Document:

Exhibit
10.6

 

[●],
2022

 

Yotta
Acquisition Corporation

1185
Avenue of the Americas, Suite 301

New
York, NY 10036

 

Ladies
and Gentlemen:

 

Yotta
Acquisition Corporation (the “Company”), a blank check company formed for the purpose of acquiring one or more businesses
or entities (a “Business Combination”), intends to register its securities under the Securities Act of 1933, as amended (“Securities
Act”), in connection with its initial public offering (“IPO”), pursuant to a registration statement on Form S-1 (“Registration
Statement”).

 

The undersigned hereby commits
that it will purchase 313,500 units of the Company (“Placement Units”), each Placement Unit consisting of one share of common
stock of the Company, $0.0001 par value (the “Common Stock”), one warrant (the “Warrant”) entitling its holder
to purchase one share of common stock, at $10.00 per Placement Unit, and one right (the “Right”) to receive one-tenth of one
share of common stock at the Business Combination, for a purchase price of $3,135,000 (the “Placement Unit Purchase Price”).

 

The undersigned hereby agrees
that it will purchase an additional amount of units of the Company (“Over-Allotment Units”), up to a maximum of 30,000 Over-Allotment
Units, or a maximum purchase price of $300,000 (“Over-Allotment Unit Purchase Price”, together with the Placement Unit Purchase
Price, the “Purchase Price”), in the event that Chardan Capital Markets, LLC (the “Underwriter”) exercises its
over-allotment option, such that the amount held in the trust account (as described in the Registration Statement, the “Trust Account”)
does not fall below $10.00 per share for each share of Common Stock sold in the IPO.

 

At
least twenty-four (24) hours prior to the pricing of the IPO, the undersigned will cause the Purchase Price to be delivered to an escrow
account with Loeb & Loeb LLP (“Loeb”).

 

The
consummation of the purchase and issuance of the Placement Units shall occur simultaneously with the consummation of the IPO and the
consummation of the purchase and issuance of the Over-Allotment Units shall occur simultaneously with the closing of any exercise of
the over-allotment option related to the IPO. Simultaneously with or prior to the consummation of the IPO, Loeb shall deposit the Private
Unit Purchase Price, without interest or deduction, into the Trust Account.

 

Each
of the Company, and the undersigned acknowledges and agrees that Loeb is serving hereunder solely as a convenience to the parties to
facilitate the purchase of the Placement Units and Loeb’s sole obligation under this letter agreement is to act with respect to
holding and disbursing the Purchase Price for the Placement Units as described above. Loeb shall not be liable to the Company, the Underwriter
or the undersigned or any other person or entity in respect of any act or failure to act hereunder or otherwise in connection with performing
its services hereunder unless Loeb has acted in a manner constituting gross negligence or willful misconduct. The Company and the undersigned
shall indemnify Loeb against any claim made against it (including reasonable attorney’s fees) by reason of it acting or failing
to act in connection with this letter agreement except as a result of its gross negligence or willful misconduct. Loeb may rely and shall
be protected in acting or refraining from acting upon any written notice, instruction or request furnished to it hereunder and believed
by it to be genuine and to have been signed or presented by the proper party or parties. 

 

The
Units and Over-Allotment Units will be identical to the units to be sold by the Company in the IPO. Additionally, the undersigned agrees:

 

		●	to
                                            vote the shares of Common Stock included in the Placement Units and Over-Allotment Units
                                            in favor of any proposed Business Combination;

 

     

     

    

 

		●	not to propose, or vote in favor of, an amendment to the Company’s
Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”) that would affect the substance or
timing of the Company’s obligation to redeem 100% of the Company’s shares of Common Stock sold in the IPO if the Company
does not complete an initial Business Combination within 9 months from the closing of the IPO (or up to 15 months, as applicable), unless
the Company provides the holders of shares of Common Stock underlying the units sold in the IPO with the opportunity to redeem their
shares of Common Stock upon approval of any such amendment at a per-share price, payable in cash, equal to the aggregate amount of the
Trust Account, including interest earned on Trust Account and not previously released to the Company to pay the Company’s franchise
and income taxes, divided by the number of then outstanding shares of Common Stock underlying the units sold in the IPO;

 

		●	not
                                            to convert any shares of Common Stock included in the Placement Units and Over-Allotment
                                            Units into the right to receive cash from the Trust Account in connection with a shareholder
                                            vote to approve either a Business Combination or an amendment to the provisions of the Certificate
                                            of Incorporation, and not to tender any shares of Common Stock included in the Placement
                                            Units and Over-Allotment Units in connection with a tender offer conducted prior to the closing
                                            of a Business Combination;

 

		●	that
                                            the undersigned will not participate in any liquidation distribution with respect to the
                                            Placement Units and Over-Allotment Units or any underlying securities (but will participate
                                            in liquidation distributions with respect to any units or shares of Common Stock purchased
                                            by the undersigned in the IPO or in the open market) if the Company fails to consummate a
                                            Business Combination;

 

		●	that
                                            the Placement Units, Over-Allotment Units and underlying securities will not be transferable
                                            until after the consummation of a Business Combination except (i) to the Company’s
                                            pre-IPO shareholders, or to the Company’s officers, directors, advisors and employees,
                                            (ii) transfers to the undersigned’s affiliates or its members upon its liquidation,
                                            (iii) to relatives and trusts for estate planning purposes, (iv) by virtue of the laws of
                                            descent and distribution upon death, (v) pursuant to a qualified domestic relations order,
                                            (vi) by private sales made in connection with the consummation of a Business Combination
                                            at prices no greater than the price at which the Placement Units were originally purchased
                                            or (vii) to the Company for cancellation in connection with the consummation of a Business
                                            Combination, in each case (except for clause vii) where the transferee agrees to the terms
                                            of the transfer restrictions; and

 

		●	the
                                            Placement Units and Over-Allotment Units will include any additional terms or restrictions
                                            as is customary in other similarly structured blank check company offerings or as may be
                                            reasonably required by the underwriters in the IPO in order to consummate the IPO, each of
                                            which will be set forth in the Registration Statement.

 

The
undersigned acknowledges and agrees that the purchaser of the Placement Units and Over-Allotment Units will execute agreements in form
and substance typical for transactions of this nature necessary to effectuate the foregoing agreements and obligations prior to the consummation
of the IPO as are reasonably acceptable to the undersigned, including but not limited to an insider letter.

 

The
undersigned hereby represents and warrants that:

 

		(a)	it
                                            has been advised that the Placement Units and Over-Allotment Units have not been registered
                                            under the Securities Act;

 

		(b)	it
                                            will be acquiring the Placement Units and Over-Allotment Units for its account for investment
                                            purposes only;

 

		(c)	it
                                            has no present intention of selling or otherwise disposing of the Placement Units and Over-Allotment
                                            Units in violation of the securities laws of the United States;

 

    2

     

    

 

		(d)	it
                                            is an “accredited investor” as defined by Rule 501 of Regulation D promulgated
                                            under the Securities Act;

 

		(e)	it
                                            has had both the opportunity to ask questions and receive answers from the officers and directors
                                            of the Company and all persons acting on its behalf concerning the terms and conditions of
                                            the offer made hereunder;

 

		(f)	it
                                            is familiar with the proposed business, management, financial condition and affairs of the
                                            Company;

 

		(g)	it
                                            has full power, authority and legal capacity to execute and deliver this letter and any documents
                                            contemplated herein or needed to consummate the transactions contemplated in this letter;
                                            and

 

		(h)	this
                                            letter constitutes its legal, valid and binding obligation, and is enforceable against it.

 

[Signature
Page Follows]

 

    3

     

    

 

This
letter agreement constitutes the entire agreement between the undersigned and the Company with respect to the purchase of the Placement
Units and Over-Allotment Units, and supersedes all prior and contemporaneous understandings, agreements, representations and warranties,
both written and oral, with respect to the same. 

 

	 	Very
    truly yours,
	 	 
	 	YOTTA
    INVESTMENT LLC
	 	 
	 	By:	 
	 	Name:	Chen
Chen
	 	Title:	Member

 

	Accepted
    and Agreed:	 
	 	 
	YOTTA
    ACQUISITION CORPORATION	 
	 	 
	By:	 	 
	 	Name:	Hui
Chen	 
	 	Title:	Chief
Executive Officer	 

 

Signature
Page to Private Placement Units Subscription Agreement

 

    4ex101

  Execution Version    US-DOCS\130540874.4  SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT AGREEMENT  This SECOND AMENDMENT TO THIRD AMENDED AND RESTATED CREDIT  AGREEMENT, dated as of April 8, 2022 (this “Amendment”), among The Ensign Group, Inc., a  Delaware corporation (“Ensign Group”), Standard Bearer Healthcare REIT, Inc., a Maryland corporation  (“Ensign REIT” and, together with Ensign Group, the “Borrowers”), certain subsidiaries of the Borrowers  party hereto, as guarantors (the “Guarantors”), the several banks and other financial institutions party  hereto constituting all of the Lenders party to the Credit Agreement (as defined below) as of the date hereof  (the “Consenting Lenders”) and Truist Bank (“Truist”), as administrative agent (in such capacity, together  with its successors and assigns, the “Administrative Agent”), which amends that certain Third Amended  and Restated Credit Agreement, dated as of October 1, 2019 (as amended, restated, amended and restated,  supplemented or otherwise modified from time to time prior to the date hereof, the “Credit Agreement”),  among Ensign Group, the several banks and other financial institutions from time to time party thereto, the  Administrative Agent and Truist as issuing bank and swingline lender.  Capitalized terms used and not  otherwise defined herein shall have the meanings assigned to them in this Amendment or the Amended  Credit Agreement (as defined below), as applicable.  WHEREAS, the Borrowers have requested certain amendments to the Credit Agreement as  necessary to provide, among other things, an extension of the Revolving Commitment Termination Date  and an increase of the Revolving Commitment to $600,000,000; and  WHEREAS, the Borrowers, the Guarantors, the Administrative Agent and the Consenting Lenders  desire to enter into this Amendment in order to effect the amendments to the Credit Agreement  contemplated herein, in each case, on the terms and subject to the conditions set forth in Section 2 hereof.  NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good  and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties  hereto agree as follows:    Amendments to the Credit Agreement.  Subject to the satisfaction (or waiver by  the Consenting Lenders) of the conditions set forth in Section 2 hereof, the Credit Agreement, including all  schedules and exhibits thereto, shall be amended as follows:   The Credit Agreement is hereby amended by inserting the language indicated in  double underlined text (indicated textually in the same manner as the following example: underlined text)  in Exhibit A hereto and by deleting the language indicated by strikethrough text (indicated textually in the  same manner as the following example: stricken text) in Exhibit A hereto; and    The Schedules to the Credit Agreement are hereby amended and restated in their  entirety as set forth in Exhibit B hereto.   The Exhibits to the Credit Agreement are hereby amended and restated in their  entirety as set forth in Exhibit C hereto.    The Credit Agreement, Schedules and Exhibits thereto, as so amended pursuant to the  foregoing clauses (a), (b) and (c), are referred to herein as the “Amended Credit Agreement”.   Conditions to Effectiveness.  The effectiveness of this Amendment is subject only  to the satisfaction (or waiver by the Consenting Lenders) of the following conditions precedent (the date  on which such conditions have been satisfied (or waived by the Consenting Lenders), the “Second  Amendment Effective Date”):  

 

    2  US-DOCS\130540874.4   The Administrative Agent shall have received executed counterparts of this  Amendment from each Loan Party, the Administrative Agent and the Consenting Lenders.   The representations and warranties of each Loan Party set forth in Article IV of  the Amended Credit Agreement or any other Loan Document shall be true and correct in all material  respects on and as of the Second Amendment Effective Date; provided that, in each case, to the extent that  such representations and warranties specifically refer to an earlier date, they shall be true and correct in all  material respects as of such earlier date; provided further that, in each case, any representation and warranty  that is qualified as to “materiality,” “Material Adverse Effect” or similar language shall be true and correct  in all respects on the date of such credit extension or on such earlier date, as the case may be.   No Event of Default shall have occurred and be continuing as of the time of the  Second Amendment Effective Date or immediately after giving effect to this Amendment.   The Administrative Agent shall have received (i) a copy of each organizational  document of each Loan Party certified as of a recent date by the applicable Governmental Authority (or, to  the extent any such organizational document has not been amended, supplemented or otherwise modified  from the version thereof delivered to the Administrative Agent on the Original Closing Date, the First  Amendment and Restatement Date, the Second Amendment and Restatement Date, the Closing Date or the  date of such Loan Party’s joinder as a Loan Party, as applicable, a certification by its secretary, assistant  secretary or Responsible Officer that such organizational document has not been amended, supplemented  or otherwise modified since such date), (ii) an incumbency certificate identifying the name and title and  bearing the signatures of the authorized signatories of each Loan Party, (iii) copies of resolutions of the  governing body of each Loan Party approving and authorizing the execution, delivery and performance of  this Amendment, certified as of the Second Amendment Effective Date by its secretary, assistant secretary  or Responsible Officer as being in full force and effect without modification or amendment and (iv) a good  standing certificate (to the extent such concept exists) from the applicable Governmental Authority of each  Loan Party’s jurisdiction of incorporation, organization or formation.   The Administrative Agent shall have received a customary written opinion  (addressed to the Administrative Agent and the Lenders and dated as of the Second Amendment Effective  Date) of (i) Kirkland & Ellis LLP, special counsel to the Loan Parties, (ii) Venable LLP, special Maryland  counsel to Ensign REIT, and (iii) Holland & Hart LLP, special Nevada counsel to the Loan Parties that are  incorporated, organized or formed in Nevada, each in form and substance reasonably satisfactory to the  Administrative Agent.   The Administrative Agent shall have received a certificate of a Responsible Officer  of Ensign Group certifying that the conditions set forth in Sections 2(b) and (c) have been satisfied.   At least three (3) days prior to the Second Amendment Effective Date, (A) all  documentation and other information with respect to the Borrowers and each other Loan Party that the  Administrative Agent or any Lender reasonably determines is required by regulatory authorities under  applicable “know your customer” and anti-money laundering rules and regulations, including, without  limitation, the Patriot Act and the Beneficial Ownership Regulation, to the extent reasonably requested by  the Administrative Agent at least ten (10) days before the Second Amendment Effective Date, and (B) if  Ensign Group or Ensign REIT qualifies as a “legal entity customer” under the Beneficial Ownership  Regulation, a Beneficial Ownership Certification in relation to such Borrower.   The Borrowers shall have paid all accrued and unpaid interest in respect of the  Revolving Loans and Swingline Loans as well as all accrued and unpaid commitment fees in respect of the  Revolving Commitment, letter of credit fees in respect of each Revolving Lender’s LC Exposure and facing  

 

    3  US-DOCS\130540874.4  fees in respect of each Issuing Bank’s LC Exposure and all other accrued and unpaid fees due and payable  by the Borrowers pursuant to the Credit Agreement and the other Loan Documents through, but not  including, the Second Amendment Effective Date.   The Borrowers shall have paid all reasonable documented out-of-pocket costs and  expenses incurred by the Administrative Agent (including the reasonable and documented fees, charges  and disbursements of counsel) in connection with this Amendment to the extent reimbursable by the  Borrowers pursuant to Section 10.3 of the Amended Credit Agreement and invoiced prior to the Second  Amendment Effective Date (except as otherwise reasonably agreed by the Borrowers).   The Administrative Agent shall have received executed counterparts of each of the  documents listed on Exhibit D hereto (the “Joinder Documents”).   Fees and Expenses.  The Borrowers agree to reimburse the Administrative Agent  for all reasonable and documented out-of-pocket costs and expenses incurred by the Administrative Agent  in connection with this Amendment to the extent reimbursable by the Borrowers pursuant to Section 10.3  of the Amended Credit Agreement.   Reallocation of LC Exposure.  On the Second Amendment Effective Date,  immediately after giving effect to the increase in the Revolving Commitment as contemplated hereby (such  increase, the “Revolving Facility Upsize”), the LC Exposure in respect of Letters of Credit that were issued  prior to, and remain outstanding as of, the Second Amendment Effective Date (the “Specified Letters of  Credit”) shall be automatically, and without further act, reallocated amongst the Revolving Lenders based  on their respective Pro Rata Share of the Revolving Commitment (after giving effect to the Revolving  Facility Upsize).  In connection with the foregoing, the Revolving Lenders shall be deemed to have assigned  or assumed, as the case may be, an amount of participation interests in respect of the Specified Letters of  Credit sufficient to cause each Revolving Lender’s LC Exposure in respect of the Specified Letters of Credit  to equal its Pro Rata Share (based on such Revolving Lender’s Revolving Commitment, after giving effect  to the Revolving Facility Upsize) of the total LC Exposure in respect of the Specified Letters of Credit.   Amendments; Counterparts.  This Amendment may not be amended or waived  except by an instrument in writing signed by each of the parties party hereto.  This Amendment and each  other Loan Document may be executed in one or more counterparts (and by different parties hereto in  different counterparts), each of which shall be deemed an original, but all of which together shall constitute  one and the same instrument. Delivery by telecopier or other electronic transmission of an executed  counterpart of a signature page to this Amendment and each other Loan Document shall be effective as  delivery of an original executed counterpart of this Amendment and such other Loan Document.  The  Administrative Agent may also require that any such documents and signatures delivered by telecopier or  other electronic transmission be confirmed by a manually-signed original thereof; provided that the failure  to request or deliver the same shall not limit the effectiveness of any document or signature delivered by  telecopier or other electronic transmission.   Governing Law, Jurisdiction and Waiver of Right to Trial by Jury.  THIS  AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE  LAW OF THE STATE OF NEW YORK.  The governing law, jurisdiction, consent to service of process,  and waiver of jury trial provisions in Sections 10.5 and 10.6 of the Credit Agreement are incorporated  herein by reference mutatis mutandis.   Headings.  The headings of this Amendment are for purposes of reference only and  shall not limit or otherwise affect the meaning hereof.  

 

    4  US-DOCS\130540874.4   Effect of Amendment.   On and after the date hereof, each reference in the Credit Agreement to “this  Agreement”, “hereunder”, “hereof” or words of like import referring to the Credit Agreement, and each  reference in the other Loan Documents to the “Credit Agreement”, “thereunder”, “thereof” or words of like  import referring to the Credit Agreement, mean and are a reference to the Credit Agreement as modified  by this Amendment.   Except as expressly amended hereby, all of the terms and provisions of the Credit  Agreement and all other Loan Documents are and shall remain in full force and effect and are hereby ratified  and confirmed.  In furtherance of the foregoing, each of the Loan Parties party hereto hereby irrevocably  and unconditionally ratifies its grant of security interest and pledge under the Security Agreement and each  Loan Document and confirms that the liens, security interests and pledges granted thereunder continue to  secure the Obligations, including, without limitation, any additional Obligations resulting from or incurred  pursuant to this Amendment.   Each of the Loan Parties as debtor, grantor, mortgagor, pledgor, guarantor,  assignor, or in other any other similar capacity in which such Loan Party grants liens or security interests  in its property or otherwise acts as accommodation party, guarantor or indemnitor, as the case may be,  hereby (i) ratifies and reaffirms all of its payment and performance obligations, contingent or otherwise,  under each of the Loan Documents to which it is a party, (ii) ratifies and reaffirms each grant of a lien on,  or security interest in, its property made pursuant to the Loan Documents (including, without limitation, the  grant of security made by such Loan Party pursuant to the Guaranty and Security Agreement) and confirms  that such liens and security interests continue to secure the Obligations under the Loan Documents, in each  case subject to the terms thereof and (iii) in the case of each Guarantor, ratifies and reaffirms its guaranty  of the Obligations pursuant to the Loan Documents.   The execution of this Amendment shall not operate  as a waiver of any right, power or remedy of the Administrative Agent or the Lenders, constitute a waiver  of any provision of any of the Loan Documents or serve to effect a novation of the Obligations.     The execution, delivery and performance of this Amendment shall not constitute a  waiver of any provision of, or operate as a waiver of any right, power or remedy of the Administrative  Agent or any Consenting Lender under, the Credit Agreement or any of the other Loan Documents.  This  Amendment shall be deemed to be a Loan Document as defined in the Credit Agreement.    No Novation.  By its execution of this Amendment, each of the parties hereto  acknowledges and agrees that the terms of this Amendment do not constitute a novation, but, rather, a  supplement of a pre-existing indebtedness and related agreement, as evidenced by the Amended Credit  Agreement.   Joinder Documents.  By its execution of this Amendment, each Lender hereby  consents to, and instructs the Administrative Agent and/or the Collateral Agent, as applicable, to enter into,  each of the Joinder Documents.  [Signature Pages Follow]    

 

    US-DOCS\130540874.4  EXHIBIT A  Amended Credit Agreement  [see attached]  

 

Execution Version  Conformed Copy (FirstSecond Amendment)    Deal CUSIP: 29358XAH7  Revolver CUSIP: 29358XAJ3    US-DOCS\128255312.5130540951.4  THIRD AMENDED AND RESTATED CREDIT AGREEMENT  dated as of October 1, 2019  among  THE ENSIGN GROUP, INC.  and  STANDARD BEARER HEALTHCARE REIT, INC.  as Borrower  THE LENDERS FROM TIME TO TIME PARTY HERETO  and  SUNTRUSTTRUIST BANK   as Administrative Agent    SUNTRUST ROBINSON HUMPHREY, INC.,  TRUIST SECURITIES INC., BOFA SECURITIES, INC., CITIBANK, N.A.,   FIFTH THIRD BANK, NATIONAL ASSOCIATION, REGIONS CAPITAL MARKETS  and  WELLS FARGO BANK, NATIONAL ASSOCIATION  REGIONS SECURITIES LLC  as Joint Lead Arrangers and Joint Book Managers  and  BANK OF AMERICA, N.A., BOFA SECURITIES, INC., CITIBANK, N.A.,  and  REGIONS BANK  as Co-Syndication Agents  and  BBVA USA,  CITIZENS BANK, N.A.,   FIFTH THIRD BANK, NATIONAL ASSOCIATION, REGIONS CAPITAL MARKETS  and  WELLS FARGO BANK, NATIONAL ASSOCIATION  as Co-DocumentationCo-Syndication Agents  

 

  US-DOCS\130540951.4  TABLE OF CONTENTS  Page  ARTICLE I     DEFINITIONS; CONSTRUCTION ......................................................................................................... 2  Section 1.1. Definitions ............................................................................................................. 2  Section 1.2. Classifications of Loans and Borrowings ........................................................ 4153  Section 1.3. Accounting Terms and Determination ............................................................. 4153  Section 1.4. Terms Generally .............................................................................................. 4254  Section 1.5. Limited Condition Acquisitions ....................................................................... 4255  ARTICLE II     AMOUNT AND TERMS OF THE COMMITMENTS ..................................................................... 4356  Section 2.1. General Description of Facilities ..................................................................... 4356  Section 2.2. Revolving Loans .............................................................................................. 4356  Section 2.3. Procedure for Revolving Borrowings .............................................................. 4456  Section 2.4. Swingline Commitment ................................................................................... 4457  Section 2.5. [Reserved] ........................................................................................................ 4659  Section 2.6. Funding of Borrowings .................................................................................... 4661  Section 2.7. Interest Elections.............................................................................................. 4662  Section 2.8. Optional Reduction and Termination of Commitments ................................... 4763  Section 2.9. Repayment of Loans ........................................................................................ 4863  Section 2.10. Evidence of Indebtedness ................................................................................ 4864  Section 2.11. Optional Prepayments ...................................................................................... 4964  Section 2.12. Mandatory Prepayments .................................................................................. 4965  Section 2.13. Interest on Loans .............................................................................................. 5067  Section 2.14. Fees .................................................................................................................. 5168  Section 2.15. Computation of Interest and Fees .................................................................... 5269  Section 2.16. Inability to Determine Interest Rates ...................... 52; Benchmark Replacement  Setting ................................................................................................................. 69  Section 2.17. Illegality ........................................................................................................... 5371  Section 2.18. Increased Costs ................................................................................................ 5472  Section 2.19. Funding Indemnity ........................................................................................... 5573  Section 2.20. Taxes ................................................................................................................ 5574  Section 2.21. Payments Generally; Pro Rata Treatment; Sharing of Set-offs ....................... 5877  Section 2.22. Letters of Credit ............................................................................................... 5978  Section 2.23. Increase of Commitments; Additional Lenders ............................................... 6383  Section 2.24. Mitigation of Obligations ................................................................................. 6787  Section 2.25. Replacement of Lenders .................................................................................. 6788  Section 2.26. Defaulting Lenders .......................................................................................... 6888  Section 2.27. Request for Extended Facilities ....................................................................... 7192  Section 2.28. Refinancing Amendment ................................................................................. 7394  ARTICLE III     CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT .................................... 7395  Section 3.1. Conditions to Effectiveness ............................................................................. 7395  Section 3.2. Conditions to Each Credit Event ..................................................................... 7798  Section 3.3. Delivery of Documents .................................................................................... 7799  

 

  US-DOCS\130540951.4 ii  Section 3.4. Effect on Existing Credit Facility .................................................................... 7799  ARTICLE IV     REPRESENTATIONS AND WARRANTIES ................................................................................. 78100  Section 4.1. Existence; Power............................................................................................ 78100  Section 4.2. Organizational Power; Authorization ............................................................ 78100  Section 4.3. Governmental Approvals; No Conflicts ........................................................ 78100  Section 4.4. Financial Statements ...................................................................................... 78100  Section 4.5. Litigation and Environmental Matters ........................................................... 79101  Section 4.6. Compliance with Laws and Agreements ....................................................... 79101  Section 4.7. Investment Company Act. ............................................................................. 79101  Section 4.8. Taxes .............................................................................................................. 79101  Section 4.9. Use of Proceeds; Margin Regulations............................................................ 79102  Section 4.10. ERISA ............................................................................................................ 80102  Section 4.11. Ownership of Property; Insurance ................................................................. 80103  Section 4.12. Disclosure ...................................................................................................... 81103  Section 4.13. Labor Relations .............................................................................................. 81104  Section 4.14. Subsidiaries .................................................................................................... 81104  Section 4.15. Solvency ........................................................................................................ 81104  Section 4.16. [Reserved] ...................................................................................................... 81104  Section 4.17. Collateral Documents .................................................................................... 82104  Section 4.18. [Reserved] ...................................................................................................... 82105  Section 4.19. Healthcare Matters ......................................................................................... 82105  Section 4.20. Sanctions ........................................................................................................ 85108  Section 4.21. Anti-Corruption Laws .................................................................................... 85108  Section 4.22. Patriot Act ...................................................................................................... 85108  Section 4.23. EEAAffected Financial Institutions .............................................................. 85108  ARTICLE V     AFFIRMATIVE COVENANTS ........................................................................................................ 85109  Section 5.1. Financial Statements and Other Information ................................................. 85109  Section 5.2. Notices of Material Events ............................................................................ 87111  Section 5.3. Existence; Conduct of Business ..................................................................... 89113  Section 5.4. Compliance with Laws. ................................................................................. 89113  Section 5.5. Payment of Obligations ................................................................................. 89113  Section 5.6. Books and Records ........................................................................................ 89113  Section 5.7. Visitation and Inspection. .............................................................................. 90114  Section 5.8. Maintenance of Properties; Insurance ............................................................ 90114  Section 5.9. Use of Proceeds; Margin Regulations............................................................ 90114  Section 5.10. [Reserved] ...................................................................................................... 90115  Section 5.11. [Reserved] ...................................................................................................... 91115  Section 5.12. Additional Subsidiaries and Collateral .......................................................... 91115  Section 5.13. Collateral Access Agreements ....................................................................... 92116  Section 5.14. Further Assurances ........................................................................................ 92117  Section 5.15. Health Care Matters ....................................................................................... 92117  Section 5.16. Post-Closing Matters...................................................................................... 93118  Section 5.17. [Reserved] ...................................................................................................... 93118  Section 5.18. Limitations on Designation of Excluded Subsidiaries ................................... 93118  Section 5.19. Anti-Corruption Laws; Sanctions .................................................................. 95120  

 

  US-DOCS\130540951.4 iii  ARTICLE VI     FINANCIAL COVENANTS .............................................................................................................. 95120  Section 6.1. Total Leverage Ratio ..................................................................................... 95120  Section 6.2. Interest/Rent Coverage Ratio ......................................................................... 96121  ARTICLE VII     NEGATIVE COVENANTS ............................................................................................................... 96121  Section 7.1. Indebtedness and Preferred Equity ................................................................ 96121  Section 7.2. Liens .............................................................................................................. 98123  Section 7.3. Fundamental Changes .................................................................................... 99125  Section 7.4. Investments, Loans ...................................................................................... 100126  Section 7.5. Restricted Payments ..................................................................................... 102128  Section 7.6. Sale of Assets ............................................................................................... 104130  Section 7.7. Transactions with Affiliates ......................................................................... 105131  Section 7.8. Restrictive Agreements ................................................................................ 105131  Section 7.9. Sale and Leaseback Transactions................................................................. 106132  Section 7.10. Hedging Transactions .................................................................................. 106132  Section 7.11. Amendment to Material Documents ............................................................ 106133  Section 7.12. PropCo Master Leases ................................................................................. 106133  Section 7.13. Accounting Changes .................................................................................... 107133  Section 7.14. Government Regulation ............................................................................... 107133  Section 7.15. Sanctions ...................................................................................................... 107134  Section 7.16. Anti-Corruption Laws .................................................................................. 107134  ARTICLE VIII     EVENTS OF DEFAULT 107134  Section 8.1. Events of Default ......................................................................................... 107134  Section 8.2. Application of Proceeds from Collateral ..................................................... 110137  ARTICLE IX     THE ADMINISTRATIVE AGENT ................................................................................................ 111139  Section 9.1. Appointment of the Administrative Agent .................................................. 111139  Section 9.2. Nature of Duties of the Administrative Agent and the Other  Agents .......................................................................................................... 112139  Section 9.3. Lack of Reliance on the Agents, the Issuing Banks and the  Lenders ........................................................................................................ 112140  Section 9.4. Certain Rights of the Administrative Agent ................................................ 113141  Section 9.5. Reliance by the Administrative Agent ......................................................... 113141  Section 9.6. The Administrative Agent in its Individual Capacity .................................. 113141  Section 9.7. Successor Administrative Agent .................................................................. 114142  Section 9.8. Withholding Tax .......................................................................................... 114142  Section 9.9. The Administrative Agent May File Proofs of Claim.................................. 115143  Section 9.10. Authorization to Execute Other Loan Documents ....................................... 116144  Section 9.11. Collateral and Guaranty Matters .................................................................. 116144  Section 9.12. Co-Documentation Agents; Co-Syndication Agents; Lead  Arrangers 116144  Section 9.13. Right to Realize on Collateral and Enforce Guarantee ................................ 116144  

 

  US-DOCS\130540951.4 iv  Section 9.14. Secured Bank Product Obligations and Hedging Obligations ..................... 116145  Section 9.15. Erroneous Payments ........................................................................................ 146  ARTICLE X     MISCELLANEOUS 118149  Section 10.1. Notices ......................................................................................................... 118149  Section 10.2. Waiver; Amendments .................................................................................. 121152  Section 10.3. Expenses; Indemnification ........................................................................... 123155  Section 10.4. Successors and Assigns ............................................................................... 125157  Section 10.5. Governing Law; Jurisdiction; Consent to Service of Process ...................... 129161  Section 10.6. WAIVER OF JURY TRIAL ........................................................................ 129162  Section 10.7. Right of Set-off ............................................................................................ 129163  Section 10.8. Counterparts; Integration ............................................................................. 130163  Section 10.9. Survival ........................................................................................................ 130163  Section 10.10. Severability .................................................................................................. 130164  Section 10.11. Confidentiality ............................................................................................. 130164  Section 10.12. Interest Rate Limitation ............................................................................... 131165  Section 10.13. Waiver of Effect of Corporate Seal ............................................................. 131165  Section 10.14. Patriot Act and Beneficial Ownership Regulation ....................................... 132165  Section 10.15. No Advisory or Fiduciary Responsibility .................................................... 132165  Section 10.16. Location of Closing ..................................................................................... 132166  Section 10.17. Releases of Collateral .................................................................................. 132166  Section 10.18. Amendment and Restatement ...................................................................... 133167  Section 10.19. AcknowledgementAcknowledgment and Consent to Bail-In of  EEAAffected Financial Institutions ............................................................ 134168  Section 10.20. Acknowledgement Regarding Any Supported QFCs .................................. 134168  Schedules  Schedule I   Commitment Amounts  Schedule II   Existing Letters of Credit  Schedule 1.2  - Subsidiary Agreements  Schedule 4.14  - Subsidiaries  Schedule 4.19  - Healthcare Matters  Schedule 5.16  - Post-Closing Matters  Schedule 7.1  - Existing Indebtedness  Schedule 7.2  - Existing Liens  Schedule 7.4  - Existing Investments  Schedule 7.8  - Existing Leases with Restrictive Agreements  Exhibits  Exhibit A  -  Form of Assignment and Acceptance  Exhibit B  - Form of Third Amended and Restated Guaranty and  Security Agreement  Exhibit 2.3  - Form of Notice of Borrowing  Exhibit 2.4  - Form of Notice of Swingline Borrowing  

 

  US-DOCS\130540951.4 v  Exhibit 2.7  - Form of Notice of Continuation/Conversion   Exhibit 3.1(b)(ii) - Form of Secretary’s Certificate    Exhibit 3.1(b)(iv) - Form of Officer’s Certificate  Exhibit 5.1(c)  - Form of Compliance Certificate  

 

    THIRD AMENDED AND RESTATED CREDIT AGREEMENT  THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT (as  amended, restated, amended and restated, supplemented, or otherwise modified from time to time,  this “Agreement”) is made and entered into as of October 1, 2019, by and among THE ENSIGN  GROUP, INC., a Delaware corporation (“Ensign”), STANDARD BEARER HEALTHCARE  REIT, INC., a Maryland corporation (“Ensign REIT” and, together with Ensign, collectively and  each individually, the “Borrower”), the several banks and other financial institutions and lenders  from time to time party hereto (the “Lenders”) and SUNTRUSTTRUIST BANK, in its capacity as  administrative agent for the Lenders (in such capacity, the “Administrative Agent”), as issuing  bank (in such capacity, an “Issuing Bank”) and as swingline lender (in such capacity, the  “Swingline Lender”).   W I T N E S S E T H:  WHEREAS, on May 30, 2014 (the “Original Closing Date”), Ensign, the  Administrative Agent and certain lenders entered into a Credit Agreement (the “2014 Credit  Agreement”);  WHEREAS, on February 5, 2016 (the “First Amendment and Restatement Date”),  Ensign, the Administrative Agent and certain lenders entered into an Amended and Restated Credit  Agreement (as amended, restated, amended and restated, supplemented or otherwise modified  prior to the Second Amendment and Restatement Date (as defined below), the “2016 Credit  Agreement”), which amended and restated the 2014 Credit Agreement in its entirety;  WHEREAS, on July 19, 2016 (the “Second Amendment and Restatement Date”),  Ensign, the Administrative Agent and certain lenders entered into a Second Amended and Restated  Credit Agreement (as amended, restated, amended and restated, supplemented or otherwise  modified prior to the date hereof, the “Existing Credit Agreement”), which amended and restated  the 2016 Credit Agreement in its entirety;  WHEREAS, Ensign has requested that the Lenders amend and restateon the  Closing Date, the Existing Credit Agreement was amended and restated in order to, among other  things, make available a credit facility consisting of a $350,000,000 revolving credit facility; and  WHEREAS, on the Second Amendment Effective Date, this Agreement was  amended to, among other things, increase the revolving credit facility hereunder to  $600,000,000.  WHEREAS, the Lenders, the Issuing Banks and the Swingline Lender party hereto  have agreed to amend and restate the Existing Credit Agreement on the terms and conditions set  forth in this Agreement and to provide and/or continue the Revolving Commitments, as the case may  be, in the amounts set forth for each such Lender on Schedule I hereto on the Closing Date; and  WHEREAS, on the Closing Date, all Refinanced Indebtedness, together with all  interest, fees and other amounts accrued and payable thereon, and all accrued fees and other amounts  payable in respect of all “Letters of Credit” (as defined in the Existing Credit Agreement) under the  Existing Credit Agreement, shall be repaid in full with the proceeds of the initial Borrowings under  this Agreement and each “Letter of Credit” (as defined in the Existing Credit Agreement)  

 

  2  outstanding under the Existing Credit Agreement shall be continued as a Letter of Credit under this  Agreement.  NOW, THEREFORE, in consideration of the premises and the mutual covenants  herein contained, Ensign, the Lenders, the Administrative Agent, the Issuing Banks and the  Swingline Lender agree as follows:  ARTICLE I    DEFINITIONS; CONSTRUCTION  Section 1.1. Definitions.  In addition to the other terms defined herein, the following  terms used herein shall have the meanings herein specified (to be equally applicable to both the  singular and plural forms of the terms defined):  “2014 Credit Agreement” shall have the meaning set forth in the Recitals.  “2016 Credit Agreement” shall have the meaning set forth in the Recitals.  “Accounts Collateral” shall have the meaning set forth in Section 7.2(i).  “Acquisition” shall mean (a) any Investment by the Borrower or any of its  Subsidiaries in any other Person organized in the United States (with all or substantially all of the  assets of such Person and its Subsidiaries located in the United States), pursuant to which such  Person shall become a Subsidiary of the Borrower or any of its Subsidiaries or shall be merged or  otherwise consolidated or combined with the Borrower or any of its Subsidiaries or (b) any  acquisition by the Borrower or any of its Subsidiaries of the assets of any Person (other than a  wholly owned Subsidiary of the Borrower) that constitute all or substantially all of the assets of  such Person or a division or business unit of such Person, whether through purchase, capital lease,  exercise of an option to purchase, merger or other business combination or transaction (and all or  substantially all of such assets, division or business unit are located in the United States).  With  respect to a determination of the amount of an Acquisition, such amount shall include all  consideration (including any deferred payments) set forth in the applicable agreements governing  such Acquisition as well as the assumption of any Indebtedness in connection therewith.  “Acquisition Consideration” shall mean purchase consideration for a Permitted  Acquisition of an Excluded Subsidiary and all other payments (but excluding any related  acquisition fees, costs and expenses incurred in connection with any Permitted Acquisition of an  Excluded Subsidiary), directly or indirectly, by the Borrower or any of its Subsidiaries in exchange  for, or as part of, or in connection with, a Permitted Acquisition of an Excluded Subsidiary,  whether paid in cash or cash equivalents or by exchange of equity interests or of any property or  by the assumption of debt of the Person or business unit or asset group of any Person acquired or  proposed to be acquired in any such Acquisition or otherwise and whether payable at or prior to  the consummation of a Permitted Acquisition of an Excluded Subsidiary or deferred for payment  at any future time (including earn-outs); provided, that any such future payment that is subject to  a contingency shall be considered Acquisition Consideration only to the extent of the reserve, if  any, required under GAAP at the time of such sale to be established in respect thereof by the  Borrower or any of its Subsidiaries; provided, further, that Acquisition Consideration shall not  

 

  3  include (a) any consideration or payment paid by the Borrower or any of its Subsidiaries (i) with  the net cash proceeds of Capital Stock of Ensign to its shareholders and/or (ii) in the form of  Capital Stock of Ensign and (b) cash and cash equivalents acquired by the Borrower or any of its  Subsidiaries as part of the applicable Permitted Acquisition of an Excluded Subsidiary.  “Additional Lender” shall have the meaning set forth in Section 2.23.  “Adjusted LIBORTerm SOFR” shall mean, with respect to each Interest Period for  a Eurodollar Loan, (i)for purposes of any calculation, the rate per annum equal to the London  interbank offered rate for deposits in U.S. Dollars appearing  on Reuters screen page LIBOR 01 (or  on any successor or substitute page of such service or any successor to such service, or such other  commercially available source providing such quotations as may be designated by the Administrative  Agent from time to time) at approximately 11:00 A.M. (London time) two (2) Business Days prior to  the first day of such Interest Period, with a maturity comparable to such Interest Period, divided by (ii)  a percentage equal to 1.00% minus the then stated maximum rate of all reserve requirements  (including any marginal, emergency, supplemental, special or other reserves and without benefit of  credits for proration, exceptions or offsets that may be available from time to time) expressed as a  decimal (rounded upward(rounded upwards, if necessary, to the next 1/100th100 of 1%)  applicable to any member bank of the Federal Reserve System in respect of Eurocurrency liabilities  as defined in Regulation D (or any successor category of liabilities under Regulation D); provided,  that if the rate referred to in clause (i) above is not available at any such time for any reason, then  the rate referred to in clause (i) shall instead be the interest rate per annum, as determined by the  Administrative Agent, to be the arithmetic average of the rates per annum at which deposits in  U. S.  Dollars in an amount equal to the amount of such Eurodollar Loan are offered by major banks in  the London interbank market to the Administrative Agent at approximately 11:00 A.M. (London  time), two (2) Business Days prior to the first day of such Interest Period. For the avoidance of doubt,  if Adjusted LIBORequal to (a) Term SOFR for such calculation plus (b) the Term SOFR  Adjustment; provided, that if Adjusted Term SOFR as so determined shall ever be less than  zero, such ratethe Floor, then Adjusted Term SOFR shall be deemed to be zero for purposes of  this Agreementthe Floor.  “Administrative Agent” shall have the meaning set forth in the introductory  paragraph hereof.  “Administrative Questionnaire” shall mean, with respect to each Lender, an  administrative questionnaire in the form provided by the Administrative Agent and submitted to  the Administrative Agent duly completed by such Lender.  “Affected Financial Institution” shall mean (a) any EEA Financial Institution  or (b) any UK Financial Institution.  “Affiliate” shall mean, as to any Person, any other Person that directly, or indirectly  through one or more intermediaries, Controls, is Controlled by, or is under common Control with,  such Person; provided that from and after the consummation of the Pennant Transaction, none of  the Pennant Subsidiaries shall constitute an Affiliate of the Borrower or any of its Subsidiaries.   For the purposes of this definition, “Control” shall mean the power, directly or indirectly, either to  (i) vote 10% or more of the securities having ordinary voting power for the election of directors  (or persons performing similar functions) of a Person or (ii) direct or cause the direction of the  management and policies of a Person, whether through the ability to exercise voting power, by  

 

  4  control or otherwise.  The terms “Controlled by” and “under common Control with” have the  meanings correlative thereto.  “Agents” shall mean, collectively, the Administrative Agent, the Lead Arrangers,  the Co-Documentation Agents  and the Co-Syndication Agents.  “Aggregate Revolving Commitment Amount” shall mean the aggregate principal  amount of the Aggregate Revolving Commitments from time to time.  On the Closing Date, the  Aggregate Revolving Commitment Amount is $350,000,000600,000,000.  “Aggregate Revolving Commitments” shall mean, collectively, all Revolving  Commitments of all Lenders at any time outstanding.    “Anti-Corruption Laws” shall have the meaning set forth in Section 4.21.  “Anti-Terrorism Order” shall mean Executive Order 13224, signed by President  George W. Bush on September 23, 2001.   “Applicable Lending Office” shall mean, for each Lender and for each Type of  Loan, the “Lending Office” of such Lender (or an Affiliate of such Lender) designated for such  Type of Loan in the Administrative Questionnaire submitted by such Lender or such other office  of such Lender (or such Affiliate of such Lender) as such Lender may from time to time specify  to the Administrative Agent and the Borrower as the office by which its Loans of such Type are  to be made and maintained.  “Applicable Margin” shall mean, as of any date, with respect to all Loans  outstanding on such date or the letter of credit fee, as the case may be, the percentage per annum  determined by reference to the applicable Total Leverage Ratio in effect on such date as set forth  in the pricing grid below (the “Pricing Grid”); provided that a change in the Applicable Margin  resulting from a change in the Total Leverage Ratio shall be effective on the second Business Day  after the Borrower delivers each of the financial statements required by Section 5.1(a) and (b) and  the Compliance Certificate required by Section 5.1(c); provided, further, that if at any time the  Borrower shall have failed to deliver such financial statements and such Compliance Certificate  when so required, the Applicable Margin shall be at Level I as set forth in the Pricing Grid until  such time as such financial statements and Compliance Certificate are delivered, at which time the  Applicable Margin shall be determined as provided above.  Notwithstanding the foregoing, the  Applicable Margin from the ClosingSecond Amendment Effective Date until the date by which  the financial statements and Compliance Certificate for the Fiscal YearQuarter ending December  31, 2019June 30, 2022 are required to be delivered shall be at Level IVV as set forth in the Pricing  Grid.  In the event that any financial statement or Compliance Certificate delivered hereunder is  shown to be inaccurate (regardless of whether this Agreement or the Commitments are in effect or  any Loans are outstanding when such inaccuracy is discovered), and such inaccuracy, if corrected,  would have led to the application of a higher Applicable Margin based upon the Pricing Grid (the  “Accurate Applicable Margin”) for any period that such financial statement or Compliance  Certificate covered, then (i) the Borrower shall promptly deliver to the Administrative Agent a  correct financial statement or Compliance Certificate, as the case may be, for such period, (ii) the  Applicable Margin shall be adjusted such that after giving effect to the corrected financial  statement or Compliance Certificate, as the case may be, the Applicable Margin shall be reset to  

 

  5  the Accurate Applicable Margin based upon the Pricing Grid for such period and (iii) the Borrower  shall promptly pay to the Administrative Agent, for the account of the Lenders, the accrued  additional interest owing as a result of such Accurate Applicable Margin for such period.  The  provisions of this definition shall not limit the rights of the Administrative Agent and the Lenders  with respect to Section 2.13(c) or Article VIII.    Pricing Grid  Pricing  Level  Total  Leverage  Ratio  Applicable  Margin for  EurodollarSOFR  Loans  Applicable  Margin for  Base Rate  Loans  Applicable  Margin for  Letter of  Credit Fees  Applicable  Percentage  for  Commitment  Fees  I Greater than or  equal to  2.50:1.00  2.5025%   per annum  1.5025%   per annum  2.5025%   per annum  0.4540%   per annum  II Less than  2.50:1.00 but  greater than or  equal to  2.00:1.00  2.2500%   per annum  1.2500%   per annum  2.2500%   per annum  0.4035%   per annum  III Less than  2.00:1.00 but  greater than or  equal to  1.50:1.00  2.001.75%   per annum  1.000.75%   per annum  2.001.75%   per annum  0.3530%   per annum  IV Less than  1.50:1.00 but  greater than or  equal to  1.00:1.00  1.7550%   per annum  0.7550%   per annum  1.7550%   per annum  0.3025%   per annum  V Less than  1.00:1.00  1.5025%   per annum  0.5025%   per annum  1.5025%   per annum  0.2520%   per annum    “Applicable Percentage” shall mean, as of any date, with respect to the commitment  fee as of such date, the percentage per annum determined by reference to the Total Leverage Ratio  in effect on such date as set forth in the Pricing Grid; provided that a change in the Applicable  Percentage resulting from a change in the Total Leverage Ratio shall be effective on the second  Business Day after which the Borrower delivers each of the financial statements required by  Section 5.1(a) and (b) and the Compliance Certificate required by Section 5.1(c); provided, further,  that if at any time the Borrower shall have failed to deliver such financial statements and such  Compliance Certificate when so required, the Applicable Percentage shall be at Level I as set forth  in the Pricing Grid until such time as such financial statements and Compliance Certificate are  delivered, at which time the Applicable Percentage shall be determined as provided above.   

