purchase,
or otherwise reacquire more than 20% of the capital stock of SpinCo in one or more transactions following the Distribution Date. 

(D) SpinCo and its Affiliates have no plan or intention to (i) sell, exchange, distribute, or otherwise dispose of,
directly or indirectly, other than in the ordinary course of business, all or a substantial part of the assets of any of the trades or businesses relied upon, including in the Tax Opinion, to satisfy Section 355(b) of the Code;
(ii) discontinue or cause to be discontinued the active conduct of any of the trades or businesses relied upon, including in the Tax Opinion, to satisfy Section 355(b) of the Code; or (iii) cause the occurrence of any restructuring
pursuant to which SpinCo ceases to be treated as conducting the trade or businesses relied upon, including in the Tax Opinion, to satisfy Section 355(b) of the Code. 

(b) Ensign. 

(i) Tax-Free Status. Ensign hereby represents and warrants that it has no plan
or intention of taking any action, or failing or omitting to take any action, or knows of any circumstance, that could reasonably be expected to (i) cause the Contribution and the Distribution to fail to qualify as a reorganization within the
meaning of Sections 368(a)(1)(D) and 355 of the Code, or (ii) cause any representation or factual statement made in the Separation Agreement, this Agreement, the other Ancillary Agreements, the Tax Opinion, or any Ensign Representation Letter,
as applicable, to be untrue in a manner that would have an adverse effect on the qualification of the Contribution and the Distribution as a reorganization within the meaning of Sections 368(a) (1)(D) and 355 of the Code or the tax treatment
described in the Tax Opinion of certain aspects of the Reorganization and the Distribution. 
 (ii) Plan or Series of
Related Transactions. 
 (A) Ensign hereby represents and warrants that, to the knowledge of Ensign and the management of
Ensign, neither the Distribution nor any related transactions are part of a plan (or series of related transactions) pursuant to which a Person will acquire directly or indirectly stock representing a fifty-percent or greater interest (within the
meaning of Sections 355(d) and (e) of the Code) in Ensign or any successor to Ensign. 
 (B) Ensign has no plan or
intention to participate in, facilitate, undertake or otherwise permit any acquisition of Ensign after the Distribution pursuant to which a direct or indirect acquisition of stock of Ensign would occur, which would result in a direct or indirect
acquisition of stock representing a 50 percent or greater interest (within the meaning of Sections 355(d) and 355(e) of the Code) in Ensign or any successor to Ensign. 

(C) Ensign and its Affiliates have no plan or intention to redeem, purchase or otherwise acquire more than 20% of Ensign’s
capital stock in one or more transactions following the Distribution Date. 

  
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 (D) Ensign and its Affiliates have no plan or intention to (i) sell,
exchange, distribute or otherwise dispose of, directly or indirectly, other than in the ordinary course of business, all or a substantial part of the assets of any of the trades or businesses relied upon, including in the Tax Opinion, to satisfy
Section 355(b) of the Code; (ii) discontinue or cause to be discontinued the active conduct of any of the trades or businesses relied upon, including in the Tax Opinion, to satisfy Section 355(b) of the Code, or (iii) cause the
occurrence of any restructuring pursuant to which Ensign ceases to be treated as conducting the trade or businesses relied upon, including in the Tax Opinion, to satisfy Section 355(b) of the Code. 

4.02 Covenants. 

(a) The Parties shall not, and shall cause their Affiliates not to, take any action or fail to take any action, where such action or failure
would be inconsistent with or have an adverse effect on the qualification of the Contribution and the Distribution as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or the tax treatment described in the Tax Opinion
of certain aspects of the Distribution. 
 (b) Unless otherwise required by a Taxing Authority or applicable Law, the Parties hereby agree to
prepare and file all Tax Returns, and to take all other actions, in a manner consistent with past practice. 
 (c) Unless otherwise required
by a Taxing Authority or applicable Law, the Parties hereby agree to prepare and file all Tax Returns, and to take all other actions, in a manner consistent with the characterization of the Reorganization and the Distribution as described in the Tax
Opinion and the Ancillary Agreements. 
 (d) Actions Consistent with Representations and Covenants. 