 

  6  Notwithstanding the foregoing, the Applicable Percentage for the commitment fee from the  Closing Date until the date by which the financial statements and Compliance Certificate for the  Fiscal Year ending December 31, 2019 are required to be delivered shall be at Level IV as set forth  in the Pricing Grid.  In the event that any financial statement or Compliance Certificate delivered  hereunder is shown to be inaccurate (regardless of whether this Agreement or the Commitments  are in effect or any Loans are outstanding when such inaccuracy is discovered), and such  inaccuracy, if corrected, would have led to the application of a higher Applicable Percentage based  upon the Pricing Grid (the “Accurate Applicable Percentage”) for any period that such financial  statement or Compliance Certificate covered, then (i) the Borrower shall promptly deliver to the  Administrative Agent a correct financial statement or Compliance Certificate, as the case may be,  for such period, (ii) the Applicable Percentage shall be adjusted such that after giving effect to the  corrected financial statement or Compliance Certificate, as the case may be, the Applicable  Percentage shall be reset to the Accurate Applicable Percentage based upon the Pricing Grid for  such period and (iii) the Borrower shall promptly pay to the Administrative Agent, for the account  of the Lenders, the accrued additional commitment fee owing as a result of such Accurate  Applicable Percentage for such period.  The provisions of this definition shall not limit the rights  of the Administrative Agent and the Lenders with respect to Section 2.13(c) or Article VIII.    “Approved Fund” shall mean any Person (other than a natural Person) that is (or  will be) engaged in making, purchasing, holding or otherwise investing in commercial loans and  similar extensions of credit in the ordinary course of its business and that is administered or  managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity  that administers or manages a Lender.   “Assignment and Acceptance” shall mean an assignment and acceptance entered  into by a Lender and an assignee (with the consent of any party whose consent is required by  Section 10.4(b)) and accepted by the Administrative Agent, in the form of Exhibit A attached  hereto or any other form approved by the Administrative Agent.  “Available Amount” shall mean, on any date, an amount not less than zero, equal  to:  (a) the aggregate amount of Equity Issuance Proceeds (including upon conversion or  exchange of a debt instrument into or for any Capital Stock (other than Disqualified Capital  Stock)) received by Ensign from or in exchange for the issuance of Capital Stock (other than  Disqualified Capital Stock and any issuance or distribution of Capital Stock in connection with  the Spin-Off Transaction and/or the Pennant Transaction) after the Original Closing Date and  on or prior to such date; plus  (b) the aggregate fair market value (determined as of the date of purchase and/or  acquisition) of the Capital Stock (other than Disqualified Capital Stock) of any Person that is  acquired by Ensign in connection with a Permitted Acquisition or other Acquisition permitted  hereunder (the “Target Capital Stock”) in exchange for Capital Stock (other than Disqualified  Capital Stock) of Ensign that is issued by Ensign to the seller(s) or issuer(s) of such Target  Capital Stock after the Original Closing Date and on or prior to such date; plus  

 

  7  (c) the aggregate fair market value of assets or Real Estate (determined as of the date  of purchase and/or acquisition) acquired in exchange for Capital Stock (other than Disqualified  Capital Stock) of Ensign after the Original Closing Date and on or prior to such date; minus  (d) the aggregate amount of any (i) Acquisition Consideration for all Permitted  Acquisitions of Excluded Subsidiaries and other Investments in Excluded Subsidiaries  utilizing the Acquisition Consideration Available Amount (as defined in the Existing Credit  Agreement), in each case, pursuant to Section 7.4(h) on or after the Original Closing Date and  on or prior to the Closing Date and (ii) Investments made pursuant to Section 7.4(e) and/or  Section 7.4(h) (in each case, in reliance on the then-outstanding Available Amount) on or after  the Closing Date and on or prior to such date; minus  (e) the aggregate amount of any Restricted Payments made pursuant to Section 7.5(viii)  (in each case, in reliance on the then-outstanding Available Amount) made since the Original  Closing Date and on or prior to such date.  “Availability Period” shall mean the period from the Closing Date to but excluding  the applicable Revolving Commitment Termination Date.   “Available Tenor” shall mean, as of any date of determination and with  respect to the then-current Benchmark, as applicable, (x) if such Benchmark is a term rate,  any tenor for such Benchmark (or component thereof) that is or may be used for determining  the length of an interest period pursuant to this Agreement or (y) otherwise, any payment  period for interest calculated with reference to such Benchmark (or component thereof) that  is or may be used for determining any frequency of making payments of interest calculated  with reference to such Benchmark, in each case, as of such date and not including, for the  avoidance of doubt, any tenor for such Benchmark that is then-removed from the definition  of “Interest Period” pursuant to Section 2.16(e).  “Bail-In Action” shall mean the exercise of any Write-Down and Conversion  Powers by the applicable EEA Resolution Authority in respect of any liability of an EEAAffected  Financial Institution.  “Bail-In Legislation” shall mean, (a) with respect to any EEA Member Country  implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council  of the European Union, the implementing law, regulation, rule or requirement for such EEA  Member Country from time to time which is described in the EU Bail-In Legislation Schedule.  and (b) with respect to the United Kingdom, Part I of the United Kingdom Banking Act 2009  (as amended from time to time) and any other law, regulation or rule applicable in the United  Kingdom relating to the resolution of unsound or failing banks, investment firms or other  financial institutions or their affiliates (other than through liquidation, administration or  other insolvency proceedings).   “Bank Product Obligations” shall mean, collectively, all obligations and other  liabilities of any Loan Party to any Bank Product Provider arising with respect to any Bank  Products.  

 

  8  “Bank Product Provider” shall mean any Person that (i) is a Lender or an Affiliate  of a Lender that provides a Bank Product to a Loan Party and (ii) except when the Bank Product  Provider is either (A) Wells Fargo Bank, National Association and its Affiliates with respect to  Bank Products in existence on the Closing Date or (B) SunTrustTruist Bank and its Affiliates, has  provided prior written notice to the Administrative Agent which has been acknowledged by the  Borrower of (x) the existence of such Bank Product,(s) and (y) the maximum dollar amount of  obligations arising thereunder (the “Bank Product Amount”) and (z) the methodology to be used by  such parties in determining the obligations under such Bank Product from time to time; provided,  the term “Bank Product Provider” shall include any Person that is the Administrative Agent, an  Affiliate of the Administrative Agent, a Lender or an Affiliate of a Lender as of the Closing Date  or as of the date that such Person provides any Bank Product to any Loan Party, but subsequently  ceases to be the Administrative Agent, an Affiliate of the Administrative Agent, a Lender or an  Affiliate of a Lender, as the case may be.  In no event shall any Bank Product Provider acting in  such capacity be deemed a Lender for purposes hereof to the extent of and as to Bank Products  except that each reference to the term “Lender” in Article IX and Section 10.3(b) shall be deemed  to include such Bank Product Provider and in no event shall the approval of any such person in its  capacity as Bank Product Provider be required in connection with the release or termination of any  security interest or Lien of the Administrative Agent.  The Administrative Agent may request,  once every twelve-month period, an updated Bank Product Amount may be changed from time  to time upon written notice to the Administrative Agent byfrom the applicable Bank Product  Provider.  No Bank Product Amount may be established at any time that a Default or Event of  Default exists.  “Bank Products” shall mean any of the following services provided to any Loan  Party by any Bank Product Provider: (a) any treasury or other cash management services, including  deposit accounts, automated clearing house (ACH) origination and other funds transfer, depository  (including cash vault and check deposit), zero balance accounts and sweeps, return items  processing, controlled disbursement accounts, positive pay, lockboxes and lockbox accounts,  account reconciliation and information reporting, payables outsourcing, payroll processing, trade  finance services, investment accounts and securities accounts, and (b) card services, including  credit cards (including purchasing cards and commercial cards), prepaid cards, including payroll,  stored value and gift cards, merchant services processing, and debit card services.  “Base Rate” shall mean the highest of (i) the rate which the Wall Street Journal  reports from time to time as the prime lending rate, as in effect from time to time, (ii) the Federal  Funds Rate, as in effect from time to time, plus one-half of one percent (0.50%) per annum, (iii)  Adjusted LIBOR determined on a daily basis for an Interest Period ofTerm SOFR for a one (1)  month tenor in effect on such day, plus one percent (1.00%) per annum and (iv) zero percent  (0.00%). Any change in the Base Rate due to a change in the prime lending rate, the Federal Funds  Rate or Adjusted LIBORTerm SOFR shall be effective as of the opening of business on the day  of such change in the prime lending rate, the Federal Funds Rate or Adjusted LIBORTerm SOFR,  respectively.  “Base Rate Term SOFR Determination Day” shall have the meaning set forth  the definition of “Term SOFR”.  

 

  9  “Benchmark” shall mean, initially, the Term SOFR Reference Rate; provided  that if a Benchmark Transition Event has occurred with respect to the Term SOFR  Reference Rate or the then-current Benchmark, then “Benchmark” shall mean the  applicable Benchmark Replacement to the extent that such Benchmark Replacement has  replaced such prior benchmark rate pursuant to Section 2.16(b).  “Benchmark Replacement” shall mean with respect to any Benchmark  Transition Event, the first alternative set forth in the order below that can be determined by  the Administrative Agent for the applicable Benchmark Replacement Date:  (a) Daily Simple SOFR; or   (b) the sum of: (i) the alternate benchmark rate that has been selected by  the Administrative Agent and the Borrower giving due consideration to (A) any  selection or recommendation of a replacement benchmark rate or the mechanism for  determining such a rate by the Relevant Governmental Body or (B) any evolving or  then-prevailing market convention for determining a benchmark rate as a  replacement to the then-current Benchmark for Dollar-denominated syndicated  credit facilities and (ii) the related Benchmark Replacement Adjustment.  If the Benchmark Replacement as determined pursuant to clause (a) or (b) above would be  less than the Floor, the Benchmark Replacement will be deemed to be the Floor for the  purposes of this Agreement and the other Loan Documents.  “Benchmark Replacement Adjustment” shall mean, with respect to any  replacement of the then-current Benchmark with an Unadjusted Benchmark Replacement,  the spread adjustment, or method for calculating or determining such spread adjustment,  (which may be a positive or negative value or zero) that has been selected by the  Administrative Agent and the Borrower giving due consideration to (a) any selection or  recommendation of a spread adjustment, or method for calculating or determining such  spread adjustment, for the replacement of such Benchmark with the applicable Unadjusted  Benchmark Replacement by the Relevant Governmental Body or (b) any evolving or then- prevailing market convention for determining a spread adjustment, or method for  calculating or determining such spread adjustment, for the replacement of such Benchmark  with the applicable Unadjusted Benchmark Replacement for Dollar-denominated  syndicated credit facilities.  “Benchmark Replacement Date” shall mean the earliest to occur of the  following events with respect to the then-current Benchmark:  (a) in the case of clause (a) or (b) of the definition of “Benchmark  Transition Event”, the later of (i) the date of the public statement or publication of  information referenced therein and (ii) the date on which the administrator of such  Benchmark (or the published component used in the calculation thereof) permanently  or indefinitely ceases to provide all Available Tenors of such Benchmark (or such  component thereof); or  

 

  10  (b) in the case of clause (c) of the definition of “Benchmark Transition  Event”, the first date on which such Benchmark (or the published component used in  the calculation thereof) has been determined and announced by or on behalf of the  administrator of such Benchmark (or such component thereof) or the regulatory  supervisor for the administrator of such Benchmark (or such component thereof) to  be non-representative or non-compliant with or non-aligned with the International  Organization of Securities Commissions (IOSCO) Principles for Financial  Benchmarks; provided that such non-representativeness, non-compliance or non- alignment will be determined by reference to the most recent statement or publication  referenced in such clause (c) and even if any Available Tenor of such Benchmark (or  such component thereof) continues to be provided on such date.  For the avoidance of doubt, the “Benchmark Replacement Date” will be deemed to have  occurred in the case of clause (a) or (b) above with respect to any Benchmark upon the  occurrence of the applicable event or events set forth therein with respect to all then-current  Available Tenors of such Benchmark (or the published component used in the calculation  thereof).  “Benchmark Transition Event” shall mean the occurrence of one or more of  the following events with respect to the then-current Benchmark:  (a) a public statement or publication of information by or on behalf of the  administrator of such Benchmark (or the published component used in the  calculation thereof) announcing that such administrator has ceased or will cease to  provide all Available Tenors of such Benchmark (or such component thereof),  permanently or indefinitely; provided that, at the time of such statement or  publication, there is no successor administrator that will continue to provide any  Available Tenor of such Benchmark (or such component thereof);  (b) a public statement or publication of information by the regulatory  supervisor for the administrator of such Benchmark (or the published component  used in the calculation thereof), the Federal Reserve Board, the Federal Reserve Bank  of New York, an insolvency official with jurisdiction over the administrator for such  Benchmark (or such component), a resolution authority with jurisdiction over the  administrator for such Benchmark (or such component) or a court or an entity with  similar insolvency or resolution authority over the administrator for such Benchmark  (or such component), which states that the administrator of such Benchmark (or such  component) has ceased or will cease to provide all Available Tenors of such  Benchmark (or such component thereof) permanently or indefinitely; provided that,  at the time of such statement or publication, there is no successor administrator that  will continue to provide any Available Tenor of such Benchmark (or such component  thereof); or  (c) a public statement or publication of information by or on behalf of the  administrator of such Benchmark (or the published component used in the  calculation thereof) or the regulatory supervisor for the administrator of such  Benchmark (or such component thereof) announcing that all Available Tenors of  

 

  11  such Benchmark (or such component thereof) are not, or as of a specified future date  will not be, representative or in compliance with or aligned with the International  Organization of Securities Commissions (IOSCO) Principles for Financial  Benchmarks.  For the avoidance of doubt, a “Benchmark Transition Event” will be deemed to have  occurred with respect to any Benchmark if a public statement or publication of information  set forth above has occurred with respect to each then-current Available Tenor of such  Benchmark (or the published component used in the calculation thereof).  “Benchmark Unavailability Period” shall mean, the period (if any) (a)  beginning at the time that a Benchmark Replacement Date has occurred if, at such time, no  Benchmark Replacement has replaced the then-current Benchmark for all purposes  hereunder and under any Loan Document in accordance with Section 2.16 and (b) ending at  the time that a Benchmark Replacement has replaced the then-current Benchmark for all  purposes hereunder and under any Loan Document in accordance with Section 2.16.  “Beneficial Ownership Certification” shall mean a certification regarding  beneficial ownership as required by the Beneficial Ownership Regulation.  “Beneficial Ownership Regulation” shall mean 31 C.F.R. § 1010.230.   “Benefit Plan” shall mean any of (a) an “employee benefit plan” (as defined in  ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975  of the Code or (c) any Person whose assets include (for purposes of Section 3(42) of ERISA or  otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such  “employee benefit plan” or “plan”.  “BHC Act Affiliate” of a party shall mean an “affiliate” (as such term is defined  under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.  “Borrower” shall have the meaning set forth in the introductory paragraph hereof.  “Borrowing” shall mean a borrowing consisting of (i) Loans of the same Class and  Type, made, converted or continued on the same date and, in the case of EurodollarSOFR Loans,  as to which a single Interest Period is in effect, or (ii) a Swingline Loan.  “Business Day” shall mean any day other than (i) a Saturday, Sunday or other day  on which commercial banks in Atlanta, Georgia are authorized or required by law to close and (ii)  if such day relates to a Borrowing of, a payment or prepayment of principal or interest on, a  conversion of or into, or an Interest Period for, a Eurodollar Loan or a notice with respect to any of  the foregoing, any day on which banks are not open for dealings in Dollar deposits in the London  interbank market.; provided that, when used in connection with a SOFR Loan, or any other  calculation or determination involving SOFR, the term “Business Day” shall mean any such  day that is also a U.S. Government Securities Business Day.  “Capital Lease Obligations” of any Person shall mean all obligations of such Person  to pay rent or other amounts under any lease (or other arrangement conveying the right to use) of  real or personal property, or a combination thereof, which obligations are required to be classified  

 

  12  and accounted for as capital leases on a balance sheet of such Person under GAAP, and the amount  of such obligations shall be the capitalized amount thereof determined in accordance with GAAP;  provided that, (i) for the avoidance of doubt, any lease of a property operated as a healthcare  facility shall be accounted for as an operating lease and not as a Capital Lease Obligation, and (ii)  any lease that is accounted for by any Person as an operating lease as of the Original Closing Date  and any lease entered into in the future that would have been accounted for as an operating lease  if such lease had been in effect on the Original Closing Date shall be accounted for as an operating  lease and not as a Capital Lease Obligation.  “Capital Stock” shall mean all shares, options, warrants, general or limited  partnership interests, membership interests or other equivalents (regardless of how designated) of  or in a corporation, partnership, limited liability company or equivalent entity whether voting or  nonvoting, including common stock, preferred stock or any other “equity security” (as such term  is defined in Rule 3a11-1 of the General Rules and Regulations promulgated by the Securities and  Exchange Commission under the Exchange Act).  “Cash Collateralize” shall mean, in respect of any obligations, to provide and  pledge (as a first priority perfected security interest) cash collateral for such obligations in Dollars  with the Administrative Agent pursuant to documentation in form and substance reasonably  satisfactory to the Administrative Agent (and “Cash Collateralized” and “Cash Collateralization”  have the corresponding meanings).  “CFC” shall mean any Subsidiary that is a “controlled foreign corporation” within  the meaning of Section 957 of the Code.  “CHAMPVA” shall mean, collectively, the Civilian Health and Medical Program  of the Department of Veterans Affairs, a program of medical benefits covering retirees and  dependents of former members of the armed services administered by the United States  Department of Veterans Affairs, and all laws, rules, regulations, manuals, orders or requirements  pertaining to such program.  “Change in Control” shall mean the occurrence of one or more of the following  events: (i) any sale, lease, exchange or other transfer (in a single transaction or a series of related  transactions) of all or substantially all of the assets of Ensign to any Person or “group” (within the  meaning of the Exchange Act and the rules of the Securities and Exchange Commission thereunder  in effect on the date hereof), (ii) the acquisition of ownership, directly or indirectly, beneficially  or of record, by any Person or “group” (within the meaning of the Exchange Act and the rules of  the Securities and Exchange Commission thereunder as in effect on the date hereof) of 35% or  more of the outstanding shares of the voting equity interests of Ensign, (iii) during any period of  24 consecutive months, a majority of the members of the board of directors or other equivalent  governing body of Ensign cease to be composed of individuals who are Continuing Directors, or  (iv) Ensign shall cease to own, directly or indirectly, beneficially or of record, less than 90% of  the outstanding shares of the voting equity interests of Ensign REIT.  It being understood and  agreed that (x) the Pennant Transactions shall not constitute a Change in Control and (y) a Person  shall not be deemed to have beneficial ownership of Capital Stock subject to a stock purchase  agreement, merger agreement or similar agreement until the consummation of the transactions  contemplated by such agreement so long as Payment in Full of the Obligations is a condition to  

 

  13  the effectiveness of the acquisition contemplated by such stock purchase agreement, merger  agreement or similar agreement.  “Change in Law” shall mean (i) the adoption of any applicable law, rule or  regulation after the date of this Agreement, (ii) any change in any applicable law, rule or regulation,  or any change in the interpretation, implementation or application thereof, by any Governmental  Authority after the date of this Agreement, or (iii) compliance by any Lender (or its Applicable  Lending Office) or any Issuing Bank (or, for purposes of Section 2.18(b), by the Parent Company  of such Lender or such Issuing Bank, if applicable) with any request, guideline or directive  (whether or not having the force of law) of any Governmental Authority made or issued after the  date of this Agreement; provided that for purposes of this Agreement, (x) the Dodd-Frank Wall  Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives in  connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank  for International Settlements, the Basel Committee on Banking Supervision (or any successor or  similar authority) or the United States or foreign regulatory authorities, in each case pursuant to  Basel III, shall in each case be deemed to be a “Change in Law”, regardless of the date enacted,  adopted, implemented or issued.  “Class”, when used in reference to any Loan or Borrowing, refers to whether such  Loan, or each of the Loans comprising such Borrowing, is a Revolving Loan, a Swingline Loan,  an Incremental Term Loan, an Extended Term Loan or an Other Refinancing Term Loan and,  when used in reference to any Commitment, refers to whether such Commitment is a Revolving  Commitment, a Swingline Commitment, an Incremental Term Loan Commitment, an Extended  Term Loan Commitment or an Other Refinancing Term Loan Commitment.  “Closing Date” shall mean the date on which the conditions precedent set forth in  Section 3.1 and Section 3.2 have been satisfied or waived in accordance with Section 10.2.  “Closing Date Refinancing” shall mean (a) the payment in full of the Refinanced  Indebtedness together with all accrued interest, fees and other amounts payable thereon and all  accrued fees and other amounts payable in respect of all “Letters of Credit” (as defined in the  Existing Credit Agreement) under the Existing Credit Agreement and (b) the continuance of all  “Letters of Credit” (as defined in the Existing Credit Agreement) outstanding under the Existing  Credit Agreement as Letters of Credit under this Agreement.  “Co-Documentation Agents” shall have the meaning set forth in Section 9.12.  “Co-Syndication Agents” shall have the meaning set forth in Section 9.12.  “Code” shall mean the Internal Revenue Code of 1986, as amended and in effect  from time to time.  “Collateral” shall mean all tangible and intangible property, real and personal, of  any Loan Party that is or purports to be the subject of a Lien to the Administrative Agent to secure  the whole or any part of the Obligations or any Guarantee thereof, and shall include, without  limitation, all casualty insurance proceeds and condemnation awards with respect to any of the  foregoing.   

 

  14  “Collateral Access Agreement” shall mean each landlord waiver or bailee  agreement granted to, and in form and substance reasonably acceptable to, the Administrative  Agent.  “Collateral Documents” shall mean, collectively, the Guaranty and Security  Agreement, all Copyright Security Agreements, all Patent Security Agreements, all Trademark  Security Agreements, all Collateral Access Agreements, all loss payee endorsements required by  Section 5.8, and all other instruments and agreements now or hereafter securing or perfecting the  Liens securing the whole or any part of the Obligations or any Guarantee thereof, all UCC  financing statements and stock powers, and all other documents, instruments, agreements and  certificates executed and delivered by any Loan Party to the Administrative Agent and the Lenders  in connection with the foregoing.  “Commitment” shall mean a Revolving Commitment, a Swingline Commitment or  a Term Loan Commitment or any combination thereof (as the context shall permit or require).  “Compliance Certificate” shall mean a certificate from the principal executive  officer or the principal financial officer of the Borrower in the form of, and containing the  certifications set forth in, the certificate attached hereto as Exhibit 5.1(c).  “Conforming Changes” shall mean, with respect to either the use or  administration of Term SOFR or the use, administration, adoption or implementation of any  Benchmark Replacement, any technical, administrative or operational changes (including  changes to the definition of “Base Rate”. the definition of “Business Day”, the definition of  “U.S. Government Securities Business Day”, the definition of “Interest Period” or any  similar or analogous definition (or the addition of a concept of “interest period”), timing and  frequency of determining rates and making payments of interest, timing of borrowing  requests or prepayment, conversion or continuation notices, the applicability and length of  lookback periods, the applicability of Section 2.19 and other technical, administrative or  operational matters) that the Administrative Agent decides may be appropriate to reflect the  adoption and implementation of any such rate or to permit the use and administration  thereof by the Administrative Agent in a manner substantially consistent with market  practice (or, if the Administrative Agent decides that adoption of any portion of such market  practice is not administratively feasible or if the Administrative Agent determines that no  market practice for the administration of any such rate exists, in such other manner of  administration as the Administrative Agent decides is reasonably necessary in connection  with the administration of this Agreement and the other Loan Documents).  “Consolidated EBITDA” shall mean, for Ensign and its Subsidiaries for any period,  an amount equal to the sum of (i) Consolidated Net Income for such period plus (ii) to the extent  deducted in determining Consolidated Net Income for such period, and without duplication,  (A) Consolidated Interest Expense, amortization or write-off of debt discount and debt issuance  costs and commissions and discounts, premiums and other fees, expenses and charges associated  with Indebtedness including underwriting, arrangement and commitment fees, letter of credit fees,  and Bank Product fees and prepayment or related premiums, (B) income tax expense determined  on a consolidated basis in accordance with GAAP, (C) depreciation and amortization determined  on a consolidated basis in accordance with GAAP, (D) unusual, extraordinary or non-recurring  

 

  15  charges or losses determined on a consolidated basis in accordance with GAAP, (E) severance,  business integration, restructuring or optimization costs determined on a consolidated basis in  accordance with GAAP, (F) costs and expenses in connection with equity or stock option plans or  other employee benefit plans or stock subscriptions to the extent funded directly or indirectly with  proceeds of an equity issuance by, or capital contribution to, Ensign or constituting non-cash  charges determined on a consolidated basis in accordance with GAAP, (G) any non-cash charges  or expenses determined on a consolidated basis in accordance with GAAP; provided that to the  extent any such non-cash charge or expense represents an accrual or reserve for a potential cash  item in any future period, the Borrower may elect to either not add such item pursuant to this clause  (G) (or to add such item in part), or to have the cash payment in respect thereof in such future  period (to the extent previously added pursuant to this clause (G)) subtracted from Consolidated  EBITDA to such extent in such future period  in which such cash payment occurs, and excluding  amortization of a prepaid cash item that was paid in a prior period, (H) expenses related to  Permitted Acquisitions and other Acquisitions permitted hereunder or approved in writing by the  Required Lenders (or attempted Permitted Acquisitions and attempted Acquisitions permitted  hereunder or approved in writing by the Required Lenders), equity issuances (whether or not  consummated) and the Related Transactions, in each case for such period, (I) costs, fees, expenses  or charges related to this Agreement and the transactions related hereto, and (J) charges, costs,  losses and expenses relating to any Development Facility solely during the first twelve (12) months  following the opening of such Development Facility; provided that the amount added back in the  determination of Consolidated EBITDA for such Test Period pursuant to this clause (J) shall not  exceed 20.0% of Consolidated EBITDA (after giving effect to such addbacks) of Ensign and its  Subsidiaries for such period, minus (iii)(A) unusual, extraordinary or non-recurring gains  determined on a consolidated basis in accordance with GAAP and (B) non-cash gains (excluding  any non-cash gain to the extent it (x) represents the reversal of an accrual or reserve for a potential  cash item that reduced Consolidated Net Income or Consolidated EBITDA in any prior period, (y)  is in respect of cash received in a prior period and not included in Consolidated Net Income or  Consolidated EBITDA in a prior period or (z) represents an accrual in the ordinary course);  provided that if any non-cash gain represents an accrual or asset outside the ordinary course for  potential cash items in any future period, the cash payment in respect thereof shall in such future  period be added to Consolidated EBITDA for such period to the extent such non-cash gain was  excluded from Consolidated EBITDA in any prior period; plus (iv) to the extent not included in  the calculation of Consolidated Net Income or not added back to Consolidated Net Income  pursuant to clause (ii) above, proceeds of business interruption insurance (to the extent actually  received in cash); provided that for purposes of calculating compliance with the financial  covenants set forth in Article VI, to the extent that during such period any Loan Party shall have  consummated a Permitted Acquisition or other Acquisition permitted hereunder or approved in  writing by the Required Lenders, or any sale, transfer or other disposition of any Person, business,  property or assets (other than the Pennant Transaction), Consolidated EBITDA shall be calculated  on a Pro Forma Basis with respect to such Person, business, property or assets so acquired or  disposed of.  Notwithstanding the foregoing, the total amount of Consolidated EBITDA that is  attributable to Excluded Subsidiaries (and their respective Subsidiaries) shall not exceed the  applicable percentage (determined by reference to the applicable Total Leverage Ratio) set forth  in the grid below (the “Maximum Attributable EBITDA Percentage”) of Consolidated EBITDA  (prior to inclusion of Consolidated EBITDA of any Excluded Subsidiary and its Subsidiaries) of  

 

  16  Ensign and its Subsidiaries in any Test Period (determined on a consolidated basis, inclusive of  intercompany transactions):  Level Total Leverage Ratio Maximum Attributable  EBITDA Percentage  I Greater than or equal to  2.75:1.00  50%  II Less than 2.75:1.00  60%    The applicable Maximum Attributable EBITDA Percentage shall (i) be determined as of  the end of each Test Period, on the date (each, a “Maximum Attributable EBITDA Percentage  Determination Date”) on which the Borrower delivers financial statements pursuant to Section  5.1(a) or (b) and the Compliance Certificate required by Section 5.1(c) for such Test Period or the  last Fiscal Quarter of such Test Period, as applicable; provided that if at any time the Borrower  shall have failed to deliver such financial statements and such Compliance Certificate when so  required, the Maximum Attributable EBITDA Percentage shall be set at Level I in the grid above  until such time as such financial statements and Compliance Certificate are delivered, at which  time the Maximum Attributable EBITDA Percentage shall be determined as provided above, and  (ii) be determined with Consolidated EBITDA calculated based on the Maximum Attributable  EBITDA Percentage in effect immediately prior to giving effect to any changes in the Maximum  Attributable EBITDA Percentage on such Maximum Attributable EBITDA Percentage  Determination Date. Any change in the Maximum Attributable EBITDA Percentage shall be  effective from and after the first day of the Fiscal Quarter in which such Maximum Attributable  EBITDA Percentage Determination Date occurs (which change, for the avoidance of doubt, (i)  shall apply with respect to Consolidated EBITDA for the Test Period for which the Maximum  Attributable EBITDA Percentage was determined and future Test Periods until a subsequent  change in the Maximum Attributable EBITDA Percentage pursuant hereto and (ii) shall apply only  prospectively (on and after the first day of such Fiscal Quarter) for all determinations based on  Consolidated EBITDA made under this Agreement (including pricing and basket capacity). The  Maximum Attributable EBITDA Percentage shall be set at Level I in the grid set forth above until  the Maximum Attributable EBITDA Percentage Determination Date for the Test Period ending  December 31, 2019 occurs. Notwithstanding the foregoing or anything to the contrary contained  herein, (i) from and after the Closing Date, Consolidated EBITDA for each of the Fiscal Quarters  ended September 30, 2018, December 31, 2018, March 31, 2019 and June 30, 2019 shall be  deemed to be $39,213,000, $46,140,000, $48,133,000 and $47,903,000, respectively, in each case  as may be subject to addbacks and adjustments (without duplication) pursuant to the second  paragraph of Section 1.3 for the applicable Test Period and (ii) Consolidated EBITDA for the  Fiscal Quarter ending September 30, 2019 shall be determined in accordance with the foregoing  definition as if the Pennant Transaction had been consummated as of the first day of such Fiscal  Quarter.  “Consolidated EBITDAR” shall mean, for Ensign and its Subsidiaries for any Test  Period, an amount equal to the sum of (i) Consolidated EBITDA for such Test Period plus the  aggregate amount of Consolidated EBITDA attributable to Excluded Subsidiaries (and their  respective Subsidiaries) for such Test Period, if any, that was excluded from the calculation of  

 

  17  Consolidated EBITDA for such Test Period as a result of the provision in the definition of  Consolidated EBITDA limiting Consolidated EBITDA attributable to Excluded Subsidiaries (and  their respective Subsidiaries) for such Test Period to the Maximum Attributable EBITDA  Percentage of Consolidated EBITDA (prior to inclusion of Consolidated EBITDA of any Excluded  Subsidiary and its Subsidiaries) of Ensign and its Subsidiaries in such Test Period and (ii)  Consolidated Lease Expense for such Test Period. Notwithstanding the foregoing or anything to  the contrary contained herein, (i) from and after the Closing Date, Consolidated EBITDAR for  each of the Fiscal Quarters ended September 30, 2018, December 31, 2018, March 31, 2019 and  June 30, 2019 shall be deemed to be $64,479,000, $71,630,000, $77,548,000 and $78,322,000,  respectively, and (ii) Consolidated EBITDAR for the Fiscal Quarter ending September 30, 2019  shall be determined in accordance with the foregoing definition as if the Pennant Transaction had  been consummated as of the first day of such Fiscal Quarter.  “Consolidated Interest Expense” shall mean, for Ensign and its Subsidiaries for any  period, determined on a consolidated basis in accordance with GAAP, the sum of (i) total interest  expense, including, without limitation, the interest component of any payments in respect of  Capital Lease Obligations, expensed during such period (whether or not actually paid during such  period) plus (ii) the net amount payable or expensed or deducted in calculating Consolidated Net  Income (or minus the net amount receivable) with respect to Hedging Transactions during such  period (whether or not actually paid or received during such period). Notwithstanding the  foregoing or anything to the contrary contained herein, (i) from and after the Closing Date,  Consolidated Interest Expense for each of the Fiscal Quarters ended September 30, 2018,  December 31, 2018, March 31, 2019 and June 30, 2019 shall be deemed to be $3,350,000,  $2,953,000, $2,929,000, and $3,200,000, respectively, and (ii) Consolidated Interest Expense for  the Fiscal Quarter ending September 30, 2019 shall be determined in accordance with the  foregoing definition as if the Pennant Transaction had been consummated as of the first day of  such Fiscal Quarter.  “Consolidated Lease Expense” shall mean, for Ensign and its Subsidiaries for any  period, the aggregate amount of fixed and contingent rentals expensed with respect to leases of  real and personal property (excluding Capital Lease Obligations) for such period (whether or not  actually paid during such period) determined on a consolidated basis in accordance with GAAP.   Notwithstanding the foregoing or anything to the contrary contained herein, (i) from and after the  Closing Date, Consolidated Lease Expense for each of the Fiscal Quarters ended September 30,  2018, December 31, 2018, March 31, 2019 and June 30, 2019 shall be deemed to be $25,266,000,  $25,490,000, $29,415,000, and $30,419,000, respectively, and (ii) Consolidated Lease Expense  for the Fiscal Quarter ending September 30, 2019 shall be determined in accordance with the  foregoing definition as if the Pennant Transaction had been consummated as of the first day of  such Fiscal Quarter.  “Consolidated Net Income” shall mean, for Ensign and its Subsidiaries for any  period, the net income (or loss) of Ensign and its Subsidiaries for such period determined on a  consolidated basis in accordance with GAAP; provided that there shall be excluded from  Consolidated Net Income (to the extent otherwise included therein) (i) any extraordinary gains or  losses, (ii) any gains attributable to write-ups of assets or the sale of assets (other than the sale of  inventory in the ordinary course of business), (iii) any equity interest of the Borrower or any  Subsidiary of the Borrower in the unremitted earnings of any Person that is not a Subsidiary, and  

 

  18  (iv) any income (or loss) of any Person accrued prior to the date it becomes a Subsidiary or is  merged into or consolidated with the Borrower or any Subsidiary or the date that such Person’s  assets are acquired by the Borrower or any Subsidiary. Notwithstanding the foregoing or anything  to the contrary contained herein, (i) from and after the Closing Date, Consolidated Net Income for  each of the Fiscal Quarters ended September 30, 2018, December 31, 2018, March 31, 2019 and  June 30, 2019 shall be deemed to be $18,609,000, $23,863,000, $24,964,000, and $24,303,000,  respectively, and (ii) Consolidated Net Income for the Fiscal Quarter ending September 30, 2019  shall be determined in accordance with the foregoing definition as if the Pennant Transaction had  been consummated as of the first day of such Fiscal Quarter.  “Consolidated Total Debt” shall mean, as of any date, all Indebtedness of Ensign  and its Subsidiaries measured on a consolidated basis as of such date, but excluding Hedging  Obligations.  “Consolidated Total Net Debt” shall mean, as of any date, (i) Consolidated Total  Debt minus (ii) all cash and Permitted Investments of the Borrower and its Subsidiaries as of such  date, except that the aggregate amount of cash and Permitted Investments deducted from  Consolidated Total Debt at any time pursuant to this clause (ii) shall not exceed  $175,000,000200,000,000.  “Consolidated Secured Debt” shall mean, as of any date, the Consolidated  Total Debt of Ensign and its Subsidiaries, secured by a Lien on any assets of Ensign or its  Subsidiaries, as measured on a consolidated basis as of such date, but excluding Hedging  Obligations.  “Consolidated Secured Net Debt” shall mean, as of any date, (i) Consolidated  Secured Debt minus (ii) all cash and Permitted Investments of the Borrower and its  Subsidiaries as of such date, except that the aggregate amount of cash and Permitted  Investments deducted from Consolidated Secured Debt at any time pursuant to this clause  (ii) shall not exceed $200,000,000.  “Continuing Director” shall mean, with respect to any period, any individuals (A)  who were members of the board of directors or other equivalent governing body of Ensign on the  first day of such period, (B) whose election or nomination to that board or equivalent governing  body was approved by individuals referred to in clause (A) above constituting at the time of such  election or nomination at least a majority of that board or equivalent governing body, or (C) whose  election or nomination to that board or other equivalent governing body was approved by  individuals referred to in clauses (A) and (B) above constituting at the time of such election or  nomination at least a majority of that board or equivalent governing body.  “Contractual Obligation” of any Person shall mean any provision of any security  issued by such Person or of any agreement, instrument or undertaking under which such Person is  obligated or by which it or any of the property in which it has an interest is bound.  “Copyright” shall have the meaning assigned to such term in the Guaranty and  Security Agreement.    

 

  19  “Copyright Security Agreement” shall mean any Copyright Security Agreement  executed by a Loan Party owning registered Copyrights or applications for Copyrights in favor of  the Administrative Agent for the benefit of the Secured Parties, both on the Original Closing Date  and thereafter.  “Covered Entity” shall mean any of the following:  (i) (a) a “covered entity” as that term is defined in, and interpreted in accordance  with, 12 C.F.R. § 252.82(b);  (ii) (b) a “covered bank” as that term is defined in, and interpreted in accordance  with, 12 C.F.R. § 47.3(b); or  (iii) (c) a “covered FSI” as that term is defined in, and interpreted in accordance  with, 12 C.F.R. § 382.2(b).  “Covered Party” shall have the meaning set forth in Section 10.20.   “Credit Agreement Refinancing Indebtedness” shall mean any Indebtedness  incurred pursuant to a Refinancing Amendment, in each case, issued, incurred or otherwise  obtained (including by means of the extension or renewal of existing Indebtedness) in exchange  for, or to extend, renew, replace or refinance, in whole or part, existing Loans or Commitments  (including any successive Credit Agreement Refinancing Indebtedness) (“Refinanced Debt”);  provided that (a) such exchanging, extending, renewing, replacing or refinancing Indebtedness  (including, if such Indebtedness includes any Other Refinancing Revolving Commitments, the  unused portion of such Other Refinancing Revolving Commitments) is in an original aggregate  principal amount not greater than the aggregate principal amount of the Refinanced Debt (and, in  the case of Refinanced Debt consisting, in whole or in part, of unused Revolving Commitments,  Extended Revolving Commitments or Other Refinancing Revolving Commitments, the amount  thereof) except by an amount equal to unpaid accrued interest and premium thereon plus  reasonable upfront fees and original issue discount on such exchanging, extending, renewing,  replacing or refinancing Indebtedness, plus other reasonable and customary fees and expenses in  connection with such exchange, modification, refinancing, refunding, renewal, replacement or  extension, (b) such Indebtedness has a maturity equal to or later than, and, except in the case of  Other Refinancing Revolving Commitments, a Weighted Average Life to Maturity equal to or  greater than, the Refinanced Debt, (c) the terms and conditions of such Indebtedness (except as  otherwise provided in clause (b) above and with respect to pricing, premiums and optional  prepayment or redemption terms) are substantially identical to, or (taken as a whole) are no more  favorable to the lenders or holders providing such Indebtedness, than those applicable to the Loans  or Commitments being refinanced (except for covenants or other provisions applicable only to  periods after the latest Maturity Date at the time of incurrence of such Indebtedness) (provided  that satisfaction of this clause (c) shall be evidenced by a certificate of a Responsible Officer of  the Borrower delivered to the Administrative Agent at least three (3) Business Days prior to the  incurrence of such Indebtedness, providing a reasonably detailed description of the material terms  and conditions of such Indebtedness or drafts of the documentation relating thereto, and a  certificate of a Responsible Officer of the Borrower stating that the Borrower has determined in  good faith that such terms and conditions satisfy the requirement of this clause (c) which shall be  conclusive evidence that such terms and conditions satisfy such requirement unless the  

 

  20  Administrative Agent notifies the Borrower within such three (3) Business Day period that it  disagrees with such determination (including a description of the basis upon which it disagrees))  and (d) such Refinanced Debt shall be repaid, or satisfied and discharged, and all accrued interest,  fees and premiums (if any) in connection therewith shall be paid, on the date such Credit  Agreement Refinancing Indebtedness is issued, incurred or obtained.  “CTRI” shall mean CareTrust REIT, Inc., a Maryland corporation.  “Daily Simple SOFR” shall mean, for any day, SOFR, with the conventions  for this rate (which will include a lookback) being established by the Administrative Agent  in accordance with the conventions for this rate selected or recommended by the Relevant  Governmental Body for determining “Daily Simple SOFR” for syndicated business loans;  provided, that if the Administrative Agent decides that any such convention is not  administratively feasible for the Administrative Agent, then the Administrative Agent (in  consultation with Borrower) may establish another convention in its reasonable discretion.   “Debtor Relief Laws” shall mean the Bankruptcy Code of the United States of  America, and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of  creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor  relief Laws of the United States or other applicable jurisdictions from time to time in effect.  “Default” shall mean any condition or event that, with the giving of notice or the  lapse of time or both, would constitute an Event of Default.  “Default Interest” shall have the meaning set forth in Section 2.13(c).  “Default Right” shall have the meaning assigned to that term in, and shall be  interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.  “Defaulting Lender” shall mean, subject to Section 2.26(c), any Lender that (a) has  failed to (i) fund all or any portion of its Loans within two (2) Business Days of the date such  Loans were required to be funded hereunder unless such Lender notifies the Administrative Agent  and the Borrower in writing that such failure is the result of such Lender’s good-faith determination  that one or more conditions precedent to funding (each of which conditions precedent, together  with any applicable default, shall be specifically identified in such writing) has not been satisfied,  or (ii) pay to the Administrative Agent, any Issuing Bank, any Swingline Lender or any other  Lender any other amount required to be paid by it hereunder (including in respect of its  participation in Letters of Credit or Swingline Loans) within two (2) Business Days of the date  when due, (b) has notified the Borrower, the Administrative Agent or any Issuing Bank or  Swingline Lender in writing that it does not intend to comply with its funding obligations  hereunder, or has made a public statement to that effect (unless such writing or public statement  relates to such Lender’s obligation to fund a Loan hereunder and states that such position is based  on such Lender’s good-faith determination that a condition precedent to funding (which condition  precedent, together with any applicable default, shall be specifically identified in such writing or  public statement) cannot be satisfied), (c) has failed, within three (3) Business Days after written  request by the Administrative Agent or the Borrower, to confirm in writing to the Administrative  Agent and the Borrower that it will comply with its prospective funding obligations hereunder  (provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon  

 

  21  receipt of such written confirmation by the Administrative Agent and the Borrower), or (d) has, or  has a direct or indirect parent company that has, (i) become the subject of a proceeding under any  Debtor Relief Law, or (ii) had appointed for it a receiver, custodian, conservator, trustee,  administrator, assignee for the benefit of creditors or similar Person charged with reorganization  or liquidation of its business or assets, including the Federal Deposit Insurance Corporation or any  other state or federal or foreign regulatory authority acting in such a capacity or (iii) become the  subject of a Bail-in Action; provided that a Lender shall not be a Defaulting Lender solely by  virtue of the ownership or acquisition of any equity interest in that Lender or any direct or indirect  parent company thereof by a Governmental Authority so long as such ownership interest does not  result in or provide such Lender with immunity from the jurisdiction of courts within the United  States or from the enforcement of judgments or writs of attachment on its assets or permit such  Lender (or such Governmental Authority) to reject, repudiate, disavow or disaffirm any contracts  or agreements made with such Lender.  Any determination by the Administrative Agent that a  Lender is a Defaulting Lender under clauses (a) through (d) above shall be conclusive and binding  absent manifest error, and such Lender shall be deemed to be a Defaulting Lender (subject to  Section 2.26(b)) upon delivery of written notice of such determination to the Borrower, each  Issuing Bank, each Swingline Lender and each Lender.  “Designated Non-Cash Consideration” shall mean the fair market value of non- cash consideration received by Borrower or any of its Subsidiaries in connection with a sale or  other disposition of assets that is so designated as “Designated Non-Cash Consideration” pursuant  to a certificate from a Responsible Officer of the Borrower setting forth the basis of such valuation,  minus the amount of cash or Permitted Investments received in connection with a subsequent sale  of or collection on such Designated Non-Cash Consideration.  “Development Facility” means any newly constructed, rehabilitated or developed  healthcare facility of the Borrower or any Subsidiary.  “Disqualified Capital Stock” shall mean, with respect to any Person, any Capital  Stock of such Person that, by its terms (or by the terms of any security into which it is convertible  or for which it is exchangeable), or upon the happening of any event, matures (excluding any  maturity as the result of an optional redemption by the issuer thereof) or is mandatorily redeemable  or redeemable at the sole option of the holder thereof (other than solely (x) for Qualified Capital  Stock or upon a sale of assets, casualty event or a change of control, in each case, subject to the  prior payment in full of the Obligations or (y) as a result of a redemption that by the terms of such  Capital Stock is contingent upon such redemption not being prohibited by this Agreement),  pursuant to a sinking fund obligation or otherwise (other than solely for Qualified Capital Stock)  or exchangeable or convertible into debt securities of the issuer thereof at the sole option of the  holder thereof, in whole or in part, on or prior to the date that is 181 days after the latest Maturity  Date then in effect at the time of issuance thereof.  “Disqualified Institutions” shall mean those Persons who are direct competitors of  the Borrower or any of its Subsidiaries and any Affiliate of such competitors that are, in each case,  identified in writing to the Administrative Agent by the Borrower from time to time (the writings  described herein, collectively, the “Disqualified Institutions List”); provided that any update or  supplement to the Disqualified Institutions List shall not apply retroactively to disqualify any  parties that have previously acquired an assignment or a participation in any Commitment or Loan;  

 

  22  provided further that the Borrower may not update or supplement the Disqualified  Institutions List during the occurrence of any Default or Event of Default.  “Disqualified Institutions List” shall have the meaning assigned to such term in the  definition of Disqualified Institution.  “Dollar(s)” and the sign “$” shall mean lawful money of the United States.  “Domestic Subsidiary” shall mean each Subsidiary of the Borrower that is  organized under the laws of the United States or any state or district thereof.  “Earlier LC Maturity Date” shall have the meaning set forth in Section 2.22(a).  “Earlier Swingline Maturity Date” shall have the meaning set forth in Section  2.4(f).   “EEA Financial Institution” shall mean (a) any credit institution or investment firm  established in any EEA Member Country which is subject to the supervision of an EEA Resolution  Authority, (b) any entity established in an EEA Member Country which is a parent of an institution  described in clause (a) of this definition, or (c) any financial institution established in an EEA  Member Country which is a subsidiary of an institution described in clause (a) or (b) of this  definition and is subject to consolidated supervision with its parent.   “EEA Member Country” shall mean any of the member states of the European  Union, Iceland, Liechtenstein and Norway.  “EEA Resolution Authority” shall mean any public administrative authority or any  Person entrusted with public administrative authority of any EEA Member Country (including any  delegee) having responsibility for the resolution of any EEA Financial Institution.  “Employee Matters Agreement” shall mean the Employee Matters Agreement,  dated as of the Original Closing Date, by and between Ensign and CTRI.  “Ensign” shall have the meaning set forth in the introductory paragraph hereof.  “Ensign Guaranty” shall mean certain Guarantees of PropCo Master Leases entered  into by Ensign in favor of the PropCo Landlords, in each case in the form of such Guarantees in  effect on the Closing Date or otherwise reasonably acceptable to the Administrative Agent.  “Ensign REIT” shall have the meaning set forth in the introductory paragraph  hereof.  “Environmental Laws” shall mean all laws, rules, regulations, codes, ordinances,  orders, decrees, judgments, injunctions, notices or binding agreements issued, promulgated or  entered into by or with any Governmental Authority relating in any way to the environment,  preservation or reclamation of natural resources, the management, Release or threatened Release  of any Hazardous Material or to health and safety matters.  

 

  23  “Environmental Liability” shall mean any liability, contingent or otherwise  (including any liability for damages, costs of environmental investigation and remediation, costs  of administrative oversight, fines, natural resource damages, penalties or indemnities), of the  Borrower or any of its Subsidiaries directly or indirectly resulting from or based upon (i) any actual  or alleged violation of any Environmental Law, (ii) the generation, use, handling, transportation,  storage, treatment or disposal of any Hazardous Materials, (iii) any actual or alleged exposure to  any Hazardous Materials, (iv) the Release or threatened Release of any Hazardous Materials or (v)  any contract, agreement or other consensual arrangement pursuant to which liability is assumed or  imposed with respect to any of the foregoing.  “Equity Issuance” shall mean (a) any issuance or sale after the Original Closing  Date by Ensign of any Capital Stock, or (b) the receipt by Ensign after the Original Closing Date  of any capital contribution (whether or not evidenced by any Capital Stock issued by the recipient  of such contribution).    “Equity Issuance Proceeds” shall mean, with respect to any Equity Issuance, the  aggregate amount of all cash received in respect thereof by the Person consummating such Equity  Issuance net of all investment banking fees, discounts and commissions, legal fees, consulting fees,  accountants’ fees, underwriting discounts and commissions and other fees and expenses actually  incurred in connection therewith.  “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as  amended and in effect from time to time, and any successor statute thereto and the regulations  promulgated and rulings issued thereunder.  “ERISA Affiliate” shall mean any person that for purposes of Title I or Title IV of  ERISA or Section 412 of the Code would be deemed at any relevant time to be a “single employer”  or otherwise aggregated with the Borrower or any of its Subsidiaries under Section 414(b), (c),  (m) or (o) of the Code or Section 4001 of ERISA.  “ERISA Event” shall mean (i) any “reportable event” as defined in Section 4043 of  ERISA with respect to a Plan (other than an event as to which the PBGC has waived under  subsection .22, .23, .25, .27 or .28 of PBGC Regulation Section 4043 the requirement of Section  4043(a) of ERISA that it be notified of such event); (ii) any failure to make a required contribution  to any Plan that would result in the imposition of a lien or other encumbrance or the provision of  security under Section 430 of the Code or Section 303 or 4068 of ERISA, or the arising of such a  lien or encumbrance, there being or arising any “unpaid minimum required contribution” or  “accumulated funding deficiency” (as defined or otherwise set forth in Section 4971 of the Code  or Part 3 of Subtitle B of Title 1 of ERISA), whether or not waived, or any filing of any request  for or receipt of a minimum funding waiver under Section 412 of the Code or Section 302 of  ERISA with respect to any Plan or Multiemployer Plan, or that such filing may be made, or any  determination that any Plan is, or is expected to be, in at-risk status under Title IV of ERISA; (iii)  any incurrence by the Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates  of any liability under Title IV of ERISA with respect to any Plan or Multiemployer Plan (other  than for premiums due and not delinquent under Section 4007 of ERISA); (iv) any institution of  proceedings, or the occurrence of an event or condition which would reasonably be expected to  constitute grounds for the institution of proceedings by the PBGC, under Section 4042 of ERISA  

 

  24  for the termination of, or the appointment of a trustee to administer, any Plan; (v) any incurrence  by the Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of any liability  with respect to the withdrawal or partial withdrawal from any Plan or Multiemployer Plan, or the  receipt by the Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates of any  notice that a Multiemployer Plan is in endangered or critical status under Section 305 of ERISA;  (vi) any receipt by the Borrower, any of its Subsidiaries or any of their respective ERISA Affiliates  of any notice, or any receipt by any Multiemployer Plan from the Borrower, any of its Subsidiaries  or any of their respective ERISA Affiliates of any notice, concerning the imposition of Withdrawal  Liability or a determination that a Multiemployer Plan is, or is expected to be, insolvent, within  the meaning of Title IV of ERISA; (vii) engaging in a non-exempt prohibited transaction within  the meaning of Section 4975 of the Code or Section 406 of ERISA; or (viii) any filing of a notice  of intent to terminate any Plan if such termination would require material additional contributions  in order to be considered a standard termination within the meaning of Section 4041(b) of ERISA,  any filing under Section 4041(c) of ERISA of a notice of intent to terminate any Plan, or the  termination of any Plan under Section 4041(c) of ERISA.  “Erroneous Payment” shall have the meaning set forth in Section 9.16(a).  “Erroneous Payment Deficiency Assignment” shall have the meaning set forth  in Section 9.16(d).  “Erroneous Payment Impacted Class” shall have the meaning set forth in  Section 9.16(d).  “Erroneous Payment Return Deficiency” shall have the meaning set forth in  Section 9.16(d).  “Erroneous Payment Subrogation Rights” shall have the meaning set forth in  Section 9.16(d).  “EU Bail-In Legislation Schedule” shall mean the EU Bail-In Legislation Schedule  published by the Loan Market Association (or any successor Person), as in effect from time to  time.  “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether  such Loan, or the Loans comprising such Borrowing, bears interest at a rate determined by reference  to Adjusted LIBOR.   “Event of Default” shall have the meaning set forth in Section 8.1.  “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended and  in effect from time to time.  “Excluded Subsidiary” shall mean (i) each Subsidiary of Ensign that is designated  by the Borrower as an “Excluded Subsidiary” on Schedule 4.14 on the Closing Date, (ii) each  Insurance Subsidiary and (iii) each other Subsidiary of Ensign that is designated by the Borrower  by written notice to the Administrative Agent as an “Excluded Subsidiary” pursuant to Section  5.18 subsequent to the Closing Date.  Notwithstanding the foregoing, (a) in no event shall any  

 

  25  tenant under any PropCo Master Lease be an Excluded Subsidiary and (b) in no event shall Ensign  REIT or any Intermediate Entity be an Excluded Subsidiary.  “Excluded Subsidiary Designation” shall have the meaning set forth in Section  5.18.  “Excluded Subsidiary Designation Amount” shall have the meaning set forth in  Section 5.18.  “Excluded Subsidiary Revocation” shall have the meaning set forth in Section 5.18.  “Excluded Taxes” shall mean, with respect to any Recipient of any payment to be  made by or on account of any obligation of the Borrower hereunder, (a) income or franchise taxes  imposed on (or measured by) the Recipient’s net income by the jurisdiction under the laws of  which such Recipient is organized or in which its principal office is located or, in the case of any  Lender, in which its Applicable Lending Office is located, (b) any branch profits taxes imposed  by the United States or any similar tax imposed by any other jurisdiction in which such Recipient  is located, and (c) any U.S. federal withholding taxes that (i) are imposed on amounts payable to  such Recipient pursuant to a law in effect at the time such Recipient becomes a Recipient under  this Agreement or designates a new lending office, except in each case to the extent that amounts  with respect to such taxes were payable either (A) to such Recipient’s assignor immediately before  such Recipient became a Recipient under this Agreement, or (B) to such Recipient immediately  before it designated a new lending office, (ii) are attributable to such Recipient’s failure to comply  with Section 2.20(e), or (iii) are imposed under FATCA.  “Existing Credit Agreement” shall have the meaning set forth in the Recitals.  “Existing Letters of Credit” shall mean those letters of credit issued under the  Existing Credit Agreement which remain outstanding as of the Closing Date that are listed on  Schedule II.  “Extended Commitments” shall mean the Extended Term Loan Commitments and  the Extended Revolving Commitments.  “Extended Facility” shall mean any additional tranche established pursuant to  Section 2.27 reflecting an extension of the maturity date and, if applicable, amortization schedule  of any existing tranche.  “Extended Facility Agreement” shall mean an Extended Revolving Credit Facility  Agreement or an Extended Term Facility Agreement, as the context may require.  “Extended Facility Closing Date” shall mean, with regard to an Extended Facility,  the first date all the conditions precedent set forth in the respective Extended Facility Agreement  are satisfied or waived in accordance with Section 10.2.  “Extended Facility Lender” shall mean, at any time, with regard to an Extended  Facility, any Lender that holds Loans or Commitments under such Extended Facility at such time.  

 

  26  “Extended Revolving Commitments” shall have the meaning set forth in Section  2.27.  “Extended Revolving Credit Facility” shall mean an Extended Facility designated  as an “Extended Revolving Credit Facility” by the Borrower and established pursuant to an  Extended Revolving Credit Facility Agreement.  “Extended Revolving Credit Facility Agreement” shall mean an agreement setting  forth the terms and conditions relating to an Extended Revolving Credit Facility.  “Extended Term Facility” shall mean an Extended Facility designated as an  “Extended Term Facility” by the Borrower and established pursuant to an Extended Term Facility  Agreement.  “Extended Term Facility Agreement” shall mean an agreement setting forth the  terms and conditions relating to an Extended Term Facility.  “Extended Term Loan Commitment” shall have the meaning set forth in Section  2.27.  “Extended Term Loans” shall have the meaning set forth in Section 2.27.  “Extending Revolving Lender” shall have the meaning set forth in Section 2.27.  “Extending Term Loan Lender” shall have the meaning set forth in Section 2.27.  “Extension” shall have the meaning set forth in Section 2.27.  “Extension Offer” shall have the meaning set forth in Section 2.27.  “FATCA” shall mean Sections 1471 through 1474 of the Code as of the date of this  Agreement (or any amended or successor version that is substantively comparable and not  materially more onerous to comply with) and any current or future regulations or official  interpretations thereof and any agreement entered into pursuant to Section 1471(b)(1) of the Code  or any intergovernmental agreements entered into in connection with the implementation of such  Sections of the Code.  “Federal Funds Rate” shall mean, for any day, the rate per annum (rounded  upwards, if necessary, to the next 1/100 of 1%) equal to the weighted average of the rates on  overnight Federal funds transactions with member banks of the Federal Reserve System, as  published by the Federal Reserve Bank of New York on the next succeeding Business Day or, if  such rate is not so published for any Business Day, the Federal Funds Rate for such day shall be  the average rate (rounded upwards, if necessary, to the next 1/100 of 1%) charged to the  Administrative Agent on such day on such transactions as determined by the Administrative  Agent. For the avoidance of doubt, if the Federal Funds Rate shall be less than zero, such rate shall  be deemed zero for purposes of this Agreement.  

 

  27  “Fee Letter” shall mean that certain fee letter, dated as of May 3, 2019, executed  by SunTrust Robinson Humphrey, Inc. and SunTrust Bank and accepted by Ensign, as amended,  restated, amended and restated, supplemented or otherwise modified from time to time.  “First Amendment and Restatement Date” shall have the meaning set forth in the  Recitals.  “Fiscal Quarter” shall mean any fiscal quarter of Ensign.  “Fiscal Year” shall mean any fiscal year of Ensign.  “Floor” shall mean a rate of interest equal to 0.00%.  “Foreign Person” shall mean any Person that is not a U.S. Person.  “Foreign Subsidiary” shall mean each Subsidiary of the Borrower that is organized  under the laws of a jurisdiction other than one of the fifty states of the United States or the District  of Columbia.   “GAAP” shall mean generally accepted accounting principles in the United States  applied on a consistent basis and subject to the terms of Section 1.3.  “Governmental Authority” shall mean the government of the United States, any  other nation or any political subdivision thereof, whether state or local, and any agency, authority,  instrumentality, regulatory body, court, central bank or other entity exercising executive,  legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to  government.  “Governmental Authority” shall include any agency, branch or other governmental  body charged with the responsibility, or vested with the authority to administer or enforce, any  Health Care Laws, including any Medicare or Medicaid contractors, intermediaries or carriers.  “Governmental Payor” shall mean Medicare, Medicaid, TRICARE, CHAMPVA,  any state health plan adopted pursuant to Title XIX of the Social Security Act, any other state or  federal health care program and any other Governmental Authority which presently or in the future  maintains a Third Party Payor Program.  “Guarantee” of or by any Person (the “guarantor”) shall mean any obligation,  contingent or otherwise, of the guarantor guaranteeing or having the economic effect of  guaranteeing any Indebtedness of any other Person (the “primary obligor”) in any manner, whether  directly or indirectly and including any obligation, direct or indirect, of the guarantor (i) to  purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness or  to purchase (or to advance or supply funds for the purchase of) any security for the payment  thereof, (ii) to purchase or lease property, securities or services for the purpose of assuring the  owner of such Indebtedness of the payment thereof, (iii) to maintain working capital, equity capital  or any other financial statement condition or liquidity of the primary obligor so as to enable the  primary obligor to pay such Indebtedness or (iv) as an account party in respect of any letter of  credit or letter of guaranty issued in support of such Indebtedness; provided that the term  “Guarantee” shall not include endorsements for collection or deposit in the ordinary course of  business.  The amount of any Guarantee shall be deemed to be an amount equal to the stated or  

 

  28  determinable amount of the primary obligation in respect of which such Guarantee is made or, if  not so stated or determinable, the maximum reasonably anticipated liability in respect thereof  (assuming such Person is required to perform thereunder) as determined by such Person in good  faith.  The term “Guarantee” used as a verb has a corresponding meaning.  “Guarantor” shall mean each of the Subsidiary Loan Parties.  “Guaranty and Security Agreement” shall mean the Third Amended and Restated  Guaranty and Security Agreement, dated as of the Closing Date and substantially in the form of  Exhibit B, made by the Loan Parties in favor of the Administrative Agent for the benefit of the  Secured Parties, as amended, restated, amended and restated, supplemented or otherwise modified  from time to time.  “Hazardous Materials” shall mean all explosive or radioactive substances or wastes  and all hazardous or toxic substances, wastes or other pollutants, including petroleum or petroleum  distillates, asbestos or asbestos containing materials, polychlorinated biphenyls, radon gas,  infectious or medical wastes and all other substances or wastes of any nature regulated pursuant to  any Environmental Law.   “Health Care Law” shall mean any Requirement of Law relating to (a) fraud and  abuse (including, without limitation, the following statutes, as amended and in effect from time to  time, and any successor statutes thereto and the regulations promulgated thereunder: the federal  Anti-Kickback Statute (42 U.S.C. § 1320a-7b(b)); the Stark Law (42 U.S.C. § 1395nn and  §1395(q)); the civil False Claims Act (31 U.S.C. § 3729 et seq.); Sections 1320a-7 and 1320a-7a  and 1320a-7b of Title 42 of the United States Code; and the Medicare Prescription Drug,  Improvement, and Modernization Act of 2003 (Pub. L. No. 108-173)); (b) Medicare, Medicaid,  CHAMPVA, TRICARE or other Third Party Payor Programs; (c) the licensure or regulation of  healthcare providers, suppliers, professionals, facilities or payors; (d) the provision of, or payment  for, health care services, items or supplies; (e) patient health care; (f) quality, safety certification  and accreditation standards and requirements; (g) the billing, coding or submission of claims or  collection of accounts receivable or refund of overpayments; (h) HIPAA; (i) fee-splitting  prohibitions; (j) health planning or rate-setting laws, including laws regarding certificates of need  and certificates of exemption; (k) certificates of operations and authority; (l) laws regulating the  provision of free or discounted care or services; and (m) any and all other applicable federal, state  or local health care laws, rules, codes, statutes, regulations, manuals, orders, ordinances, statutes,  policies, professional or ethical rules, administrative guidance and requirements, in each case as  amended from time to time.      “Health Care Permits” shall mean, with respect to any Person, any permit, approval,  consent, authorization, license, provisional license, registration, accreditation, certificate,  certification, certificate of need, qualification, operating authority, concession, grant, franchise,  variance or permission from any Governmental Authority issued or required under applicable  Health Care Laws.   “Hedging Obligations” of any Person shall mean any and all obligations of such  Person, whether absolute or contingent and howsoever and whensoever created, arising, evidenced  or acquired under (i) any and all Hedging Transactions, (ii) any and all cancellations, buy backs,  reversals, terminations or assignments of any Hedging Transactions and (iii) any and all renewals,  

 

  29  extensions and modifications of any Hedging Transactions and any and all substitutions for any  Hedging Transactions.  “Hedging Transaction” of any Person shall mean (a) any transaction (including an  agreement with respect to any such transaction) now existing or hereafter entered into by such  Person that is a rate swap transaction, swap option, basis swap, forward rate transaction,  commodity swap, commodity option, equity or equity index swap or option, bond option, interest  rate option, foreign exchange transaction, cap transaction, floor transaction, collar transaction,  currency swap transaction, cross-currency rate swap transaction, currency option, spot transaction,  credit protection transaction, credit swap, credit default swap, credit default option, total return  swap, credit spread transaction, repurchase transaction, reverse repurchase transaction, buy/sell- back transaction, securities lending transaction, or any other similar transaction (including any  option with respect to any of these transactions) or any combination thereof, whether or not any  such transaction is governed by or subject to any master agreement, and (b) any and all transactions  of any kind, and the related confirmations, which are subject to the terms and conditions of, or  governed by, any form of master agreement published by the International Swaps and Derivatives  Association, Inc., any International Foreign Exchange Master Agreement, or any other master  agreement (any such master agreement, together with any related schedules, a “Master  Agreement”), including any such obligations or liabilities under any Master Agreement.  “HIPAA” shall mean the (a) Health Insurance Portability and Accountability Act  of 1996; (b) the Health Information Technology for Economic and Clinical Health Act (Title XIII  of the American Recovery and Reinvestment Act of 2009); and (c) any state and local laws  regulating the privacy and/or security of individually identifiable information, including state laws  providing for notification of breach of privacy or security of individually identifiable information,  in each case, with respect to the laws described in clauses (a), (b) and (c) of this definition, as  amended and in effect from time to time, and any successor statutes thereto and the regulations  promulgated thereunder.  “Immaterial Subsidiary” shall mean, as of any date of determination, any direct or  indirect Subsidiary of Ensign that is formed or acquired after the Closing Date having, when taken  together with all other then-existing Immaterial Subsidiaries: (a) assets in an amount not in excess  of 20.0% of the total assets of Ensign and its Subsidiaries  determined on a consolidated basis as  of such date; or (b) revenues in an amount not in excess of 10.0% of the total revenues of Ensign  and its Subsidiaries on a consolidated basis for the most recently ended Test Period.   Notwithstanding the foregoing, in no event shall Ensign REIT or any Intermediate Entity be an  Immaterial Subsidiary.  “Increasing Lender” shall have the meaning set forth in Section 2.23.  “Incremental Commitment” shall have the meaning set forth in Section 2.23.  “Incremental Commitment Joinder” shall have the meaning set forth in Section  2.23.  “Incremental Revolving Commitment” shall have the meaning set forth in Section  2.23.  

 

  30  “Incremental Term Loan” shall have the meaning set forth in Section 2.23.  “Incremental Term Loan Commitment” shall have the meaning set forth in Section  2.23.  “Indebtedness” of any Person shall mean, without duplication, (i) all obligations of  such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds,  debentures, notes or other similar instruments, (iii) all obligations of such Person in respect of the  deferred purchase price of property or services (other than trade payables incurred in the ordinary  course of business and excluding earn-outs except to the extent required under GAAP to be  reflected as a liability on the balance sheet of such Person), (iv) all obligations of such Person  under any conditional sale or other title retention agreement(s) relating to property acquired by  such Person, (v) all Capital Lease Obligations of such Person, (vi) all obligations, contingent or  otherwise, of such Person in respect of letters of credit, acceptances or similar extensions of credit,  (vii) all Guarantees of such Person of the type of Indebtedness described in clauses (i) through (vi)  above, (viii) all Indebtedness of a third party secured by any Lien on property owned by such  Person, whether or not such Indebtedness has been assumed by such Person (provided that if such  Person has not assumed or otherwise become liable in respect of such Indebtedness, such  Indebtedness shall be deemed to be in an amount equal to the lesser of (A) the amount of such  Indebtedness and (B) the fair market value of the property to which such Lien relates), (ix) all  obligations of such Person in respect of Disqualified Capital Stock, (x) all Off-Balance Sheet  Liabilities and (xi) all Hedging Obligations.  The Indebtedness of any Person shall include (1) the  Indebtedness of any partnership in which such Person is a general partner, except to the extent that  the terms of such Indebtedness or the terms of the partnership agreement of such partnership  provide that such Person is not liable therefor and (2) the Indebtedness of any joint venture (other  than to the extent covered by clause (1) above) in which such Person is joint venturer, solely to the  extent that the terms of such Indebtedness or the terms of the operating agreement of such joint  venture expressly provide that such Person is liable therefor, or such Person is otherwise liable  therefor.  “Indemnified Taxes” shall mean Taxes, other than Excluded Taxes, imposed on or  with respect to any payment made by or on account of any obligation of any Loan Party under any  Loan Document.  “Insurance Subsidiary” shall mean Standardbearer Insurance Company, Inc., an  Arizona corporation and a wholly-owned Subsidiary of Ensign.  “Interest/Rent Coverage Ratio” shall mean, as of the end of any Test Period, the  ratio of (i) Consolidated EBITDAR for such Test Period to (ii) the sum of Consolidated Interest  Expense and Consolidated Lease Expense for such Test Period.   “Interest Period” shall mean with respect to any EurodollarSOFR Borrowing, a  period of one, three or six months, or such other period that is twelve months or less than one month  that is agreed to by all relevant Lenders; provided that:   (i)  the initial Interest Period for such Borrowing shall commence on  the date of such Borrowing (including the date of any conversion from a Borrowing of  

 

  31  another Type), and each Interest Period occurring thereafter in respect of such Borrowing  shall commence on the day on which the next preceding Interest Period expires;  (ii) if any Interest Period would otherwise end on a day other than a  Business Day, such Interest Period shall be extended to the next succeeding Business Day,  unless such Business Day falls in another calendar month, in which case such Interest  Period would end on the next preceding Business Day;  (iii) any Interest Period which begins on the last Business Day of a  calendar month or on a day for which there is no numerically corresponding day in the  calendar month at the end of such Interest Period shall end on the last Business Day of such  calendar month;   (iv) each principal installment of the Term Loans shall have an Interest  Period ending on or prior to each installment payment date and the remaining principal  balance (if any) of the Term Loans shall have an Interest Period determined as set forth  above; and   (v) no Interest Period may extend beyond the applicable Revolving  Commitment Termination Date, unless on such Revolving Commitment Termination Date  the aggregate outstanding principal amount of Term Loans is equal to or greater than the  aggregate principal amount of EurodollarSOFR Loans with Interest Periods expiring after  such date, and no Interest Period may extend beyond the final Maturity Date.; and  (vi) no tenor that has been removed from this definition pursuant to  Section 2.16(e) shall be available for specification in any Notice of Borrowing or  Notice of Conversion/Continuation.  “Intermediate Entity” shall mean any Subsidiary of Ensign that is both a parent  company of Ensign REIT and a Subsidiary of Ensign.  “Investments” shall have the meaning set forth in Section 7.4.  “Issuing Bank” shall mean (a) SunTrustTruist Bank in its capacity as an issuer of  Letters of Credit and (b) each other Lender with a Revolving Commitment selected by the  Borrower and approved by the Administrative Agent that agrees to act as an issuer of Letters of  Credit (it being understood that any other Lender that becomes an Issuing Bank may condition its  agreement to act in such capacity on a lesser sublimit within the LC Commitment but that the  Administrative Agent shall not have any responsibility for monitoring the usage of such lesser  sublimit), in each case pursuant to Section 2.22.  “Joining Guarantor” shall have the meaning set forth in Section 5.12(a).  “LCA Election” shall mean the Borrower’s election to treat a specified Acquisition  as a Limited Condition Acquisition in accordance with Section 1.5, effective upon delivery by the  Borrower of the LCA Election Certificate required by Section 1.5.  “LCA Election Certificate” shall have the meaning set forth in Section 1.5.  

 

  32  “LCA Test Date” shall have the meaning set forth in Section 1.5.  “LC Commitment” shall mean that portion of the Aggregate Revolving  Commitments that may be used by the Borrower for the issuance of Letters of Credit in an  aggregate face amount not to exceed $50,000,000.  “LC Disbursement” shall mean a payment made by an Issuing Bank pursuant to a  Letter of Credit.  “LC Documents” shall mean all applications, agreements and instruments relating  to the Letters of Credit but excluding the Letters of Credit.  “LC Exposure” shall mean, at any time, the sum of (i) the aggregate undrawn  amount of all outstanding Letters of Credit at such time, plus (ii) the aggregate amount of all LC  Disbursements that have not been reimbursed by or on behalf of the Borrower at such time.  The  LC Exposure of any Revolving Lender shall be its Pro Rata Share (based on such Revolving  Lender’s Revolving Commitment or Revolving Credit Exposure, as applicable) of the total LC  Exposure at such time.  “Lead Arrangers” shall mean SunTrust Robinson Humphrey,Truist Securities Inc.,  BofA Securities, Inc. andCitibank, N.A., Fifth Third Bank, National Association, Regions  Securities LLCCapital Markets and Wells Fargo Bank, National Association, each in its  capacity as a joint lead arranger in connection with this Agreement.  “Lender-Related Hedge Provider” shall mean any Person that, at the time it enters  into a Hedging Transaction with any Loan Party, (i) is a Lender or an Affiliate of a Lender and (ii)  except when the Lender-Related Hedge Provider is SunTrustTruist Bank or any of its Affiliates,  has provided prior written notice to the Administrative Agent which has been acknowledged by  the Borrower of (x) the existence of such Hedging Transaction and (y) the methodology to be used  by such parties in determining the obligations under such Hedging Transaction from time to time.   In no event shall any Lender-Related Hedge Provider acting in such capacity be deemed a Lender  for purposes hereof to the extent of and as to Hedging Obligations except that each reference to  the term “Lender” in Article IX and Section 10.3(b) shall be deemed to include such Lender- Related Hedge Provider.  In no event shall the approval of any such Person in its capacity as  Lender-Related Hedge Provider be required in connection with the release or termination of any  security interest or Lien of the Administrative Agent.    “Lenders” shall have the meaning set forth in the introductory paragraph hereof and  shall include, where appropriate, the Swingline Lender, each Increasing Lender, each Additional  Lender that joins this Agreement pursuant to Section 2.23, each Extended Facility Lender and each  Refinancing Lender.  “Letter of Credit” shall mean any stand-by letter of credit issued pursuant to Section  2.22 by an Issuing Bank for the account of the Borrower pursuant to the LC Commitment.  For the  avoidance of doubt, each Existing Letter of Credit shall be deemed to be a Letter of Credit issued  pursuant to Section 2.22 by an Issuing Bank for the account of the Borrower pursuant to the LC  Commitment effective from and after the Closing Date.  

 

  33  “Leverage Ratio” shall mean, as of any date of determination, the ratio of (i) Consolidated  Total Net Debt as of such date to (ii) Consolidated EBITDA for the most recently ended Test Period.    “Licensed Personnel” shall mean any Person (including any physician) involved in  the delivery of health care or medical items, services or supplies, employed or retained by the  Borrower or any of its Subsidiaries.    “Lien” shall mean any mortgage, pledge, security interest, lien (statutory or  otherwise), charge, encumbrance, hypothecation, assignment, or other arrangement having the  practical effect of any of the foregoing or any preference, priority or other security agreement or  preferential arrangement for security of any kind or nature whatsoever (including any conditional  sale or other title retention agreement and any capital lease having the same economic effect as  any of the foregoing).  “Limited Condition Acquisition” shall mean any Acquisition whose consummation  is not conditioned on the availability of, or on obtaining, third party financing; provided that in the  event the consummation of any such acquisition shall not have occurred on or prior to the date that  is one hundred and fifty (150) days following the signing of the applicable Limited Condition  Acquisition Agreement (or such longer period as is reasonably necessary to obtain regulatory  approvals from any applicable Governmental Authority), such acquisition shall no longer  constitute a Limited Condition Acquisition for any purpose hereunder.  “Limited Condition Acquisition Agreement” shall have the meaning set forth in  Section 1.5.   “Loan Documents” shall mean, collectively, this Agreement, the Collateral  Documents, the LC Documents, the Fee Letter, all Notices of Borrowing, all Notices of Swingline  Borrowing, all Notices of Conversion/Continuation, all Compliance Certificates, any promissory  notes issued hereunder and each other instrument, agreement, document and writing executed in  connection with any of the foregoing that is identified by its terms as a “Loan Document”.  “Loan Parties” shall mean Ensign, Ensign REIT and the Subsidiary Loan Parties.  “Loans” shall mean all Revolving Loans, Swingline Loans and Term Loans in the  aggregate or any of them, as the context shall require, and shall include, where appropriate, any  loan made pursuant to Section 2.23, 2.27 or 2.28.  “Master Leases” shall mean the PropCo Master Leases and each other Material  Master Lease.  “Material Adverse Effect” shall mean, with respect to any event, act, condition or  occurrence of whatever nature, whether singularly or in conjunction with any other event or events,  act or acts, condition or conditions, occurrence or occurrences whether or not related, resulting in  a material adverse change in, or a material adverse effect on, (i) the business, results of operations,  financial condition, assets, liabilities or properties of the Borrower and its Subsidiaries taken as a  whole and after giving effect to the Related Transactions, (ii) the ability of the Loan Parties, taken  as a whole, to perform their respective obligations under the Loan Documents, (iii) the rights and  remedies of the Administrative Agent, each Issuing Bank, the Swingline Lender or the Lenders  

 

  34  under any of the Loan Documents or (iv) the legality, validity or enforceability of any of the Loan  Documents.  “Material Agreements” shall mean (i) all agreements, indentures or notes governing  the terms of any Material Indebtedness, (ii) each Master Lease and (iii) all other agreements,  documents, contracts, indentures and instruments pursuant to which a default, breach or  termination thereof could reasonably be expected to result in a Material Adverse Effect.    “Material Indebtedness” shall mean any Indebtedness (other than the  Commitments, the Loans and the Letters of Credit) of the Borrower or any of its Subsidiaries  individually or in an aggregate committed or outstanding principal amount exceeding $35,000,000.   For purposes of determining the amount of attributed Indebtedness from Hedging Obligations, the  “principal amount” of any Hedging Obligations at any time shall be the Net Mark-to-Market  Exposure of such Hedging Obligations.  “Material Master Lease” shall mean a master lease of multiple properties to the  Borrower or its Subsidiaries pursuant to which a default, breach or termination thereof could  reasonably be expected to result in a Material Adverse Effect.  “Material Subsidiary” shall mean, as of any date, any direct or indirect Subsidiary  of Ensign that is not an Immaterial Subsidiary.  “Maturity Date” shall mean, (a) with respect to any new tranche of Term Loans  (including any Incremental Term Loans, Extended Term Loans or Other Refinancing Term  Loans), the maturity dates specified therefor in the applicable Incremental Commitment Joinder,  Extended Facility Agreement or Refinancing Amendment, as applicable and (b) with respect to  the Revolving Commitments, the Revolving Commitment Termination Date.  “Maximum Attributable EBITDA Percentage” shall have the meaning assigned to  such term in the definition of Consolidated EBITDA.  “Maximum Attributable EBITDA Percentage Determination Date” shall have the  meaning assigned to such term in the definition of Consolidated EBITDA.  “Maximum Total Leverage Ratio” shall have the meaning set forth in Section  6.1.  “Medicaid” shall mean, collectively, the health care assistance program established  by Title XIX of the Social Security Act (42 U.S.C. 1396 et seq.) and any statutes succeeding  thereto, and all laws, rules, regulations, manuals, orders or requirements pertaining to such  program, including (a) all federal statutes affecting such program; (b) all state statutes and plans  for medical assistance enacted in connection with such program and federal rules and regulations  promulgated in connection with such program; and (c) all applicable provisions of all rules,  regulations, manuals, orders and administrative, reimbursement, and requirements of all  Government Authorities promulgated in connection with such program (whether or not having the  force of law), in each case as the same may be amended and in effect from time to time.     

 

  35  “Medicare” shall mean, collectively, the health insurance program for the aged and  disabled established by Title XVIII of the Social Security Act (42 U.S.C. 1395 et seq.) and any  statutes succeeding thereto, and all laws, rules, regulations, manuals, orders or requirements  pertaining to such program including (a) all federal statutes (whether set forth in Title XVIII of the  Social Security Act (42 U.S.C. 1395 et seq.) or elsewhere) affecting such program; and (b) all  applicable provisions of all rules, regulations, manuals, orders and administrative and  reimbursement requirements of all Governmental Authorities promulgated in connection with such  program (whether or not having the force of law), in each case as the same may be amended and  in effect from time to time.   “Moody’s” shall mean Moody’s Investors Service, Inc.  “Multiemployer Plan” shall mean any “multiemployer plan” as defined in Section  4001(a)(3) of ERISA, which is contributed to by (or to which there is or may be an obligation to  contribute of) the Borrower, any of its Subsidiaries or an ERISA Affiliate, and each such plan for  the five-year period immediately following the latest date on which the Borrower, any of its  Subsidiaries or an ERISA Affiliate contributed to or had an obligation to contribute to such plan.  “Net Mark-to-Market Exposure” of any Person shall mean, as of any date of  determination with respect to any Hedging Obligation, the excess (if any) of all unrealized losses  over all unrealized profits of such Person arising from such Hedging Obligation.  “Unrealized  losses” shall mean the fair market value of the cost to such Person of replacing the Hedging  Transaction giving rise to such Hedging Obligation as of the date of determination (assuming such  Hedging Transaction were to be terminated as of that date), and “unrealized profits” shall mean  the fair market value of the gain to such Person of replacing such Hedging Transaction as of the  date of determination (assuming such Hedging Transaction were to be terminated as of that date).  “Non-Defaulting Lender” shall mean, at any time, a Lender that is not a Defaulting  Lender.    “Non-Public Information” shall mean any material non-public information (within  the meaning of United States federal and state securities laws) with respect to the Borrower or any  of its Subsidiaries or any of their respective securities.   “Non-U.S. Plan” shall mean any plan, fund (including, without limitation, any  superannuation fund) or other similar program established, contributed to (regardless of whether  through direct contributions or through employee withholding) or maintained outside the United  States by the Borrower or one or more of its Subsidiaries primarily for the benefit of employees of  the Borrower or such Subsidiaries residing outside the United States, which plan, fund or other  similar program provides, or results in, retirement income, a deferral of income in contemplation  of retirement, or payments to be made upon termination of employment, and which plan is not  subject to ERISA or the Code.  “Notice of Conversion/ContinuationBorrowing” shall have the meaning set forth  in Section 2.7(b)2.3.  “Notice of BorrowingConversion/Continuation” shall have the meaning set forth  in Section 2.32.7(b).  

 

  36   “Notice of Swingline Borrowing” shall have the meaning set forth in Section 2.4.  “Obligations” shall mean (a) all amounts owing by the Loan Parties to the  Administrative Agent, any Issuing Bank, any Lender (including the Swingline Lender) or any Lead  Arranger pursuant to or in connection with this Agreement or any other Loan Document or  otherwise with respect to any Commitment, Loan or Letter of Credit, including, without limitation,  all principal, interest (including any interest accruing after the filing of any petition in bankruptcy  or the commencement of any insolvency, reorganization or like proceeding relating to the  Borrower, whether or not a claim for post-filing or post-petition interest is allowed in such  proceeding), reimbursement obligations, obligations pursuant to the Administrative Agent’s  Erroneous Payment Subrogation Rights, fees, expenses, indemnification and reimbursement  payments, costs and expenses, whether direct or indirect, absolute or contingent, liquidated or  unliquidated, now existing or hereafter arising hereunder or thereunder, (b) all Hedging  Obligations owed by any Loan Party to any Lender-Related Hedge Provider, and (c) all Bank  Product Obligations, together with all renewals, extensions, modifications or refinancings of any  of the foregoing.  “OFAC” shall mean the U.S. Department of the Treasury’s Office of Foreign  Assets Control.  “Off-Balance Sheet Liabilities” of any Person shall mean (i) any repurchase  obligation or liability of such Person with respect to accounts or notes receivable sold by such  Person, (ii) any Synthetic Lease Obligation or (iii) any obligation arising with respect to any other  transaction which is the functional equivalent of or takes the place of borrowing but which does  not constitute a liability on the balance sheet of such Person other than, in the case of this clause  (iii), any operating lease, including, for the avoidance of doubt, any other lease referred to in the  provisos of the definition of “Capital Lease Obligations”.  “Opportunities Agreement” shall mean the Opportunities Agreement dated as of  the Original Closing Date by and between Ensign and CTRI.  “Original Closing Date” shall have the meaning set forth in the Recitals.  “OSHA” shall mean the Occupational Safety and Health Act of 1970, as amended  and in effect from time to time, and any successor statute thereto.  “Other Refinancing Commitments” shall mean the Other Refinancing Revolving  Commitments and the Other Refinancing Term Loan Commitments.  “Other Refinancing Loans” shall mean the Other Refinancing Revolving Loans and  the Other Refinancing Term Loans.  “Other Refinancing Revolving Commitments” shall mean one or more classes of  revolving commitments hereunder or extended Revolving Commitments that result from a  Refinancing Amendment.  “Other Refinancing Revolving Loans” shall mean the Revolving Loans made  pursuant to any Other Refinancing Revolving Commitment.  

 

  37  “Other Refinancing Term Loan Commitments” shall mean one or more classes of  term loan commitments hereunder that result from a Refinancing Amendment.  “Other Refinancing Term Loans” shall mean one or more classes of Term Loans  that result from a Refinancing Amendment.  “Other Taxes” shall mean any and all present or future stamp, court or  documentary, intangible, recording, filing or similar Taxes that arise from any payment made  hereunder or under any other Loan Document or from the execution, delivery, performance or  enforcement or registration of, from the receipt or perfection of a security interest under, or  otherwise with respect to, this Agreement or any other Loan Document.   “Parent Company” shall mean, with respect to a Lender, the “bank holding  company” as defined in Regulation Y, if any, of such Lender, and/or any Person owning,  beneficially or of record, directly or indirectly, a majority of the shares of such Lender.   “Participant” shall have the meaning set forth in Section 10.4(d).  “Pass-Through Foreign Holdco” shall mean (i) any Domestic Subsidiary that is a  Subsidiary of a Foreign Subsidiary of the Borrower and (ii) any Domestic Subsidiary for which all  or substantially all of its assets consist (directly or through Subsidiaries) of Capital Stock of one  or more CFCs.  “Patent” shall have the meaning assigned to such term in the Guaranty and Security  Agreement.    “Patent Security Agreement” shall mean any Patent Security Agreement executed  by a Loan Party owning Patents or licenses of Patents in favor of the Administrative Agent for the  benefit of the Secured Parties, both on the Original Closing Date and thereafter.  “Patriot Act” shall mean the USA PATRIOT Improvement and Reauthorization  Act of 2005 (Pub. L. 109-177 (signed into law March 9, 2006)), as amended and in effect from  time to time.  “Payment in Full” and “Paid in Full” shall mean the termination of all Revolving  Commitments and all other commitments of the Lenders to lend funds or extend financial  accommodations to the Borrower under the Loan Documents and the payment in full, in  immediately available funds, of all of the Obligations (other than (a) contingent indemnification  and expense reimbursement Obligations, in each case, to the extent no claim giving rise thereto  has been asserted, (b) Hedging Obligations and Bank Product Obligations to the extent  arrangements satisfactory to the Lender-Related Hedge Provider or Bank Product Provider, as  applicable, shall have been made and (c) contingent Obligations with respect to which the deposit  of cash collateral (in the case of LC Exposure, which shall not exceed 103% of the face amount of  the relevant Letters of Credit and in the case of other Obligations, which shall not exceed 100% of  the amount thereof) (or, as an alternative to cash collateral in the case of any LC Exposure, receipt  by the Administrative Agent of a back-up letter of credit reasonably satisfactory to the  Administrative Agent and the applicable Issuing Bank), in amounts and on terms and conditions  

 

  38  and with parties reasonably satisfactory to the Administrative Agent and each Indemnitee that is,  or may be, owed such Obligations has been provided).  “Payment Office” shall mean the office of the Administrative Agent located at 303  Peachtree Street, N.E., Atlanta, Georgia 30308, or such other location as to which the  Administrative Agent shall have given written notice to the Borrower and the other Lenders.  “Payment Recipient” shall have the meaning assigned to such term in Section  9.6(a).  “PBGC” shall mean the U.S. Pension Benefit Guaranty Corporation referred to and  defined in ERISA, and any successor entity performing similar functions.  “Pennant” shall mean The Pennant Group, Inc., a Delaware corporation.  “Pennant Business Assets” shall have the meaning assigned to such term in the  definition of Pennant Transaction.   “Pennant Contribution Agreement” shall mean that certain Distribution and  Contribution Agreement, dated as of October 1, by and among Bridgestone Living, LLC, a Nevada  limited liability company, Ensign, and Pinnacle Senior Living, LLC, a Delaware limited liability  company.  “Pennant Employee Matters Agreement” shall mean that certain Employee Matters  Agreement, dated as of October 1, by and between Ensign and Pennant.  “Pennant Master Leases” shall mean the master leases entered into by Ensign or  any of its Subsidiaries with Pennant or any of its Subsidiaries.  “Pennant Master Separation Agreement” shall mean that certain Separation and  Distribution Agreement, dated as of October 1, by and between Ensign and Pennant.  “Pennant Preferred Provider Agreement” shall mean that certain Preferred Provider  Agreement, dated as of October 1, 2019, by and between Ensign and Pennant.  “Pennant Subsidiaries” shall mean Pennant and each other subsidiary of Ensign  identified on Schedule 4.4 as a “Pennant Subsidiary”, the equity interests of which will be  distributed to Ensign’s shareholders in connection with the Pennant Transaction.  “Pennant Tax Matters Agreement” shall mean that certain Tax Matters Agreement,  dated as of October 1, 2019, by and between Ensign, by and on behalf of itself and each affiliate  of Ensign, and Pennant, by and behalf of itself and each affiliate of Pennant.  “Pennant Transaction” shall mean (a) the transfer by Ensign of substantially all of  the existing assets of Ensign and its Subsidiaries related to their home health, hospice and select  senior living businesses (collectively, the “Pennant Business Assets”) to Pennant and (b) the spin- off of Pennant and the Pennant Subsidiaries (which, immediately prior to such spin-off, will own  the Pennant Business Assets) to Ensign’s shareholders, in each case in accordance with the Pennant  Transaction Documents.  

 

  39  “Pennant Transaction Documents” shall mean the Pennant Master Separation  Agreement, the Pennant Transition Services Agreement, the Pennant Employee Matters  Agreement, the Pennant Tax Matters Agreement, the Pennant Preferred Provider Agreement, the  Pennant Contribution Agreement, and the Pennant Master Leases.  “Pennant Transition Services Agreement” shall mean that certain Transition  Services Agreement, dated as of October 1, 2019, by and between Ensign and Pennant.  “Perfection Certificate” shall have the meaning assigned to such term in the  Guaranty and Security Agreement.   “Permitted Acquisition” shall mean any Acquisition by the Borrower or any of its  Subsidiaries that occurs when the following conditions have been satisfied:    (i) subject, in the case of a Limited Condition Acquisition, to Section 1.5,  before and after giving effect to such Acquisition, no Default or Event of Default has  occurred and is continuing or would result therefrom; provided that (A) this clause (i) shall  be limited to Events of Default referenced in Section 2.23(a)(iii) if an Incremental  Commitment is being funded in connection with any such Permitted Acquisition and (B)  if the Borrower makes an LCA Election pursuant to Section 1.5 and such condition is tested  as of the applicable LCA Test Date, it shall also be a condition that no Event of Default under  Section 8.1(a), (b), (g), (h) or (i) shall have occurred and be continuing or would result from  such Acquisition and the transactions consummated in connection therewith (including the  incurrence of any Indebtedness and the use proceeds thereof) on the date on which such  Acquisition is consummated;    (ii) subject, in the case of a Limited Condition Acquisition, to Section 1.5,  before and after giving effect to such Acquisition, on a Pro Forma Basis (giving effect to  such Acquisition and any related debt incurrences), the Borrower is in compliance with  each of the covenants set forth in Article VI, measuring Consolidated Total Net Debt for  purposes of Section 6.1 as of the date of such Acquisition and otherwise recomputing the  covenants set forth in Article VI as of the end of the most recently ended Test Period as if  such Acquisition (and any other Acquisitions that have been consummated since the end  of such Test Period and on or prior to the date of such Acquisition) had occurred, and any  Indebtedness incurred in connection therewith was incurred, on the first day of the relevant  period for testing compliance;    (iii) at least five (5) days (or such shorter period of time as may be agreed  to by the Administrative Agent) prior to the date of the consummation of any such  Acquisition for which the aggregate consideration to be paid is at least $50,000,000, the  Borrower shall have delivered to the Administrative Agent notice of such Acquisition,  together with, to the extent available and received by the Borrower in connection with such  Acquisition (including after request by the Borrower to the applicable seller), historical  financial information with respect to the Person whose stock or assets are being acquired,  the acquisition agreement and such other information in the possession of the Borrower  that is reasonably requested by the Administrative Agent, and which is not subject to  confidentiality agreements restricting the Borrower from providing such information;  

 

  40    (iv) such Acquisition is not opposed by the board of directors (or the  equivalent thereof) of the Person whose stock or assets are being acquired;    (v) the Person or assets being acquired is in the same type of business  conducted by the Borrower and its Subsidiaries on the date hereof or any business  reasonably related thereto or ancillary or complementary thereto;    (vi) such Acquisition is consummated in compliance in all material  respects with all Requirements of Law, and all material consents and approvals from any  Governmental Authority and all material consents and approvals from any other Person in  each case required in connection with such Acquisition have been obtained; and    (vii) at least five (5) days (or such shorter period of time as may be agreed  to by the Administrative Agent) prior to the date of the consummation of any such  Acquisition for which the aggregate consideration to be paid is at least $50,000,000, the  Borrower shall have delivered to the Administrative Agent a certificate executed by a  Responsible Officer certifying that each of the conditions set forth above has been satisfied  (or, with respect to the condition set forth in clause (iv), that such condition will be satisfied  by the date of the consummation of such Acquisition); provided that, in the case of a  Limited Condition Acquisition, the conditions set forth above that are tested as of the  applicable LCA Test Date shall be certified in the applicable LCA Election Certificate  instead of the certificate delivered pursuant to this clause (vii).  “Permitted Alternative Investments” shall mean any of the following, but excluding  any Permitted Investment:    (i) direct obligations of, or obligations the principal of and interest on  which are unconditionally guaranteed by, the United States (or by any agency thereof to  the extent such obligations are backed by the full faith and credit of the United States);     (ii) commercial paper having the highest rating, at the time of  acquisition thereof, of S&P or Moody’s and in either case maturing within one year from  the date of acquisition thereof;     (iii) certificates of deposit, bankers’ acceptances and time deposits  maturing within one year from the date of acquisition thereof issued or guaranteed by or  placed with, and money market deposit accounts issued or offered by, any domestic office  of any commercial bank organized under the laws of the United States or any state thereof  which has a combined capital and surplus and undivided profits of not less than  $500,000,000 (determined at the time of such investment);     (iv) other securities, including, without limitation, corporate debt,  having the highest rating, at the time of acquisition thereof, of S&P or Moody’s and in  either case maturing within one year from the date of acquisition thereof; and     (v) mutual funds investing primarily in any one or more of the Permitted  Alternative Investments described in clauses (i) through (iv) above (determined at the time  of such investment).  