(i) SpinCo shall not, and shall not permit any of its Affiliates to, take any action or fail to take any action, where such
action or failure to act would be inconsistent with or cause to be materially untrue any material, information, covenant, or representation in the Separation Agreement, this Agreement, the other Ancillary Agreements, the Tax Opinion, or any SpinCo
Representation Letter. 
 (ii) Ensign shall not, and shall not permit any of its Affiliates to, take any action or fail to
take any action, where such action or failure to act would be inconsistent with or cause to be materially untrue any material, information, covenant, or representation in the Separation Agreement, this Agreement, the other Ancillary Agreements, the
Tax Opinion, or any Ensign Representation Letter. 
 (e) Notwithstanding anything herein to the contrary, during the Restricted Period,
SpinCo shall not (and shall not allow any of its subsidiaries or Affiliates to): 
 (i) allow any Proposed Acquisition
Transaction to occur; 

  
 18 

 (ii) merge or consolidate with any other Person or dissolve, liquidate or
partially liquidate (other than a wholly owned subsidiary of SpinCo merging or consolidating with SpinCo or another wholly owned subsidiary of SpinCo); 

(iii) approve or allow the discontinuance, cessation, or sale or other transfer (to an Affiliate or otherwise) of any Active
Business by SpinCo or its Affiliates, as applicable, for purposes of Section 355 of the Code; 
 (iv) sell or otherwise
dispose of more than 35% of its consolidated gross or net assets or allow the sale or other disposition (to an Affiliate or otherwise) of more than 35% of the consolidated gross or net assets of SpinCo (in each case, excluding sales in the ordinary
course of business, sales the net cash proceeds (taking into account any Taxes payable) of which are reinvested in other assets (including pursuant to an exchange under Section 1031 of the Code) and sales the net cash proceeds (taking into
account any Taxes payable) of which are used to repay indebtedness, and measured based on fair market values as of the date of the Distribution or other transaction); 

(v) amend its certificate of incorporation or take any similar action that affects the rights of stockholders under the
certificate of incorporation; 
 (vi) purchase, directly or through any Affiliate, any of its outstanding stock after the
Distribution, other than through stock purchases meeting the requirements of Section 4.05(1)(b) of Revenue Procedure 96-30 (as in effect prior to the amendment of such Revenue Procedure by Revenue
Procedure 2003-48); 
 (vii) take any action or fail to take any action, or permit
any of its Affiliates to take any action or fail to take any action, that is inconsistent with the representations and covenants made in the Representation Letters, or that is inconsistent with the Tax Opinion; nor 

(f) enter into an arrangement or agreement to do any of the foregoing. 

4.03 Procedures Regarding Opinions. 

(a) If SpinCo notifies Ensign that it desires to take one of the actions described in Section 4.02 (a “Notified Action”),
Ensign shall cooperate with SpinCo and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting SpinCo to take the Notified Action unless
Ensign shall have waived the requirement to obtain such opinion. If such a ruling is to be sought, Ensign shall apply for such ruling and Ensign and SpinCo shall jointly control the process of obtaining such ruling. In no event shall Ensign be
required to file any ruling request under this Section 4.03(a) unless SpinCo represents that (i) it has read such ruling request, and (ii) all information and representations, if any, relating to any member of the SpinCo Group,
contained in such ruling request documents are (subject to any qualifications therein) true, correct, and complete. SpinCo shall reimburse Ensign for all reasonable costs and expenses incurred by the Ensign Group in obtaining a ruling or an
Unqualified Tax Opinion requested by SpinCo within twenty (20) days after receiving an invoice from Ensign therefor. 