 

  41  “Permitted Encumbrances” shall mean:    (i) Liens imposed by law for taxes not yet due or which are being  contested in good faith by appropriate proceedings and with respect to which adequate  reserves are being maintained in accordance with GAAP;    (ii) Liens of landlords, carriers, warehousemen, mechanics,  materialmen and other Liens imposed by law which arise in the ordinary course of business  for amounts not yet due or which are being contested in good faith by appropriate  proceedings and with respect to which adequate reserves are being maintained in  accordance with GAAP;     (iii) pledges and deposits made in the ordinary course of business in  compliance with workers’ compensation, unemployment insurance and other social  security laws or regulations;     (iv) deposits to secure the performance of bids, trade contracts, leases,  statutory obligations, surety and appeal bonds, performance bonds and other obligations of  a like nature, in each case in the ordinary course of business;    (v) judgment and attachment liens not giving rise to an Event of Default  or Liens created by or existing from any litigation or legal proceeding that are currently  being contested in good faith by appropriate proceedings diligently conducted and with  respect to which adequate reserves are being maintained in accordance with GAAP;     (vi) customary rights of set-off, revocation, refund or chargeback under  deposit agreements or under the Uniform Commercial Code or common law of banks or  other financial institutions where the Borrower or any of its Subsidiaries maintains deposits  (other than deposits intended as cash collateral) in the ordinary course of business;     (vii) easements, zoning restrictions, rights-of-way and similar  encumbrances on real property imposed by law or arising in the ordinary course of business  that do not secure any monetary obligations and do not materially interfere with the  ordinary conduct of business of the Borrower and its Subsidiaries taken as a whole;   (viii) (x) Liens solely on any cash earnest money deposits made by the  Borrower or any of its Subsidiaries and (y) restrictions on transfers of assets that are subject  to sale or transfer pursuant to purchase and sale arrangements, in each case, in connection  with any letter of intent or purchase and sale agreement permitted hereunder;   (ix) in the case of any non-wholly owned Subsidiary or joint venture,  any put and call arrangements or restrictions on disposition related to its Capital Stock set  forth in its organizational documents or any related joint venture or similar agreement; and    (x) licenses and sublicenses of intellectual property granted by any  Loan Party in the ordinary course of business and not interfering in any material respect  with the ordinary conduct of business of the Loan Parties;    

 

  42  provided that the term “Permitted Encumbrances” shall not include any Lien securing  Indebtedness.  “Permitted Investments” shall mean:    (i) direct obligations of, or obligations the principal of and interest on  which are unconditionally guaranteed by, the United States (or by any agency thereof to  the extent such obligations are backed by the full faith and credit of the United States), in  each case maturing within one year from the date of acquisition thereof;     (ii) commercial paper having the highest rating, at the time of  acquisition thereof, of S&P or Moody’s and in either case maturing within six months from  the date of acquisition thereof;     (iii) certificates of deposit, bankers’ acceptances and time deposits  maturing within 180 days of the date of acquisition thereof issued or guaranteed by or  placed with, and money market deposit accounts issued or offered by, any domestic office  of any commercial bank organized under the laws of the United States or any state thereof  which has a combined capital and surplus and undivided profits of not less than  $500,000,000 (determined at the time of such investment);     (iv) fully collateralized repurchase agreements with a term of not more  than 30 days for securities described in clause (i) above and entered into with a financial  institution satisfying the criteria described in clause (iii) above (determined at the time of  such investment); and     (v) mutual funds investing primarily in any one or more of the Permitted  Investments described in clauses (i) through (iv) above (determined at the time of such  investment).  “Periodic Term SOFR Determination Day” shall have the meaning set forth  in the definition of “Term SOFR”.  “Person” shall mean any individual, partnership, firm, corporation, association,  joint venture, limited liability company, trust or other entity, or any Governmental Authority.  “Plan” shall mean any “employee benefit plan” as defined in Section 3 of ERISA  (other than a Multiemployer Plan) maintained or contributed to by the Borrower or any ERISA  Affiliate or to which the Borrower or any ERISA Affiliate has or may have an obligation to  contribute, and each such plan that is subject to Title IV of ERISA for the five-year period  immediately following the latest date on which the Borrower or any ERISA Affiliate maintained,  contributed to or had an obligation to contribute to (or is deemed under Section 4069 of ERISA to  have maintained or contributed to or to have had an obligation to contribute to, or otherwise to  have liability with respect to) such plan.  “Proceeding” shall mean any investigation, inquiry, litigation, review, hearing, suit,  claim, audit, arbitration, proceeding or action (in each case, whether civil, criminal, administrative,  

 

  43  investigative or informal) commenced, brought, conducted or heard by or before, or otherwise  involving, any Governmental Authority or arbitrator.  “Pro Forma Basis” shall mean, (i) with respect to any Person, business, property or  asset acquired in a Permitted Acquisition or other Acquisition permitted hereunder or approved in  writing by the Required Lenders, the inclusion as “Consolidated EBITDA” of the Consolidated  EBITDA (determined by reference to such Person, business, property or asset) for such Person,  business, property or asset as if such Acquisition had been consummated on the first day of the  applicable period, based on historical results accounted for in accordance with GAAP, adjusted by  (A) any credit received for acquisition-related costs and savings to the extent expressly permitted  pursuant to Article 11 of Securities and Exchange Commission Regulation S-X and (B) other  reasonable adjustments consistent with the operation by the Borrower or any of its Subsidiaries of  comparable businesses, properties or assets that are in the same or reasonably related line of  business in the same or similar geographies for (1) insurance expense savings, (2) bad debt expense  savings, (3) any other non-recurring or non-cash charges that have been deducted from the  EBITDA of or attributable to such Person, business, property or asset prior to such Acquisition  and (4) cost savings and synergies reasonably expected to be achieved by the Borrower relating to  such Acquisition; provided that in each case (x) the cost savings or synergies associated with such  adjustments are reasonably expected by the Borrower in good faith to be realized within twelve  (12) months of the consummation of such Acquisition and (y) for any such adjustments included  twelve (12) months after the consummation of such Acquisition, the Borrower and its Subsidiaries  have achieved annualized run-rate savings consistent with such adjustments; and (ii) with respect  to any Person, business, property or asset sold, transferred or otherwise disposed of, the exclusion  from “Consolidated EBITDA” of the portion of Consolidated EBITDA for such Person, business,  property or asset so disposed of during such period as if such disposition had been consummated  on the first day of the applicable period, in accordance with GAAP.  “PropCo Landlord” shall mean CTRI and any Subsidiary of CTRI.  “PropCo Master Leases” shall mean the master leases entered into by the Borrower  or any of its Subsidiaries with one or more PropCo Landlords, in each case, in substantially the  form of such master leases delivered to the Administrative Agent on or prior to the Original  Closing Date and any other master lease entered into by the Borrower or any of its Subsidiaries  with a PropCo Landlord.  “Pro Rata Share” shall mean (i) with respect to any Class of Commitment or Loan  of any Lender at any time, a percentage, the numerator of which shall be such Lender’s  Commitment of such Class (or, if such Commitment has been terminated or expired or the Loans  have been declared to be due and payable, such Lender’s Revolving Credit Exposure or Term  Loan, as applicable), and the denominator of which shall be the sum of all Commitments of such  Class of all Lenders (or, if such Commitments have been terminated or expired or the Loans have  been declared to be due and payable, all Revolving Credit Exposure or Term Loans, as applicable,  of all Lenders) and (ii) with respect to all Classes of Commitments and Loans of any Lender at  any time, the numerator of which shall be the sum of such Lender’s Revolving Commitment (or,  if such Revolving Commitment has been terminated or expired or the Loans have been declared  to be due and payable, such Lender’s Revolving Credit Exposure) and Term Loan and the  denominator of which shall be the sum of all Lenders’ Revolving Commitments (or, if such  

 

  44  Revolving Commitments have been terminated or expired or the Loans have been declared to be  due and payable, all Revolving Credit Exposure of all Lenders funded under such Commitments)  and Term Loans.  “PTE” shall mean a prohibited transaction class exemption issued by the U.S.  Department of Labor, as any such exemption may be amended from time to time.    “Public Lender” shall mean any Lender who does not wish to receive Non-Public  Information and who may be engaged in investment and other market related activities with respect  to the Borrower, its Affiliates or any of their securities or loans.  “QFC” shall have the meaning assigned to the term “qualified financial contract”  in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).  “QFC Credit Support” shall have the meaning set forth in Section 10.20.  “Qualified Capital Stock” shall mean, with respect to any Person, any Capital Stock  of such Person that is not Disqualified Capital Stock.  “Real Estate” shall mean all real property owned or leased by the Borrower and its  Subsidiaries.  “Recipient” shall mean, as applicable, (a) the Administrative Agent, (b) any Lender  and (c) any Issuing Bank.  “Refinanced Indebtedness” shall mean all Loans (as defined in the Existing Credit  Agreement) outstanding as of the Closing Date under the Existing Credit Agreement.  “Refinancing Amendment” shall mean an amendment to this Agreement in form  and substance reasonably satisfactory to the Administrative Agent and the Borrower executed by  each of (a) the Borrower, (b) the Administrative Agent, (c) each Issuing Bank (in the case of Other  Refinancing Revolving Commitments or Other Refinancing Revolving Loans) and (d) each  Refinancing Lender and Lender that agrees to provide any portion of the Credit Agreement  Refinancing Indebtedness being incurred pursuant thereto, in accordance with Section 2.28.  “Refinancing Lender” shall mean, at any time, any bank, other financial institution  or institutional investor that agrees to provide any portion of any Credit Agreement Refinancing  Indebtedness pursuant to a Refinancing Amendment in accordance with Section 2.28; provided  that each Refinancing Lender (other than any Person that is a Lender, an Affiliate of a Lender or  an Approved Fund of a Lender at such time) shall be subject to the approval of the Administrative  Agent and each Issuing Bank (in the case of Other Refinancing Revolving Commitments or Other  Refinancing Revolving Loans) (such approval not to be unreasonably withheld or delayed), in each  case to the extent any such consent would be required from the Administrative Agent and each  Issuing Bank (in the case of Other Refinancing Revolving Commitments or Other Refinancing  Revolving Loans) under Section 10.4(b) for an assignment of Loans or Commitments to such  Refinancing Lender.  

 

  45  “Regulation D” shall mean Regulation D of the Board of Governors of the Federal  Reserve System, as the same may be in effect from time to time, and any successor regulations.  “Regulation T” shall mean Regulation T of the Board of Governors of the Federal  Reserve System, as the same may be in effect from time to time, and any successor regulations.  “Regulation U” shall mean Regulation U of the Board of Governors of the Federal  Reserve System, as the same may be in effect from time to time, and any successor regulations.  “Regulation X” shall mean Regulation X of the Board of Governors of the Federal  Reserve System, as the same may be in effect from time to time, and any successor regulations.  “Regulation Y” shall mean Regulation Y of the Board of Governors of the Federal  Reserve System, as the same may be in effect from time to time, and any successor regulations.  “Related Parties” shall mean, with respect to any specified Person, such Person’s  Affiliates and the respective managers, administrators, trustees, partners, directors, officers,  employees, agents, advisors or other representatives of such Person and such Person’s Affiliates.  “Related Transaction Documents” shall mean the Loan Documents, the Pennant  Transaction Documents and all other agreements or instruments executed in connection with the  Related Transactions.   “Related Transactions” shall mean, collectively, the Closing Date Refinancing, the  making of the initial Loans on the Closing Date, the consummation of the Pennant Transaction,  the payment of all fees, costs and expenses associated with all of the foregoing and the execution  and delivery of all Related Transaction Documents.  “Release” shall mean any release, spill, emission, leaking, dumping, injection,  pouring, deposit, disposal, discharge, dispersal, leaching or migration into the environment  (including ambient air, surface water, groundwater, land surface or subsurface strata) or within  any building, structure, facility or fixture.  “Relevant Governmental Body” shall mean the Federal Reserve Board and/or  the Federal Reserve Bank of New York, or a committee officially endorsed or convened by  the Federal Reserve Board and/or the Federal Reserve Bank of New York, or any successor  thereto.  “Resolution Authority” shall mean an EEA Resolution Authority or, with  respect to any UK Financial Institution, a UK Resolution Authority.     “Required Lenders” shall mean, at any time, Lenders holding more than 50% of the  aggregate outstanding Revolving Commitments and Term Loans at such time or, if the Lenders  have no Commitments outstanding, then Lenders holding more than 50% of the aggregate  outstanding Revolving Credit Exposure and Term Loans of the Lenders at such time; provided that  to the extent that any Lender is a Defaulting Lender, such Defaulting Lender and all of its  Revolving Commitments, Revolving Credit Exposure and Term Loans shall be excluded for  purposes of determining Required Lenders.  

 

  46  “Required Revolving Lenders” shall mean, at any time, Lenders holding more than  50% of the aggregate outstanding Revolving Commitments at such time or, if the Lenders have no  Revolving  Commitments outstanding, then Lenders holding more than 50% of the aggregate  outstanding Revolving Credit Exposure at such time; provided that to the extent that any Lender  is a Defaulting Lender, such Defaulting Lender and all of its Revolving Commitments and  Revolving Credit Exposure shall be excluded for purposes of determining Required Revolving  Lenders.  “Requirement of Law” for any Person shall mean the articles or certificate of  incorporation, bylaws, partnership certificate and agreement, or limited liability company  certificate of organization and agreement, as the case may be, and other organizational and  governing documents of such Person, and any law, treaty, rule or regulation, or determination of a  Governmental Authority, in each case applicable to or binding upon such Person or any of its  property or to which such Person or any of its property is subject, including, without limitation, all  Health Care Laws.  “Responsible Officer” shall mean (x) with respect to certifying compliance with the  financial covenants set forth in Article VI, the chief financial officer or the treasurer of the  Borrower and (y) with respect to all other provisions, any of the president, the chief executive  officer, the chief operating officer, the chief financial officer, the treasurer or a vice president of  the Borrower or such other representative of the Borrower as may be designated in writing by any  one of the foregoing with the consent of the Administrative Agent.  “Restricted Payment” shall mean, for any Person, any dividend or distribution on  any class of its Capital Stock, or any payment on account of, or set apart assets for a sinking or  other analogous fund for, the purchase, redemption, retirement, defeasance or other acquisition of  any shares of its Capital Stock, any Indebtedness subordinated to the Obligations or any Guarantee  thereof or any options, warrants or other rights to purchase such Capital Stock or such  Indebtedness, whether now or hereafter outstanding.   “Revolving Commitment” shall mean, with respect to each Lender, the  commitment of such Lender to make Revolving Loans to the Borrower and to acquire  participations in Letters of Credit and Swingline Loans in an aggregate principal amount not  exceeding the amount set forth with respect to such Lender on Schedule I, as such schedule may  be amended pursuant to Section 2.23, Section 2.27 or Section 2.28, or, in the case of a Person  becoming a Lender after the Closing Date, the amount of the assigned “Revolving Commitment”  as provided in the Assignment and Acceptance executed by such Person as an assignee, or the  amount provided in the Incremental Commitment Joinder or Refinancing Amendment executed  by such Person, in each case as such commitment may subsequently be increased or decreased  pursuant to the terms hereof.  Unless the context shall otherwise require, the term “Revolving  Commitment” shall include any Extended Revolving Commitment.  “Revolving Commitment Termination Date” shall mean the earliest of (a) (i) with  respect to the Revolving Commitments (including any Incremental Revolving Commitments) of  the Revolving Lenders (other than any portion constituting Extended Revolving Commitments or  Other Refinancing Revolving Commitments), October 1April 8, 20242027, (ii) with respect to any  Extended Revolving Commitments, the maturity date specified therefor in the applicable Extended  

 

  47  Facility Agreement and (iii) with respect to any Other Refinancing Revolving Commitments, the  maturity date specified therefor in the applicable Refinancing Amendment, (b) the date on which  the Revolving Commitments are terminated pursuant to Section 2.8 and (c) the date on which all  amounts outstanding under this Agreement have been declared or have automatically become due  and payable (whether by acceleration or otherwise).  “Revolving Credit Exposure” shall mean, with respect to any Lender at any time,  the sum of the outstanding principal amount of such Lender’s Revolving Loans, LC Exposure and  Swingline Exposure.  “Revolving Lender” shall mean each Lender with a Revolving Commitment (or if  the Revolving Commitments have terminated, who hold Revolving Credit Exposure).  “Revolving Loan” shall mean a loan made by a Lender (other than the Swingline  Lender) to the Borrower under its Revolving Commitment, which may either be a Base Rate Loan  or a EurodollarSOFR Loan.  “S&P” shall mean Standard & Poor’s, a division of The McGraw-Hill Companies,  Inc.  “Sanctioned Country” shall mean, at any time, a country, region or territory that is,  or whose government or an agency of whose government is, or an organization directly or  indirectly controlled by a country or territory that is, the subject or target of any Sanctions.  “Sanctioned Person” shall mean, at any time, (a) any Person listed in any Sanctions- related list of designated Persons maintained by OFAC, the U.S. Department of State, the United  Nations Security Council, the European Union, any EU member state or any other Governmental  Authority, (b) any Person located, organized, operating or resident in a Sanctioned Country, (c) a  Person or legal entity that is a target of Sanctions or (d) any Person directly or indirectly controlled  (individually or in the aggregate) by or acting on behalf of any such Person described in the  foregoing clauses (a) through (c).  “Sanctions” shall mean economic or financial sanctions or trade embargoes  administered, imposed or enforced from time to time by (a) the U.S. government, including those  administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council,  the European Union, any EU member state, Her Majesty’s Treasury of the United Kingdom or any  other applicable Governmental Authority.  “Screen RateSecond Amendment” shall mean the rate specified in clause (i) of the  definition of Adjusted LIBOR.that certain Second Amendment to Third Amended and  Restated Credit Agreement, dated as of April 8, 2022, by and among the Borrowers, certain  subsidiaries of the Borrowers party thereto, as guarantors, the several banks and other  financial institutions party thereto and the Administrative Agent.  “Second Amendment and Restatement Date” shall have the meaning set forth in  the Recitals.  

 

  48  “Second Amendment Effective Date” shall have the meaning set forth in  Second Amendment.  “Secured Leverage Ratio” shall mean, as of any date of determination, the  ratio of (i) Consolidated Secured Net Debt as of such date to (ii) Consolidated EBITDA for  the most recently ended Test Period.  “Secured Parties” shall mean the Administrative Agent, the Lenders, the Issuing  Banks, the Lender-Related Hedge Providers and the Bank Product Providers.  “Separation and Distribution Agreement” shall mean the Separation and  Distribution Agreement, dated as of the Original Closing Date, between Ensign and CTRI.  “SOFR” shall mean a rate per annum equal to the secured overnight financing  rate as administered by the SOFR Administrator.   “SOFR Administrator” shall mean the Federal Reserve Bank of New York (or  a successor administrator of the secured overnight financing rate).  “SOFR Loan” shall mean a Loan that bears interest at a rate based on  Adjusted Term SOFR, other than pursuant to clause (iii) of the definition of “Base Rate”.   “Solvent” shall mean, with respect to any Person on a particular date, that on such  date (a) the fair value of the property of such Person is greater than the total amount of liabilities,  including subordinated and contingent liabilities, of such Person; (b) the present fair saleable value  of the assets of such Person is not less than the amount that will be required to pay the probable  liability of such Person on its debts and liabilities, including subordinated and contingent liabilities  as they become absolute and matured; (c) such Person does not intend to, and does not believe that  it will, incur debts or liabilities beyond such Person’s ability to pay as such debts and liabilities  mature; and (d) such Person is not engaged in a business or transaction, and is not about to engage  in a business or transaction, for which such Person’s property would constitute an unreasonably  small capital.  The amount of contingent liabilities (such as litigation, guaranties and pension plan  liabilities) at any time shall be computed as the amount that, in light of all the facts and  circumstances existing at the time, represents the amount that would reasonably be expected to  become an actual or matured liability.  “Specified Representations” shall mean the representations and warranties set forth  in Sections 4.1(i) and (ii),  4.2, 4.3(a), 4.3(b), 4.7, 4.9, 4.15, 4.17(a), 4.20, 4.21, and 4.22.   “Specified Subsidiary” shall mean (i) any Pass-Through Foreign Holdco, (ii) any  CFC and (iii) any Subsidiary that is prohibited by applicable law, rule or regulation or by  agreement, instrument or other undertaking to which such Subsidiary is a party or by which it or  any of its property or assets is bound from guaranteeing the Obligations; provided that any such  agreement, instrument or other undertaking (x) is in existence on the ClosingSecond Amendment  Effective Date and listed on Schedule 1.2 (or, with respect to a Subsidiary acquired after the  ClosingSecond Amendment Effective Date, as of the date of such acquisition) and (y) in the case  of a Subsidiary acquired after the ClosingSecond Amendment Effective Date, was not entered  into in connection with or in anticipation of such acquisition.  Notwithstanding the foregoing, in  

 

  49  no event shall any tenant under any PropCo Master Lease, Ensign REIT or any Intermediate Entity  be a Specified Subsidiary.  “Specified Target Representations” shall have the meaning set forth in Section  2.23(a)(iii).  “Spin-Off Documents” shall mean the Separation and Distribution Agreement, the  Ensign Guaranty, the PropCo Master Leases, the Opportunities Agreement, the Employee Matters  Agreement, the Tax Matters Agreement and the Transition Services Agreement.  “Spin-Off Transaction” shall mean (a) the transfer by Ensign of (x) certain Real  Estate assets of Ensign and its Subsidiaries and (y) certain independent living facilities to CTRI,  (b) the spin-off of CTRI and its Subsidiaries to Ensign’s shareholders and (c) the series of corporate  and other restructurings and other transactions entered into in connection with the foregoing, in  each case that occurred within the first three (3) Business Days following the Original Closing  Date.  “Subsidiary” shall mean, with respect to any Person (the “parent”) at any date, any  corporation, partnership, joint venture, limited liability company, association or other entity the  accounts of which would be consolidated with those of the parent in the parent’s consolidated  financial statements if such financial statements were prepared in accordance with GAAP as of  such date, as well as any other corporation, partnership, joint venture, limited liability company,  association or other entity (i) of which securities or other ownership interests representing more  than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a  partnership, more than 50% of the general partnership interests are, as of such date, owned,  controlled or held, or (ii) that is, as of such date, otherwise controlled, by the parent or one or more  subsidiaries of the parent or by the parent and one or more subsidiaries of the parent.  Unless  otherwise indicated, all references to “Subsidiary” hereunder shall mean a Subsidiary of Ensign.   Notwithstanding anything in this Agreement to the contrary, in no event shall any Pennant  Subsidiary be deemed to be a Subsidiary of Ensign or any of its Subsidiaries for any purposes  hereof or any other Loan Document.  “Subsidiary Loan Party” shall mean any Subsidiary that executes or becomes a  party to the Guaranty and Security Agreement, unless and until any such Subsidiary is released  pursuant to Section 9.11.  “Supported QFC” shall have the meaning set forth in Section 10.20.  “Swingline Commitment” shall mean the commitment of the Swingline Lender to  make Swingline Loans in an aggregate principal amount at any time outstanding not to exceed  $15,000,000.  “Swingline Exposure” shall mean, with respect to each Lender, the principal  amount of the Swingline Loans in which such Lender is legally obligated either to make a Base  Rate Loan or to purchase a participation in accordance with Section 2.4, which shall equal such  Lender’s Pro Rata Share of all outstanding Swingline Loans.  

 

  50  “Swingline Lender” shall mean SunTrustTruist Bank in its capacity as such,  together with any successor in such capacity.   “Swingline Loan” shall mean a loan made to the Borrower by the Swingline Lender  under the Swingline Commitment.    “Synthetic Lease” shall mean a lease transaction under which the parties intend that  (i) the lease will be treated as an “operating lease” by the lessee pursuant to Accounting Standards  Codification Sections 840-10 and 840-20, as amended, and (ii) the lessee will be entitled to various  tax and other benefits ordinarily available to owners (as opposed to lessees) of like property.  “Synthetic Lease Obligations” shall mean, with respect to any Person, the sum of  (i) all remaining rental obligations of such Person as lessee under Synthetic Leases which are  attributable to principal and, without duplication, plus (ii) all rental and purchase price payment  obligations of such Person under such Synthetic Leases assuming such Person exercises the option  to purchase the lease property at the end of the lease term.  “Taxes” shall mean any and all present or future taxes, levies, imposts, duties,  deductions, assessments, fees, charges or withholdings imposed by any Governmental Authority,  including any interest, additions to tax or penalties applicable thereto.  “Tax Matters Agreement” shall mean the Tax Matters Agreement, dated as of the  Original Closing Date, by and between Ensign and CTRI.  “Term Loan” shall mean any term loan made hereunder pursuant to Section 2.23,  Section 2.27, or Section 2.28.  “Term Loan Commitment” shall mean, with respect to each Lender, such Lender’s  Incremental Term Loan Commitment, Extended Term Loan Commitment and/or Other  Refinancing Term Loan Commitment, as the context may require.    “Term Lender” shall mean a Lender holding a Term Loan or a Term Loan  Commitment.  “Term SOFR” shall mean,   (a) for any calculation with respect to a SOFR Loan, the Term SOFR  Reference Rate for a tenor comparable to the applicable Interest Period on the day (such  day, the “Periodic Term SOFR Determination Day”) that is two (2) U.S. Government  Securities Business Days prior to the first day of such Interest Period, as such rate is published  by the Term SOFR Administrator; provided, that if as of 5:00 p.m. on any Periodic Term  SOFR Determination Day the Term SOFR Reference Rate for the applicable tenor has not  been published by the Term SOFR Administrator and a Benchmark Replacement Date with  respect to the Term SOFR Reference Rate has not occurred, then Term SOFR will be the  Term SOFR Reference Rate for such tenor as published by the Term SOFR Administrator  on the first preceding U.S. Government Securities Business Day for which such Term SOFR  Reference Rate for such tenor was published by the Term SOFR Administrator so long as  such first preceding U.S. Government Securities Business Day is not more than three (3) U.S.  

 

  51  Government Securities Business Days prior to such Periodic Term SOFR Determination  Day, and  (b) for any calculation with respect to a Base Rate Loan on any day, the  Term SOFR Reference Rate for a tenor of one month on the day (such day, the “Base Rate  Term SOFR Determination Day”) that is two (2) U.S. Government Securities Business Days  prior to such day, as such rate is published by the Term SOFR Administrator; provided that  if as of 5:00 p.m. on any Base Rate Term SOFR Determination Day the Term SOFR  Reference Rate for the applicable tenor has not been published by the Term SOFR  Administrator and a Benchmark Replacement Date with respect to the Term SOFR  Reference Rate has not occurred, then Term SOFR will be the Term SOFR Reference Rate  for such tenor as published by the Term SOFR Administrator on the first preceding U.S.  Government Securities Business Day for which such Term SOFR Reference Rate for such  tenor was published by the Term SOFR Administrator so long as such first preceding U.S.  Government Securities Business Day is not more than three (3) U.S. Government Securities  Business Days prior to such Base Rate Term SOFR Determination Day.  “Term SOFR Adjustment” shall mean a percentage equal to 0.10% per  annum.  “Term SOFR Administrator” shall mean the CME Group Benchmark  Administration Limited (CBA) (or a successor administrator of the Term SOFR Reference  Rate selected by the Administrative Agent in its reasonable discretion).  “Term SOFR Reference Rate” shall mean the rate per annum determined by  the Administrative Agent as the forward-looking term rate based on SOFR.   “Test Period” shall mean, for any date of determination under this Agreement, the  four consecutive Fiscal Quarters most recently ended as of such date of determination for which  financial statements have been or are required to have been delivered pursuant to Section 5.1(a) or  (b), provided, that for Test Periods prior to the first such required delivery after the Closing Date,  “Test Period” shall refer to the most recently ended period of four consecutive Fiscal Quarters for  which financial statements are available; provided, further, that for the purposes of determining  quarterly compliance with Sections 6.1 and 6.2, Test Period shall mean the four consecutive Fiscal  Quarters ending on the applicable date of determination.  “Third Party Payor” shall mean any Governmental Payor, private insurers,  managed care plans, and any other person or entity which presently or in the future maintains Third  Party Payor Programs.   “Third Party Payor Authorizations” shall mean all participation agreements,  provider or supplier agreements, enrollments, accreditations and billing numbers necessary to  participate in and receive reimbursement from a Third Party Payor Program, including all  Medicare and Medicaid participation agreements.  “Third Party Payor Programs” shall mean all payment or reimbursement programs,  sponsored or maintained by any Third Party Payor, in which the Borrower or any of its Subsidiaries  participates.   

 

  52  “Threshold Amount” shall have the meaning set forth in Section 5.12(c).  “Total Leverage Ratio” shall mean, as of any date of determination, the ratio of  (i) Consolidated Total Net Debt as of such date to (ii) Consolidated EBITDA for the most recently  ended Test Period.   “Trademark” shall have the meaning assigned to such term in the Guaranty and  Security Agreement.    “Trademark Security Agreement” shall mean any Trademark Security Agreement  executed by a Loan Party owning registered Trademarks or applications for Trademarks in favor  of the Administrative Agent for the benefit of the Secured Parties, both on the Original Closing  Date and thereafter.   “Trading with the Enemy Act” shall mean the Trading with the Enemy Act of the  United States of America (50 U.S.C. App. §§ 1 et seq.), as amended and in effect from time to  time.  “Transition Services Agreement” shall mean the Transition Services Agreement,  dated as of the Original Closing Date, by and between Ensign and CTRI.   “TRICARE” shall mean, collectively, a program of medical benefits covering  former and active members of the uniformed services and certain of their dependents, financed  and administered by the United States Departments of Defense, Health and Human Services and  Transportation, and all laws applicable to such programs.   “Type”, when used in reference to a Loan or a Borrowing, refers to whether the rate  of interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference  to Adjusted LIBORTerm SOFR or the Base Rate.   “UK Financial Institution” shall mean any BRRD Undertaking (as such term  is defined under the PRA Rulebook (as amended from time to time) promulgated by the  United Kingdom Prudential Regulation Authority) or any person falling within IFPRU 11.6  of the FCA Handbook (as amended from time to time) promulgated by the United Kingdom  Financial Conduct Authority, which includes certain credit institutions and investment  firms, and certain affiliates of such credit institutions or investment firms.  “UK Resolution Authority” shall mean the Bank of England or any other  public administrative authority having responsibility for the resolution of any UK Financial  Institution.  “Unadjusted Benchmark Replacement” shall mean the Benchmark  Replacement excluding the Benchmark Replacement Adjustment.  “Unfunded Pension Liability” of any Plan shall mean the amount, if any, by which  the value of the accumulated plan benefits under the Plan, determined on a plan termination basis  in accordance with actuarial assumptions at such time consistent with those prescribed by the  PBGC for purposes of Section 4044 of ERISA, exceeds the fair market value of all Plan assets  

 

  53  allocable to such liabilities under Title IV of ERISA (excluding any accrued but unpaid  contributions).  “Uniform Commercial Code” or “UCC” shall mean the Uniform Commercial Code  as amended and in effect from time to time in the State of New York.   “United States” or “U.S.” shall mean the United States of America.  “U.S. Government Securities Business Day” shall mean any day except for (i)  a Saturday, (ii) a Sunday or (iii) a day on which the Securities Industry and Financial  Markets Association recommends that the fixed income departments of its members be  closed for the entire day for purposes of trading in United States government securities.  “U.S. Person” shall mean any Person that is a “United States person” as defined in  Section 7701(a)(30) of the Code.  “U.S. Special Resolution Regimes” shall have the meaning set forth in Section  10.20.  “U.S. Tax Compliance Certificate” shall have the meaning set forth in Section  2.20(e)(ii).  “Weighted Average Life to Maturity” shall mean, when applied to any  Indebtedness at any date, the number of years obtained by dividing (i) the sum of the products  obtained by multiplying (x) the amount of each then remaining installment, sinking fund, serial  maturity or other required payments of principal, including payment at final maturity, in respect  thereof, by (y) the number of years (calculated to the nearest one-twelfth) that will elapse between  such date and the making of such payment by (ii) the then outstanding principal amount of such  Indebtedness.  “Withdrawal Liability” shall mean liability to a Multiemployer Plan as a result of a  complete or partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I  of Subtitle E of Title IV of ERISA.  “Withholding Agent” shall mean the Borrower, any other Loan Party or the  Administrative Agent, as applicable.  “Write-Down and Conversion Powers” shall mean, (a) with respect to any EEA  Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority  from time to time under the Bail-In Legislation for the applicable EEA Member Country, which  write-down and conversion powers are described in the EU Bail-In Legislation Schedule., and (b)  with respect to the United Kingdom,  any powers of the applicable Resolution Authority   under the Bail-In Legislation to cancel, reduce, modify or change the form of a liability of  any UK Financial Institution  or any contract or instrument under which that liability arises,  to convert all or part of that liability into shares, securities or obligations of that person or  any other person, to provide that any such contract or instrument is to have effect as if a  right had been exercised under it or to suspend any obligation in respect of that liability or  

 

  54  any of the powers under that Bail-In Legislation that are related to or ancillary to any of  those powers.  Section 1.2. Classifications of Loans and Borrowings.  For purposes of this  Agreement, Loans may be classified and referred to by Class (e.g. “Revolving Loan” or “Term  Loan”) or by Type (e.g. “EurodollarSOFR Loan” or “Base Rate Loan”) or by Class and Type (e.g.  “Revolving EurodollarSOFR Loan”).  Borrowings also may be classified and referred to by Class  (e.g. “Revolving Borrowing”) or by Type (e.g. “EurodollarSOFR Borrowing”) or by Class and  Type (e.g. “Revolving EurodollarSOFR Borrowing”).  Section 1.3. Accounting Terms and Determination.  Unless otherwise defined or  specified herein, all accounting terms used herein shall be interpreted, all accounting  determinations hereunder shall be made, and all financial statements required to be delivered  hereunder shall be prepared, in accordance with GAAP as in effect from time to time, applied,  except as otherwise indicated therein, on a basis consistent with the most recent audited  consolidated financial statement of Ensign delivered pursuant to Section 5.1(a); provided that if  the Borrower notifies the Administrative Agent that the Borrower wishes to amend any covenant  in Article VI to eliminate the effect of any change in GAAP on the operation of such covenant (or  if the Administrative Agent notifies the Borrower that the Required Lenders wish to amend Article  VI for such purpose), then the Borrower’s compliance with such covenant shall be determined on  the basis of GAAP in effect immediately before the relevant change in GAAP became effective,  until either such notice is withdrawn or such covenant is amended in a manner satisfactory to the  Borrower and the Required Lenders (and each party hereto agrees to negotiate in good faith with  respect to such amendment).  Notwithstanding any other provision contained herein, (i) all terms  of an accounting or financial nature used herein shall be construed, and all computations of  amounts and ratios referred to herein shall be made, without giving effect to any election under  Accounting Standards Codification Section 825-10 (or any other Financial Accounting Standard  having a similar result or effect) to value any Indebtedness or other liabilities of  any Loan Party  or any Subsidiary of any Loan Party at “fair value”, as defined therein; and (ii) for purposes of this  Agreement, any change in GAAP requiring leases which were previously classified as operating  leases (or which, had they been entered into prior to the Original Closing Date, would have been  treated as an operating lease on the Original Closing Date) to be treated as capitalized leases shall  be disregarded and such leases shall continue to be, or shall be, treated as operating leases  consistent with GAAP as in effect immediately before such change in GAAP became effective.   Notwithstanding anything to the contrary herein, all financial ratios and tests contained in this  Agreement that are calculated with respect to any Test Period during which any Permitted  Acquisition or other Acquisition permitted hereunder occurs shall be calculated with respect to  such Test Period and such Permitted Acquisition or other Acquisition permitted hereunder on a  Pro Forma Basis.  Further, if since the beginning of any such Test Period and on or prior to the  date of any required calculation of any financial ratio or test (other than for compliance with the  definition of “Permitted Acquisition”) any Permitted Acquisition or other Acquisition permitted  hereunder shall have occurred then any applicable financial ratio or test shall be calculated on a  Pro Forma Basis for such Test Period as if such Permitted Acquisition or other Acquisition  permitted hereunder had occurred at the beginning of the applicable Test Period (it being  understood, for the avoidance of doubt, that solely for purposes of calculating quarterly compliance  with Sections 6.1 and 6.2, the date of the required calculation shall be the end of the Test Period,  

 

  55  and no Permitted Acquisition or other Acquisition permitted hereunder occurring thereafter shall  be taken into account).     Section 1.4. Terms Generally.  The definitions of terms herein shall apply equally to  the singular and plural forms of the terms defined.  Whenever the context may require, any pronoun  shall include the corresponding masculine, feminine and neuter forms.  The words “include”,  “includes” and “including” shall be deemed to be followed by the phrase “without limitation”.   The word “will” shall be construed to have the same meaning and effect as the word “shall”.  In  the computation of periods of time from a specified date to a later specified date, the word “from”  means “from and including” and the word “to” means “to but excluding”.  Unless the context  requires otherwise (i) any definition of or reference to any agreement, instrument or other  document herein shall be construed as referring to such agreement, instrument or other document  as it was originally executed or as it may from time to time be amended, restated, supplemented  or otherwise modified (subject to any restrictions on such amendments, supplements or  modifications set forth herein), (ii) any reference herein to any Person shall be construed to include  such Person’s successors and permitted assigns, (iii) the words “hereof”, “herein” and “hereunder”  and words of similar import shall be construed to refer to this Agreement as a whole and not to  any particular provision hereof, (iv) all references to Articles, Sections, Exhibits and Schedules  shall be construed to refer to Articles, Sections, Exhibits and Schedules to this Agreement and (v)  all references to a specific time shall be construed to refer to the time in Atlanta, Georgia, unless  otherwise indicated. Any reference herein or in any other Loan Document to an assignment, sale,  disposition or transfer, or similar term, shall be deemed to apply to a division of or by a limited  liability company, limited partnership or trust, or an allocation of assets to a series of a limited  liability company, limited partnership or trust, as if it were an assignment, sale, disposition or  transfer, or similar term, as applicable, to, of or with a separate Person, and any reference herein  to a merger, consolidation or amalgamation, or similar term, shall be deemed to apply to the  unwinding of such a division or allocation, as if it were a merger, consolidation or amalgamation,  or similar term, as applicable, with a separate Person. Any division of a limited liability company,  limited partnership or trust shall constitute a separate Person hereunder (and each division of any  limited liability company, limited partnership or trust that is a Subsidiary, an Excluded Subsidiary,  a joint venture or any other like term shall also constitute such a Person unless, in the case of a  Subsidiary or an Excluded Subsidiary, it is otherwise designated in accordance with the terms of  this Agreement).  Section 1.5. Limited Condition Acquisitions.  Notwithstanding anything to the  contrary herein, for purposes of (i) determining compliance with Sections 6.1 and 6.2 on a pro  forma basis and capacity under baskets (including baskets measured as a percentage of  Consolidated EBITDA or based on a ratio test) with respect to the making of any Permitted  Acquisitions or other Acquisitions permitted hereunder and the incurrence of any Indebtedness  permitted hereunder in connection therewith (other than Indebtedness under or other use of the  Revolving Commitment or the establishment of any Incremental Revolving Commitment) or (ii)  determining compliance with representations and warranties or any Default or Event of Default  test with respect to the making of any Permitted Acquisitions or other Acquisitions permitted  hereunder and the incurrence of any Indebtedness permitted hereunder in connection therewith  (other than Indebtedness under or other use of the Revolving Commitment or the establishment of  any Incremental Revolving Commitment), in the case of clauses (i) and (ii), in connection with a  Limited Condition Acquisition, if the Borrower has made an LCA Election with respect to such  

 

  56  Limited Condition Acquisition, the date of determination of whether any such action is permitted  hereunder (including, in the case of calculating Consolidated EBITDA, the reference date for  determining the most recently ended period of four consecutive fiscal quarters) shall be deemed to  be the date the definitive agreement for such Limited Condition Acquisition (a “Limited Condition  Acquisition Agreement”) is entered into (the “LCA Test Date”), and if, after giving effect to such  Limited Condition Acquisition and the other transactions to be entered into in connection therewith  (including the incurrence of any Indebtedness and the use of proceeds thereof) on a pro forma  basis, the Borrower could have taken such action on the relevant LCA Test Date in compliance  with such financial covenant, basket, representation and warranty or Default or Event of Default  test, such financial covenant, basket, representation and warranty or Default or Event of Default  test shall be deemed to have been complied with.  Upon making an LCA Election with respect to  any Limited Condition Acquisition, the Borrower shall deliver a certificate of a Responsible  Officer of the Borrower to the Administrative Agent (a) notifying the Administrative Agent of  such LCA Election and (b) certifying that each of the conditions for such Limited Condition  Acquisition and any related transactions that are tested as of the LCA Test Date have been satisfied  (which shall include calculations in reasonable detail for any conditions requiring compliance on  a pro forma basis with the covenants set forth in Article VI or with any relevant ratio tests) (such  certificate, an “LCA Election Certificate”).  For the avoidance of doubt, if the Borrower has made  an LCA Election and any of the financial covenant, basket, representation and warranty or Default  or Event of Default tests for which compliance was determined or tested as of the LCA Test Date  would thereafter have failed to have been satisfied as a result of fluctuations in any such financial  covenant or basket, including due to fluctuations in Consolidated EBITDA, or changes in  compliance with such representation and warranty or Default or Event of Default test at or prior  to the consummation of the relevant Limited Condition Acquisition, such financial covenant,  basket, representation and warranty and Default or Event of Default tests will not be deemed to  have failed to have been satisfied as a result of such fluctuations or changes.  If the Borrower has  made an LCA Election for any Limited Condition Acquisition, then in connection with any  subsequent calculation of any ratio (other than testing of actual compliance with the covenants set  forth in Article VI and determination of the Total Leverage Ratio for purposes of determining the  Applicable Margin or the Maximum Attributable EBITDA Percentage) or basket on or following  the relevant LCA Test Date and prior to the earlier of (i) the date on which such Limited Condition  Acquisition is consummated or (ii) the date that the Limited Condition Acquisition Agreement  therefor is terminated or expires without consummation of such Limited Condition Acquisition,  any such ratio or basket shall be calculated (x) on a pro forma basis assuming such Limited  Condition Acquisition and other transactions in connection therewith (including any incurrence of  Indebtedness and the use of proceeds thereof) have been consummated and (y) with respect to  Restricted Payments only, also on a standalone basis without giving effect to such Limited  Condition Acquisition and the other transactions in connection therewith.  ARTICLE II    AMOUNT AND TERMS OF THE COMMITMENTS  Section 2.1. General Description of Facilities.  Subject to and upon the terms and  conditions herein set forth, (i) the Revolving Lenders hereby establish in favor of the Borrower a  revolving credit facility pursuant to which each Revolving Lender severally agrees (to the extent  of such Revolving Lender’s Revolving Commitment) to make Revolving Loans to the Borrower  

 

  57  in accordance with Section 2.2; (ii) each Issuing Bank may issue Letters of Credit in accordance  with Section 2.22; (iii) the Swingline Lender may make Swingline Loans in accordance with  Section 2.4; and (iv) each Revolving Lender agrees to purchase a participation interest in the  Letters of Credit and the Swingline Loans pursuant to the terms and conditions hereof; provided  that in no event shall the aggregate principal amount of all outstanding Revolving Loans,  Swingline Loans and outstanding LC Exposure exceed the Aggregate Revolving Commitment  Amount in effect from time to time.  Section 2.2. Revolving Loans.  Subject to the terms and conditions set forth herein, each  Revolving Lender severally agrees to make Revolving Loans, ratably in proportion to its Pro Rata  Share of the Aggregate Revolving Commitments, to the Borrower, from time to time during the  Availability Period, in an aggregate principal amount outstanding at any time that will not result  in (a) such Revolving Lender’s Revolving Credit Exposure exceeding such Revolving Lender’s  Revolving Commitment or (b) the aggregate Revolving Credit Exposures of all Revolving Lenders  exceeding the Aggregate Revolving Commitment Amount.  During the Availability Period, the  Borrower shall be entitled to borrow, prepay and reborrow Revolving Loans in accordance with  the terms and conditions of this Agreement; provided that the Borrower may not borrow or  reborrow should there exist a Default or Event of Default.  Section 2.3. Procedure for Revolving Borrowings. The Borrower shall give the  Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each  Revolving Borrowing, substantially in the form of Exhibit 2.3 attached hereto (a “Notice of  Borrowing”), (x) prior to 1:00 p.m. one (1) Business Day prior to the requested date of each Base  Rate Borrowing and (y) prior to 1:00 p.m. three (3) Business Days prior to the requested date of  each EurodollarSOFR Borrowing; provided that in the case of any Base Rate Borrowings on the  Closing Date, such Notice of Borrowing may be provided on the Closing Date.  Each Notice of  Borrowing shall be irrevocable and shall specify (i) the aggregate principal amount of such  Borrowing, (ii) the date of such Borrowing (which shall be a Business Day), (iii) the Class and  Type of Loan comprising such Borrowing and (iv) in the case of a EurodollarSOFR Borrowing,  the duration of the initial Interest Period applicable thereto (subject to the provisions of the  definition of Interest Period).  Each Revolving Borrowing shall consist entirely of Base Rate Loans  or EurodollarSOFR Loans, as the Borrower may request.  The aggregate principal amount of each  EurodollarSOFR Borrowing shall not be less than $5,000,000 or a larger multiple of $250,000,  and the aggregate principal amount of each Base Rate Borrowing shall not be less than $1,000,000  or a larger multiple of $100,000; provided that Base Rate Loans made pursuant to Section 2.4 or  Section 2.22(d) may be made in lesser amounts as provided therein.  At no time shall the total  number of EurodollarSOFR Borrowings outstanding at any time exceed eight (8).  Promptly  following the receipt of a Notice of Borrowing in accordance herewith, the Administrative Agent  shall advise each applicable Lender of the details thereof and the amount of such Lender’s Loan  to be made as part of the requested Borrowing.  Section 2.4. Swingline Commitment.   (a) Subject to the terms and conditions set forth herein, the Swingline Lender  may, in its sole discretion, make Swingline Loans to the Borrower, from time to time during the  Availability Period, in an aggregate principal amount outstanding at any time not to exceed the  lesser of (i) the Swingline Commitment then in effect and (ii) the difference between the Aggregate  