  
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 (b) If Ensign requests a ruling or other guidance pursuant to Section 4.03(a): (A)
Ensign shall keep SpinCo informed in a timely manner of all material actions taken or proposed to be taken by Ensign in connection therewith; (B) Ensign shall (i) reasonably in advance of the submission of any documents relating to the
ruling provide SpinCo with a draft thereof, (ii) reasonably consider SpinCo’s comments to such draft, (iii) provide SpinCo with a final copy of any documents relating to the ruling, (iv) provide SpinCo with notice reasonably in
advance of, and SpinCo shall have the right to attend, any meetings with the Taxing Authority (subject to the approval of the Taxing Authority) that relate to such ruling, and (v) provide SpinCo with a copy of such ruling. 

4.04 Enforcement. The Parties acknowledge that irreparable harm would occur in the event that any of the provisions of this
Article IV were not performed in accordance with their specific terms or were otherwise breached. The Parties agree that, in order to preserve the qualification of the Contribution and the Distribution as a reorganization within the meaning of
Sections 368(a)(1)(D) and 355 of the Code, injunctive relief is appropriate to prevent any violation of the foregoing covenants; provided, however, that injunctive relief shall not be the exclusive legal or equitable remedy for any such violation.

 ARTICLE V 

COOPERATION AND EXCHANGE OF INFORMATION 

5.01 Cooperation. 

(a) Notwithstanding anything to the contrary in the Separation Agreement or the Ancillary Agreements, Ensign and SpinCo shall cooperate (and
shall cause each of their respective Affiliates to cooperate) fully at such time and to the extent reasonably requested by the other Party in connection with the preparation and filing of any Tax Return or the conduct of any Tax controversy,
including any audit, protest, or claim for refund, competent authority proceeding, or litigation in Tax court or any other court of competent jurisdiction (a “Tax Controversy”) (including providing a power of attorney) concerning
any issues or any other matter contemplated under this Agreement or otherwise as reasonably requested by the other Party. Each Party shall make its employees and facilities available on a mutually convenient basis to facilitate such cooperation.

 (b) Notwithstanding anything to the contrary in this Agreement, if a Party materially fails to comply with any of its obligations set
forth in this Section 5.01, upon reasonable request and notice by the other Party, the non-performing Party shall (i) reimburse the other Party for any internal or incremental costs incurred by such
other Party in having its employees or agents view or obtain such material, and (ii) to the extent such failure results in the imposition of additional Taxes, be liable in full for such additional Taxes. 

5.02 Retention of Records. 

(a) The Parties and their Affiliates shall retain and provide to one another on demand books, records, documentation, information, or other
materials (including computer data) relating to any Tax Return, or any supplemental information necessary or reasonably helpful to support any position taken therein until the later of (x) the expiration of the applicable statute of limitations
(giving effect to any extension, waiver, or mitigation thereof) or (y) in the event any claim has been made under this Agreement for which such information is relevant, the occurrence of a Final Determination with respect to such claim. 

  
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 (b) The Parties shall retain and make available to one another and to Tax Authorities,
records and documentation that specifically include information regarding the amount, basis, and fair market value of all assets exchanged in the Contribution, and relevant facts regarding any liabilities assumed or extinguished as part of
Contribution, pursuant to Treasury Regulation Section 1.355-5(d). 
 (c) If at any time after
the Distribution Date a Party proposes to destroy materials or information required to be retained pursuant to Section 5.02(a), it shall first notify the other Party in writing and such other Party shall be entitled to receive such materials or
information proposed to be destroyed if such materials or information relate to the other Party or any of its Affiliates or any assets held by the other Party’s or any of its Affiliates. 

5.03 Contest Provisions. 

(a) The Party responsible for Taxes under Article II (the “Responsible Party”) shall, with respect to a Tax Return, have the
exclusive right at its own cost, to control, contest and represent the interests of Ensign, SpinCo, and their respective Affiliates in any Tax Controversy related to such Tax Return; provided, for the avoidance of doubt that Ensign shall be
the Responsible Party with respect to any Tax Return reflecting a Tax described in Section 2.02(a)(i)(A). Such right to control shall include the right, in the Responsible Party’s reasonable discretion, to resolve, settle or agree to any
deficiency, claim or adjustment proposed, asserted or assessed in connection with or as a result of any such Tax Controversy; provided, however, that at the request of Ensign or at SpinCo’s option, SpinCo shall reasonably participate as
described in Section 5.04 in the contest of a Tax Controversy of the Ensign Consolidated Group for any Pre-Distribution Periods. 

(b) Ensign shall use reasonable efforts to keep SpinCo advised as to the status of Tax Controversies involving any issue that relates to a Tax
of SpinCo or any SpinCo Affiliate or that could reasonably be expected to give rise to a liability of SpinCo or any of its Affiliates under this Agreement (in each case, a “Liability Issue”). Ensign shall promptly furnish to SpinCo
copies of any inquiries or requests for information from any Taxing Authority or any other administrative, judicial, or other governmental authority concerning any Liability Issue pertaining to SpinCo. 

5.04 Reasonable Participation. 

(a) In the event that SpinCo elects or is required to participate in the defense of a Tax Controversy pursuant to Section 5.03(a), Ensign
shall (i) provide SpinCo with notice reasonably in advance of any proceeding relating to such Tax Controversy, and (ii) consult in good faith with SpinCo on the resolution of the Tax Controversy and on any written submissions in connection
with such Tax Controversy, including providing SpinCo with an opportunity to review and provide comments on any written submission. 

  
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 (b) SpinCo shall have the right, at its expense, to be present at, and participate in, any
proceeding relating to such Tax Controversy to the extent allowed by Law. 
 (c) Ensign shall not settle, either administratively or after
the commencement of litigation, such Tax Controversy without the prior written consent of SpinCo, which shall not be unreasonably withheld, conditioned, or delayed. If SpinCo withholds, conditions, or delays consent in a manner deemed
“unreasonable” by Ensign, Article VII shall govern the determination of unreasonable. 
 5.05 Information for
Shareholders. 
 (a) Ensign shall provide each shareholder that receives SpinCo stock pursuant to the Distribution with the information
necessary for such shareholder to comply with the requirements of Section 355 of the Code and the Treasury Regulations thereunder with respect to statements that such shareholders must file with their federal income Tax Returns demonstrating
the applicability of Section 355 of the Code to the Distribution. 
 (b) Ensign shall make available on its website the information
required by Section 6045B of the Code with respect to the effect of the Distribution on the basis of Ensign and SpinCo stock in the hands of a U.S. taxpayer. 

ARTICLE VI 
 INDEMNITY
OBLIGATIONS AND PAYMENTS 
 6.01 Indemnity Obligations. In addition to the obligations set forth in Article II, 

(a) The Ensign Group shall indemnify and hold harmless SpinCo and any member of the SpinCo Group from and against any liability, cost, or
expense, including, without limitation, any fine, penalty, interest, charge, or accountant’s fee, arising out of fraudulent or negligent preparation of any Tax Return or claim for Refund filed by Ensign or an Ensign Affiliate for any period
during which SpinCo or any member of the SpinCo Group was or has been a member of the Ensign Consolidated Group, or arising out of the untimely provision of information required to be provided under this Agreement. 

(b) The SpinCo Group shall indemnify and hold harmless Ensign and any member of the Ensign Group from and against any liability, cost, or
expenses, including, without limitation, any fine, penalty, interest, charge, or accountant’s fee, arising out of fraudulent or negligent information, workpapers, documents, and other items prepared by SpinCo or any SpinCo Affiliate used in the
preparation of any Tax Return or claim for Refund filed by Ensign or any Ensign Affiliate for any period during which SpinCo or any SpinCo Affiliate was or has been a member of the Ensign Consolidated Group, or arising out of the untimely provision
of information required to be provided under this Agreement. 