 

  58  Revolving Commitment Amount and the aggregate Revolving Credit Exposures of all Lenders;  provided that the Swingline Lender shall not be required to make a Swingline Loan to refinance  an outstanding Swingline Loan.  The Borrower shall be entitled to borrow, repay and reborrow  Swingline Loans in accordance with the terms and conditions of this Agreement.   (b) The Borrower shall give the Administrative Agent written notice (or  telephonic notice promptly confirmed in writing) of each Swingline Borrowing, substantially in  the form of Exhibit 2.4 attached hereto (a “Notice of Swingline Borrowing”), prior to 1:00 p.m. on  the requested date of each Swingline Borrowing.  Each Notice of Swingline Borrowing shall be  irrevocable and shall specify (i) the principal amount of such Swingline Borrowing, (ii) the date  of such Swingline Borrowing (which shall be a Business Day) and (iii) the account of the Borrower  to which the proceeds of such Swingline Borrowing should be credited.  The Administrative Agent  will promptly advise the Swingline Lender of each Notice of Swingline Borrowing.  The aggregate  principal amount of each Swingline Loan shall not be less than $100,000 or a larger multiple of  $50,000, or such other minimum amounts agreed to by the Swingline Lender and the Borrower.   The Swingline Lender will make the proceeds of each Swingline Loan available to the Borrower  in Dollars in immediately available funds at the account specified by the Borrower in the applicable  Notice of Swingline Borrowing not later than 3:00 p.m. on the requested date of such Swingline  Borrowing.    (c) The Swingline Lender, at any time and from time to time in its sole  discretion, may, but in no event no less frequently than once each calendar week shall, on behalf  of the Borrower (which hereby irrevocably authorizes and directs the Swingline Lender to act on  its behalf), give a Notice of Borrowing to the Administrative Agent requesting the Revolving  Lenders (including the Swingline Lender) to make Base Rate Loans in an amount equal to the  unpaid principal amount of any Swingline Loan.  Each Revolving Lender will make the proceeds  of its Base Rate Loan included in such Borrowing available to the Administrative Agent for the  account of the Swingline Lender in accordance with Section 2.6, which will be used solely for the  repayment of such Swingline Loan.   (d) If for any reason a Base Rate Borrowing may not be (as determined in the  sole discretion of the Administrative Agent), or is not, made in accordance with the foregoing  provisions, then each Revolving Lender (other than the Swingline Lender) shall purchase an  undivided participating interest in such Swingline Loan in an amount equal to its Pro Rata Share  thereof on the date that such Base Rate Borrowing should have occurred.  On the date of such  required purchase, each Revolving Lender shall promptly transfer, in immediately available funds,  the amount of its participating interest to the Administrative Agent for the account of the Swingline  Lender.      (e) Each Revolving Lender’s obligation to make a Base Rate Loan pursuant to  subsection (c) of this Section or to purchase participating interests pursuant to subsection (d) of  this Section shall be absolute and unconditional and shall not be affected by any circumstance,  including, without limitation, (i) any set-off, counterclaim, recoupment, defense or other right that  such Revolving Lender or any other Person may have or claim against the Swingline Lender, the  Borrower or any other Person for any reason whatsoever, (ii) the existence of a Default or an Event  of Default or the termination of any Revolving Lender’s Revolving Commitment, (iii) the  existence (or alleged existence) of any event or condition which has had or could reasonably be  

 

  59  expected to have a Material Adverse Effect, (iv) any breach of this Agreement or any other Loan  Document by any Loan Party, the Administrative Agent or any Lender or (v) any other  circumstance, happening or event whatsoever, whether or not similar to any of the foregoing.  If  such amount is not in fact made available to the Swingline Lender by any Revolving Lender, the  Swingline Lender shall be entitled to recover such amount on demand from such Revolving  Lender, together with accrued interest thereon for each day from the date of demand thereof (x) at  the Federal Funds Rate until the second Business Day after such demand and (y) at the Base Rate  at all times thereafter.  Until such time as such Revolving Lender makes its required payment, the  Swingline Lender shall be deemed to continue to have outstanding Swingline Loans in the amount  of the unpaid participation for all purposes of the Loan Documents.  In addition, such Revolving  Lender shall be deemed to have assigned any and all payments made of principal and interest on  its Loans and any other amounts due to it hereunder to the Swingline Lender to fund the amount  of such Revolving Lender’s participation interest in such Swingline Loans that such Revolving  Lender failed to fund pursuant to this Section, until such amount has been purchased in full.  (f) If a Revolving Commitment Termination Date (the “Earlier Swingline  Maturity Date”) shall have occurred at a time when another tranche or tranches of Revolving  Commitments is or are in effect with a longer Maturity Date, then, on the Earlier Swingline  Maturity Date, all then outstanding Swingline Loans shall be repaid in full (and there shall be no  adjustment to the participations in such Swingline Loans as a result of the occurrence of the Earlier  Swingline Maturity Date); provided, however, that if on the occurrence of the Earlier Swingline  Maturity Date (after giving effect to any repayments of Revolving Loans and any reallocation of  Letter of Credit participations as contemplated in Section 2.22(a)), there shall exist sufficient  unutilized Extended Revolving Commitments which will remain in effect after the occurrence of  the Earlier Swingline Maturity Date so that the respective outstanding Swingline Loans could be  incurred pursuant to such Extended Revolving Commitments, then (1) there shall be an automatic  adjustment on the Earlier Swingline Maturity Date of the risk participations of the Revolving  Lenders under such Extended Revolving Commitments pro rata according to such Revolving  Lender’s Pro Rata Share of the existing Extended Revolving Commitments and such outstanding  Swingline Loans shall be deemed to have been incurred solely pursuant to such Extended  Revolving Commitments and (2) such Swingline Loans shall not be required to be repaid in full  on the Earlier Swingline Maturity Date.  Section 2.5. Borrower Representative; Co-Borrowers.  (a) Ensign REIT hereby appoints Ensign to act as its agent, attorney-in-fact and  representative for the purposes of issuing notices, giving instructions with respect to the  disbursement of the proceeds of the Loans, selecting interest rate options, giving and receiving all  other notices and consents hereunder or under any of the other Loan Documents, executing Loan  Documents on its behalf, delivering all documents, reports, financial statements and written  materials required to be delivered by the Borrower under this Agreement or any of the other Loan  Documents, taking all other actions (including in respect of compliance with covenants and  amendments to the Loan Documents) on behalf of the Borrower under the Loan Documents, and  all other purposes incidental to any of the foregoing. Ensign hereby accepts the foregoing  appointment as Borrower Representative.  

 

  60  (b) Each Agent, the Swingline Lender, each Issuing Bank and each Lender may  regard any notice or other communication pursuant to any Loan Document from Ensign as a notice  or communication from the Borrower, and may give any notice or communication required or  permitted to be given to the Borrower hereunder to Ensign. Ensign REIT agrees that each notice,  election, representation and warranty, covenant, agreement and undertaking made on its behalf by  Ensign shall be deemed for all purposes to have been made by Ensign REIT and shall be binding  upon and enforceable against Ensign REIT to the same extent as if the same had been made directly  by Ensign REIT.  (c) All Obligations of Ensign and Ensign REIT (the “Companies” and, each, a  “Company”) under this Agreement and the other Loan Documents shall be joint and several  Obligations of each Company. Notwithstanding anything to the contrary in this Agreement or any  other Loan Document, the Obligations of each Company hereunder, solely to the extent that such  Company did not receive proceeds of Loans from any borrowing hereunder, shall be limited to a  maximum aggregate amount equal to the largest amount that would not render its Obligations  subject to avoidance as a fraudulent transfer or conveyance under any applicable fraudulent  transfer laws, in each case, after giving effect to all other liabilities of such Company, contingent  or otherwise, that are relevant under such fraudulent transfer laws (specifically excluding,  however, any liabilities of such Company in respect of intercompany Indebtedness to any other  Loan Party or Affiliates of any other Loan Party to the extent that such Indebtedness would be  discharged in an amount equal to the amount paid by such Loan Party hereunder) and after giving  effect as assets to the value (as determined under the applicable provisions of applicable fraudulent  transfer laws) of any rights to subrogation or contribution of such Company pursuant to (i)  applicable law or (ii) any agreement providing for an equitable allocation among such Company  and other Affiliates of any Loan Party of Obligations arising under Guarantees by such parties.  (d) Until the Obligations shall have been Paid in Full, each Company shall  withhold exercise of any right of subrogation, contribution or any other right to enforce any remedy  that it now has or may hereafter have against the other Company or any Guarantor of the  Obligations. Each Company further agrees that, to the extent the waiver of its rights of subrogation,  contribution and remedies as set forth herein is found by a court of competent jurisdiction to be  void or voidable for any reason, any such rights such Company may have against the other  Company, any collateral or security or any Guarantor shall be junior and subordinate to any rights  Administrative Agent may have against the other Company, any such collateral or security and  any Guarantor. The Companies together desire to allocate among themselves, in a fair and  equitable manner, their respective Obligations arising under this Agreement and the other Loan  Documents. Accordingly, in the event any payment or distribution is made on any date by any  Company under this Agreement and the other Loan Documents (a “Funding Company”) such that  its Obligation Aggregate Payments exceed its Obligation Fair Share as of such date, that Funding  Company shall be entitled to a contribution from the other Company in the amount of the other  Company’s Obligation Fair Share Shortfall as of such date, with the result that all such  contributions will cause each Company’s Obligation Aggregate Payments to equal its Obligation  Fair Share as of such date. “Obligation Fair Share” means, with respect to any Company as of any  date of determination, an amount equal to (i) the ratio of (x) the Obligation Fair Share Contribution  Amount with respect to such Company to (y) the aggregate of the Obligation Fair Share  Contribution Amounts with respect to both Companies, multiplied by (ii) the aggregate amount  paid or distributed on or before such date by both Funding Companies under this Agreement and  

 

  61  the other Loan Documents in respect of the Obligations. “Obligation Fair Share Shortfall” means,  with respect to any Company as of any date of determination, the excess, if any, of the Obligation  Fair Share of such Company over the Obligation Aggregate Payments of such Company.  “Obligation Fair Share Contribution Amount” means, with respect to any Company as of any date  of determination, the maximum aggregate amount of the Obligations of such Company under this  Agreement and the other Loan Documents that would not render its Obligations subject to  avoidance as a fraudulent transfer or conveyance under any applicable fraudulent transfer laws;  provided, solely for purposes of calculating the Obligation Fair Share Contribution Amount with  respect to any Company for purposes of this Section 2.5, any assets or liabilities of such Company  arising by virtue of any rights to subrogation, reimbursement or indemnification or any rights to  or obligations of contribution hereunder shall not be considered as assets or liabilities of such  Company. “Obligation Aggregate Payments” means, with respect to any Company as of any date  of determination, an amount equal to (i) the aggregate amount of all payments and distributions  made on or before such date by such Company in respect of this Agreement and the other Loan  Documents (including in respect of this Section 2.5), minus (ii) the aggregate amount of all  payments received on or before such date by such Company from the other Company as  contributions under this Section 2.5. The amounts payable as contributions hereunder shall be  determined as of the date on which the related payment or distribution is made by the applicable  Funding Company. The allocation among the Companies of their respective Obligations as set  forth in this Section 2.5 shall not be construed in any way to limit the liability of any Company  hereunder or under any other Loan Document.  (e) Each Company hereby waives, for the benefit of the Secured Parties, (i) any  right to require any Secured Party, as a condition of payment or performance by such Company,  to (A) proceed against the other Company, any Guarantor or any other Person, (B) proceed against  or exhaust any security held from the other Company, any Guarantor or any other Person, (C)  proceed against or have resort to any balance of any deposit account, securities account, or any  other credit on the books of any Secured Party in favor of the other Company, any Guarantor or  any other Person, or (D) pursue any other remedy in the power of any Secured Party whatsoever;  (ii) any defense arising by reason of the incapacity, lack of authority or any disability or other  defense of the other Company or any Guarantor including any defense based on or arising out of  the lack of validity or the unenforceability of the Obligations or any agreement or instrument  relating thereto or by reason of the cessation of the liability of the other Company or any Guarantor  from any cause, other than Payment in Full of all Obligations; (iii) any defense based upon any  statute or rule of law that provides that the obligation of a surety must be neither larger in amount  nor in other respects more burdensome than that of the principal; (iv) any defense based upon any  Secured Party’s errors or omissions in the administration of the Obligations, except behavior that  amounts to willful misconduct as determined by a final, non-appealable judgment of a court of  competent jurisdiction; (v) (A) any principles or provisions of law, statutory or otherwise, that are  or might be in conflict with the terms hereof and any legal or equitable discharge of such  Company’s Obligations, (B) the benefit of any statute of limitations affecting such Company’s  liability hereunder or the enforcement hereof, (C) any rights to set offs, recoupments and  counterclaims, and (D) promptness, diligence and any requirement that any Secured Party protect,  secure, perfect or ensure any security interest or lien or any property subject thereto; (vi) notices,  demands, presentments, protests, notices of protest, notices of dishonor and notices of any action  or inaction, including acceptance hereof, notices of default hereunder or under any Hedging  Transaction with a Lender-Related Hedge Provider or any agreement or instrument related thereto,  

 

  62  notices of any renewal, extension or modification of the Obligations or any agreement related  thereto, notices of any extension of credit to any Company; and (vii) any defenses or benefits that  may be derived from or afforded by law that limit the liability of or exonerate guarantors or  sureties, or that may conflict with the terms hereof.  Section 2.6. Funding of Borrowings.  (a) Each Lender will make available each Loan to be made by it hereunder on  the proposed date thereof by wire transfer in immediately available funds by 11:00 a.m. to the  Administrative Agent at the Payment Office; provided that the Swingline Loans will be made as  set forth in Section 2.4.  The Administrative Agent will make such Loans available to the Borrower  by promptly crediting the amounts that it receives, in like funds by the close of business on such  proposed date, to an account maintained by the Borrower with the Administrative Agent or, at the  Borrower’s option, by effecting a wire transfer of such amounts to an account designated by the  Borrower to the Administrative Agent.  (b) Unless the Administrative Agent shall have been notified by any Lender  prior to 5:00 p.m. one (1) Business Day prior to the date of a Borrowing in which such Lender is  to participate that such Lender will not make available to the Administrative Agent such Lender’s  share of such Borrowing, the Administrative Agent may assume that such Lender has made such  amount available to the Administrative Agent on such date, and the Administrative Agent, in  reliance on such assumption, may make available to the Borrower on such date a corresponding  amount.  If such corresponding amount is not in fact made available to the Administrative Agent  by such Lender on the date of such Borrowing, the Administrative Agent shall be entitled to  recover such corresponding amount on demand from such Lender together with interest (x) at the  Federal Funds Rate until the second Business Day after such demand and (y) at the Base Rate at  all times thereafter.  If such Lender does not pay such corresponding amount forthwith upon the  Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the  Borrower, and the Borrower shall immediately pay such corresponding amount to the  Administrative Agent together with interest at the rate specified for such Borrowing.  Nothing in  this subsection shall be deemed to relieve any Lender from its obligation to fund its Pro Rata Share  of any Borrowing hereunder or to prejudice any rights which the Borrower may have against any  Lender as a result of any default by such Lender hereunder.  (c) All Revolving Borrowings shall be made by the Revolving Lenders on the  basis of their respective Pro Rata Shares of the Revolving Commitments.  No Lender shall be  responsible for any default by any other Lender in its obligations hereunder, and each Lender shall  be obligated to make its Loans provided to be made by it hereunder, regardless of the failure of  any other Lender to make its Loans hereunder.  Section 2.7. Interest Elections.  (a) Each Borrowing initially shall be of the Type specified in the applicable  Notice of Borrowing.  Thereafter, the Borrower may elect to convert such Borrowing into a  different Type or to continue such Borrowing, all as provided in this Section.  The Borrower may  elect different options with respect to different portions of the affected Borrowing, in which case  each such portion shall be allocated ratably among the Lenders holding Loans comprising such  Borrowing, and the Loans comprising each such portion shall be considered a separate Borrowing.  

 

  63  (b) To make an election pursuant to this Section, the Borrower shall give the  Administrative Agent written notice (or telephonic notice promptly confirmed in writing) of each  Borrowing that is to be converted or continued, as the case may be, substantially in the form of  Exhibit 2.7 attached hereto (a “Notice of Conversion/Continuation”) (x) prior to 1:00 p.m. one (1)  Business Day prior to the requested date of a conversion into a Base Rate Borrowing and (y) prior  to 1:00 p.m. three (3) Business Days prior to a continuation of or conversion into a  EurodollarSOFR Borrowing.  Each such Notice of Conversion/Continuation shall be irrevocable  and shall specify (i) the Borrowing to which such Notice of Conversion/Continuation applies and,  if different options are being elected with respect to different portions thereof, the portions thereof  that are to be allocated to each resulting Borrowing (in which case the information to be specified  pursuant to clauses (iii) and (iv) shall be specified for each resulting Borrowing), (ii) the effective  date of the election made pursuant to such Notice of Conversion/Continuation, which shall be a  Business Day, (iii) whether the resulting Borrowing is to be a Base Rate Borrowing or a  EurodollarSOFR Borrowing, and (iv) if the resulting Borrowing is to be a EurodollarSOFR  Borrowing, the Interest Period applicable thereto after giving effect to such election, which shall  be a period contemplated by the definition of “Interest Period”.  If any such Notice of Conversion/  Continuation requests a EurodollarSOFR Borrowing but does not specify an Interest Period, the  Borrower shall be deemed to have selected an Interest Period of one month.  The principal amount  of any resulting Borrowing shall satisfy the minimum borrowing amount for EurodollarSOFR  Borrowings and Base Rate Borrowings set forth in Section 2.3.  (c) If, on the expiration of any Interest Period in respect of any  EurodollarSOFR Borrowing, the Borrower shall have failed to deliver a Notice of  Conversion/Continuation, then, unless such Borrowing is repaid as provided herein, the Borrower  shall be deemed to have elected to convert such Borrowing to a Base Rate Borrowing.  No  Borrowing may be converted into, or continued as, a EurodollarSOFR Borrowing if a Default or  an Event of Default exists, unless the Administrative Agent and each of the Lenders holding Loans  comprising such Borrowing shall have otherwise consented in writing.  No conversion of any  EurodollarSOFR Loan shall be permitted except on the last day of the Interest Period in respect  thereof.    (d) Upon receipt of any Notice of Conversion/Continuation, the Administrative  Agent shall promptly notify each Lender of the details thereof and of such Lender’s portion of  each resulting Borrowing.  Section 2.8. Optional Reduction and Termination of Commitments.  (a) Unless previously terminated, all Revolving Commitments, Swingline  Commitments and LC Commitments shall terminate on the Revolving Commitment Termination  Date.    (b) Upon at least three (3) Business Days’ prior written notice (or telephonic  notice promptly confirmed in writing) to the Administrative Agent (which notice shall be  irrevocable unless the Borrower provides in such notice (in connection with a termination in  whole) that it is conditional on the occurrence of another financing or transaction, in which case  such notice may be revoked if such financing or transaction does not occur on a timely basis;  provided that the Borrower shall pay all amounts required to be paid pursuant to Section 2.19 as a  

 

  64  result of such revocation), the Borrower may reduce the Aggregate Revolving Commitments in  part or terminate the Aggregate Revolving Commitments in whole; provided that (i) any partial  reduction shall apply to reduce proportionately and permanently the Revolving Commitment of  each Lender, (ii) any partial reduction pursuant to this Section shall be in an amount of at least  $5,000,000 and any larger multiple of $1,000,000, and (iii) no such reduction shall be permitted  which would reduce the Aggregate Revolving Commitment Amount to an amount less than the  aggregate outstanding Revolving Credit Exposure of all Lenders.  Any such reduction in the  Aggregate Revolving Commitment Amount below the principal amount of the Swingline  Commitment and the LC Commitment shall result in a dollar-for-dollar reduction in the Swingline  Commitment and the LC Commitment, as applicable.  (c) With the written approval of the Administrative Agent, the Borrower may  terminate (on a non-ratable basis) the unused amount of the Revolving Commitment of a  Defaulting Lender, and in such event the provisions of Section 2.26 will apply to all amounts  thereafter paid by the Borrower for the account of any such Defaulting Lender under this  Agreement (whether on account of principal, interest, fees, indemnity or other amounts); provided  that such termination will not be deemed to be a waiver or release of any claim that the Borrower,  the Administrative Agent, any Issuing Bank, the Swingline Lender or any other Lender may have  against such Defaulting Lender.  Section 2.9. Repayment of Loans.   (a) The outstanding principal amount of all Revolving Loans and Swingline  Loans shall be due and payable (together with accrued and unpaid interest thereon) on the  Revolving Commitment Termination Date.    (b) The Borrower unconditionally promises to repay any Incremental Term  Loan on the applicable Maturity Date and on the applicable dates scheduled for the repayment of  principal of any Incremental Term Loan and in the amounts set forth in the applicable Incremental  Commitment Joinder.  The Borrower unconditionally promises to repay any Extended Term Loan  on the applicable Maturity Date and on the applicable dates scheduled for the repayment of  principal of any Extended Term Loan and in the amounts set forth in the applicable Extended  Facility Agreement.  The Borrower promises to repay any Other Refinancing Term Loans on the  applicable Maturity Date and on the applicable dates scheduled for the repayment of principal of  any Other Refinancing Term Loan and in the amounts set forth in the applicable Refinancing  Amendment.  Section 2.10. Evidence of Indebtedness.      (a) Each Lender shall maintain in accordance with its usual practice appropriate  records evidencing the Indebtedness of the Borrower to such Lender resulting from each Loan  made by such Lender from time to time, including the amounts of principal and interest payable  thereon and paid to such Lender from time to time under this Agreement.  The Administrative  Agent shall maintain appropriate records in which shall be recorded (i) the Revolving Commitment  and the Term Loan Commitment of each Lender, (ii) the amount of each Loan made hereunder by  each Lender, the Class and Type thereof and, in the case of each EurodollarSOFR Loan, the  Interest Period applicable thereto, (iii) the date of any continuation of any Loan pursuant to Section  2.7, (iv) the date of any conversion of all or a portion of any Loan to another Type pursuant to  

 

  65  Section 2.7, (v) the date and amount of any principal or interest due and payable or to become due  and payable from the Borrower to each Lender hereunder in respect of the Loans and (vi) both the  date and amount of any sum received by the Administrative Agent hereunder from the Borrower  in respect of the Loans and each Lender’s Pro Rata Share thereof.  The entries made in such records  shall be prima facie evidence of the existence and amounts of the obligations of the Borrower  therein recorded; provided that the failure or delay of any Lender or the Administrative Agent in  maintaining or making entries into any such record or any error therein shall not in any manner  affect the obligation of the Borrower to repay the Loans (both principal and unpaid accrued  interest) of such Lender in accordance with the terms of this Agreement.  (b) This Agreement evidences the obligation of the Borrower to repay the  Loans and is being executed as a “noteless” credit agreement.  However, at the request of any  Lender (including the Swingline Lender) at any time, the Borrower agrees that it will prepare,  execute and deliver to such Lender a promissory note payable to such Lender (or, if requested by  such Lender, to such Lender and its registered assigns) and in a form approved by the  Administrative Agent.  Thereafter, the Loans evidenced by such promissory note and interest  thereon shall at all times (including after assignment permitted hereunder) be represented by one  or more promissory notes in such form payable to the payee named therein (or, if such promissory  note is a registered note, to such payee and its registered assigns).  Section 2.11. Optional Prepayments.  The Borrower shall have the right at any time and  from time to time to prepay any Borrowing, in whole or in part, without premium or penalty, by  giving written notice (or telephonic notice promptly confirmed in writing) to the Administrative  Agent no later than (i) in the case of any prepayment of any EurodollarSOFR Borrowing, 1:00  p.m. not less than three (3) Business Days prior to the date of such prepayment, (ii) in the case of  any prepayment of any Base Rate Borrowing, 1:00 p.m. not less than one (1) Business Day prior  to the date of such prepayment, and (iii) in the case of any prepayment of any Swingline  Borrowing, prior to 1:00 p.m. on the date of such prepayment.  Each such notice shall be  irrevocable (provided that (x) any such notice in connection with the repayment of all Loans may  be conditioned on the occurrence of another financing or transaction, in which case such notice  may be revoked if such financing or transaction does not occur on a timely basis and (y) the  Borrower shall pay all amounts required to be paid pursuant to Section 2.19 as a result of such  revocation) and shall specify the proposed date of such prepayment and the principal amount of  each Borrowing or portion thereof to be prepaid.  Upon receipt of any such notice, the  Administrative Agent shall promptly notify each affected Lender of the contents thereof and of  such Lender’s Pro Rata Share of any such prepayment.  If such notice is given, the aggregate  amount specified in such notice shall be due and payable on the date designated in such notice  (unless revoked as provided above), together with accrued interest to such date on the amount so  prepaid in accordance with Section 2.13(d); provided that if a EurodollarSOFR Borrowing is  prepaid on a date other than the last day of an Interest Period applicable thereto, the Borrower shall  also pay all amounts required pursuant to Section 2.19.  Each partial prepayment of (i) each  EurodollarSOFR Borrowing shall not be less than $5,000,000 or a larger multiple of $250,000,  (ii) each Base Rate Borrowing (other than a Base Rate Borrowing of Swingline Loans) shall not  be less than $1,000,000 or a larger multiple of $100,000 and (iii) each Base Rate Borrowing of  Swingline Loans shall not be less than $100,000 or a larger multiple of $50,000.  Each prepayment  of a Borrowing shall be applied ratably to the Loans comprising such Borrowing and, in the case  

 

  66  of a prepayment of a Term Loan Borrowing, to principal installments in the manner directed by  the Borrower.   Section 2.12. Mandatory Prepayments.  (a) Immediately upon receipt by the Borrower or any of its Subsidiaries of any  proceeds of any sale or disposition by the Borrower or any of its Subsidiaries of any of its assets,  or any proceeds from any casualty insurance policies or eminent domain, condemnation or similar  proceedings, the Borrower shall prepay the Obligations in an amount equal to all such proceeds,  net of commissions and other reasonable and customary transaction costs, fees and expenses  properly attributable to such transaction and payable by the Borrower in connection therewith (in  each case, paid to non-Affiliates); provided that the Borrower shall not be required to prepay the  Obligations with respect to (i) proceeds from the sales of inventory in the ordinary course of  business, (ii) proceeds from the sales of assets securing Indebtedness permitted under Section  7.1(c) to the extent such proceeds are used to repay such Indebtedness, (iii) proceeds from other  asset sales permitted under Section 7.6 in an aggregate amount less than (x) in any Fiscal Year,  10% of the total assets of the Borrower and its Subsidiaries determined on a consolidated basis as  of the date of any such asset sale and (y) $150,000,000 in the aggregate after the Closing Date and  (iv) proceeds that are reinvested in assets then used or usable in the business of the Borrower and  its Subsidiaries within 180 days following receipt thereof.  Any such prepayment shall be applied  in accordance with subsection (c) of this Section.   (b) In the event that the Borrower or any of its Subsidiaries receives proceeds  from the issuance or incurrence of Indebtedness by the Borrower or any of its Subsidiaries that is  not permitted under Section 7.1, the Borrower shall, substantially simultaneously with (and in any  event not later than the fifth succeeding Business Day) the receipt of such proceeds by the  Borrower or its applicable Subsidiary, apply an amount equal to 100% of such proceeds, net of all  fees, commissions, costs, underwriting discounts and other fees and expenses incurred in  connection therewith, to prepay the Obligations in accordance with subsection (c) of this Section.   In the event that the Borrower or any of its Subsidiaries receives proceeds from the issuance or  incurrence of Indebtedness that constitutes (i) Incremental Term Loans or Revolving Loans in  respect of Incremental Revolving Commitments, in each case incurred to refinance all or any  portion of the Term Loans, (ii) Extended Term Loans or Revolving Loans in respect of Extended  Revolving Commitments, in each case incurred to refinance all or any portion of the Term Loans  or (iii) Other Refinancing Loans incurred to refinance all or any portion of the Term Loans, the  Borrower shall, substantially simultaneously with (and in any event not later than the fifth  succeeding Business Day) the receipt of such proceeds by the Borrower or its applicable  Subsidiary, apply an amount equal to 100% of such proceeds, net of all fees, commissions, costs,  underwriting discounts and other fees and expenses incurred in connection therewith, to prepay  the outstanding principal amount of the relevant Term Loans and, thereafter, to prepay the  Obligations in accordance with subsection (c) of this Section.  (c) Any prepayments made by the Borrower pursuant to subsection (a) or (b)  of this Section shall be applied as follows: first, to the Administrative Agent’s fees and  reimbursable expenses then due and payable pursuant to any of the Loan Documents; second, to  all reimbursable expenses of the Lenders and all fees and reimbursable expenses of the Issuing  Bank then due and payable pursuant to any of the Loan Documents, pro rata to the Lenders and  

 

  67  the Issuing Bank based on their respective pro rata shares of such fees and expenses; third, to  interest and fees then due and payable hereunder, pro rata to the Lenders based on their respective  pro rata shares of such interest and fees; fourth, unless otherwise provided in the applicable  Incremental Commitment Joinder, Extended Facility Agreement or Refinancing Amendment, as  applicable, to the principal balance of any then outstanding Term Loans, until the same shall have  been paid in full, pro rata to the Lenders based on their Pro Rata Shares of such Term Loans, and  applied to installments of such Term Loans on a pro rata basis (including, without limitation, the  final payment due on the Maturity Date); fifth, to the principal balance of the Swingline Loans,  until the same shall have been paid in full, to the Swingline Lender; sixth, to the principal balance  of the Revolving Loans, until the same shall have been paid in full, pro rata to the Lenders based  on their respective Revolving Commitments; and seventh, to Cash Collateralize the Letters of  Credit in an amount in cash equal to the LC Exposure as of such date plus any accrued and unpaid  fees thereon.    (d) If at any time the aggregate Revolving Credit Exposure of all Lenders  exceeds the Aggregate Revolving Commitment Amount, as reduced pursuant to Section 2.8 or  otherwise increased pursuant to Section 2.23, the Borrower shall immediately repay the Swingline  Loans and the Revolving Loans in an amount equal to such excess, together with all accrued and  unpaid interest on such excess amount and any amounts due under Section 2.19.  Each prepayment  shall be applied as follows: first, to the Swingline Loans to the full extent thereof; second, to the  Revolving Loans that are Base Rate Loans to the full extent thereof; and third, to the Revolving  Loans that are EurodollarSOFR Loans to the full extent thereof.  If, after giving effect to  prepayment of all Swingline Loans and Revolving Loans, the aggregate Revolving Credit  Exposure of all Lenders exceeds the Aggregate Revolving Commitment Amount, the Borrower  shall Cash Collateralize its reimbursement obligations with respect to all Letters of Credit in an  amount equal to such excess plus any accrued and unpaid fees thereon.    Section 2.13. Interest on Loans.  (a) The Borrower shall pay interest on (i) each Base Rate Loan at the Base Rate  plus the Applicable Margin in effect from time to time and (ii) each EurodollarSOFR Loan at  Adjusted LIBORTerm SOFR for the applicable Interest Period in effect for such Loan plus the  Applicable Margin in effect from time to time.  (b) The Borrower shall pay interest on each Swingline Loan at the Base Rate  plus the Applicable Margin in effect from time to time.  (c) Notwithstanding subsections (a) and (b) of this Section, automatically upon  the occurrence and during the continuance of an Event of Default, the Borrower shall pay interest  (“Default Interest”) with respect to all overdue principal and interest and all other Obligations not  paid when due at the rate per annum equal to 200 basis points above the otherwise applicable  interest rate with respect thereto (i.e., for EurodollarSOFR Loans at the rate per annum equal to  200 basis points above the otherwise applicable interest rate for such EurodollarSOFR Loans for  the then-current Interest Period until the last day of such Interest Period, and thereafter, and with  respect to all Base Rate Loans and all other Obligations hereunder (other than Loans), at the rate  per annum equal to 200 basis points above the otherwise applicable interest rate for Base Rate  Loans).  Notwithstanding the foregoing, automatically upon the occurrence and during the  

 

  68  continuance of an Event of Default under Sections 8.1(g), (h) or (i) with respect to the Borrower,  the Borrower shall pay Default Interest in accordance with the preceding sentence with respect to  all Obligations whether or not overdue.  (d) Interest on the principal amount of all Loans shall accrue from and including  the date such Loans are made to but excluding the date of any repayment thereof.  Interest on all  outstanding Base Rate Loans and Swingline Loans shall be payable quarterly in arrears on the last  day of each March, June, September and December and on the applicable Maturity Date.  Interest  on all outstanding EurodollarSOFR Loans shall be payable on the last day of each Interest Period  applicable thereto, and, in the case of any EurodollarSOFR Loans having an Interest Period in  excess of three months, on each day which occurs every three months after the initial date of such  Interest Period, and on the applicable Maturity Date.  Interest on any Loan which is converted into  a Loan of another Type or which is repaid or prepaid shall be payable on the date of such  conversion or on the date of any such repayment or prepayment (on the amount repaid or prepaid)  thereof.  All Default Interest shall be payable on demand.  (e) The Administrative Agent shall determine each interest rate applicable to  the Loans hereunder and shall promptly notify the Borrower and the Lenders of such rate in writing  (or by telephone, promptly confirmed in writing).  Any such determination shall be conclusive and  binding for all purposes, absent manifest error.  Section 2.14. Fees.  (a) The Borrower shall pay to the Administrative Agent for its own account  fees in the amounts and at the times previously agreed upon in writing by the Borrower and the  Administrative Agent.   (b) The Borrower agrees to pay to the Administrative Agent for the account of  each Revolving Lender a commitment fee, which shall accrue at the Applicable Percentage per  annum (determined daily in accordance with the Pricing Grid) on the daily amount of the unused  Revolving Commitment of such Revolving Lender during the Availability Period.  For purposes  of computing the commitment fee, the Revolving Commitment of each Revolving Lender shall be  deemed used to the extent of the outstanding Revolving Loans and LC Exposure, but not Swingline  Exposure, of such Revolving Lender.  (c) The Borrower agrees to pay (i) to the Administrative Agent, for the account  of each Revolving Lender, a letter of credit fee with respect to its participation in each Letter of  Credit, which shall accrue at a rate per annum equal to the Applicable Margin for letter of credit  fees then in effect on the average daily amount of such Revolving Lender’s LC Exposure  attributable to such Letter of Credit during the period from and including the date of issuance of  such Letter of Credit to but excluding the date on which such Letter of Credit expires or is drawn  in full (including, without limitation, any LC Exposure that remains outstanding after the  Revolving Commitment Termination Date) and (ii) to each Issuing Bank for its own account a  facing fee, which shall accrue at the rate separately agreed to by the Borrower and such Issuing  Bank on the average daily amount of the LC Exposure (excluding any portion thereof attributable  to unreimbursed LC Disbursements) during the Availability Period (or until the date that such  Letter of Credit is irrevocably cancelled, whichever is later), as well as such Issuing Bank’s  standard fees with respect to issuance, amendment, renewal or extension of any Letter of Credit or  

 

  69  processing of drawings thereunder.  Notwithstanding the foregoing, if the Borrower, in accordance  with Section 2.13(c), is obligated to pay Default Interest with respect to the Obligations whether  or not overdue, the fee payable pursuant to this subsection (c) shall increase by two percent (2.00%)  per annum.  (d) [Intentionally Omitted].  (e) The Borrower shall pay on the Closing Date to the Administrative Agent  and its Affiliates all fees in the Fee Letter that are due and payable on the Closing Date.  The  Borrower shall pay on the Closing Date to the Lenders all upfront fees previously agreed in writing.    (f) Accrued fees under subsections (b) and (c) of this Section shall be payable  quarterly in arrears on the last day of each March, June, September and December, commencing  on December 31, 2019, and on the Revolving Commitment Termination Date (and, if later, the  date the Revolving Loans and LC Exposure shall be repaid in their entirety); provided that any  such fees accruing after the Revolving Commitment Termination Date shall be payable on  demand.    (g) Anything herein to the contrary notwithstanding, during such period as a  Lender is a Defaulting Lender, such Defaulting Lender will not be entitled to commitment fees  accruing with respect to its Revolving Commitment during such period pursuant to subsection (b)  of this Section or letter of credit fees accruing during such period pursuant to subsection (c) of this  Section (without prejudice to the rights of the Lenders other than Defaulting Lenders in respect of  such fees), provided that (x) to the extent that a portion of the LC Exposure of such Defaulting  Lender is reallocated to the Non-Defaulting Lenders pursuant to Section 2.26, such fees that would  have accrued for the benefit of such Defaulting Lender will instead accrue for the benefit of and  be payable to such Non-Defaulting Lenders, pro rata in accordance with their respective  Revolving Commitments, and (y) to the extent any portion of such LC Exposure cannot be so  reallocated, such fees will instead accrue for the benefit of and be payable to the applicable Issuing  Bank (unless such LC exposure has been Cash Collateralized).  The pro rata payment provisions  of Section 2.21 shall automatically be deemed adjusted to reflect the provisions of this subsection.    Section 2.15. Computation of Interest and Fees.  Interest hereunder based on the prime lending rate shall be computed on the basis  of a year of 365 days (or 366 days in a leap year) and paid for the actual number of days elapsed  (including the first day but excluding the last day).  All other interest and all fees hereunder shall  be computed on the basis of a year of 360 days and paid for the actual number of days elapsed  (including the first day but excluding the last day).  Each determination by the Administrative  Agent of an interest rate or fee hereunder shall be made in good faith and, except for manifest  error, shall be final, conclusive and binding for all purposes.  Section 2.16. Inability to Determine Interest Rates; Benchmark Replacement  Setting.    (a) IfInability to Determine SOFR.  Subject to paragraphs (b) through (f)  below, if, prior to the commencement of any Interest Period for any EurodollarSOFR Borrowing:  

 

  70  (i)   (i) the Administrative Agent shall have  determined (which determination shall be conclusive and binding upon the Borrower)  that, by reason of circumstances affecting the relevant interbank market, adequate means  do not exist for ascertaining Adjusted LIBOR (including, without limitation, because the  Screen Rate is not available or published on a current basis) for such Interest Period,  orabsent manifest error) that “Adjusted Term SOFR” cannot be determined  pursuant to the definition thereof, or   (ii)   (ii) the Administrative Agent shall have received  notice from the Required Lenders that Adjusted LIBOR doesTerm SOFR for such  Interest Period will not adequately and fairly reflect the cost to such Lenders of making,  funding or maintaining their EurodollarSOFR Loans for such Interest Period,  then the Administrative Agent shall give written notice thereof (or telephonic notice, promptly  confirmed in writing) to the Borrower and to the Lenders as soon as practicable thereafter.  Until   Upon notice thereof by the Administrative Agent shall notifyto the Borrower and the Lenders that  the circumstances giving rise to such notice no longer exist, (i) the obligations, any obligation of the  Lenders to make EurodollarSOFR Loans, and any right of the Borrower to continue SOFR  Loans or to continue or convert outstandingBase Rate Loans as or into Eurodollarto SOFR Loans,  shall be suspended and (ii) all such(to the extent of the affected SOFR Loans or affected Interest  Periods) until the Administrative Agent revokes such notice.  Upon receipt of such notice, (i)  the Borrower may revoke any pending request for a borrowing of, conversion to or  continuation of SOFR Loans (to the extent of the affected SOFR Loans or affected Interest  Periods) or, failing that, the Borrower will be deemed to have converted any such request  into a request for a Borrowing of or conversion to Base Rate Loans in the amount specified  therein and (ii) any outstanding affected SOFR Loans shall bewill be deemed to have been  converted into Base Rate Loans onat the last dayend of the then currentapplicable Interest Period  applicable thereto unless the Borrower prepays such Loans in accordance with this Agreement.   Unless the Borrower notifies the Administrative Agent at least one (1) Business Day before the date  of any Eurodollar Borrowing for which a Notice of Borrowing or a Notice of Conversion/  Continuation has previously been given that it elects not to borrow, continue or convert to a  Eurodollar Borrowing on such date, then such Borrowing shall be made as, continued as or converted  into a Base Rate Borrowing. .  Upon any such conversion, the Borrower shall also pay accrued  interest on the amount so converted, together with any additional amounts required  pursuant to Section 2.19.  Subject to paragraphs (b) through (f) below, if the Administrative  Agent determines (which determination shall be conclusive and binding absent manifest  error) that “Adjusted Term SOFR” cannot be determined pursuant to the definition thereof  on any given day, the interest rate on Base Rate Loans shall be determined by the  Administrative Agent without reference to clause (iii) of the definition of “Base Rate” until  the Administrative Agent revokes such determination.  (b) If at any time the Administrative Agent determines (which determination shall be  conclusive absent manifest error) that (i) the circumstances set forth in clause (a)(i) above have arisen  and such circumstances are unlikely to be temporary or (ii) the circumstances set forth in clause (a)(i)  above have not arisen but the supervisor for the administrator of the Screen Rate or a Governmental  Authority having jurisdiction over the Administrative Agent has made a public statement identifying  a specific date after which the Screen Rate shall no longer be used for determining interest rates for  loans, then the Administrative Agent and the Borrower shall endeavor to establish an alternate rate  

 

  71  of interest to the Screen Rate that gives due consideration to the then prevailing market convention  for determining a rate of interest for syndicated loans in the United States at such time, and shall  enter into an amendment to this Agreement to reflect such alternate rate of interest and such other  related changes to this Agreement as may be applicable (but for the avoidance of doubt, such related  changes shall not include a reduction of the Applicable Margin).  Notwithstanding anything to the  contrary in Section 10.2, such amendment shall become effective without any further action or  consent of any other party to this Agreement so long as the Administrative Agent shall not have  received, within five (5) Business Days of the date notice of such alternate rate of interest is provided  to the Lenders, a written notice from the Required Lenders stating that such Required Lenders object  to such amendment.  Until an alternate rate of interest shall be determined in accordance with this  clause (b) (but, in the case of the circumstances described in clause (ii) of the first sentence of this  Section 2.16(b), only to the extent the Screen Rate for the applicable currency and/or such Interest  Period is not available or published at such time on a current basis), (x) any Notice of  Conversion/Continuation that requests the conversion of any Borrowing to, or continuation of any  Borrowing as, a Eurodollar Borrowing shall be ineffective, and (y) if any Notice of Borrowing  requests a Eurodollar Borrowing, such Borrowing shall be made as a Base Rate Borrowing;  provided, that, if such alternate rate of interest shall be less than zero, such rate shall be deemed to  be zero for the purposes of this Agreement.  (b) Benchmark Replacement.    (i) Notwithstanding anything to the contrary herein or in any other  Loan Document, if a Benchmark Transition Event and its related Benchmark  Replacement Date have occurred prior any setting of the then-current Benchmark,  then (x) if a Benchmark Replacement is determined in accordance with clause (a)  of the definition of “Benchmark Replacement” for such Benchmark Replacement  Date, such Benchmark Replacement will replace such Benchmark for all purposes  hereunder and under any Loan Document in respect of such Benchmark setting and  subsequent Benchmark settings without any amendment to, or further action or  consent of any other party to, this Agreement or any other Loan Document and (y)  if a Benchmark Replacement is determined in accordance with clause (b) of the  definition of “Benchmark Replacement” for such Benchmark Replacement Date,  such Benchmark Replacement will replace such Benchmark for all purposes  hereunder and under any Loan Document in respect of any Benchmark setting at  or after 5:00 p.m. on the fifth (5th) Business Day after the date notice of such  Benchmark Replacement is provided to the Lenders without any amendment to, or  further action or consent of any other party to, this Agreement or any other Loan  Document so long as the Administrative Agent has not received, by such time,  written notice of objection to such Benchmark Replacement from Lenders  comprising the Required Lenders.   (ii) No hedge or swap agreement shall be deemed to be a “Loan  Document” for purposes of this Section 2.16.  (c) Benchmark Replacement Conforming Changes.  In connection with the  use, administration, adoption or implementation of a Benchmark Replacement, the  Administrative Agent will have the right to make Conforming Changes from time to time  and, notwithstanding anything to the contrary herein or in any other Loan Document, any  

 

  72  amendments implementing such Conforming Changes will become effective without any  further action or consent of any other party to this Agreement or any other Loan Document.  (d) Notices; Standards for Decisions and Determinations.  The  Administrative Agent will promptly notify the Borrower and the Lenders of (i) the  implementation of any Benchmark Replacement and (ii) the effectiveness of any Conforming  Changes in connection with the use, administration, adoption or implementation of a  Benchmark Replacement.  The Administrative Agent will promptly notify the Borrower of  the removal or reinstatement of any tenor of a Benchmark pursuant to Section 2.16(e).  Any  determination, decision or election that may be made by the Administrative Agent or, if  applicable, any Lender (or group of Lenders) pursuant to this Section 2.16, including any  determination with respect to a tenor, rate or adjustment or of the occurrence or non- occurrence of an event, circumstance or date and any decision to take or refrain from taking  any action or any selection, will be conclusive and binding absent manifest error and may be  made in its or their sole discretion and without consent from any other party to this  Agreement or any other Loan Document, except, in each case, as expressly required  pursuant to this Section 2.16.  (e) Unavailability of Tenor of Benchmark.  Notwithstanding anything to  the contrary herein or in any other Loan Document, at any time (including in connection  with the implementation of a Benchmark Replacement), (i) if the then-current Benchmark  is a term rate (including the Term SOFR Reference Rate) and either (A) any tenor for such  Benchmark is not displayed on a screen or other information service that publishes such rate  from time to time as selected by the Administrative Agent in its reasonable discretion or (B)  the administrator of such Benchmark or the regulatory supervisor for the administrator of  such Benchmark has provided a public statement or publication of information announcing  that any tenor for such Benchmark is not or will be not be representative or in compliance  with or aligned with the International Organization of Securities Commissions (IOSCO)  Principles for Financial Benchmarks, then the Administrative Agent may modify the  definition of “Interest Period” (or any similar or analogous definition) for any Benchmark  settings at or after such time to remove such unavailable or non-representative tenor and (ii)  if a tenor that was removed pursuant to clause (i) above either (A) is subsequently displayed  on a screen or information service for a Benchmark (including a Benchmark Replacement)  or (B) is not, or is no longer, subject to an announcement that it is not or will not be  representative or in compliance with or aligned with the International Organization of  Securities Commissions (IOSCO) Principles for Financial Benchmarks for a Benchmark  (including a Benchmark Replacement), then the Administrative Agent may modify the  definition of “Interest Period” (or any similar or analogous definition) for all Benchmark  settings at or after such time to reinstate such previously removed tenor.  (f) Benchmark Unavailability Period.  Upon the Borrower’s receipt of  notice of the commencement of a Benchmark Unavailability Period, the Borrower may  revoke any pending request for a SOFR Borrowing of, conversion to or continuation of  SOFR Loans to be made, converted or continued during any Benchmark Unavailability  Period and, failing that, the Borrower will be deemed to have converted any such request  into a request for a Borrowing of or conversion to Base Rate Loans.  During a Benchmark  Unavailability Period or at any time that a tenor for the then-current Benchmark is not an  