  
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 6.02 Notice. A Party making a claim for indemnification under this Agreement
(the “Indemnified Party”) shall provide the Party from whom such indemnification is sought (the “Indemnifying Party”) with written notice of such claim describing such claim in reasonable detail and accompanied by
reasonable documentation supporting such claim no later than twenty (20) calendar days after the Indemnified Party (i) files a Tax Return reporting Taxes due which are subject to reimbursement, or (ii) receives written notice from any
Taxing Authority with respect to a Final Determination of Taxes that may be subject to indemnification under this Agreement; provided, however, that in the event that timely notice is not provided, the Indemnifying Party shall be relieved of its
obligation to indemnify the Indemnified Party only to the extent that such delay results in actual increased costs or actual prejudice. 

6.03 Payment. In the event that the Indemnifying Party is required to make a payment to the Indemnified Party pursuant to this
Agreement, then to the extent not otherwise provided for in this Agreement or in the Separation Agreement, such payment shall be made according to this Section 6.03. 

(a) All payments shall be made to the Indemnified Party or to the appropriate Taxing Authority as specified by the Indemnified Party within the
time prescribed for such payment in this Agreement, or if no period is prescribed, within twenty (20) calendar days after delivery of written notice of payment owing together with a computation of the amounts due. 

(b) Unless otherwise required by any Final Determination, the Parties agree that any payment made by one Party to the other Party (other than
payments of interest and payment of After Tax Amounts pursuant to Section 6.03(c)) pursuant to this Agreement shall be treated for all Tax and financial accounting purposes as payments with respect to stock (dividend distributions or capital
contributions, as the case may be) made immediately prior to the Distribution. 
 (c) If, pursuant to a Final Determination, it is determined
that the receipt or accrual of any payment made under this Agreement (other than payments of interest) is subject to any Tax, the Party making such payment shall be liable for (i) the After Tax Amount with respect to such payment, and
(ii) interest at the rate described in Section 6.03(d) on the amount of such Tax from the date such Tax is due through the date of payment of such After Tax Amount. The Party making a demand for payment pursuant to this Agreement and for a
payment of an After Tax Amount with respect to such payment shall separately specify and compute such After Tax Amount. However, a Party may choose not to specify an After Tax Amount in a demand for payment pursuant to this Agreement without thereby
being deemed to have waived its right subsequently to demand an After Tax Amount with respect to such payment. 
 (d) Any payment that is
required to be made pursuant to this Agreement (i) by SpinCo (or a SpinCo Affiliate) to Ensign (or an Ensign Affiliate), or (ii) by Ensign (or an Ensign Affiliate) to SpinCo (or a SpinCo Affiliate), that is not made on or prior to the date
that such payment is required to be made pursuant to this Agreement shall thereafter bear interest at the rate established for underpayments pursuant to Section 6621(a)(2) of the Code. 

  
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 ARTICLE VII 

DISPUTE RESOLUTION 

7.01 All disputes, controversies, or claims arising under or in connection with this Agreement (including any dispute, controversy, or
claim relating to the breach, termination, or validity thereof) between or among any of Ensign or its Affiliates and SpinCo or its Affiliates shall be governed by Article X of the Separation Agreement or the procedures set forth in Section 7.02
as determined by the Parties. If the Parties cannot agree as to which procedure will govern such dispute, such dispute shall be resolved pursuant to Article X of the Separation Agreement. Each Party agrees that the procedures set forth in Article X
of the Separation Agreement or Section 7.02, as determined in Section 7.01, shall be the sole and exclusive remedy in connection with any dispute, controversy, or claim relating to any of the foregoing matters. 

7.02 With respect to any dispute governed by this Section 7.02, the Parties shall appoint a nationally recognized independent
public accounting firm (the “Accounting Firm”) to resolve such dispute. In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by Ensign and SpinCo and
their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only. The Parties shall require the Accounting Firm to
attempt to resolve all disputes no later than sixty (60) days after the submission of such dispute to the Accounting Firm, but in no event later than the due date for the payment of Taxes or the filing of the applicable Tax Return, if
applicable, and agree that all decisions by the Accounting Firm with respect thereto shall, absent fraud or manifest error, be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all disputes in a manner consistent
with this Agreement and, to the extent not inconsistent with this Agreement, in a manner consistent with the past practices of Ensign and its Affiliates, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm
to render all determinations in writing to each of the Parties and to set forth, in reasonable detail, the basis for such determination. The fees and expenses of the Accounting Firm shall be paid by the
non-prevailing Party. 
 7.03 In order to facilitate the comprehensive resolution of related
disputes, all claims between any of the parties to a Dispute that arises under or in connection with both this Agreement, on the one hand, and the Separation Agreement and/or the other Ancillary Agreements, on the other hand, may be brought in a
single arbitration in accordance with this Section 7.03. Upon the written request of any party to an arbitration proceeding constituted under both this Agreement, on the one hand, and the Separation Agreement and/or the other Ancillary
Agreements, on the other hand, the arbitral tribunal shall consolidate such arbitration proceeding with any other arbitration proceeding relating to this Agreement, on the one hand and the Separation Agreement and/or the other Ancillary Agreements,
on the other hand, if the arbitral tribunal determines that (i) there are issues of fact or Law common to the proceedings so that a consolidated proceeding would be more efficient than separate proceedings, and (ii) no party to the Dispute
would be unduly prejudiced as a result of such consolidation through undue delay or otherwise. In the event of different rulings on this question by the arbitral tribunal constituted hereunder and another arbitral tribunal constituted under this
Agreement, on the one hand, and the Separation Agreement and/or the other Ancillary Agreements, on the other hand, the ruling of the arbitral tribunal constituted first in time shall control, and such arbitral tribunal shall serve as the tribunal
for any consolidated arbitration. This Section 7.03 shall not apply to any claims brought under Section 7.02. 

  
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 7.04 In the event of a Dispute, each party to the Dispute shall continue to perform
its obligations under the Separation Agreement, this Agreement, and the other Ancillary Agreements in good faith during the resolution of such Dispute as if such Dispute had not arisen, unless and until the Separation Agreement, this Agreement, or
the other Ancillary Agreements, as applicable, are terminated in accordance with their respective provisions. 
 ARTICLE VIII 

MISCELLANEOUS 
 8.01
Incorporation by Reference. The following sections of the Separation Agreement are hereby incorporated in this Agreement by reference to the extent not inconsistent with any of the provisions set forth in this Agreement: Section 12.3
(Amendments and Waivers); Section 12.4 (Entire Agreement); Section 12.5 (Survival of Agreements); Section 12.9 (Counterparts; Electronic Delivery); Section 12.10 (Severability); Section 12.11 (Assignability; Binding Effect);
Section 12.12 (Governing Law); Section 12.13 (Construction); Section 12.14 (Performance); and Section 12.15 (Title and Headings). 

8.02 Third Party Beneficiaries. This Agreement shall be binding upon and inure solely to the benefit of Ensign, SpinCo, and their
respective Affiliates, and nothing herein, express or implied, is intended to or shall confer upon any third parties any legal or equitable right, benefit, or remedy of any nature whatsoever under or by reason of this Agreement. 

8.03 Effectiveness. This Agreement shall become effective on the Distribution Date. 

8.04 Changes in Law. Any reference to a provision of the Code, Treasury Regulations, or a Law of another jurisdiction shall
include a reference to any applicable successor provision or Law. If, due to any change in applicable Law or regulations or their interpretation by any court of Law or other governing body having jurisdiction subsequent to the date specified in the
preamble to this Agreement, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties shall use their commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated by such provision. 
 8.05 Notices. All
notices, requests, permissions, waivers and other communications hereunder shall be in writing and shall be deemed to have been duly given (a) five (5) Business Days following sending by registered or certified mail, postage prepaid,
(b) when sent, if sent by facsimile or e-mail of a PDF document (with confirmation of transmission) if sent during normal business hours of the recipient, and on the next Business Day if sent after normal
business hours of the recipient, (c) when delivered, if delivered personally to the intended recipient, and (d) one (1) Business Day following sending by overnight delivery via a national courier service and, in each case, addressed to a
Party at the following address for such Party (as updated from time to time by notice in writing to the other Party): 

  
 25 

	 	(a)	 If to Ensign, at: 

The Ensign Group, Inc. 