 

  73  Available Tenor, the component of the Base Rate based upon the then-current Benchmark  or such tenor for such Benchmark, as applicable, will not be used in any determination of  the Base Rate.  Section 2.17. Illegality.  If any Change in Law shall make it unlawful or impossible for  any Lender to make, maintain or fund any Eurodollar LoanSOFR Loan or to determine or  charge interest rates based upon SOFR, the Term SOFR Reference Rate, Adjusted Term  SOFR or Term SOFR and such Lender shall so notify the Administrative Agent, the  Administrative Agent shall promptly give notice thereof to the Borrower and the other Lenders,  whereupon until such Lender notifies the Administrative Agent and the Borrower that the  circumstances giving rise to such suspension no longer exist, the obligation of such Lender to make  EurodollarSOFR Loans, or to continue or convert outstanding Loans as or into EurodollarSOFR  Loans, shall be suspended.  In the case of the making of a EurodollarSOFR Borrowing, such  Lender’s Loan shall be made as a Base Rate Loan as part of the same Borrowing for the same  Interest Period and, if the affected EurodollarSOFR Loan is then outstanding, such Loan shall be  converted to a Base Rate Loan either (i) on the last day of the then current Interest Period applicable  to such EurodollarSOFR Loan if such Lender may lawfully continue to maintain such Loan to  such date or (ii) immediately if such Lender shall determine that it may not lawfully continue to  maintain such EurodollarSOFR Loan to such date.  Notwithstanding the foregoing, the affected  Lender shall, prior to giving such notice to the Administrative Agent, designate a different  Applicable Lending Office if such designation would avoid the need for giving such notice and if  such designation would not otherwise be disadvantageous to such Lender in the good faith exercise  of its discretion.  Section 2.18. Increased Costs.  (a) If any Change in Law shall:    (i) impose, modify or deem applicable any reserve, special deposit or  similar requirement that is not otherwise included in the determination of Adjusted  LIBORTerm SOFR hereunder against assets of, deposits with or for the account of, or  credit extended by, any Lender (except any such reserve requirement reflected in Adjusted  LIBORTerm SOFR) or any Issuing Bank;     (ii) impose on any Lender, any Issuing Bank or the eurodollar  interbankSOFR loan market any other condition affecting this Agreement or any  EurodollarSOFR Loans made by such Lender or any Letter of Credit or any participation  therein; or    (iii) subject any Recipient to any Taxes (other than Indemnified Taxes  and Excluded Taxes) on its loans, loan principal, letters of credit, commitments or other  obligations, or its deposits, reserves, other liabilities or capital attributable thereto;  and the result of any of the foregoing is to increase the cost to such Lender of making, converting  into, continuing or maintaining a EurodollarSOFR Loan or to increase the cost to such Lender or  such Issuing Bank of participating in or issuing any Letter of Credit or to reduce the amount  received or receivable by such Lender or such Issuing Bank hereunder (whether of principal,  interest or any other amount), then, from time to time, such Lender or such Issuing Bank may  

 

  74  provide the Borrower (with a copy thereof to the Administrative Agent) with written notice and  demand with respect to such increased costs or reduced amounts and within five (5) Business Days  after receipt of the certificate required under subsection (c) below, the Borrower shall pay to such  Lender or such Issuing Bank, as the case may be, such additional amounts as will compensate such  Lender or such Issuing Bank for any such increased costs incurred or reduction suffered.  (b) If any Lender or any Issuing Bank shall have determined that on or after the  date of this Agreement any Change in Law regarding capital and liquidity requirements has or  would have the effect of reducing the rate of return on such Lender’s or such Issuing Bank’s capital  or assets (or on the capital or assets of the Parent Company of such Lender or such Issuing Bank)  as a consequence of its obligations hereunder or under or in respect of any Letter of Credit to a  level below that which such Lender, such Issuing Bank or such Parent Company could have  achieved but for such Change in Law (taking into consideration such Lender’s or such Issuing  Bank’s policies or the policies of such Parent Company with respect to capital adequacy and  liquidity), then, from time to time, such Lender or such Issuing Bank may provide the Borrower  (with a copy thereof to the Administrative Agent) with written notice and demand with respect to  such reduced amounts, and within five (5) Business Days after receipt of the certificate required  under subsection (c) below, the Borrower shall pay to such Lender or such Issuing Bank, as the  case may be, such additional amounts as will compensate such Lender, such Issuing Bank or such  Parent Company for any such reduction suffered.    (c) A certificate of such Lender or such Issuing Bank setting forth (x) the  amount or amounts necessary to compensate such Lender, such Issuing Bank or the Parent  Company of such Lender or such Issuing Bank, as the case may be, specified in subsection (a) or  (b) of this Section and (y) a reasonably detailed explanation of the applicable Change in Law, shall  be delivered to the Borrower (with a copy to the Administrative Agent) and shall be conclusive,  absent manifest error.  (d) Failure or delay on the part of any Lender or any Issuing Bank to demand  compensation pursuant to this Section shall not constitute a waiver of such Lender’s or such  Issuing Bank’s right to demand such compensation; provided that the Borrower shall not be  required to compensate a Lender or Issuing Bank pursuant to this Section for any increased costs  incurred or reductions suffered more than six months prior to the date that such Lender or Issuing  Bank notifies the Borrower of the Change in Law giving rise to such increased costs or reductions  and of such Lender’s or Issuing Bank’s intention to claim compensation therefor (except that, if  the Change in Law giving rise to such increased costs or reductions is retroactive, then the six- month period referred to above shall be extended to include the period of retroactive effect thereof).  Section 2.19. Funding Indemnity.  In the event of (a) the payment of any principal of a  EurodollarSOFR Loan other than on the last day of the Interest Period applicable thereto  (including as a result of an Event of Default), (b) the conversion or continuation of a  EurodollarSOFR Loan other than on the last day of the Interest Period applicable thereto, or (c)  the failure by the Borrower to borrow, prepay, convert or continue any EurodollarSOFR Loan on  the date specified in any applicable notice (regardless of whether such notice is withdrawn or  revoked), then, in any such event, the Borrower shall compensate each Lender, within five (5)  Business Days after written demand from such Lender, for any loss, cost or expense attributable  to such event.  In the case of a EurodollarSOFR Loan, such loss, cost or expense shall be deemed  

 

  75  to include an amount determined by such Lender to be the excess, if any, of (A) the amount of  interest that would have accrued on the principal amount of such EurodollarSOFR Loan if such  event had not occurred at Adjusted LIBORTerm SOFR applicable to such EurodollarSOFR Loan  for the period from the date of such event to the last day of the then current Interest Period therefor  (or, in the case of a failure to borrow, convert or continue, for the period that would have been the  Interest Period for such EurodollarSOFR Loan) over (B) the amount of interest that would accrue  on the principal amount of such EurodollarSOFR Loan for the same period if Adjusted  LIBORTerm SOFR were set on the date such EurodollarSOFR Loan was prepaid or converted  or the date on which the Borrower failed to borrow, convert or continue such EurodollarSOFR  Loan.  A certificate as to any additional amount payable under this Section submitted to the  Borrower by any Lender (with a copy to the Administrative Agent) shall be conclusive, absent  manifest error.  Section 2.20. Taxes.  (a) Any and all payments by or on account of any obligation of the Borrower  or any other Loan Party hereunder or under any other Loan Document shall be made free and clear  of and without deduction or withholding for any Indemnified Taxes or Other Taxes; provided that  if any applicable law requires the deduction or withholding of any Tax from any such payment,  then the applicable Withholding Agent shall make such deduction and timely pay the full amount  deducted to the relevant Governmental Authority in accordance with applicable law and, if such  Tax is an Indemnified Tax or Other Tax, then the sum payable by the Borrower or other Loan  Party, as applicable, shall be increased as necessary so that after making all required deductions  and withholdings (including deductions and withholdings applicable to additional sums payable  under this Section) the applicable Recipient shall receive an amount equal to the sum it would have  received had no such deductions or withholdings been made.  (b) In addition, without limiting the provisions of subsection (a) of this Section,  the Borrower shall timely pay any Other Taxes to the relevant Governmental Authority in  accordance with applicable law.  (c) The Borrower shall indemnify each Recipient, within five (5) Business  Days after written demand therefor, for the full amount of any Indemnified Taxes or Other Taxes  paid or payable by such Recipient (including Indemnified Taxes or Other Taxes imposed or  asserted on or attributable to amounts payable under this Section) and any penalties, interest and  reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified  Taxes or Other Taxes were correctly or legally imposed or asserted by the relevant Governmental  Authority.  A certificate as to the amount of such payment or liability delivered to the Borrower  by the applicable Recipient shall be conclusive, absent manifest error.  (d) As soon as practicable after any payment of Indemnified Taxes or Other  Taxes by the Borrower or any other Loan Party to a Governmental Authority, the Borrower or  other Loan Party, as applicable, shall deliver to the Administrative Agent an original or a certified  copy of a receipt issued by such Governmental Authority evidencing such payment, a copy of the  return reporting such payment or other evidence of such payment reasonably satisfactory to the  Administrative Agent.  (e) Tax Forms.  

 

  76  (i)  Any Lender that is a U.S. Person shall deliver to the Borrower and  the Administrative Agent, on or prior to the date on which such Lender becomes a Lender  under this Agreement (and from time to time thereafter upon the reasonable request of the  Borrower or the Administrative Agent), duly executed copies of IRS Form W-9 certifying,  to the extent such Lender is legally entitled to do so, that such Lender is exempt from U.S.  federal backup withholding tax.   (ii) Any Lender that is a Foreign Person and that is entitled to an  exemption from or reduction of withholding tax under the Code or any treaty to which the  United States is a party with respect to payments under this Agreement shall deliver to the  Borrower and the Administrative Agent, at the time or times prescribed by applicable law,  such properly completed and executed documentation prescribed by applicable law or  reasonably requested by the Borrower or the Administrative Agent as will permit such  payments to be made without withholding or at a reduced rate of withholding.  Without  limiting the generality of the foregoing, each Lender that is a Foreign Person shall, to the  extent it is legally entitled to do so, (w) on or prior to the date such Lender becomes a  Lender under this Agreement, (x) on or prior to the date on which any such form or  certification expires or becomes obsolete, (y) after the occurrence of any event requiring a  change in the most recent form or certification previously delivered by it pursuant to this  subsection, and (z) from time to time upon the reasonable request by the Borrower or the  Administrative Agent, deliver to the Borrower and the Administrative Agent (in such  number of copies as shall be requested by the Borrower or the Administrative Agent),  whichever of the following is applicable:  (A) if such Lender is claiming eligibility for benefits of an income tax  treaty to which the United States is a party (x) with respect to payments of interest  under any Loan Document, duly executed copies of IRS Form W-8BEN or IRS  Form W-8BEN-E, as applicable, or any successor form thereto, establishing an  exemption from, or reduction of, U.S. federal withholding tax pursuant to the  “interest” article of such tax treaty, and (y) with respect to any other applicable  payments under any Loan Document, duly executed copies of IRS Form W-8BEN  or IRS Form W-8BEN-E, as applicable, or any successor form thereto, establishing  an exemption from, or reduction of, U.S. federal withholding tax pursuant to the  “business profits” or “other income” article of such tax treaty;  (B)  duly executed copies of IRS Form W-8ECI, or any successor form  thereto, certifying that the payments received by such Lender are effectively  connected with such Lender’s conduct of a trade or business in the United States;  (C)  if such Lender is claiming the benefits of the exemption for portfolio  interest under Section 871(h) or Section 881(c) of the Code, duly executed copies  of IRS Form W-8BEN or IRS Form W-8BEN-E, as applicable, or any successor  form thereto, together with a certificate (a “U.S. Tax Compliance Certificate”) upon  which such Lender certifies that (1) such Lender is not a bank for purposes of  Section 881(c)(3)(A) of the Code, or the obligation of the Borrower hereunder is  not, with respect to such Lender, a loan agreement entered into in the ordinary  course of its trade or business, within the meaning of that Section, (2) such Lender  

 

  77  is not a 10% shareholder of the Borrower within the meaning of Section 871(h)(3)  or Section 881(c)(3)(B) of the Code, (3) such Lender is not a controlled foreign  corporation that is related to the Borrower within the meaning of Section  881(c)(3)(C) of the Code, and (4) the interest payments in question are not  effectively connected with a U.S. trade or business conducted by such Lender; or  (D)  if such Lender is not the beneficial owner (for example, a  partnership or a participating Lender granting a typical participation), duly  executed copies of IRS Form W-8IMY, or any successor form thereto,  accompanied by IRS Form W-9, IRS Form W-8ECI, IRS Form W-8BEN, IRS  Form W-8BEN-E, a U.S. Tax Compliance Certificate, and/or other certification  documents from each beneficial owner, as applicable.   (iii)  Each Lender agrees that if any form or certification it previously  delivered under this Section expires or becomes obsolete or inaccurate in any respect and  such Lender is not legally entitled to provide an updated form or certification, it shall  promptly notify the Borrower and the Administrative Agent of its inability to update such  form or certification.  (f) If a payment made to a Lender under any Loan Document would be subject  to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with  the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or  1472(b) of the Code, as applicable), such Lender shall deliver to the Borrower and the  Administrative Agent at the time or times prescribed by law and at such time or times reasonably  requested by the Borrower or the Administrative Agent such documentation prescribed by  applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such  additional documentation reasonably requested by the Borrower or the Administrative Agent as  may be necessary for the Borrower and the Administrative Agent to comply with their obligations  under FATCA and to determine that such Lender has complied with such Lender’s obligations  under FATCA or to determine the amount to deduct and withhold from such payment.    (g) Treatment of Certain Refunds.  If any party determines, in its sole discretion  exercised in good faith, that it has received a refund of any Taxes as to which it has been  indemnified pursuant to this Section 2.20 (including by the payment of additional amounts  pursuant to this Section 2.20), it shall pay to the indemnifying party an amount equal to such refund  (but only to the extent of indemnity payments made under this Section 2.20 with respect to the  Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such  indemnified party and without interest (other than any interest paid by the relevant Governmental  Authority with respect to such refund).  Such indemnifying party, upon the request of such  indemnified party, shall repay to such indemnified party the amount paid over pursuant to this  paragraph (g) (plus any penalties, interest or other charges imposed by the relevant Governmental  Authority) in the event that such indemnified party is required to repay such refund to such  Governmental Authority.  Notwithstanding anything to the contrary in this paragraph (g) in no  event will the indemnified party be required to pay any amount to an indemnifying party pursuant  to this paragraph (g) the payment of which would place the indemnified party in a less favorable  net after-Tax position than the indemnified party would have been in if the Tax subject to  indemnification and giving rise to such refund had not been deducted, withheld or otherwise  

 

  78  imposed and the indemnification payments or additional amounts with respect to such Tax had  never been paid.  This paragraph shall not be construed to require any indemnified party to make  available its Tax returns (or any other information relating to its Taxes that it deems confidential)  to the indemnifying party or any other Person.  (h) Survival.  Each party’s obligations under this Section 2.20 shall survive the  resignation or replacement of the Administrative Agent or any assignment of rights by, or the  replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or  discharge of all obligations under any Loan Document.  Section 2.21. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.   (a) The Borrower shall make each payment required to be made by it hereunder  (whether of principal, interest, fees or reimbursement of LC Disbursements, or of amounts payable  under Section 2.18, 2.19 or 2.20, or otherwise) prior to 12:00 noon on the date when due, in  immediately available funds, free and clear of any defenses, rights of set-off, counterclaim, or  withholding or deduction of taxes.  Any amounts received after such time on any date may, in the  discretion of the Administrative Agent, be deemed to have been received on the next succeeding  Business Day for purposes of calculating interest thereon.  All such payments shall be made to the  Administrative Agent at the Payment Office, except payments to be made directly to the applicable  Issuing Bank or the Swingline Lender as expressly provided herein and except that payments  pursuant to Sections 2.18, 2.19, 2.20 and 10.3 shall be made directly to the Persons entitled thereto.   The Administrative Agent shall distribute any such payments received by it for the account of any  other Person to the appropriate recipient promptly following receipt thereof.  If any payment  hereunder shall be due on a day that is not a Business Day, the date for payment shall be extended  to the next succeeding Business Day, and, in the case of any payment accruing interest, interest  thereon shall be made payable for the period of such extension.  All payments hereunder shall be  made in Dollars.  (b) If at any time insufficient funds are received by and available to the  Administrative Agent to pay fully all amounts of principal, unreimbursed LC Disbursements,  interest and fees then due hereunder, such funds shall be applied as follows: first, to all fees and  reimbursable expenses of the Administrative Agent then due and payable pursuant to any of the  Loan Documents; second, to all reimbursable expenses of the Lenders and all fees and  reimbursable expenses of the Issuing Banks then due and payable pursuant to any of the Loan  Documents, pro rata to the Lenders and the Issuing Banks based on their respective pro rata shares  of such fees and expenses; third, to all interest and fees then due and payable hereunder, pro rata  to the Lenders based on their respective pro rata shares of such interest and fees; and fourth, to all  principal of the Loans and unreimbursed LC Disbursements then due and payable hereunder, pro  rata to the parties entitled thereto based on their respective pro rata shares of such principal and  unreimbursed LC Disbursements.  (c) If any Lender shall, by exercising any right of set-off or counterclaim or  otherwise, obtain payment in respect of any principal of or interest on any of its Loans or  participations in LC Disbursements or Swingline Loans then due that would result in such Lender  receiving payment of a greater proportion of the aggregate amount of its Revolving Credit  Exposure, Term Loans and accrued interest and fees thereon (as applicable) than the proportion  

 

  79  received by any other Lender with respect to its Revolving Credit Exposure or Term Loans (as  applicable), then the Lender receiving such greater proportion shall purchase (for cash at face  value) participations in the Revolving Credit Exposure and Term Loans (as applicable) of other  Lenders to the extent necessary so that the benefit of all such payments shall be shared by the  Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on  their respective Revolving Credit Exposure and Term Loans (as applicable); provided that (i) if  any such participations are purchased and all or any portion of the payment giving rise thereto is  recovered, such participations shall be rescinded and the purchase price restored to the extent of  such recovery, without interest, and (ii) the provisions of this subsection shall not be construed to  apply to any payment made by the Borrower pursuant to and in accordance with the express terms  of this Agreement or any payment obtained by a Lender as consideration for the assignment of or  sale of a participation in any of its Revolving Credit Exposure or Term Loans to any assignee or  participant, other than to the Borrower or any Subsidiary or Affiliate thereof (as to which the  provisions of this subsection shall apply).  The Borrower consents to the foregoing and agrees, to  the extent it may effectively do so under applicable law, that any Lender acquiring a participation  pursuant to the foregoing arrangements may exercise against the Borrower rights of set-off and  counterclaim with respect to such participation as fully as if such Lender were a direct creditor of  the Borrower in the amount of such participation.  (d) Unless the Administrative Agent shall have received notice from the  Borrower prior to the date on which any payment is due to the Administrative Agent for the  account of the Lenders or the Issuing Banks hereunder that the Borrower will not make such  payment, the Administrative Agent may assume that the Borrower has made such payment on such  date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders  or the Issuing Banks, as the case may be, the amount or amounts due.  In such event, if the  Borrower has not in fact made such payment, then each of the Lenders or the Issuing Banks, as the  case may be, severally agrees to repay to the Administrative Agent forthwith on demand the  amount so distributed to such Lender or such Issuing Bank with interest thereon, for each day from  and including the date such amount is distributed to it to but excluding the date of payment to the  Administrative Agent, at the greater of the Federal Funds Rate and a rate determined by the  Administrative Agent in accordance with banking industry rules on interbank compensation.  Section 2.22. Letters of Credit.  (a) During the Availability Period, each Issuing Bank, in reliance upon the  agreements of the other Revolving Lenders pursuant to subsections (d) and (e) of this Section,  shall issue, at the request of the Borrower, Letters of Credit for the account of the Borrower on the  terms and conditions hereinafter set forth; provided that (i) each Letter of Credit shall expire on  the earlier of (A) the date one year after the date of issuance of such Letter of Credit (or, in the  case of any renewal or extension thereof (which may be an automatically renewing or extending  Letter of Credit), one year after such renewal or extension) and (B) the date that is five (5) Business  Days prior to the latest Revolving Commitment Termination Date; (ii) each Letter of Credit shall  be in a stated amount of at least $50,000; and (iii) the Borrower may not request any Letter of  Credit if, after giving effect to such issuance, (A) the aggregate LC Exposure would exceed the  LC Commitment or (B) the aggregate Revolving Credit Exposure of all Lenders would exceed the  Aggregate Revolving Commitment Amount.  Each Lender with a Revolving Commitment shall  be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the applicable  

 

  80  Issuing Bank without recourse a participation in each Letter of Credit equal to such Lender’s Pro  Rata Share of the aggregate amount available to be drawn under such Letter of Credit on the date  of issuance.  Each issuance of a Letter of Credit shall be deemed to utilize the Revolving  Commitment of each Lender by an amount equal to the amount of such participation.  If the  Maturity Date in respect of any tranche of Revolving Commitments occurs prior to the expiration  of any Letter of Credit (such maturity date, the “Earlier LC Maturity Date”), then (i) on such Earlier  LC Maturity Date, if one or more other tranches of Revolving Commitments in respect of which  the Maturity Date shall not have occurred are then in effect, such Letters of Credit shall  automatically be deemed to have been issued (including for purposes of the obligations of the  Revolving Lenders to purchase participations therein and to make Revolving Loans and payments  in respect thereof pursuant to this Section) under (and ratably participated in by Revolving Lenders  pursuant to) the Revolving Commitments in respect of such non-terminating tranches up to an  aggregate amount not to exceed the aggregate principal amount of the unutilized Revolving  Commitments thereunder at such time (it being understood that no partial face amount of any  Letter of Credit may be so reallocated) and (ii) to the extent not reallocated pursuant to the  immediately preceding clause (i), the Borrower shall Cash Collateralize any such Letter of Credit.   Except to the extent of reallocations of participations pursuant to clause (i) of the immediately  preceding sentence, the occurrence of a Maturity Date with respect to a given tranche of Revolving  Commitments shall have no effect upon (and shall not diminish) the percentage participations of  the Revolving Lenders in any Letter of Credit issued before such Maturity Date.  (b) To request the issuance of a Letter of Credit (or any amendment, renewal or  extension of an outstanding Letter of Credit), the Borrower shall give the applicable Issuing Bank  and the Administrative Agent irrevocable written notice prior to 1:00 p.m. at least three (3)  Business Days prior to the requested date of such issuance specifying the date (which shall be a  Business Day) such Letter of Credit is to be issued (or amended, renewed or extended, as the case  may be), the expiration date of such Letter of Credit, the amount of such Letter of Credit, the name  and address of the beneficiary thereof and such other information as shall be necessary to prepare,  amend, renew or extend such Letter of Credit.  In addition to the satisfaction of the conditions in  Section 3.2, the issuance of such Letter of Credit (or any amendment which increases the amount  of such Letter of Credit) will be subject to the further conditions that such Letter of Credit shall be  in such form and contain such terms as the applicable Issuing Bank shall approve and that the  Borrower shall have executed and delivered any additional applications, agreements and  instruments relating to such Letter of Credit as such Issuing Bank shall reasonably require;  provided that in the event of any conflict between such applications, agreements or instruments  and this Agreement, the terms of this Agreement shall control.   (c) At least two (2) Business Days prior to the issuance of any Letter of Credit,  the applicable Issuing Bank will confirm with the Administrative Agent (by telephone or in  writing) that the Administrative Agent has received such notice, and, if not, such Issuing Bank will  provide the Administrative Agent with a copy thereof.  Unless such Issuing Bank has received  notice from the Administrative Agent, on or before the Business Day immediately preceding the  date such Issuing Bank is to issue the requested Letter of Credit, directing such Issuing Bank not  to issue the Letter of Credit because such issuance is not then permitted hereunder because of the  limitations set forth in subsection (a) of this Section or that one or more conditions specified in  Section 3.2 are not then satisfied, then, subject to the terms and conditions hereof, such Issuing  

 

  81  Bank shall, on the requested date, issue such Letter of Credit in accordance with such Issuing  Bank’s usual and customary business practices.  (d) Each Issuing Bank shall examine all documents purporting to represent a  demand for payment under a Letter of Credit promptly following its receipt thereof.  The applicable  Issuing Bank shall notify the Borrower and the Administrative Agent of such demand for payment  and whether such Issuing Bank has made or will make a LC Disbursement thereunder; provided  that any failure to give or delay in giving such notice shall not relieve the Borrower of its obligation  to reimburse such Issuing Bank and the Revolving Lenders with respect to such LC Disbursement.   The Borrower shall be irrevocably and unconditionally obligated to reimburse such Issuing Bank  for any LC Disbursements paid by such Issuing Bank in respect of such drawing, without  presentment, demand or other formalities of any kind.  Unless the Borrower shall have notified the  applicable Issuing Bank and the Administrative Agent prior to 11:00 a.m. on the Business Day  immediately following the date on which such drawing is honored that the Borrower intends to  reimburse such Issuing Bank for the amount of such drawing in funds other than from the proceeds  of Revolving Loans, the Borrower shall be deemed to have timely given a Notice of Borrowing to  the Administrative Agent requesting the Revolving Lenders to make a Base Rate Borrowing on  such date in an exact amount due to such Issuing Bank; provided that for purposes solely of such  Borrowing, the conditions precedent set forth in Section 3.2 hereof shall not be applicable.  The  Administrative Agent shall notify the Revolving Lenders of such Borrowing in accordance with  Section 2.3, and each Revolving Lender shall make the proceeds of its Base Rate Loan included  in such Borrowing available to the Administrative Agent for the account of such Issuing Bank in  accordance with Section 2.6.  The proceeds of such Borrowing shall be applied directly by the  Administrative Agent to reimburse such Issuing Bank for such LC Disbursement.   (e) If for any reason a Base Rate Borrowing may not be (as determined in the  sole discretion of the Administrative Agent), or is not, made in accordance with the foregoing  provisions, then each Revolving Lender (other than the applicable Issuing Bank) shall be obligated  to fund the participation that such Revolving Lender purchased pursuant to subsection (a) of this  Section in an amount equal to its Pro Rata Share of such LC Disbursement on and as of the date  which such Base Rate Borrowing should have occurred.  Each Revolving Lender’s obligation to  fund its participation shall be absolute and unconditional and shall not be affected by any  circumstance, including, without limitation, (i) any set-off, counterclaim, recoupment, defense or  other right that such Revolving Lender or any other Person may have against the applicable Issuing  Bank or any other Person for any reason whatsoever, (ii) the existence of a Default or an Event of  Default or the termination of the Aggregate Revolving Commitments, (iii) any adverse change in  the condition (financial or otherwise) of the Borrower or any of its Subsidiaries, (iv) any breach of  this Agreement by the Borrower or any other Lender, (v) any amendment, renewal or extension of  any Letter of Credit or (vi) any other circumstance, happening or event whatsoever, whether or not  similar to any of the foregoing.  On the date that such participation is required to be funded, each  Revolving Lender shall promptly transfer, in immediately available funds, the amount of its  participation to the Administrative Agent for the account of the applicable Issuing Bank.   Whenever, at any time after the applicable Issuing Bank has received from any such Revolving  Lender the funds for its participation in a LC Disbursement, such Issuing Bank (or the  Administrative Agent on its behalf) receives any payment on account thereof, the Administrative  Agent or such Issuing Bank, as the case may be, will distribute to such Revolving Lender its Pro  Rata Share of such payment; provided that if such payment is required to be returned for any reason  

 

  82  to the Borrower or to a trustee, receiver, liquidator, custodian or similar official in any bankruptcy  proceeding, such Revolving Lender will return to the Administrative Agent or such Issuing Bank  any portion thereof previously distributed by the Administrative Agent or such Issuing Bank to it.  (f) To the extent that any Revolving Lender shall fail to pay any amount  required to be paid pursuant to subsection (d) or (e) of this Section on the due date therefor, such  Revolving Lender shall pay interest to the applicable Issuing Bank (through the Administrative  Agent) on such amount from such due date to the date such payment is made at a rate per annum  equal to the Federal Funds Rate; provided that if such Revolving Lender shall fail to make such  payment to the applicable Issuing Bank within three (3) Business Days of such due date, then,  retroactively to the due date, such Revolving Lender shall be obligated to pay interest on such  amount at the rate set forth in Section 2.13(c).  (g) If any Event of Default shall occur and be continuing, on the Business Day  that the Borrower receives notice from the Administrative Agent or the Required Lenders  demanding that its reimbursement obligations with respect to the Letters of Credit be Cash  Collateralized pursuant to this subsection, the Borrower shall deposit in an account with the  Administrative Agent, in the name of the Administrative Agent and for the benefit of each Issuing  Bank and the Revolving Lenders, an amount in cash equal to 103% of the aggregate LC Exposure  of all Lenders as of such date plus any accrued and unpaid fees thereon; provided that such  obligation to Cash Collateralize the reimbursement obligations of the Borrower with respect to the  Letters of Credit shall become effective immediately, and such deposit shall become immediately  due and payable, without demand or notice of any kind, upon the occurrence of any Event of  Default with respect to the Borrower described in Section 8.1(h) or (i).  Such deposit shall be held  by the Administrative Agent as collateral for the payment and performance of the obligations of  the Borrower under this Agreement.  The Administrative Agent shall have exclusive dominion and  control, including the exclusive right of withdrawal, over such account.  The Borrower agrees to  execute any documents and/or certificates to effectuate the intent of this subsection.  Other than  any interest earned on the investment of such deposits, which investments shall be made at the  option and sole discretion of the Administrative Agent and at the Borrower’s risk and expense,  such deposits shall not bear interest.  Interest and profits, if any, on such investments shall  accumulate in such account.  Moneys in such account shall be applied by the Administrative Agent  to reimburse the applicable Issuing Bank for LC Disbursements for which it had not been  reimbursed and, to the extent not so applied, shall be held for the satisfaction of the reimbursement  obligations of the Borrower for the LC Exposure at such time or, if the maturity of the Loans has  been accelerated, with the consent of the Required Lenders, be applied to satisfy other obligations  of the Borrower under this Agreement and the other Loan Documents.  If the Borrower is required  to Cash Collateralize its reimbursement obligations with respect to the Letters of Credit as a result  of the occurrence of an Event of Default, such cash collateral so posted (to the extent not so applied  as aforesaid) shall be returned to the Borrower within three (3) Business Days after all Events of  Default have been cured or waived.  (h) Upon the request of any Revolving Lender, but no more frequently than  quarterly, each Issuing Bank shall deliver (through the Administrative Agent) to each Revolving  Lender and the Borrower a report describing the aggregate Letters of Credit issued by such Issuing  Bank and then outstanding.  Upon the request of any Revolving Lender from time to time, each  Issuing Bank shall deliver to such Revolving Lender any other information reasonably requested  

 

  83  by such Revolving Lender with respect to each Letter of Credit issued by such Issuing Bank and  then outstanding.  (i) The Borrower’s obligation to reimburse LC Disbursements hereunder shall  be absolute, unconditional and irrevocable and shall be performed strictly in accordance with the  terms of this Agreement under all circumstances whatsoever and irrespective of any of the  following circumstances:  (i) any lack of validity or enforceability of any Letter of Credit or this  Agreement;  (ii) the existence of any claim, set-off, defense or other right which the  Borrower or any Subsidiary or Affiliate of the Borrower may have at any time against a  beneficiary or any transferee of any Letter of Credit (or any Persons or entities for whom  any such beneficiary or transferee may be acting), any Lender (including any Issuing Bank)  or any other Person, whether in connection with this Agreement or the Letter of Credit or  any document related hereto or thereto or any unrelated transaction;   (iii) any draft or other document presented under a Letter of Credit  proving to be forged, fraudulent or invalid in any respect or any statement therein being  untrue or inaccurate in any respect;  (iv) payment by any Issuing Bank under a Letter of Credit against  presentation of a draft or other document to such Issuing Bank that does not comply with  the terms of such Letter of Credit;  (v) any other event or circumstance whatsoever, whether or not similar  to any of the foregoing, that might, but for the provisions of this Section, constitute a legal  or equitable discharge of, or provide a right of set-off against, the Borrower’s obligations  hereunder; or  (vi) the existence of a Default or an Event of Default.  Neither the Administrative Agent, any Issuing Bank, any Lender nor any Related Party of any of  the foregoing shall have any liability or responsibility by reason of or in connection with the  issuance or transfer of any Letter of Credit or any payment or failure to make any payment  thereunder (irrespective of any of the circumstances referred to above), or any error, omission,  interruption, loss or delay in transmission or delivery of any draft, notice or other communication  under or relating to any Letter of Credit (including any document required to make a drawing  thereunder), any error in interpretation of technical terms or any consequence arising from causes  beyond the control of the applicable Issuing Bank; provided that the foregoing shall not be  construed to excuse any Issuing Bank from liability to the Borrower to the extent of any actual  direct damages (as opposed to special, indirect (including claims for lost profits or other  consequential damages), or punitive damages, claims in respect of which are hereby waived by the  Borrower to the extent permitted by applicable law) suffered by the Borrower that are caused by  such Issuing Bank’s failure to exercise due care when determining whether drafts or other  documents presented under a Letter of Credit comply with the terms thereof.  The parties hereto  expressly agree that, in the absence of gross negligence or willful misconduct on the part of any  

 

  84  Issuing Bank (as finally determined by a court of competent jurisdiction), such Issuing Bank shall  be deemed to have exercised due care in each such determination.  In furtherance of the foregoing  and without limiting the generality thereof, the parties agree that, with respect to documents  presented that appear on their face to be in substantial compliance with the terms of a Letter of  Credit, the applicable Issuing Bank may, in its sole discretion, either accept and make payment  upon such documents without responsibility for further investigation, regardless of any notice or  information to the contrary, or refuse to accept and make payment upon such documents if such  documents are not in strict compliance with the terms of such Letter of Credit.  (j) Unless otherwise expressly agreed by the applicable Issuing Bank and the  Borrower when a Letter of Credit is issued and subject to applicable laws, (i) each standby Letter  of Credit shall be governed by the “International Standby Practices 1998” (ISP98) (or such later  revision as may be published by the Institute of International Banking Law & Practice on any date  any Letter of Credit may be issued), (ii) each documentary Letter of Credit shall be governed by  the Uniform Customs and Practices for Documentary Credits (2007 Revision), International  Chamber of Commerce Publication No. 600 (or such later revision as may be published by the  International Chamber of Commerce on any date any Letter of Credit may be issued) and (iii) the  Borrower shall specify the foregoing in each letter of credit application submitted for the issuance  of a Letter of Credit.  (k) The parties hereto agree that the Existing Letters of Credit shall constitute  Letters of Credit for all purposes hereunder as if such letters of credit were issued by an Issuing  Bank under this Agreement.  Section 2.23. Increase of Commitments; Additional Lenders.    (a) From time to time after the Closing Date and in accordance with this  Section, the Borrower and one or more Increasing Lenders or Additional Lenders (each as defined  below) may enter into an agreement to (i) increase the aggregate principal amount of the Revolving  Commitments and/or (ii) establish one or more tranches of Incremental Term Loan Commitments  hereunder (each such increase or additional tranche, an “Incremental Commitment” and the  principal amount thereof, the “Incremental Commitment Amount”) so long as the following  conditions are satisfied:  (i) subject, in the case of an Incremental Term Loan (and related  Incremental Term Loan Commitments) used to finance a Limited Condition Acquisition,  to Section 1.5, the aggregate principal amount of all such Incremental Commitments made  pursuant to this Section shall not exceed the sum of (A) $175,000,000400,000,000 plus  (B) additional amounts so long as the Secured Leverage Ratio, calculated on a pro forma  basis (giving pro forma effect to the incurrence of such Incremental Commitments (and  treating any unfunded Incremental Commitments as fully drawn) and any transactions  entered into in connection therewith, including the incurrence or repayment of any  Indebtedness and any Acquisitions (on a Pro Forma Basis)) without netting the cash  proceeds of the Incremental Term Loans or Revolving Loans made under such Incremental  Commitments or the proceeds of any other Indebtedness incurred substantially  concurrently therewith, does not exceed 1.753.00:1.00;  

 

  85  (ii) the Borrower shall execute and deliver such documents and  instruments and take such other actions as may be reasonably required by the  Administrative Agent in connection with and at the time of any such proposed increase;   (iii)  subject, in the case of an Incremental Term Loan (and related  Incremental Term Loan Commitments) used to finance a Limited Condition Acquisition,  to Section 1.5, at the time of and immediately after giving effect to any such Incremental  Commitment, (x) no Event of Default shall exist; provided that (A) in the case of any  Incremental Commitment obtained for the purposes of financing an Acquisition not  prohibited by this Agreement, the Lenders providing such Incremental Commitment and  the Administrative Agent may agree that such condition shall be limited to an absence of  an Event of Default under Section 8.1(a), (b), (g), (h) or (i) and (B) if the Borrower makes  an LCA Election pursuant to Section 1.5 and such condition is tested as of the applicable  LCA Test Date, it shall also be a condition that no Event of Default under Section 8.1(a),  (b), (g), (h) or (i) shall have occurred and be continuing or would result from the incurrence  of such Incremental Term Loan (and related Term Loan Commitments) and the  transactions consummated in connection therewith (including the incurrence of any  Indebtedness and the use proceeds thereof) on the date on which such Incremental Term  Loan (and related Incremental Term Loan Commitments) is incurred and the applicable  Limited Condition Acquisition is consummated, and (y) all representations and warranties  of each Loan Party set forth in the Loan Documents shall be true and correct in all material  respects (other than those representations and warranties that are expressly qualified by  Material Adverse Effect or other materiality, in which case such representations and  warranties shall be true and correct in all respects) as of the date of the establishment of  such Incremental Commitment (or, if such representation or warranty relates to an earlier  date, as of such earlier date); provided that in the case of any Incremental Commitment  obtained for the purposes of financing an Acquisition or other Investment not prohibited  by this Agreement, the Lenders providing such Incremental Commitment may agree that  the only representations and warranties the accuracy of which shall be a condition to such  Incremental Commitment (and the Incremental Term Loans or Revolving Loans provided  thereunder) shall be (I) the Specified Representations and (II) the representations and  warranties made by or on behalf of the applicable target in the purchase, acquisition or  similar agreement governing such Acquisition or other Investment as are material to the  interests of the Lenders, but only to the extent that the Borrower (or the Borrower’s  applicable Affiliates or Subsidiaries) has the right (determined without regard to any notice  requirement) not to consummate or the right to terminate (or cause the termination of) the  Borrower’s (or such Affiliates’ or Subsidiaries’) obligations under such purchase,  acquisition or other agreement as a result of a breach of such representations or warranties  in such purchase, acquisition or other agreement (or the failure of such representations or  warranties to be accurate or to satisfy the closing conditions in such purchase, acquisition  or other agreement applicable to such representations or warranties) (such representations  and warranties, the “Specified Target Representations”);  (iv)  (x) any incremental term loans made pursuant to this Section (the  “Incremental Term Loans” and, the commitments with respect thereto, the “Incremental  Term Loan Commitments”) shall have a maturity date no earlier than the latest Maturity  Date in effect at the time such Incremental Term Loans are incurred, shall have a Weighted  

 

  86  Average Life to Maturity no shorter than that of any then-outstanding Term Loans (without  giving effect to previous reductions in and previously made amortization payments on such  Term Loans) and shall otherwise have terms (other than pricing and any representations,  warranties, covenants and other provisions applicable only to periods after the latest  Maturity Date hereunder at such time) that either are consistent with the applicable terms  of the existing Loans and Commitments hereunder or are reasonably satisfactory to the  Administrative Agent (it being understood and agreed that to the extent that any more  restrictive terms are added for the benefit of any Incremental Term Loan Commitments  and related Incremental Term Loans, no consent shall be required from the Administrative  Agent or any Lender to the extent that such terms are also added for the benefit of the  existing Loans and Commitments (to the extent applicable)), and (y) any incremental  Revolving Commitments provided pursuant to this Section (the “Incremental Revolving  Commitments”) shall have identical terms (including pricing and termination date;  provided that upfront fees for any Incremental Revolving Commitments will be permitted  and shall be determined by the Borrower and the Lenders providing such Incremental  Revolving Commitments) to the Revolving Commitments and be treated as the same Class  as the Revolving Commitments and the Borrower shall, after the establishment of any  Incremental Revolving Commitments pursuant to this Section, repay and incur Revolving  Loans ratably as between the Incremental Revolving Commitments and the Revolving  Commitments outstanding immediately prior to such increase (provided that such  repayment and incurrence may, with the Administrative Agent’s consent, be effectuated  through assignments among Lenders with Revolving Commitments, which shall not  require an Assignment and Acceptance and may be effectuated by the Administrative  Agent through changes in the Register and fundings from such Lenders providing  Incremental Commitments); provided, further, that Interest Periods applicable to  Incremental Term Loans or Revolving Loans advanced pursuant to Incremental Revolving  Commitments may, at the election of the Administrative Agent and the Borrower, be made  with Interest Period(s) identical to the then remaining Interest Period(s) applicable to any  existing Term Loans of the relevant Class or existing Revolving Loans of the applicable  Class (and allocated to such Interest Period(s) on a proportional basis);   (v)  subject, in the case of an Incremental Term Loan (and related  Incremental Term Loan Commitments) used to finance a Limited Condition Acquisition,  to Section 1.5, the Borrower and its Subsidiaries shall be in pro forma compliance with  each of the financial covenants set forth in Article VI as of the most recently ended Test  Period, calculated as if all such Incremental Term Loans had been made and all such  Incremental Revolving Commitments had been established (and fully funded) as of the  first day of the relevant period for testing compliance (including giving effect to any  Acquisitions on a Pro Forma Basis that are contemplated to be funded with such  Incremental Term Loans or Incremental Revolving Commitments); and  (vi)  any collateral securing any such Incremental Commitments shall  also secure all other Obligations on a pari passu basis.    (b) The Borrower shall provide at least ten (10) days’ (or such shorter period of  time as may be agreed to by the Administrative Agent in its sole discretion) written notice to the  Administrative Agent (who shall promptly provide a copy of such notice to each Lender) of any  

 

  87  proposal to establish an Incremental Commitment.  The Borrower may also, but is not required to,  specify any fees offered to those Lenders (the “Increasing Lenders”) that agree to increase the  principal amount of their Revolving Commitments and/or provide Incremental Term Loan  Commitments, which fees may be variable based upon the amount by which any such Lender is  willing to increase the principal amount of its Revolving Commitment and/or the principal amount  of the Incremental Term Loan Commitment such Lender is willing to provide, as applicable.  No  Lender (or any successor thereto) shall have any obligation, express or implied, to offer to increase  the aggregate principal amount of its Revolving Commitment and/or provide an Incremental Term  Loan Commitment, and any decision by a Lender to increase its Revolving Commitment and/or  provide an Incremental Term Loan Commitment shall be made in its sole discretion independently  from any other Lender.  Only the consent of each Increasing Lender shall be required for  Incremental Commitments  pursuant to this Section.  No Lender which declines to increase the  principal amount of its Revolving Commitment and/or provide an Incremental Term Loan  Commitment may be replaced with respect to its existing Revolving Commitment, its existing  Term Loan Commitment (if any) and/or its existing Term Loans (if any), as applicable, as a result  thereof without such Lender’s consent.  The Borrower may accept some or all of the offered  amounts from existing Lenders or designate new lenders that are acceptable to the Administrative  Agent (any such consent to be required only to the extent required under Section 10.4(b) for an  assignment of Loans or Commitments of such Type to such new lender), the Borrower and, in the  case of any Incremental Revolving Commitments, each Issuing Bank (such approvals of the  Administrative Agent, the Borrower and the Issuing Banks not to be unreasonably withheld) as  additional Lenders hereunder in accordance with this Section (the “Additional Lenders”), which  Additional Lenders may assume all or a portion of such Incremental Commitment.  The Borrower  shall have discretion to adjust the allocation of such Incremental Revolving Commitments and/or  such Incremental Term Loans among the then-existing Lenders and the Additional Lenders (as it  may elect).  The sum of the increase in the principal amount of the Revolving Commitments and  the aggregate principal amount of the Incremental Term Loan Commitments of the Increasing  Lenders plus the principal amount of the Revolving Commitments and the aggregate principal  amount of the Term Loan Commitments of the Additional Lenders shall not in the aggregate  exceed the unsubscribed amount of the Incremental Commitment Amount.  (c) Subject to subsections (a) and (b) of this Section, any increase requested by  the Borrower shall be effective upon delivery to the Administrative Agent of each of the following  documents:    (i)  an originally executed copy of an instrument of joinder (each, an  “Incremental Commitment Joinder”), in form and substance reasonably acceptable to the  Administrative Agent, executed by the Administrative Agent, by the Borrower, by each  Additional Lender and by each Increasing Lender, setting forth the Incremental Revolving  Commitments and/or Incremental Term Loan Commitments, as applicable, of such  Lenders and setting forth the agreement of each Additional Lender to become a party to  this Agreement and to be bound by all of the terms and provisions hereof;  (ii) such evidence of appropriate corporate authorization on the part of  the Borrower with respect to such Incremental Commitment and such opinions of counsel  for the Borrower with respect to such Incremental Commitment as the Administrative  Agent may reasonably request;  

 

  88  (iii) a certificate of the Borrower signed by a Responsible Officer, in  form and substance reasonably acceptable to the Administrative Agent, certifying that each  of the conditions in subsection (a) of this Section has been satisfied; provided that, in the  case of an Incremental Term Loan (and related Incremental Term Loan Commitments)  used to finance a Limited Condition Acquisition, the conditions set forth in subsection (a)  of this Section that are tested as of the applicable LCA Test Date shall be certified in the  applicable LCA Election Certificate instead of the certificate delivered pursuant to this  subsection (iii);   (iv)  to the extent requested by any Additional Lender or any Increasing  Lender, executed promissory notes evidencing such Incremental Revolving Commitments  and/or such Incremental Term Loans, issued by the Borrower in accordance with  Section 2.10; and   (v) any other certificates or documents that the Administrative Agent shall  reasonably request, in form and substance reasonably satisfactory to the Administrative  Agent.    Upon the effectiveness of any such Incremental Commitment, the Commitments  and Pro Rata Share of each Lender will be adjusted to give effect to the Incremental  Commitments  and/or the Incremental Term Loans, as applicable, and Schedule I shall automatically be deemed  amended accordingly.  (d) If any Incremental Term Loan Commitments are to be established pursuant  to this Section, other than as set forth herein, all terms with respect thereto shall be as set forth in  the applicable Incremental Commitment Joinder, the execution and delivery of which agreement  shall be a condition to the effectiveness of the establishment of the Incremental Term Loan  Commitments.  Notwithstanding anything to the contrary in Section 10.2, the Administrative  Agent is expressly permitted to amend the Loan Documents to the extent necessary to give effect  to any increase in Commitments and/or establishment of a new Incremental Term Loan  Commitment pursuant to this Section and mechanical changes necessary or advisable in  connection therewith (including amendments to implement the requirements in the preceding  sentence or the foregoing clause (a)(iv) of this Section, amendments to ensure pro rata allocations  of EurodollarSOFR Loans and Base Rate Loans between Loans incurred pursuant to this Section  and Loans outstanding immediately prior to any such incurrence and amendments to implement  ratable participation in Letters of Credit between the Incremental Revolving Commitments and the  Revolving Commitments outstanding immediately prior to any such incurrence).  (e) This Section 2.23 shall supersede any provisions in Section 2.21 or 10.2 to  the contrary.  Section 2.24. Mitigation of Obligations.  If any Lender requests compensation under  Section 2.18, or if the Borrower is required to pay any additional amount to any Lender or any  Governmental Authority for the account of any Lender pursuant to Section 2.20, then such Lender  shall use reasonable efforts to designate a different lending office for funding or booking its Loans  hereunder or to assign its rights and obligations hereunder to another of its offices, branches or  Affiliates, if, in the sole judgment of such Lender, such designation or assignment (i) would  eliminate or reduce amounts payable under Section 2.18 or Section 2.20, as the case may be, in  

 

  89  the future and (ii) would not subject such Lender to any unreimbursed cost or expense and would  not otherwise be disadvantageous to such Lender.  The Borrower hereby agrees to pay all costs  and expenses incurred by any Lender in connection with such designation or assignment.  Section 2.25. Replacement of Lenders.  If (a) any Lender requests compensation under  Section 2.18, or if the Borrower is required to pay any additional amount to any Lender or any  Governmental Authority for the account of any Lender pursuant to Section 2.20 or any Lender has  failed to approve an amendment or waiver that requires the consent of all Lenders or all Lenders  of a particular Class or all affected Lenders (and such amendment or waiver has been approved by  Requisite Lenders or Lenders with a majority of the Commitments or Loans of a particular Class  or a majority of affected Lenders), or (b) any Lender is a Defaulting Lender, then the Borrower  may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent,  require such Lender to assign and delegate, without recourse (in accordance with and subject to  the restrictions set forth in Section 10.4(b)), all of its interests, rights (other than its existing rights  to payments pursuant to Section 2.18 or 2.20, as applicable) and obligations under this Agreement  to an assignee that shall assume such obligations (which assignee may be another Lender) (a  “Replacement Lender”); provided that (i) the Borrower shall have received the prior written  consent of the Administrative Agent, which consent shall not be unreasonably withheld, (ii) such  Lender shall have received payment of an amount equal to the outstanding principal amount of all  Loans owed to it, accrued interest thereon, accrued fees and all other amounts payable to it  hereunder from the assignee (in the case of such outstanding principal and accrued interest) and  from the Borrower (in the case of all other amounts), and (iii) in the case of a claim for  compensation under Section 2.18 or payments required to be made pursuant to Section 2.20, such  assignment will result in a reduction in such compensation or payments.  A Lender shall not be  required to make any such assignment and delegation if, prior thereto, as a result of a waiver by  such Lender or otherwise, the circumstances entitling the Borrower to require such assignment and  delegation cease to apply.  If a Lender fails to execute an Assignment and Assumption Acceptance  giving effect to the assignment contemplated under this Section 2.25, such Assignment and  Acceptance may be executed by the Borrower, the Administrative Agent and any Replacement  Lender and become effective without the consent of such replaced Lender.  Section 2.26. Defaulting Lenders.  (a) Cash Collateral  (i) At any time that there shall exist a Defaulting Lender, within one  Business Day following the written request of the Administrative Agent or any Issuing  Bank (with a copy to the Administrative Agent) the Borrower shall Cash Collateralize each  Issuing Bank’s LC Exposure with respect to such Defaulting Lender (determined after  giving effect to Section 2.26(b)(iv) and any Cash Collateral provided by such Defaulting  Lender) in an amount not less than 103% of such Issuing Bank’s LC Exposure with respect  to such Defaulting Lender.  (ii) The Borrower, and to the extent provided by any Defaulting Lender,  such Defaulting Lender, hereby grants to the Administrative Agent, for the benefit of the  Issuing Banks, and agrees to maintain, a first priority security interest in all such Cash  Collateral as security for the Defaulting Lenders’ obligation to fund participations in  

 

  90  respect of Letters of Credit, to be applied pursuant to clause (iii) below.  If at any time the  Administrative Agent determines that Cash Collateral is subject to any right or claim of  any Person other than the Administrative Agent and the Issuing Banks as herein provided,  or that the total amount of such Cash Collateral is less than the minimum amount required  pursuant to clause (i) above, the Borrower will, promptly upon demand by the  Administrative Agent, pay or provide to the Administrative Agent additional Cash  Collateral in an amount sufficient to eliminate such deficiency (after giving effect to any  Cash Collateral provided by the Defaulting Lender).  (iii) Notwithstanding anything to the contrary contained in this  Agreement, Cash Collateral provided under this Section 2.26(a) or Section 2.26(b) in  respect of Letters of Credit shall be applied to the satisfaction of the Defaulting Lender’s  obligation to fund participations in respect of Letters of Credit or LC Disbursements  (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on  such obligation) for which the Cash Collateral was so provided, prior to any other  application of such property as may otherwise be provided for herein.  (iv) Cash Collateral (or the appropriate portion thereof) provided to  reduce any Issuing Bank’s LC Exposure shall no longer be required to be held as Cash  Collateral pursuant to this Section 2.26(a) following (A) the elimination of the applicable  LC Exposure (including by the termination of Defaulting Lender status of the applicable  Lender), or (ii) the determination by the Administrative Agent and each Issuing Bank that  there exists excess Cash Collateral; provided that, subject to Section 2.26(b) through (d),  the Person providing Cash Collateral and each Issuing Bank may agree that Cash Collateral  shall be held to support future anticipated LC Exposure or other obligations and provided  further that to the extent that such Cash Collateral was provided by the Borrower, such  Cash Collateral shall remain subject to the security interest granted pursuant to the Loan  Documents.  (b) Defaulting Lender Adjustments.  Notwithstanding anything to the contrary  contained in this Agreement, if any Lender becomes a Defaulting Lender, then, until such time as  such Lender is no longer a Defaulting Lender, to the extent permitted by applicable law:  (i) Such Defaulting Lender’s right to approve or disapprove any  amendment, waiver or consent with respect to this Agreement shall be restricted as set forth  in the definition of Required Lenders and in Section 10.2.  (ii) Any payment of principal, interest, fees or other amounts received  by the Administrative Agent for the account of such Defaulting Lender (whether voluntary  or mandatory, at maturity, pursuant to Article VIII or otherwise) or received by the  Administrative Agent from a Defaulting Lender pursuant to Section 10.7 shall be applied  at such time or times as may be determined by the Administrative Agent as follows: first,  to the payment of any amounts owing by such Defaulting Lender to the Administrative  Agent hereunder; second, to the payment on a pro rata basis of any amounts owing by such  Defaulting Lender to each Issuing Bank or the Swingline Lender hereunder; third, to Cash  Collateralize the Issuing Banks’ LC Exposure with respect to such Defaulting Lender in  accordance with Section 2.26(a); fourth, as the Borrower may request (so long as no  

 

  91  Default or Event of Default exists), to the funding of any Loan in respect of which such  Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as  determined by the Administrative Agent; fifth, if so determined by the Administrative  Agent and the Borrower, to be held in a deposit account and released pro rata in order to  (x) satisfy such Defaulting Lender’s potential future funding obligations with respect to  Loans under this Agreement and (y) Cash Collateralize the Issuing Banks’ future LC  Exposure with respect to such Defaulting Lender with respect to future Letters of Credit  issued under this Agreement, in accordance with Section 2.26(a); sixth, to the payment of  any amounts owing to the Lenders, the Issuing Banks or the Swingline Lender as a result  of any judgment of a court of competent jurisdiction obtained by any Lender, any Issuing  Bank or the Swingline Lender against such Defaulting Lender as a result of such Defaulting  Lender’s breach of its obligations under this Agreement; seventh, so long as no Default or  Event of Default exists, to the payment of any amounts owing to the Borrower as a result  of any judgment of a court of competent jurisdiction obtained by the Borrower against such  Defaulting Lender as a result of such Defaulting Lender's breach of its obligations under  this Agreement; and eighth, to such Defaulting Lender or as otherwise directed by a court  of competent jurisdiction; provided that if (x) such payment is a payment of the principal  amount of any Loans or LC Disbursements in respect of which such Defaulting Lender has  not fully funded its appropriate share, and (y) such Loans were made or the related Letters  of Credit were issued at a time when the conditions set forth in Section 3.2 were satisfied  or waived, such payment shall be applied solely to pay the Loans of, and LC Disbursements  owed to, all Non-Defaulting Lenders on a pro rata basis prior to being applied to the  payment of any Loans of, or LC Disbursements owed to, such Defaulting Lender until such  time as all Loans and funded and unfunded participations in respect of Letters of Credit  and Swingline Loans are held by the Lenders pro rata in accordance with the Commitments  without giving effect to sub-section (iv) below.  Any payments, prepayments or other  amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts  owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section 2.26(b)(ii)  shall be deemed paid to and redirected by such Defaulting Lender, and each Lender  irrevocably consents hereto.  (iii) (A) No Defaulting Lender shall be entitled to receive any  commitment fees pursuant to Section 2.14(b) for any period during which that Lender is a  Defaulting Lender (and the Borrower shall not be required to pay any such fee that  otherwise would have been required to have been paid to that Defaulting Lender).    (B) Each Defaulting Lender shall be entitled to receive letter of credit  fees pursuant to Section 2.14(c) for any period during which that Lender is a Defaulting  Lender only to the extent allocable to that portion of its LC Exposure for which it has  provided Cash Collateral pursuant to Section 2.26(a).    (C) With respect to any letter of credit fee not required to be paid to any  Defaulting Lender pursuant to clause (A) or (B) above, the Borrower shall (x) pay to each  Non-Defaulting Lender that portion of any such fee otherwise payable to such Defaulting  Lender with respect to such Defaulting Lender’s participation in Letters of Credit or  Swingline Loans that has been reallocated to such Non-Defaulting Lender pursuant to  clause (iv) below, (y) pay to each Issuing Bank and the Swingline Lender, as applicable,  

 

  92  the amount of any such fee otherwise payable to such Defaulting Lender to the extent  allocable to such Issuing Bank’s LC Exposure or Swingline Lender’s Swingline Exposure  with respect to such Defaulting Lender that has not been Cash Collateralized, and (z) not  be required to pay the remaining amount of any such fee.  (iv) All or any part of such Defaulting Lender’s participation in Letters  of Credit and Swingline Loans shall be reallocated among the Non-Defaulting Lenders in  accordance with their respective Pro Rata Shares of the Revolving Commitments  (calculated without regard to such Defaulting Lender’s Revolving Commitment) but only  to the extent that (x) the conditions set forth in Section 3.2 are satisfied at the time of such  reallocation (and, unless the Borrower shall have otherwise notified the Administrative  Agent at such time, the Borrower shall be deemed to have represented and warranted that  such conditions are satisfied at such time), and (y) such reallocation does not cause the  aggregate Revolving Credit Exposure of any Non-Defaulting Lender to exceed such Non- Defaulting Lender’s Revolving Commitment.  NoSubject to Section 10.18, no reallocation  hereunder shall constitute a waiver or release of any claim of any party hereunder against  a Defaulting Lender arising from that Lender having become a Defaulting Lender,  including any claim of a Non-Defaulting Lender as a result of such Non-Defaulting  Lender’s increased exposure following such reallocation.  (v) If the reallocation described in clause (iv) above cannot, or can only  partially, be effected, the Borrower shall, without prejudice to any right or remedy available  to it hereunder or under law, (x) first, prepay Swingline Loans in an amount equal to the  Swingline Lender’s Swingline Exposure with respect to such Defaulting Lender and (y)  second, Cash Collateralize the Issuing Banks’ LC Exposure with respect to such Defaulting  Lender in accordance with the procedures set forth in Section 2.26(a).  (c) Defaulting Lender Cure.  If the Borrower, the Administrative Agent,  Swingline Lender and Issuing Banks agree in writing that a Lender is no longer a Defaulting  Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective  date specified in such notice and subject to any conditions set forth therein (which may include  arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable,  purchase at par that portion of outstanding Loans of the other Lenders or take such other actions  as the Administrative Agent may determine to be necessary to cause the Loans and funded and  unfunded participations in Letters of Credit and Swingline Loans to be held pro rata by the Lenders  in accordance with the applicable Commitments  (without giving effect to Section 2.26(b)(iv)),  whereupon such Lender will cease to be a Defaulting Lender; provided that no adjustments will  be made retroactively with respect to fees accrued or payments made by or on behalf of the  Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the  extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting  Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising  from that Lender’s having been a Defaulting Lender.  (d) New Swingline Loans/Letters of Credit.  So long as any Lender is a  Defaulting Lender, (i) the Swingline Lender shall not be required to fund any Swingline Loans  unless it is satisfied that it will have no Swingline Exposure after giving effect to such Swingline  

 

  93  Loan and (ii) no Issuing Bank shall be required to issue, extend, renew or increase any Letter of  Credit unless it is satisfied that it will have no LC Exposure after giving effect thereto.  Section 2.27. Request for Extended Facilities.    Notwithstanding anything to the contrary in this Agreement, pursuant to one or more offers (each,  an “Extension Offer”) made from time to time by the Borrower to all Lenders of  Term Loans with  a like Maturity Date  or all Lenders with Revolving Commitments of the same Class, in each case  on a pro rata basis (based on the outstanding amount of the respective Loans or the aggregate  amount of the Revolving Commitments, as the case may be, with the same Maturity Date) and on  the same terms to each such Lender, the Borrower may from time to time offer (but no Lender is  obligated to accept such offer) to extend the maturity date, modify the interest rate or fees payable  in respect of such Term Loans and/or Revolving Commitments (and related outstandings) and/or  modify the amortization schedule in respect of such  Term Loans (each, an “Extension”, and each  group of Term Loans or Revolving Commitments, as applicable, in each case as so extended, as  well as the original Term Loans and Revolving Commitments (in each case not so extended), being  a tranche; any Extended Term Loans shall constitute a separate tranche of Term Loans from the  tranche of Term Loans from which they were converted, and any Extended Revolving  Commitments shall constitute a separate tranche of Revolving Commitments from the tranche of  Revolving Commitments from which they were converted), all as set forth in greater detail in an  Extended Facility Agreement so long as the terms set forth below are satisfied:  (i) (A) no Event of Default shall have occurred and be continuing at the  time an Extension Offer is delivered to the Lenders or at the time of the Extended Facility  Closing Date and (B) all representations and warranties of each Loan Party set forth in the  Loan Documents shall be true and correct in all material respects (other than those  representations and warranties that are expressly qualified by Material Adverse Effect or  other materiality, in which case such representations and warranties shall be true and  correct in all respects) as of the Extended Facility Closing Date (or, if such representation  or warranty relates to an earlier date, as of such earlier date);  (ii) except as to interest rates, fees and final maturity, the Revolving  Commitment of any Lender (an “Extending Revolving Lender”) extended pursuant to an  Extension (an “Extended Revolving Commitment”), and the related outstandings, shall be  a Revolving Commitment (or related Revolving Loan outstandings, as the case may be)  with the same terms as the original Revolving Commitments (and related Revolving Loan  outstandings); provided that (x) subject to the provisions of Sections 2.22(a) and 2.4(f) to  the extent dealing with Letters of Credit and Swingline Loans which mature or expire after  a Maturity Date when there exist Extended Revolving Commitments with a longer  Maturity Date, all Letters of Credit and Swingline Loans shall be participated in on a pro  rata basis by all Lenders with Revolving Commitments in accordance with their Pro Rata  Share of the Aggregate Revolving Commitment Amount (and except as provided in  Sections 2.22(a) and 2.4(f), without giving effect to changes thereto on an earlier Maturity  Date with respect to Swingline Loans and Letters of Credit theretofore incurred or issued)  and all Borrowings under Revolving Commitments and repayments thereunder shall be  made on a pro rata basis (except for (A) payments of interest and fees at different rates on  Extended Revolving Commitments (and related outstandings) and (B) repayments required  

 

  94  upon the Maturity Date for the non-extending Revolving Commitments) and (y) at no time  shall there be Revolving Commitments hereunder (including Extended Revolving  Commitments and any original Revolving Commitments) which have more than five (5)  different Maturity Dates;  (iii) except as to interest rates, fees, amortization schedule, final maturity  date, premium, required prepayment dates and participation in prepayments, the Term  Loans of any Lender (an “Extending Term Loan Lender”) extended pursuant to any  Extension (“Extended Term Loans”) shall have the same terms as the tranche of Term  Loans subject to such Extension Offer except to the extent that such terms are less favorable  to the Extending Term Loan Lenders than to the Lenders of the non-extended Term Loans  or apply solely to periods after the Maturity Date of the non-extended Term Loans;  (iv) the final maturity date for any Extended Term Loans shall be no  earlier than the then latest Maturity Date hereunder or under any existing Extended Facility  Agreement and the amortization schedule applicable to such Extended Term Loans for  periods prior to the maturity date of the Term Loans extended thereby may not be increased  from any then existing amortization schedule applicable to Term Loans;  (v) the Weighted Average Life to Maturity of any Extended Term Loans  shall be no shorter than the remaining Weighted Average Life to Maturity of the Term  Loans extended thereby;  (vi) any Extended Term Loans may participate on a pro rata basis or a  less than pro rata basis (but not greater than a pro rata basis) in any voluntary or mandatory  repayments or prepayments hereunder, in each case as specified in the respective Extended  Facility Agreement;  (vii) if the aggregate principal amount of applicable Term Loans  (calculated on the face amount thereof) or Revolving Commitments, as the case may be, in  respect of which applicable Lenders holding Term Loans or Lenders holding Revolving  Commitments, as the case may be, shall have accepted the relevant Extension Offer shall  exceed the maximum aggregate principal amount of applicable Term Loans or Revolving  Commitments, as the case may be, offered to be extended by Borrower pursuant to such  Extension Offer, then the applicable Term Loans or Revolving Commitments, as the case  may be, of the applicable Lenders holding Term Loans or Lenders holding Revolving  Commitments, as the case may be, shall be extended ratably up to such maximum amount  based on the respective principal amounts (but not to exceed actual holdings of record)  with respect to which such Lenders holding Term Loans or Lenders holding Revolving  Commitments, as the case may be, have accepted such Extension Offer;  (viii) all documentation in respect of such Extension shall be consistent  with the foregoing;  (ix) any Extended Facility requested by the Borrower shall be in a  minimum amount of $20,000,000; and  

 

  95  (x) the Administrative Agent and the lenders party thereto shall enter  into an Extended Revolving Credit Facility Agreement or an Extended Term Facility  Agreement, as the case may be, and the conditions precedent set forth therein shall have  been satisfied or waived in accordance with its terms.  Subject to compliance with the terms of this Section 2.27, the Administrative Agent, each Issuing  Bank and the Lenders hereby consent to the Extensions and the other transactions contemplated  by this Section 2.27 (including, for the avoidance of doubt, payment of any interest, fees or  premium in respect of any Extended Term Loans and/or Extended Revolving Commitments on  such terms as may be set forth in the relevant Extended Facility Agreement) and hereby waive the  requirements of any provision of this Agreement (including, without limitation, Sections 2.21,  10.2, or any other provisions regarding the sharing of payments) or any other Loan Document that  may otherwise prohibit any such Extension or any other transaction contemplated by this Section  2.27.  The Lenders hereto agree that the Extended Facility Lenders party to any Extended Facility  Agreement may, from time to time, make amendments to such Extended Facility Agreement or to  this Agreement and the other Loan Documents to give effect to the Extended Facility Agreement  without the consent of any other Lenders so long as such Extended Facility Agreement, as  amended, complies with the terms set forth in this Section 2.27.  Section 2.28. Refinancing Amendment.    At any time after the Closing Date, the Borrower may obtain, from any Lender or any Refinancing  Lender, Credit Agreement Refinancing Indebtedness in respect of all or any portion of the Loans  or Revolving Commitments then outstanding under this Agreement (which for purposes of this  Section 2.28 will be deemed to include any then outstanding Other Refinancing Term Loans, Other  Refinancing Revolving Commitments, Incremental Term Loans, Incremental Revolving  Commitments, Extended Term Loans or Extended Revolving Commitments), in the form of Other  Refinancing Loans or Other Refinancing Commitments in each case pursuant to a Refinancing  Amendment; provided that such Credit Agreement Refinancing Indebtedness (i) will rank  pari passu or junior in right of payment and of security with the other Loans and Commitments  hereunder and (ii) will have such pricing, premiums and optional prepayment or redemption terms  as may be agreed by the Borrower and the Lenders thereof.  Any Other Refinancing Loans or Other  Refinancing Commitments, as applicable, may participate on a pro rata basis or on a less than  pro rata basis (but not on a greater than pro rata basis) in any voluntary or mandatory prepayments  hereunder, as specified in the applicable Refinancing Amendment.  The effectiveness of any  Refinancing Amendment shall be subject to the satisfaction or waiver on the date thereof of each  of the conditions set forth in Section 3.2 and, to the extent reasonably requested by the  Administrative Agent, receipt by the Administrative Agent of (a) board resolutions, officers’  certificates and/or reaffirmation agreements consistent with those delivered on the Closing Date  under Section 3.1 and (b) customary legal opinions reasonably acceptable to the Administrative  Agent.  Each issuance of Credit Agreement Refinancing Indebtedness incurred under this  Section 2.28 shall be in an aggregate principal amount that is not less than $25,000,000.  The  Administrative Agent shall promptly notify each Lender as to the effectiveness of each  Refinancing Amendment.  Each of the parties hereto hereby agrees that, upon the effectiveness of  any Refinancing Amendment, this Agreement shall be deemed amended to the extent (but only to  the extent) necessary or advisable to reflect the existence and terms of the Credit Agreement  Refinancing Indebtedness incurred pursuant thereto (including any amendments necessary to treat  

 

  96  the Loans and Commitments subject thereto as Other Refinancing Loans and/or Other Refinancing  Commitments).  Any Refinancing Amendment may, without the consent of any other Lenders,  effect such amendments to this Agreement and the other Loan Documents as may be necessary or  appropriate, in the reasonable opinion of the Administrative Agent and the Borrower, to effect the  provisions of this Section 2.28.  This Section 2.28 shall supersede any provisions in Sections 2.21  or 10.2 to the contrary.  ARTICLE III    CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT  Section 3.1. Conditions to Effectiveness.  The obligations of the Lenders (including the  Swingline Lender) to make Loans and the obligation of each Issuing Bank to issue any Letters of  Credit hereunder shall not become effective until the date on which each of the following  conditions is satisfied (or waived in accordance with Section 10.2 or otherwise permitted to be  satisfied after the Closing Date pursuant to Section 5.16):  (a) The Administrative Agent shall have received payment of all fees, expenses  and other amounts due and payable on or prior to the Closing Date, including, without limitation,  reimbursement or payment of all out-of-pocket expenses of the Administrative Agent, the Lead  Arrangers and their Affiliates (including reasonable fees, charges and disbursements of one  primary counsel to the Administrative Agent, one local counsel in each applicable jurisdiction and  any special regulatory counsel) required to be reimbursed or paid by the Borrower hereunder,  under any other Loan Document and under any agreement with the Administrative Agent or the  Lead Arrangers.  (b) The Administrative Agent (or its counsel) shall have received the following,  each to be in form and substance satisfactory to the Administrative Agent:  (i) a counterpart of this Agreement signed by or on behalf of each party  hereto or written evidence satisfactory to the Administrative Agent (which may include  telecopy or email transmission of a signed signature page of this Agreement) that such  party has signed a counterpart of this Agreement;  (ii) a certificate of the Secretary or Assistant Secretary of each Loan  Party in the form of Exhibit 3.1(b)(ii), attaching and certifying copies of (A) such Loan  Party’s articles or certificate of incorporation, formation, organization or limited  partnership, or other registered organizational documents, which shall, if a recently  certified copy thereof has been received by the Loan Parties from such Secretary of State  prior to the Closing Date, be certified as of a recent date by the Secretary of State of the  jurisdiction of organization of such Loan Party, or certifying that there have been no  changes to such Loan Party’s articles or certificate of incorporation, formation,  organization or limited partnership, or other registered organizational documents, as  applicable, certified by the Secretary of State of the jurisdiction of organization of such  Loan Party and delivered to the Administrative Agent on the Original Closing Date, the  First Amendment and Restatement Date, the Second Amendment and Restatement Date or  the date of such Loan Party’s joinder as a Loan Party, as applicable, (B) such Loan Party’s  bylaws, limited liability company agreement or partnership agreement, as applicable, or  

 

  97  certifying that there have been no changes to such Loan Party’s bylaws, limited liability  company agreement or partnership agreement, as applicable, delivered to the  Administrative Agent on the Original Closing Date, the First Amendment and Restatement  Date, the Second Amendment and Restatement Date or the date of such Loan Party’s  joinder as a Loan Party, as applicable, (C) the resolutions of such Loan Party’s board of  directors, managers, members, general partner or other equivalent governing body,  authorizing the execution, delivery and performance of the Loan Documents to which it is  a party, (D) certificates of good standing or existence, as applicable, from the Secretary of  State of the jurisdiction of incorporation or organization of such Loan Party and each other  jurisdiction where the failure of such Loan Party to be qualified to do business as a foreign  company would have a Material Adverse Effect, in each case as of a recent date, and (E) a  certificate of incumbency containing the name, title and true signature of each officer of  such Loan Party executing the Loan Documents to which such Loan Party is a party;   (iii) favorable written opinions of Kirkland & Ellis LLP, counsel to the  Loan Parties, and Snell & Wilmer L.L.P., Nevada counsel to the Loan Parties, in each case,  addressed to the Administrative Agent, each Issuing Bank and each of the Lenders, and  covering such matters relating to the Loan Parties, the Loan Documents and the  transactions contemplated therein as the Administrative Agent or the Required Lenders  shall reasonably request;  (iv) a certificate in the form of Exhibit 3.1(b)(iv), dated the Closing Date  and signed by a Responsible Officer, certifying that after giving effect to the Related  Transactions, (A) no Default or Event of Default has occurred and is continuing on the  Closing Date, (B) all representations and warranties of each Loan Party set forth in the  Loan Documents are true and correct in all material respects (other than those  representations and warranties that are expressly qualified by Material Adverse Effect or  other materiality, in which case such representations and warranties shall be true and  correct in all respects), (C) since the date of the financial statements of the Borrower  described in Section 4.4(i), there has been no change which has had or could reasonably be  expected to have a Material Adverse Effect and (D) the conditions set forth in clause  (b)(vii) and (xiii) below have been satisfied;  (v) a duly executed Notice of Borrowing for each Borrowing on the  Closing Date;  (vi) a report setting forth the sources and uses of the proceeds hereof;  (vii) all consents, approvals, authorizations, registrations and filings and  orders required to be made or obtained under any Requirement of Law, or by any  Contractual Obligation of any Loan Party, in connection with the execution, delivery,  performance, validity and enforceability of the Loan Documents, the other Related  Transaction Documents or any of the transactions contemplated thereby, and such  consents, approvals, authorizations, registrations, filings and orders shall be in full force  and effect and all applicable waiting periods shall have expired, and no investigation or  inquiry by any governmental authority regarding the Commitments or any transaction  being financed with the proceeds thereof shall be ongoing;   

 

  98  (viii) copies of (A) the quarterly financial statements of Ensign and its  Subsidiaries (and the Pennant Subsidiaries) on a consolidated basis for the Fiscal Quarter  ended March 31, 2019 and the Fiscal Quarter ended June 30, 2019, including, in each case,  the related statements of income and cash flows, (B) the audited consolidated financial  statements for Ensign and its Subsidiaries (and the Pennant Subsidiaries) for the Fiscal  Year ended December 31, 2018, including in each case the related statements of income,  shareholders’ equity and cash flows, (C) a pro forma balance sheet and related pro forma  statements of income and cash flows of Ensign and its Subsidiaries (for the avoidance of  doubt, excluding the Pennant Subsidiaries) as of and for (x) the twelve-month period  ending on December 31, 2018 and (y) the twelve-month period ending on the last day of  each Fiscal Quarter ending after December 31, 2018 and at least 60 days prior to the  Closing Date, in each case, prepared so as to give effect to the Related Transactions as if  the Related Transactions had occurred as of such date (in the case of such balance sheet)  or at the beginning of such period (in the case of such other financial statements) and  (D) financial projections of Ensign and its Subsidiaries (for the avoidance of doubt,  excluding the Pennant Subsidiaries) on an annual basis through December 31, 2024;  (ix) a duly completed and executed Compliance Certificate, including  calculations of the financial covenants set forth in Article VI hereof as of June 30, 2019,  calculated on a pro forma basis as if the initial Borrowing(s) had been funded and the  Pennant Transaction and the other Related Transactions had occurred, in each case, as of  the first day of the relevant period for testing compliance (and setting forth in reasonable  detail such calculations);  (x) a certificate, dated the Closing Date and signed by the chief financial  officer of the Borrower, confirming that the Borrower is, and the Borrower and its  Subsidiaries, on a consolidated basis, are, Solvent before and after giving effect to the  funding of the initial Borrowing(s) and the consummation of the Pennant Transaction and  the other Related Transactions contemplated to occur on the Closing Date;  (xi) the Guaranty and Security Agreement, duly executed by the  Borrower and each of its Domestic Subsidiaries (other than the Excluded Subsidiaries),  together with (A) UCC financing statements and other applicable documents under the  laws of all necessary or appropriate jurisdictions with respect to the perfection of the Liens  granted under the Guaranty and Security Agreement, as requested by the Administrative  Agent in order to perfect such Liens, duly authorized by the Loan Parties, (B) copies of  favorable UCC, tax and judgment lien search reports in all necessary or appropriate  jurisdictions, as requested by the Administrative Agent, indicating that there are no prior  Liens on any of the Collateral other than Permitted Encumbrances and other Liens  permitted under Section 7.2 and Liens to be released on the Closing Date, (C) a Perfection  Certificate, duly completed and executed by the Borrower, (D) duly executed Patent  Security Agreements, Trademark Security Agreements and Copyright Security  Agreements, (E) original certificates evidencing all issued and outstanding shares of  Capital Stock of all Subsidiaries (other than the Excluded Subsidiaries) owned directly by  any Loan Party; provided that, in the case of Capital Stock of any Foreign Subsidiary that  is a CFC and Capital Stock of any Pass-Through Foreign Holdco, such original certificates  shall be limited to 65% of the issued and outstanding voting Capital Stock and 100% of the  

 

  99  issued and outstanding non-voting Capital Stock of such Foreign Subsidiary or such Pass- Through Foreign Holdco, as applicable, (F) stock or membership interest powers or other  appropriate instruments of transfer executed in blank and (G) a master intercompany  promissory note duly executed by the Borrower and its Subsidiaries;   (xii) certificates of insurance, in form and detail acceptable to the  Administrative Agent, describing the types and amounts of insurance (property and  liability) maintained by any of the Loan Parties, in each case naming the Administrative  Agent as loss payee or additional insured, as the case may be, together with endorsements  in form and substance reasonably satisfactory to the Administrative Agent;   (xiii) evidence that (A) the Borrower has declared the dividend or  distribution constituting the Pennant Transaction and (B) the Pennant Transaction has been  consummated or will be consummated substantially concurrently with the effectiveness of  this Agreement on the Closing Date, in each case, in form and substance satisfactory to the  Administrative Agent;  (xiv) at least three (3) days prior to the Closing Date, (A) all  documentation and other information with respect to the Borrower and each other Loan  Party that the Administrative Agent or any Lender reasonably determines is required by  regulatory authorities under applicable “know your customer” and anti-money laundering  rules and regulations, including, without limitation, the Patriot Act and the Beneficial  Ownership Regulation, to the extent reasonably requested by the Administrative Agent at  least ten (10) days before the Closing Date, and (B) if the Borrower qualifies as a “legal  entity customer” under the Beneficial Ownership Regulation, a Beneficial Ownership  Certification in relation to the Borrower; and  (xv) the Closing Date Refinancing shall have occurred or shall occur  substantially concurrently with the effectiveness of this Agreement.      Without limiting the generality of the provisions of this Section, for purposes of  determining compliance with the conditions specified in this Section, each Lender that has signed  this Credit Agreement shall be deemed to have consented to, approved of, accepted or been  satisfied with each document or other matter required thereunder to be consented to, approved by  or acceptable or satisfactory to a Lender unless the Administrative Agent shall have received notice  from such Lender prior to the proposed Closing Date specifying its objection thereto.  Section 3.2. Conditions to Each Credit Event.  The obligation of each Lender to make  a Loan on the occasion of any Borrowing and of each Issuing Bank to issue, amend, renew or  extend any Letter of Credit is subject to Section 2.26(c) and the satisfaction of the following  conditions:  (a) at the time of and immediately after giving effect to such Borrowing or the  issuance, amendment, renewal or extension of such Letter of Credit, as applicable, no Default or  Event of Default shall exist;  (b) at the time of and immediately after giving effect to such Borrowing or the  issuance, amendment, renewal or extension of such Letter of Credit, as applicable, all  

 

  100  representations and warranties of each Loan Party set forth in the Loan Documents shall be true  and correct in all material respects, unless such representation or warranty expressly relates to an  earlier date, in which case such representation or warranty shall be true and correct in all material  respects as of such earlier date (other than those representations and warranties that are expressly  qualified by a Material Adverse Effect or other materiality, in which case such representations and  warranties shall be true and correct in all respects); and  (c) the Borrower shall have delivered the required Notice of Borrowing.   Each Borrowing and each issuance, amendment, renewal or extension of any Letter  of Credit shall be deemed to constitute a representation and warranty by the Borrower on the date  thereof as to the matters specified in subsections (a) and (b) of this Section. Notwithstanding the  foregoing, the incurrence of Incremental Commitments and the initial borrowing of Incremental  Term Loans (but not Revolving Loans) thereunder shall be subject solely to the conditions set forth  in Section 2.23.  Section 3.3. Delivery of Documents.  All of the Loan Documents, certificates, legal  opinions and other documents and papers referred to in Section 3.1, unless otherwise specified,  shall be delivered to the Administrative Agent for the account of each of the Lenders and, if  requested by a Lender, in sufficient counterparts or copies for each such Lender.  Section 3.4. Effect on Existing Credit Facility.  Upon this Agreement becoming  effective, all commitments of the lenders under the Existing Credit Agreement to fund additional  advances shall terminate automatically and be replaced by the Commitments set forth in Schedule  I, and all amounts outstanding under the Existing Credit Agreement, together with all accrued and  unpaid interest, fees and other amounts shall be paid in full by the initial Borrowing(s) hereunder  (including through deemed repayment of any Revolving Loans (as defined in the Existing Credit  Agreement) of a Lender (as defined in the Existing Credit Agreement) that are continued as  Revolving Loans hereunder in lieu of being repaid to such Lender in cash and funded again in cash  by such Lender on the Closing Date) (other than with respect to the Existing Letters of Credit  which shall, from and after the Closing Date, be deemed to be Letters of Credit issued pursuant to  this Agreement). Notwithstanding the foregoing, the parties hereto agree that the Liens granted to  the Administrative Agent under or in connection with the Existing Credit Agreement, the Guaranty  and Security Agreement (as defined in the Existing Credit Agreement) and any other Loan  Document (as defined in the Existing Credit Agreement) shall continue in full force and effect and  secure the Secured Obligations (as defined in the Guaranty and Security Agreement (for the  avoidance of doubt, as defined herein)) upon the effectiveness of this Agreement.  Each Lender  party to this Agreement that was also a Lender under and as defined in the Existing Credit  Agreement hereby waives any amounts due and owing to such Lender pursuant to Section 2.19 of  the Existing Credit Agreement as a result of the repayment of loans under the Existing Credit  Agreement on the Closing Date in connection with the effectiveness hereof.   ARTICLE IV    REPRESENTATIONS AND WARRANTIES  The Borrower represents and warrants, both before and after giving effect to the  Related Transactions, to the Administrative Agent, each Lender and each Issuing Bank as follows:  

 

  101  Section 4.1. Existence; Power.  The Borrower and each of its Subsidiaries (i) is duly  organized, validly existing and in good standing as a corporation, partnership or limited liability  company under the laws of the jurisdiction of its organization, (ii) has all requisite power and  authority to carry on its business as now conducted, and (iii) is duly qualified to do business, and  is in good standing, in each jurisdiction where such qualification is required, except where a failure  to be so qualified could not reasonably be expected to result in a Material Adverse Effect.   Section 4.2. Organizational Power; Authorization.  The execution, delivery and  performance by each Loan Party of the Loan Documents and the other Related Transaction  Documents to which it is a party are within such Loan Party’s organizational powers and have  been duly authorized by all necessary organizational and, if required, shareholder, partner or  member action.  This Agreement has been duly executed and delivered by the Borrower and  constitutes, and each other Loan Document and Related Transaction Document to which any Loan  Party is a party, when executed and delivered by such Loan Party, will constitute, valid and binding  obligations of the Borrower or such Loan Party (as the case may be), enforceable against it in  accordance with their respective terms, except as may be limited by applicable bankruptcy,  insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’  rights generally and by general principles of equity.  Section 4.3. Governmental Approvals; No Conflicts.  The execution, delivery and  performance by each Loan Party of the Loan Documents and the other Related Transaction  Documents to which it is a party (a) do not require any consent or approval of, registration or filing  with, or any action by, any Governmental Authority, except those as have been obtained or made  and are in full force and effect and except for filings necessary to perfect or maintain perfection of  the Liens created under the Loan Documents, (b) will not violate any Requirement of Law  applicable to the Borrower or any of its Subsidiaries or any judgment, order or ruling of any  Governmental Authority, (c) will not violate or result in a default under any Contractual Obligation  of the Borrower or any of its Subsidiaries or any of its assets or give rise to a right thereunder to  require any payment to be made by the Borrower or any of its Subsidiaries, (d) will not result in  the creation or imposition of any Lien on any asset of the Borrower or any of its Subsidiaries,  except Liens (if any) created under the Loan Documents, and (e) do not affect the Borrower’s or  any Subsidiary’s right to receive, or reduce the amount of, payments and reimbursements from  Third Party Payors, or materially adversely affect any Health Care Permit.  Section 4.4. Financial Statements.  The Borrower has furnished to each Lender (i) the  audited consolidated balance sheet of Ensign and its Subsidiaries (and the Pennant Subsidiaries)  as of December 31, 2018, and the related audited consolidated statements of income, shareholders’  equity and cash flows for the Fiscal Year then ended, audited by Deloitte & Touche, LLP and  (ii) the unaudited consolidated balance sheet of Ensign and its Subsidiaries (and the Pennant  Subsidiaries) as of June 30, 2019, and the related unaudited consolidated statements of income and  cash flows for the Fiscal Quarter and year-to-date period then ended, certified by a Responsible  Officer.  Such financial statements fairly present the consolidated financial condition of the  Borrower and its Subsidiaries (and the Pennant Subsidiaries) as of such dates and the consolidated  results of operations for such periods in conformity with GAAP consistently applied, subject to  year-end audit adjustments and the absence of footnotes in the case of the statements referred to  in clause (ii).  Since December 31, 2018, there have been no changes with respect to the Borrower  

 

  102  and its Subsidiaries which have had or could reasonably be expected to have, either individually  or in the aggregate, a Material Adverse Effect.  Section 4.5. Litigation and Environmental Matters.  (a) No litigation, investigation or proceeding of or before any arbitrators or  Governmental Authorities is pending against or, to the knowledge of the Borrower, threatened in  writing against or affecting the Borrower or any of its Subsidiaries (i) as to which there is a  reasonable possibility of an adverse determination that could reasonably be expected to have,  either individually or in the aggregate, a Material Adverse Effect or (ii) which could reasonably  be expected to result in the invalidity or unenforceability of this Agreement or any other Loan  Document or any other Related Transaction Document.  (b) Neither the Borrower nor any of its Subsidiaries (i) has failed to comply  with any Environmental Law or to obtain, maintain or comply with any permit, license or other  approval required under any Environmental Law, (ii) has become subject to any Environmental  Liability, (iii) has received notice of any claim with respect to any Environmental Liability or (iv)  knows of any basis for any Environmental Liability, in the case of each of clauses (i), (ii), (iii) and  (iv) which have had or could reasonably be expected to have, either individually or in the  aggregate, a Material Adverse Effect.  Section 4.6. Compliance with Laws and Agreements.  The Borrower and each of its  Subsidiaries is in compliance with (a) all Requirements of Law and all judgments, decrees and  orders of any Governmental Authority and (b) all indentures, agreements or other instruments  binding upon it or its properties, except where non-compliance, either individually or in the  aggregate, could not reasonably be expected to result in a Material Adverse Effect.   Section 4.7. Investment Company Act.  Neither the Borrower nor any of its  Subsidiaries is (a) an “investment company” or is “controlled” by an “investment company”, as  such terms are defined in, or subject to regulation under, the Investment Company Act of 1940, as  amended and in effect from time to time, or (b) otherwise subject to any other regulatory scheme  limiting its ability to incur debt or requiring any approval or consent from, or registration or filing  with, any Governmental Authority in connection therewith.  Section 4.8. Taxes.  The Borrower and its Subsidiaries and each other Person for whose  Taxes the Borrower or any of its Subsidiaries could become liable have timely filed or caused to  be filed all Federal income tax returns and all other material tax returns that are required to be filed  by them, and have paid all Taxes shown to be due and payable on such returns or on any  assessments made against it or its property and all other Taxes, fees or other charges imposed on  it or any of its property by any Governmental Authority, except where the same are currently being  contested in good faith by appropriate proceedings and for which the Borrower or such Subsidiary,  as the case may be, has set aside on its books adequate reserves in accordance with GAAP.    Section 4.9. Use of Proceeds; Margin Regulations.  None of the proceeds of any of the  Loans or Letters of Credit will be used, directly or indirectly, for “purchasing” or “carrying” any  “margin stock” within the respective meanings of each of such terms under Regulation U or for  any purpose that violates the provisions of Regulation T, Regulation U or Regulation X.  Neither  the Borrower nor any of its Subsidiaries is engaged principally, or as one of its important activities,  

 

  103  in the business of extending credit for the purpose of purchasing or carrying “margin stock”.  The  Borrower will use the Revolving Loans and the Swingline Loans for working capital, capital  expenditures, dividends, distributions and Permitted Acquisitions not prohibited by this  Agreement, for other general corporate purposes of the Borrower and its Subsidiaries and for any  other purpose not prohibited by this Agreement.  The Borrower will use the proceeds of any  Incremental Term Loans or Other Refinancing Term Loans for the purposes set forth in any  Incremental Commitment Joinder or Refinancing Amendment.  Section 4.10. ERISA.  Except as would not reasonably be expected to have a Material  Adverse Effect, each Plan is in substantial compliance in form and operation with its terms and  with ERISA and the Code (including, without limitation, the Code provisions compliance with  which is necessary for any intended favorable tax treatment) and all other applicable laws and  regulations.  Each Plan (and each related trust, if any) which is intended to be qualified under  Section 401(a) of the Code has received a favorable determination letter from the Internal Revenue  Service to the effect that it meets the requirements of Sections 401(a) and 501(a) of the Code  covering all applicable tax law changes, or is comprised of a master or prototype plan that has  received a favorable opinion letter from the Internal Revenue Service, and, except as would not  reasonably be expected to have a Material Adverse Effect, nothing has occurred since the date of  such determination that would adversely affect such determination (or, in the case of a Plan with  no determination, nothing has occurred that would adversely affect the issuance of a favorable  determination letter or otherwise adversely affect such qualification).  No ERISA Event has  occurred or is reasonably expected to occur.  There exists no Unfunded Pension Liability with  respect to any Plan.  None of the Borrower, any of its Subsidiaries or any ERISA Affiliate is  making or accruing an obligation to make contributions, or has, within any of the five calendar  years immediately preceding the date this assurance is given or deemed given, made, or accrued  an obligation to make, contributions to any Multiemployer Plan.  There are no actions, suits or  claims pending against or involving a Plan (other than routine claims for benefits) or, to the  knowledge of the Borrower, any of its Subsidiaries or any ERISA Affiliate, threatened in writing,  which would reasonably be expected to be asserted successfully against any Plan and, if so asserted  successfully, would reasonably be expected either singly or in the aggregate to result in a Material  Adverse Effect.  Except as would not reasonably be expected either individually or in the aggregate  to have a Material Adverse Effect, the Borrower, each of its Subsidiaries and each ERISA Affiliate  have made all contributions to or under each Plan and Multiemployer Plan required by law within  the applicable time limits prescribed thereby, by the terms of such Plan or Multiemployer Plan,  respectively, or by any contract or agreement requiring contributions to a Plan or Multiemployer  Plan.  No Plan which is subject to Section 412 of the Code or Section 302 of ERISA has applied  for or received an extension of any amortization period within the meaning of Section 412 of the  Code or Section 303 or 304 of ERISA.  None of the Borrower, any of its Subsidiaries or any ERISA  Affiliate have ceased operations at a facility so as to become subject to the provisions of Section  4068(a) of ERISA, withdrawn as a substantial employer so as to become subject to the provisions  of Section 4063 of ERISA or ceased making contributions to any Plan subject to Section 4064(a)  of ERISA to which it made contributions.  None of the Borrower or any of its Subsidiaries has  established, contributes to or maintains any Non-U.S. Plan.  