29222 Rancho Viejo Rd., Suite 127 

San Juan Capistrano, CA 92675 

Attention: General Counsel 

Email: legal@ensignservices.net 
  

	 	(b)	 If to SpinCo, at: 

The Pennant Group, Inc. 

1675 E. Riverside Dr., Ste. 150 

Eagle, ID 83616 

Attention: General Counsel 

Email: legal@pennantservices.com 

8.06 Joint and Several Liability. SpinCo and each SpinCo Affiliate shall have joint and several liability for any obligation of
SpinCo or a SpinCo Affiliate arising pursuant to this Agreement. Ensign and each Ensign Affiliate shall have joint and several liability for any obligation of Ensign or an Ensign Affiliate arising pursuant to this Agreement. 

8.07 Tax Sharing Agreements. All Tax sharing, indemnification and similar agreements, written or unwritten, as between any member
of the SpinCo Group, on the one hand, and any member of the Ensign Group, on the other hand (other than the Separation Agreement, this Agreement, or any other Ancillary Agreement), shall be or shall have been terminated as of the Effective Time and,
after the Effective Time, none of such Parties (or their respective Subsidiaries) to any such Tax sharing, indemnification or similar agreement shall have any further rights or obligations under any such agreement. 

8.08 Expenses. Unless otherwise expressly provided in this Agreement, each Party shall bear any and all expenses that arise from
their respective obligations under this Agreement. 
 8.09 Confidentiality. Each Party shall hold and cause its consultants and
advisors to hold in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of Law, all information written or oral concerning the other Party hereto furnished it
by such other Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (i) previously known by the Party to which it was furnished, (ii) in the public domain through no
fault of such Party, or (iii) later lawfully acquired from other sources by the Party to which it was furnished), and each Party shall not release or disclose such information to any other person, except its auditors, attorneys, financial
advisors, bankers, and other consultants and advisors who shall be advised of the provisions of this Section 8.09. Each Party shall be deemed to have satisfied its obligation to hold confidential information concerning or supplied by the other
Party if it exercises the same care as it takes to preserve confidentiality for its own similar information. 

  
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 8.10 Limitation on Damages. Each Party irrevocably waives, and no Party shall
be entitled to seek or receive, consequential, special, indirect or incidental damages (including without limitation damages for loss of profits) or punitive damages, regardless of how such damages were caused and regardless of the theory of
liability; provided that the foregoing shall not limit each Party’s indemnification obligations set forth in the Separation Agreement and the Ancillary Agreements. 

8.11 Consent by Affiliates. Each of Ensign and SpinCo shall cause each of its respective Affiliates (including any entity that
becomes an Affiliate after the date hereof) to consent to, and be bound by, the terms, conditions, covenants, and provisions of this Agreement. 

8.12 Coordination with Other Agreements. The Parties agree that this Agreement shall take precedence over any and all agreements
among the Parties with respect to Tax matters, including indemnification in respect of Tax matters; provided, however, this Agreement shall not take precedence over any Tax matter relating to the payment or reimbursement of Taxes that exists now or
in the future under any lease of property between Ensign and SpinCo, or any of their respective Affiliates, as the case may be, and any such Taxes shall be governed exclusively by such leases without regard to this Agreement. 

[Signature Page Follows] 

  
 27 

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

			
	THE ENSIGN GROUP, INC.
		
	By:	 	          

	Name:	 	  

	Title:	 	  

	
	THE PENNANT GROUP, INC.
		
	By:	 	          

	Name:	 	  

	Title:

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