 

  104  Section 4.11. Ownership of Property; Insurance.  (a) Each of the Borrower and its Subsidiaries has good title to, or valid  leasehold interests in or other right to occupy, all of its real and personal property material to the  operation of its business, including all such properties reflected in the most recent audited  consolidated balance sheet of Ensign referred to in Section 4.4 or purported to have been acquired  by the Borrower or any of its Subsidiaries after said date (except as sold or otherwise disposed of  in the ordinary course of business), in each case free and clear of Liens prohibited by this  Agreement.  All leases that individually or in the aggregate are material to the business or  operations of the Borrower and its Subsidiaries taken as a whole are valid and subsisting and are  in full force.  The Borrower has delivered to Administrative Agent a true, complete and correct  copy of each Master Lease.    (b) Each of the Borrower and its Subsidiaries owns, or is licensed or otherwise  has the right to use, all patents, trademarks, service marks, trade names, copyrights and other  intellectual property material to its business, and the use thereof by the Borrower and its  Subsidiaries does not infringe on the rights of any other Person, except in any manner to the extent  that such failure to do so or such infringement would not reasonably be expected to result in a  Material Adverse Effect.  (c) The properties of the Borrower and its Subsidiaries are insured (i) with  financially sound and reputable insurance companies which are not Affiliates of the Borrower, in  such amounts with such deductibles and covering such risks as are customarily carried by  companies engaged in similar businesses and owning similar properties in localities where the  Borrower or any applicable Subsidiary operates or (ii) as determined in the Borrower’s reasonable  business judgment, through the Borrower’s self-insured retention program maintained through the  Insurance Subsidiaries.  Section 4.12. Disclosure.  None of the reports (including, without limitation, all reports  that the Borrower is required to file with the Securities and Exchange Commission), financial  statements (including, for the avoidance of doubt, the pro forma financial statements referred to in  Section 3.1(b)(viii)(C)), certificates or other information furnished by or on behalf of the Borrower  to the Administrative Agent or any Lender in connection with the negotiation or syndication of  this Agreement or any other Loan Document or delivered hereunder or thereunder (as modified or  supplemented by any other information so furnished) contains any material misstatement of fact  or omits to state any material fact necessary to make the statements therein, taken as a whole in  light of the circumstances under which they were made, not materially misleading; provided that,  with respect to projected financial information, the Borrower represents only that such projected  information was prepared in good faith based upon assumptions believed to be reasonable at the  time, it being understood and agreed that such projected information is subject to contingencies  and assumptions, many of which are not within the control of the Borrower, and no assurances can  be given that any projections will be realized, and any divergences from projected results may be  material. As of the Closing Date, the information included in the Beneficial Ownership  Certification is true and correct in all respects.  Section 4.13. Labor Relations.  There are no strikes, lockouts or other labor disputes or  grievances against the Borrower or any of its Subsidiaries, or, to the Borrower’s knowledge,  

 

  105  threatened  in writing against or affecting the Borrower or any of its Subsidiaries, and no unfair  labor practice charges or grievances are pending against the Borrower or any of its Subsidiaries,  or, to the Borrower’s knowledge, threatened in writing against any of them before any  Governmental Authority, in each case, that would, either individually or in the aggregate,  reasonably be expected to result in a Material Adverse Effect.  All payments due from the  Borrower or any of its Subsidiaries pursuant to the provisions of any collective bargaining  agreement have been paid or accrued as a liability on the books of the Borrower or any such  Subsidiary, except where the failure to do so could not reasonably be expected to have a Material  Adverse Effect.  Section 4.14. Subsidiaries.  As of the ClosingSecond Amendment Effective Date and  (other than with respect to the Pennant Subsidiaries) as of each date on which such schedule is  subsequently updated pursuant to the terms of this Agreement, Schedule 4.14 sets forth the name  of, the ownership interest of the applicable owner in, the jurisdiction of incorporation or  organization of, and the type of each Subsidiary of the Borrower and the other Loan Parties and  identifies each Subsidiary that is a Subsidiary Loan Party, each Subsidiary that is an Excluded  Subsidiary and each Pennant Subsidiary.  Section 4.15. Solvency.  After giving effect to the execution and delivery of the Loan  Documents and the other Related Transaction Documents and the making of the Loans under this  Agreement and the consummation of the other Related Transactions, the Borrower is, and the  Borrower and its Subsidiaries, on a consolidated basis, are, Solvent.  Section 4.16. [Reserved].    Section 4.17. Collateral Documents.     (a)  The Guaranty and Security Agreement is effective to create in favor of the  Administrative Agent for the ratable benefit of the Secured Parties a legal, valid and enforceable  security interest in the Collateral (as defined therein), and when UCC financing statements in  appropriate form are filed in the offices specified on Schedule 3 to the Guaranty and Security  Agreement, the Guaranty and Security Agreement shall constitute a fully perfected Lien (to the  extent that such Lien may be perfected by the filing of a UCC financing statement) on, and security  interest in, all right, title and interest of the grantors thereunder in such Collateral, in each case  prior and superior in right to any other Person, other than with respect to Liens expressly permitted  by Section 7.2.  When the certificates evidencing all Capital Stock pledged pursuant to the  Guaranty and Security Agreement are delivered to the Administrative Agent, together with  appropriate stock powers or other similar instruments of transfer duly executed in blank, the Liens  in such Capital Stock shall be fully perfected first priority security interests, perfected by “control”  as defined in the UCC.    (b) When the filings in subsection (a) of this Section are made and when, if  applicable, the Patent Security Agreements and the Trademark Security Agreements are filed in  the United States Patent and Trademark Office and the Copyright Security Agreements are filed  in the United States Copyright Office, the Guaranty and Security Agreement shall constitute a fully  perfected Lien on, and security interest in, all right, title and interest of the Loan Parties in the  Patents, Trademarks and Copyrights, if any, in which a security interest may be perfected by filing,  recording or registering a security agreement, financing statement or analogous document in the  

 

  106  United States Patent and Trademark Office or the United States Copyright Office, as applicable,  in each case prior and superior in right to any other Person, subject to inchoate Liens permitted  hereunder that do not secure Indebtedness.  Section 4.18. [Reserved].    Section 4.19. Healthcare Matters.    (a) Compliance with Health Care Laws.  The Borrower and each of its  Subsidiaries is, and at all times during the four calendar years immediately preceding the Closing  Date has been, in compliance with all Health Care Laws and requirements of Third Party Payor  Programs applicable to it, its assets, business or operations, except where the failure to do so has  not had or could not reasonably be expected to have, in the aggregate, a Material Adverse Effect.   No circumstance exists or event has occurred which could result in a violation of any Health Care  Law or any requirement of any Third Party Payor Program that could reasonably be expected to  result in a Material Adverse Effect.    (b) Health Care Permits.  The Borrower and each of its Subsidiaries holds, and  at all times during the four calendar years immediately preceding the Closing Date has held, all  Health Care Permits necessary for it to own, lease, sublease or operate its assets or to conduct its  business or operations for the period covered by such Health Care Permit.  All such Health Care  Permits are, and at all times during the four calendar years immediately preceding the Closing  Date have been, in full force and effect and there is and has been no material default under,  violation of, or other noncompliance with the terms and conditions of any such Health Care Permit.   No condition exists or event has occurred which, in itself or with the giving of notice or lapse of  time or both, has resulted or would result in the suspension, revocation, termination, restriction,  limitation, modification or non-renewal of any Health Care Permit that could reasonably be  expected to have, in the aggregate, a Material Adverse Effect.  Other than as set forth on Schedule  4.19, no Governmental Authority has taken, or to the knowledge of the Borrower or any of its  Subsidiaries intends to take, action to suspend, revoke, terminate, place on probation, restrict, limit,  modify or not renew any Health Care Permit of the Borrower or any of its Subsidiaries.  As of the  ClosingSecond Amendment Effective Date, Schedule 4.19 sets forth an accurate, complete and  current list of all material Health Care Permits, and all Third Party Payor Authorizations for Third  Party Payor Programs in which the Borrower or any of its Subsidiaries participates.    (c) Third Party Payor Authorizations.   The Borrower and each of its  Subsidiaries holds, and at all times during the four calendar years immediately preceding the  Closing Date has held, in full force and effect, all Third Party Payor Authorizations necessary to  participate in and be reimbursed by all Third Party Payor Programs in which the Borrower or any  of its Subsidiaries participates, except where the failure to do so has not had or could not reasonably  be expected to have, in the aggregate, a Material Adverse Effect.  There is no investigation, audit,  claim review, or other action pending or, to the knowledge of the Borrower or any of its  Subsidiaries, threatened in writing, which could result in a suspension, revocation, termination,  restriction, limitation, modification or non-renewal of any Third Party Payor Authorization or  result in the exclusion of the Borrower or any of its Subsidiaries from any Third Party Payor  Program that could reasonably be expected to have, in the aggregate, a Material Adverse Effect.  

 

  107  (d) Licensed Personnel.  The Licensed Personnel have complied and currently  are in compliance with all applicable Health Care Laws and hold, and, at all times that such Persons  have been Licensed Personnel of the Borrower or any of its Subsidiaries, have held, all professional  licenses and other Health Care Permits and all Third Party Payor Authorizations required in the  performance of such Licensed Personnel’s duties for the Borrower or any of its Subsidiaries, and  each such Health Care Permit and Third Party Payor Authorization is in full force and effect and,  to the knowledge of the Borrower and its Subsidiaries, no suspension, revocation, termination,  impairment, modification or non-renewal of any such Health Care Permit or Third Party Payor  Authorization is pending or threatened in writing, except where the failure to do so has not had or  could not reasonably be expected to have, in the aggregate, a Material Adverse Effect.   (e) Accreditation.  The Borrower and each of its Subsidiaries has obtained and  maintains accreditation in good standing and without limitation or impairment by all applicable  accrediting organizations, to the extent prudent and customary in the industry in which it is  engaged or required by law (including any foreign law or equivalent regulation), except where the  failure to have or maintain such accreditation in good standing or imposition of limitation or  impairment would not have, in the aggregate, a Material Adverse Effect.   (f) Proceedings; Audits.  There are no pending (or, to the knowledge of the  Borrower or any of its Subsidiaries, threatened) Proceedings against or affecting the Borrower or  any of its Subsidiaries or, to the knowledge of the Borrower or any of its Subsidiaries, any Licensed  Personnel, relating to any actual or alleged non-compliance with any Health Care Law or  requirement of any Third Party Payor Program, in each case, that could reasonably be expected to  have, in the aggregate, a Material Adverse Effect.  There are no facts, circumstances or conditions  that would reasonably be expected to form the basis for any such Proceeding against or affecting  any Loan Party or, to the knowledge of the Borrower or any of its Subsidiaries, any Licensed  Personnel that could reasonably be expected to have, in the aggregate, a Material Adverse Effect.   There currently exist no restrictions, deficiencies, required plans of correction or other such  remedial measures with respect to any Health Care Permit of the Borrower or any of its  Subsidiaries, or the participation by the Borrower or any of its Subsidiaries in any Third Party  Payor Program, in each case, that could reasonably be expected to have, in the aggregate, a  Material Adverse Effect.  Without limiting the foregoing, no validation review, program integrity  review, audit or other investigation related to the Borrower or any of its Subsidiaries or its  operations, or the consummation of the transactions contemplated in the Loan Documents or  related to the Collateral, (i) has been conducted by or on behalf of any Governmental Authority,  or (ii) is scheduled, pending or, to the knowledge of the Borrower or any of its Subsidiaries,  threatened in writing, in each case that could reasonably be expected to have, in the aggregate, a  Material Adverse Effect.      (g) Overpayments.  Neither the Borrower nor any of its Subsidiaries (i) has  knowingly retained an overpayment received from, or failed to refund any amount due to, any  Third Party Payor in material violation of any Health Care Law or contract; or (ii) except as set  forth on Schedule 4.19, has received written notice of, or has knowledge of, any material  overpayment or refunds due to any Third Party Payor.  (h) Material Statements.  Neither the Borrower nor any of its Subsidiaries, nor  any officer, Affiliate, employee or agent of the Borrower or any of its Subsidiaries, has made an  

 

  108  untrue statement of a material fact or fraudulent statement to any Governmental Authority, failed  to disclose a material fact that must be disclosed to any Governmental Authority, or committed an  act, made a statement or failed to make a statement that, at the time such statement, disclosure or  failure to disclose occurred, in each case, that could reasonably be expected to have, in the  aggregate, a Material Adverse Effect.    (i) Prohibited Transactions.  Except as where any of the following could not be  reasonably expected to result in a Material Adverse Effect, neither the Borrower nor any of its  Subsidiaries, nor any officer, Affiliate or managing employee of the Borrower or any of its  Subsidiaries, directly or indirectly, has (i) offered or paid or solicited or received any remuneration,  in cash or in kind, or made any financial arrangements, in violation of any Health Care Law; (ii)  given or agreed to give, or is aware that there has been made or that there is any agreement to  make, any gift or gratuitous payment of any kind, nature or description (whether in money,  property or services) in violation of any Health Care Law; (iii) made or agreed to make, or is aware  that there has been made or that there is any agreement to make, any contribution, payment or gift  of funds or property to, or for the private use of, any governmental official, employee or agent  where either the contribution, payment or gift or the purpose of such contribution, payment or gift  is or was illegal under the laws of any Governmental Authority having jurisdiction over such  payment, contribution or gift; (iv) established or maintained any unrecorded fund or asset for any  purpose or made any misleading, false or artificial entries on any of its books or records for any  reason; or (v) made, or agreed to make, or is aware that there has been made or that there is any  agreement to make, any payment to any person with the intention or understanding that any part  of such payment would be in violation of any Health Care Law or used or was given for any  purpose other than that described in the documents supporting such payment.  To the knowledge  of the Borrower and its Subsidiaries, no Person has filed or has threatened in writing to file against  the Borrower, any of its Subsidiaries or any of their Affiliates an action under any federal or state  whistleblower statute, including, without limitation, under the False Claims Act of 1863 (31 U.S.C.  § 3729 et seq.), to the extent such a filing, if adversely determined, would reasonably be expected  to result in a Material Adverse Effect.  (j) Exclusion.  Except as where any of the following could not be reasonably  expected to result in a Material Adverse Effect, neither the Borrower nor any of its Subsidiaries,  nor any owner, officer, director, partner, agent, managing employee or Person with a “direct or  indirect ownership interest” (as that phrase is defined in 42 C.F.R. § 420.201) in the Borrower or  any of its Subsidiaries, nor any Licensed Personnel of the Borrower or any of its Subsidiaries, has  been (or has been threatened to be) (i) excluded from any Third Party Payor Program pursuant to  42 U.S.C. § 1320a-7 and related regulations, (ii) “suspended” or “debarred” from selling products  to the U.S. government or its agencies pursuant to the Federal Acquisition Regulation, relating to  debarment and suspension applicable to federal government agencies generally (42 C.F.R. Subpart  9.4), or other applicable laws or regulations, (iii) debarred, disqualified, suspended or excluded  from participation in any Third Party Payor Program or is listed on the General Services  Administration list of excluded parties, nor is any such debarment, disqualification, suspension or  exclusion threatened or pending, or (iv) made a party to any other action by any Governmental  Authority that may prohibit it from selling products or providing services to any governmental or  other purchaser pursuant to any federal, state or local laws or regulations.    

 

  109  Section 4.20. Sanctions.  Neither any Loan Party nor any of its Subsidiaries or Affiliates  or, to the knowledge of any Loan Party, any of their respective directors, officers, employees or  agents, is an individual or entity that is, or is owned or controlled by any individual or entity that  is, (i) currently the subject or target of any Sanctions, (ii) a Sanctioned Person or (iii) located,  organized or resident in a Sanctioned Country.  Each of the Loan Parties and their Subsidiaries,  and to the knowledge of the Loan Parties, each of their respective directors, officers, employees,  agents and Affiliates is in compliance with all applicable Sanctions and has instituted and  maintained policies and procedures designed to promote and achieve compliance with all  applicable Sanctions.  Section 4.21. Anti-Corruption Laws.  The Loan Parties and their Subsidiaries and  Affiliates have conducted their businesses in compliance in all material respects with the United  States Foreign Corrupt Practices Act of 1977, the UK Bribery Act of 2010, and other applicable  legislation or laws and regulations concerning or relating to bribery, money laundering or  corruption in other jurisdictions (collectively, the “Anti-Corruption Laws”) and have instituted and  maintained policies and procedures designed to promote and achieve compliance with such Anti- Corruption Laws.  Section 4.22. Patriot Act.  Neither any Loan Party nor any of its Subsidiaries is an  “enemy” or an “ally of the enemy” within the meaning of Section 2 of the Trading with the Enemy  Act or any enabling legislation or executive order relating thereto.  Neither any Loan Party nor any  or its Subsidiaries is in violation of (a) the Trading with the Enemy Act, (b) any of the foreign  assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter  V, as amended) or any enabling legislation or executive order relating thereto or (c) the Patriot  Act.  None of the Loan Parties (i) is a blocked person described in Section 1 of the Anti-Terrorism  Order or (ii) to the best of its knowledge, engages in any dealings or transactions, or is otherwise  associated, with any such blocked person.  Section 4.23. EEAAffected Financial Institutions. Neither the Borrower nor any  Subsidiary is an EEAAffected Financial Institution.  ARTICLE V    AFFIRMATIVE COVENANTS  The Borrower covenants and agrees that until Payment in Full of the Obligations:   Section 5.1. Financial Statements and Other Information.  The Borrower will deliver  to the Administrative Agent:  (a) as soon as available and in any event within 90 days after the end of each  Fiscal Year of Ensign (or if Ensign is no longer required to file periodic reports under Section  13(a) or Section 15(d) of the Exchange Act, then 120 days after the end of each Fiscal Year), a  copy of the annual audited report for such Fiscal Year for Ensign and its Subsidiaries, containing  a consolidated balance sheet of Ensign and its Subsidiaries as of the end of such Fiscal Year and  the related consolidated statements of income, stockholders’ equity and cash flows (together with  all footnotes thereto) of Ensign and its Subsidiaries for such Fiscal Year, setting forth in each case  in comparative form the figures for the previous Fiscal Year, all in reasonable detail and reported  

 

  110  on by Deloitte & Touche, LLP or other independent public accountants of nationally recognized  standing (without a “going concern” or like qualification, exception or explanation and without  any qualification or exception as to the scope of such audit (other than any “going concern” or  similar qualification or exception related to the maturity or refinancing of the Obligations)) to the  effect that such financial statements present fairly in all material respects the financial condition  and the results of operations of the Borrower and its Subsidiaries for such Fiscal Year on a  consolidated basis in accordance with GAAP, and that the examination by such accountants in  connection with such consolidated financial statements has been made in accordance with  generally accepted auditing standards;  (b) as soon as available and in any event within 45 days after the end of each  of the first three Fiscal Quarters of Ensign (or if Ensign is no longer required to file periodic reports  under Section 13(a) or Section 15(d) of the Exchange Act, then 60 days after the end of each Fiscal  Quarter) (including, for the avoidance of doubt, the Fiscal Quarter of Ensign ended September 30,  2019), an unaudited consolidated balance sheet of Ensign and its Subsidiaries as of the end of such  Fiscal Quarter and the related unaudited consolidated statements of income and cash flows of  Ensign and its Subsidiaries for such Fiscal Quarter and the then elapsed portion of such Fiscal  Year, setting forth in each case in comparative form the figures for the corresponding Fiscal  Quarter and the corresponding portion of Ensign’s previous Fiscal Year;  (c) concurrently with the delivery of the financial statements referred to in  subsections (a) and (b) of this Section, a Compliance Certificate signed by the principal executive  officer or the principal financial officer of the Borrower (i) certifying that such financial statements  fairly present the financial condition, results of operations, shareholders’ equity and cash flows of  Ensign and its Subsidiaries on a consolidated basis in accordance with GAAP, in the case of  quarterly financial statements subject only to normal year-end audit adjustments and the absence  of footnotes, (ii) certifying as to whether there exists a Default or Event of Default on the date of  such certificate and, if a Default or an Event of Default then exists, specifying the details thereof  and the action which the Borrower has taken or proposes to take with respect thereto, (iii) setting  forth in reasonable detail calculations demonstrating compliance with the financial covenants set  forth in Article VI (beginning with the Fiscal Quarter ended September 30, 2019), (iv) specifying  any change in the identity of the Borrower or any of its Subsidiaries as of the end of such Fiscal  Year or Fiscal Quarter from the Borrower or any of its Subsidiaries identified to the Lenders on  the Closing Date or as of the most recent Fiscal Year or Fiscal Quarter, as the case may be, (v)  stating whether any change in GAAP or the application thereof has occurred since the date of the  mostly recently delivered audited financial statements of Ensign and its Subsidiaries, and, if any  change has occurred, specifying the effect of such change on the financial statements  accompanying such Compliance Certificate, (vi) setting forth a list of all Subsidiaries of the  Borrower (other than Excluded Subsidiaries and Specified Subsidiaries) that are not Subsidiary  Loan Parties as of such date and setting forth in reasonable detail calculations of total assets of  such Subsidiaries as of such date and the total revenue of such Subsidiaries for the Test Period  then ended and (vii) setting forth a list of all Excluded Subsidiaries as of such date and setting  forth in reasonable detail calculations of (w) Indebtedness of such Excluded Subsidiaries incurred  pursuant to Section 7.1(h) that remains outstanding as of such date, (x) the total amount of  Investments made in Excluded Subsidiaries pursuant to Section 7.4(h) as of such date, (y) the  Maximum Attributable EBITDA Percentage (beginning with the Fiscal Year ending December  31, 2019) and (z) that portion of Consolidated EBITDA that is attributable to such Excluded  

 

  111  Subsidiaries (and their respective Subsidiaries) with respect to the applicable Fiscal Year or Fiscal  Quarter end;  (d) as soon as available and in any event within 60 days after the end of the  calendar year, a budget for the succeeding Fiscal Year, containing an income statement, balance  sheet and statement of cash flow;  (e) promptly after the same become publicly available, copies of all periodic  and other reports, proxy statements and other materials filed with the Securities and Exchange  Commission, or any Governmental Authority succeeding to any or all functions of said  Commission, or with any national securities exchange, or distributed by Ensign to its shareholders  generally, as the case may be; and  (f) promptly following any request therefor, such other information regarding  the results of operations, business affairs and financial condition of the Borrower or any of its  Subsidiaries (including information and documentation for purposes of compliance with  applicable “know your customer” and anti-money-laundering rules and regulations, including,  without limitation, the Patriot Act and the Beneficial Ownership Regulation) as the Administrative  Agent may reasonably request (provided that no such information shall be required to be provided  if providing such information would violate confidentiality agreements or result in a loss of  attorney-client privilege or a claim of attorney work product with respect to such information so  long as the Borrower notifies the Administrative Agent that such information is being withheld  and the reason therefor).  So long as Ensign is required to file periodic reports under Section 13(a) or Section  15(d) of the Exchange Act, the Borrower shall be deemed to have satisfied its obligation to deliver  the financial statements referred to in clauses (a), (b) and (e) upon the filing of such reports with  the Securities and Exchange Commission.    Section 5.2. Notices of Material Events.  The Borrower will furnish to the  Administrative Agent (for distribution to each Lender) prompt written notice of the following:  (a) the occurrence of any Default or Event of Default;  (b) the filing or commencement of, or any material development in, any action,  suit, proceeding, audit, claim, demand, order or dispute with, by or before any arbitrator or  Governmental Authority against or, to the knowledge of the Borrower, affecting the Borrower or  any of its Subsidiaries that (i) seeks injunctive or similar relief, (ii) alleges potential or actual  violations of any Health Care Law by the Borrower or any of its Subsidiaries or any of its Licensed  Personnel and (iii) would, either individually or in the aggregate, reasonably be expected to result  in a Material Adverse Effect;  (c) the occurrence of any event or any other development by which the  Borrower or any of its Subsidiaries (i) fails to comply with any Environmental Law or to obtain,  maintain or comply with any permit, license or other approval required under any Environmental  Law, (ii) becomes subject to any Environmental Liability, (iii) receives notice of any claim with  respect to any Environmental Liability, or (iv) becomes aware of any basis for any Environmental  

 

  112  Liability, in each case which, either individually or in the aggregate, could reasonably be expected  to result in a Material Adverse Effect;   (d) promptly and in any event within 15 days after (i) the Borrower, any of its  Subsidiaries or any ERISA Affiliate knows or has reason to know that any ERISA Event has  occurred, a certificate of the chief financial officer of the Borrower describing such ERISA Event  and the action, if any, proposed to be taken with respect to such ERISA Event and a copy of any  notice filed with the PBGC or the IRS pertaining to such ERISA Event and any notices received  by the Borrower, such Subsidiary or such ERISA Affiliate from the PBGC or any other  governmental agency with respect thereto, and (ii) becoming aware (1) that there has been a  material increase in Unfunded Pension Liabilities (not taking into account Plans with negative  Unfunded Pension Liabilities) since the date the representations hereunder are given or deemed  given, or from any prior notice, as applicable, (2) of the existence of any material Withdrawal  Liability, (3) of the adoption of, or the commencement of contributions to, any Plan subject to  Section 412 of the Code by the Borrower, any of its Subsidiaries or any ERISA Affiliate, or (4) of  the adoption of any amendment to a Plan subject to Section 412 of the Code which results in a  material increase in contribution obligations of the Borrower, any of its Subsidiaries or any ERISA  Affiliate, a detailed written description thereof from the chief financial officer of the Borrower;  (e) the occurrence of any event of default, or the receipt by the Borrower or any  of its Subsidiaries of any written notice of an alleged event of default, with respect to any Material  Indebtedness of the Borrower or any of its Subsidiaries;   (f) any termination, expiration or loss of any Material Agreement that,  individually or in the aggregate, could reasonably be expected to result in a reduction in  Consolidated EBITDA of 10% or more on a consolidated basis from the prior Fiscal Year; and  (g) any other development that results in, or could reasonably be expected to  result in, a Material Adverse Effect.   The Borrower will furnish to the Administrative Agent and each Lender the  following:    (x) notice of any change (i) in any Loan Party’s legal name (but, for the  avoidance of doubt, excluding any trade names), (ii) in any Loan Party’s chief executive office,  (iii) in any Loan Party’s organizational existence or (iv) in any Loan Party’s federal taxpayer  identification number or organizational number or jurisdiction of organization, in each case, prior  to or concurrently with such change; and  (y) promptly and in any event no later than three (3) Business Days after any  Responsible Officer of the Borrower or any of its Subsidiaries has actual knowledge of:  (i)  the voluntary disclosure by the Borrower or any of its Subsidiaries  to the Office of the Inspector General of the United States Department of Health and  Human Services, or any Third Party Payor Program (including to any intermediary, carrier  or contractor of such Program), of an actual overpayment matter involving the submission  of claims to a Third Party Payor in an amount greater than $1,000,000;  

 

  113  (ii) that the Borrower or any of its Subsidiaries, or an owner, officer,  manager, employee or Person with a “direct or indirect ownership interest” (as that phrase  is defined in 42 C.F.R. §420.201) in the Borrower or any of its Subsidiaries, (i) has had a  civil monetary penalty assessed against him or her pursuant to 42 U.S.C. §1320a-7a or is  the subject of a proceeding seeking to assess such penalty; (ii) has been excluded from  participation in a Federal Health Care Program (as that term is defined in 42 U.S.C. §1320a- 7b) or is the subject of a proceeding seeking to assess such penalty; (iii) has been convicted  (as that term is defined in 42 C.F.R. §1001.2) of any of those offenses described in 42  U.S.C. §1320a-7b or 18 U.S.C. §§669, 1035, 1347, 1518 or is the subject of a proceeding  seeking to assess such penalty; or (iv) has been involved or named in a U.S. Attorney  complaint made or any other action taken pursuant to the False Claims Act under 31 U.S.C.  §§3729-3731 or in any qui tam action brought pursuant to 31 U.S.C. §3729 et seq.;  (iii) any claim to recover any alleged overpayments (other than any such  claim made against the Borrower or any of its Subsidiaries that relates to a period during  which the Borrower or such Subsidiary did not operate the respective facility) with respect  to any receivables in excess of $500,000;   (iv) notice of any final and documented material reduction in the level  of reimbursement expected to be received with respect to receivables;  (v) any allegations of licensure violations or fraudulent acts or  omissions involving the Borrower or any of its Subsidiaries, or, to the knowledge of the  Borrower or any of its Subsidiaries, any Licensed Personnel that would, in the aggregate,  have a Material Adverse Effect;   (vi)  the pending or threatened imposition of any material fine or penalty  by any Governmental Authority under any Health Care Law against the Borrower or any  of its Subsidiaries, or, to the knowledge of the Borrower or any of its Subsidiaries, any  Licensed Personnel;    (vii)  any changes in any Health Care Law (including the adoption of a  new Health Care Law) known to the Borrower or any of its Subsidiaries that would, in the  aggregate, have a Material Adverse Effect;  (viii) any pending or threatened (in writing) revocation, suspension,  termination, probation, restriction, limitation, denial, or non-renewal with respect to any  Health Care Permit or Third Party Payor Authorization;   (ix)   any non-routine and material inspection of any facility of the  Borrower or any of its Subsidiaries by any Governmental Authority; and   (x) without duplication, any failure of the Borrower or any of its  Subsidiaries to comply with the covenants and conditions of Section 5.15.    Each notice or other document delivered under this Section shall be accompanied  by a written statement of a Responsible Officer setting forth the details of the event or development  requiring such notice or other document and any action taken or proposed to be taken with respect  thereto.  Section 5.3. Existence; Conduct of Business.  The Borrower will, and will cause each  of its Subsidiaries to, do or cause to be done all things necessary to (i) maintain in full force and  

 

  114  effect its legal existence and (ii) preserve, renew and maintain its respective rights, licenses,  permits, privileges, franchises, patents, copyrights, trademarks and trade names material to the  conduct of its business (except, in the case of this clause (ii), as would not reasonably be expected  to result in a Material Adverse Effect); provided that nothing in this Section shall prohibit any  merger, consolidation, liquidation or dissolution permitted under Section 7.3.   Section 5.4. Compliance with Laws.  The Borrower will, and will cause each of its  Subsidiaries to, comply with all laws, rules, regulations and requirements of any Governmental  Authority applicable to its business and properties, including, without limitation, all  Environmental Laws, ERISA and OSHA, except where the failure to do so, either individually or  in the aggregate, could not reasonably be expected to result in a Material Adverse Effect.  The  Borrower will, and will cause each of its Subsidiaries to, comply with all applicable Sanctions and  in all material respects with the laws, rules, regulations and requirements referenced in Sections  4.20, 4.21, and 4.22.  Section 5.5. Payment of Obligations.  The Borrower will, and will cause each of its  Subsidiaries to, pay and discharge at or before maturity all of its obligations and liabilities  (including, without limitation, all taxes, assessments and other governmental charges, levies and  all other claims that could result in a statutory Lien) before the same shall become delinquent or  in default, except where (a) the validity or amount thereof is being contested in good faith by  appropriate proceedings and the Borrower or such Subsidiary has set aside on its books adequate  reserves with respect thereto in accordance with GAAP or (b) the failure to make any such payment  could not reasonably be expected to result in a Material Adverse Effect.  Section 5.6. Books and Records.  The Borrower will, and will cause each of its  Subsidiaries to, keep proper books of record and account in which full, true and correct entries  shall be made of all dealings and transactions in relation to its business and activities to the extent  necessary to prepare the consolidated financial statements of the Borrower in conformity with  GAAP.  Section 5.7. Visitation and Inspection.  The Borrower will, and will cause each of its  Subsidiaries to, permit any representative of the Administrative Agent or any Lender to visit and  inspect its properties, to examine its books and records and to make copies and take extracts  therefrom, and to discuss its affairs, finances and accounts with any of its officers and with its  independent certified public accountants, all at such reasonable times as the Administrative Agent  or any Lender may reasonably request after reasonable prior notice to the Borrower; provided that  (a) so long as no Event of Default shall have occurred and be continuing, the Administrative Agent  and the Lenders shall not make more than one (1) such visit and inspection in any Fiscal Year; (b)  if an Event of Default has occurred and is continuing, no prior notice shall be required and the  limitation on the number of visits and inspections shall no longer apply; (c) any such inspection  and examination, copies and discussions shall not be permitted to the extent it would violate  confidentiality agreements or result in a loss of attorney-client privilege or claim of attorney work  product so long as the Borrower notifies the Administrative Agent of such limitation and the reason  therefor; and (d) any such inspection and examination, copies and discussions shall be subject to  the terms of any applicable Master Lease and the accompanying Collateral Access Agreement.  

 

  115  Section 5.8. Maintenance of Properties; Insurance.  The Borrower will, and will cause  each of its Subsidiaries to, (a) keep and maintain all property material to the conduct of its business  in good working order and condition, ordinary wear and tear, force majeure, casualty and  condemnation events excepted, (b) maintain with financially sound and reputable insurance  companies, or with Affiliates of the Borrower (as permitted in Section 4.11(c)(ii)), (i) insurance  with respect to its properties and business, and the properties and business of its Subsidiaries,  against loss or damage of the kinds customarily insured against by companies in the same or similar  businesses operating in the same or similar locations and (ii) all insurance required to be  maintained pursuant to the Collateral Documents, and will, upon request of the Administrative  Agent, furnish to each Lender a certificate of a Responsible Officer setting forth the nature and  extent of all insurance maintained by the Borrower and its Subsidiaries in accordance with this  Section, and (c) at all times shall name the Administrative Agent as additional insured on all  liability policies of the Borrower and the other Loan Parties and as loss payee (pursuant to a loss  payee endorsement approved by the Administrative Agent) on all casualty and property insurance  policies of the Borrower and the other Loan Parties; provided that, so long as no Event of Default  shall have occurred and be continuing, the Administrative Agent shall not make more than two  requests for a certificate pursuant to clause (b)(ii) of this Section in any Fiscal Year; provided,  further, that if an Event of Default has occurred and is continuing, the limitation on the number of  requests for such a certificate shall no longer apply.  Section 5.9. Use of Proceeds; Margin Regulations.  The Borrower (i) will use the  proceeds of the initial Borrowing(s) to consummate the Closing Date Refinancing and the other  Related Transactions, to pay transaction costs and expenses arising in connection herewith and for  working capital and other general corporate purposes, and (ii) after the Closing Date, will use the  proceeds of the Revolving Loans and the Swingline Loans for working capital, capital  expenditures, dividends, distributions and Permitted Acquisitions not prohibited by this  Agreement, for other general corporate purposes of the Borrower and its Subsidiaries and for any  other purpose not prohibited by this Agreement.  The Borrower will use the proceeds of any  Incremental Term Loans or Other Refinancing Term Loans for the purposes set forth in the  applicable Incremental Commitment Joinder or Refinancing Amendment.  No part of the proceeds  of any Loan will be used, whether directly or indirectly, for any purpose that would violate any  rule or regulation of the Board of Governors of the Federal Reserve System, including Regulation  T, Regulation U or Regulation X.  All Letters of Credit will be used for general corporate purposes.  Section 5.10. [Reserved].    Section 5.11. [Reserved].    Section 5.12. Additional Subsidiaries and Collateral.    (a) Within 75 days after the end of the second Fiscal Quarter of each Fiscal  Year of Ensign (or, if the Administrative Agent determines in its sole discretion that the Borrower  is working in good faith, such longer period as the Administrative Agent shall permit not to exceed  60 additional days), commencing with the 2020 Fiscal Year, the Borrower will (i) cause each  Domestic Subsidiary that is a Material Subsidiary (excluding any Excluded Subsidiary, any  Specified Subsidiary and any Subsidiary that is already a Guarantor) (a “Joining Guarantor”) (A)  to become a new Guarantor and to grant Liens in favor of the Administrative Agent in all of its  

 

  116  personal property subject to the Guaranty and Security Agreement by executing and delivering to  the Administrative Agent a supplement to the Guaranty and Security Agreement in form and  substance reasonably satisfactory to the Administrative Agent, executing and delivering a  Copyright Security Agreement, Patent Security Agreement and Trademark Security Agreement,  as and to the extent applicable, and authorizing and delivering, at the request of the Administrative  Agent, such UCC financing statements or similar instruments required by the Administrative  Agent to perfect the Liens in favor of the Administrative Agent and granted under any of the Loan  Documents, (B) to deliver all such other documentation (including, without limitation, certified  organizational documents, resolutions, lien searches and, if requested by the Administrative Agent,  legal opinions, provided, that legal opinions shall only be required for a Joining Guarantor having  a fair market value in excess of $50,000,000) and to take all such other actions as such Joining  Guarantor would have been required to deliver and take pursuant to Section 3.1 if such Joining  Guarantor had been a Loan Party on the Closing Date, (C) to comply with Section 5.11, and (D)  to deliver Collateral Access Agreements with respect to leased Real Estate (to the extent the  landlord of any such leased Real Estate is a PropCo Landlord or a landlord under a Material Master  Lease), in each case, of the type required under Section 5.13, (ii) pledge, or cause the applicable  Loan Party to pledge, all of the Capital Stock of such Joining Guarantor to the Administrative  Agent as security for the Obligations by executing and delivering a supplement to the Guaranty  and Security Agreement in form and substance reasonably satisfactory to the Administrative  Agent, and (iii) deliver the original certificates (if any and to the extent not prohibited under  applicable law) evidencing such pledged Capital Stock to the Administrative Agent, together with  appropriate powers executed in blank.   (b) Within 75 days after the end of the second Fiscal Quarter of each Fiscal  Year of Ensign (or, if the Administrative Agent determines in its sole discretion that the Borrower  is working in good faith, such longer period as the Administrative Agent shall permit not to exceed  60 additional days), commencing with the 2020 Fiscal Year, the Borrower shall (i) cause the  applicable Loan Parties to pledge all of the Capital Stock of each Foreign Subsidiary and each  Pass-Through Foreign Holdco that is a Material Subsidiary (excluding any Excluded Subsidiaries)  to the extent such Capital Stock is owned directly by a Loan Party to the Administrative Agent as  security for the Obligations pursuant to the Guaranty and Security Agreement; provided that, in  the case of any such Foreign Subsidiary that is a CFC and any such Pass-Through Foreign Holdco,  such pledge shall be limited to 65% of the issued and outstanding voting Capital Stock and 100%  of the issued and outstanding non-voting Capital Stock of such Foreign Subsidiary or such Pass- Through Foreign Holdco, as applicable, (ii) deliver the original certificates (if any and to the extent  not prohibited under applicable law) evidencing such pledged Capital Stock to the Administrative  Agent, together with appropriate powers executed in blank and (iii) deliver all such other  documentation (including, without limitation, certified organizational documents, resolutions, lien  searches and, if requested by the Administrative Agent, legal opinions) and to take all such other  actions as the Administrative Agent may reasonably request.  (c) If (i) the Total Leverage Ratio for the four consecutive Fiscal Quarter  period ending on the end of any Fiscal Quarter, commencing with the Fiscal Quarter ending on or  about December 31, 2019, is greater than 2.00:1.00 and (ii) as of the end of such Fiscal Quarter  either (x) the aggregate assets of all Subsidiaries of the Borrower (other than Excluded Subsidiaries  and Specified Subsidiaries) that are not Subsidiary Loan Parties as of such date are in excess of  20.0% of the total assets of Ensign and its Subsidiaries determined on a consolidated basis as of  

 

  117  such date or (y) the aggregate revenues of all Subsidiaries of the Borrower (other than Excluded  Subsidiaries and Specified Subsidiaries) that are not Subsidiary Loan Parties as of such date are in  excess of 10.0% of the total revenues of Ensign and its Subsidiaries on a consolidated basis as of  such date (such percentages in clauses (x) and (y), the “Threshold Amounts”), then within 75 days  after the end of such Fiscal Quarter (or with respect to the fourth Fiscal Quarter of each Fiscal  Year, then within 120 days after the end of such Fiscal Quarter), the Borrower shall cause one or  more of such Domestic Subsidiaries that is at such time not a Subsidiary Loan Party to become an  additional Subsidiary Loan Party to the extent necessary to cause the aggregate assets and the  aggregate revenue of all Subsidiaries of the Borrower that are not Subsidiary Loan Parties at such  time (other than Excluded Subsidiaries and Specified Subsidiaries) to be no greater than the  Threshold Amounts, by executing and delivering the documents and taking the actions described  in subsection (a) above as if such Domestic Subsidiaries were Joining Guarantors.  (d) The Borrower agrees that, following the delivery of any Collateral  Documents required to be executed and delivered by this Section, the Administrative Agent shall  have a valid and enforceable, first priority perfected Lien on the property required to be pledged  pursuant to subsections (a), (b) and (c) of this Section (to the extent that such Lien can be perfected  by execution, delivery and/or recording of the Collateral Documents or UCC financing statements,  or possession of such Collateral), free and clear of all Liens other than Liens expressly permitted  by Section 7.2.  All actions to be taken pursuant to this Section shall be at the expense of the  Borrower or the applicable Loan Party, and shall be taken to the reasonable satisfaction of the  Administrative Agent.  Section 5.13. Collateral Access Agreements.  To the extent otherwise permitted  hereunder, if any Loan Party proposes to lease any Real Estate from a PropCo Landlord under a  Master Lease or any landlord that is party to a Material Master Lease, it shall first provide to the  Administrative Agent a copy of such lease (if the Administrative Agent has not previously received  a copy of such lease) and a Collateral Access Agreement from the landlord of such leased property;  provided that with regard to landlords other than PropCo Landlords, no such Collateral Access  Agreement shall be required if the Borrower is unable to obtain such Collateral Access Agreement  following use of commercially reasonable efforts to do so.      Section 5.14. Further Assurances.  The Borrower will, and will cause each other Loan  Party to, execute any and all further documents, financing statements, agreements and instruments,  and take all such further actions (including the filing and recording of financing statements and  other documents), which may be required under any applicable law, or which the Administrative  Agent or the Required Lenders may reasonably request, to effectuate the transactions contemplated  by the Loan Documents or to grant, preserve, protect or perfect the Liens created by the Collateral  Documents or the validity or priority of any such Lien, all at the expense of the Loan Parties.  The  Borrower also agrees to provide to the Administrative Agent, from time to time upon reasonable  request, evidence reasonably satisfactory to the Administrative Agent as to the perfection and  priority of the Liens created or intended to be created by the Collateral Documents.    

 

  118  Section 5.15. Health Care Matters.    (a)  Without limiting or qualifying Section 5.4, or any other provision of this  Agreement, the Borrower and each of its Subsidiaries will be in material compliance with all  applicable Health Care Laws relating to the operation of such Person’s business.          (b) Each of the Borrower and its Subsidiaries shall:  (i) obtain, maintain and preserve, and cause each of its Subsidiaries to  obtain, maintain and preserve, and take all necessary action to timely renew, all material  Health Care Permits (including, as applicable, Health Care Permits necessary for it to be  eligible to receive payment and compensation from and to participate in Medicare,  Medicaid or any other Third Party Payor programs) which are necessary or useful in the  proper conduct of its business;   (ii) be and remain in material compliance with all requirements for  participation in, and for licensure required to provide the goods or services that are  reimbursable under, Medicare, Medicaid and other Third Party Payor Programs;   (iii) cause all Licensed Personnel to be in material compliance with all  applicable Health Care Laws in the performance of their duties to or for the Borrower and  its Subsidiaries, and to maintain in full force and effect all professional licenses and other  Health Care Permits required to perform such duties; and  (iv) keep and maintain all records required to be maintained by any  Governmental Authority or otherwise under any Health Care Law.  (c) The Borrower and each of its Subsidiaries shall maintain a corporate and  health care regulatory compliance program (“CCP”) which addresses the requirements of Health  Care Laws, including, without limitation, HIPAA and includes at least the following components  and allows the Administrative Agent (and/or its consultants) from time to time to review such  CCP: (i) standards of conduct and procedures that describe compliance policies regarding laws  with an emphasis on prevention of fraud and abuse; (ii) a specific officer within high-level  personnel identified as having overall responsibility for compliance with such standards and  procedures; (iii) training and education programs which effectively communicate the compliance  standards and procedures to employees and agents, including, without limitation, fraud and abuse  laws and illegal billing practices; (iv) auditing and monitoring systems and reasonable steps for  achieving compliance with such standards and procedures, including, without limitation,  publicizing a report system to allow employees and other agents to anonymously report criminal  or suspect conduct and potential compliance problems; (v) disciplinary guidelines and consistent  enforcement of compliance policies, including, without limitation, discipline of individuals  responsible for the failure to detect violations of the CCP; and (vi) mechanisms to immediately  respond to detected violations of the CCP.  The Borrower and its Subsidiaries shall modify such  CCPs from time to time, as may be necessary to ensure continuing compliance with all applicable  Health Care Laws.  Upon request, the Administrative Agent (and/or its consultants) shall be  permitted to review such CCPs.  

 

  119  Section 5.16. Post-Closing Matters.  The Borrower will, and will cause each other Loan  Party to, satisfy the requirements set forth on Schedule 5.16 on or before the date specified for  such requirement or such later date as agreed to by the Administrative Agent in its sole discretion.  Section 5.17. [Reserved].  Section 5.18. Limitations on Designation of Excluded Subsidiaries.  (a)     (a) The Borrower may, on or after the Closing Date, designate any Subsidiary of the  Borrower (other than Ensign REIT or any Intermediate Entity) as an “Excluded Subsidiary” under  this Agreement (an “Excluded Subsidiary Designation”) only if:  (i) no Default or Event of Default shall have occurred and be continuing at the  time of or immediately after giving effect to such Excluded Subsidiary Designation;   (ii) the Borrower would be permitted under this Agreement to make an  Investment at the time of such Excluded Subsidiary Designation (assuming the  effectiveness of such Excluded Subsidiary Designation) in an amount (the “Excluded  Subsidiary Designation Amount”) equal to the sum of the book value (or, in the case of  cash, the amount of cash invested) (without duplication) of Investments held by the  Borrower or other Loan Parties in such Subsidiary determined net of any payments  received with respect to such Investment from the date that such Investment was made  through the date of such Excluded Subsidiary Designation (to be determined without  duplication of other Investments permitted under Section 7.4);  (iii) after giving effect to such Excluded Subsidiary Designation and any  Acquisition or Disposition permitted by this Agreement consummated since the most  recently ended Test Period, the Borrower shall be in compliance on a Pro Forma Basis with  the covenants set forth in Article VI as of the end of the most recently ended Test Period  as if such Excluded Subsidiary Designation had occurred, and any Indebtedness incurred  in connection therewith was incurred, on the first day of such Test Period;  (iv) substantially concurrent with such Excluded Subsidiary Designation, either  (x) such Subsidiary incurs or assumes Indebtedness that is permitted pursuant to Section  7.1(h) that is secured by Liens that are permitted pursuant to Section 7.2(f), (y) such  Subsidiary enters into a lease with respect to Real Estate to be operated or otherwise used  by such Subsidiary, which lease requires such Subsidiary to grant a first priority Lien in  favor of such landlord on such Subsidiary’s accounts receivable and/or the Capital Stock  of such Subsidiary or otherwise prohibits such Subsidiary from granting a first priority  Lien in favor of the Administrative Agent on such Subsidiary’s accounts receivable and/or  the Capital Stock of such Subsidiary (or results in a lease default if such Lien is granted),  provided, that the Borrower shall not be required to designate such Subsidiary as an  Excluded Subsidiary to the extent such Subsidiary is a Subsidiary Loan Party and the Liens  and security interests in favor of the landlord on the assets of such Subsidiary Loan Party  are permitted pursuant to, and subject to an intercreditor agreement contemplated by,  Section 7.2(i) or (z) with respect to a lease that was previously entered into by such  

 

  120  Subsidiary with respect to Real Estate to be operated or otherwise used by such Subsidiary  and in connection with such lease the landlord under such lease was granted a Lien on and  security interest in the assets of such Subsidiary that were permitted immediately prior to  such Excluded Subsidiary Designation pursuant to, and subject to an intercreditor  agreement contemplated by, Section 7.2(i), the date occurs that is 75 days prior to the date  provided in the applicable intercreditor agreement whereupon any of the Liens on and  security interests in favor of such landlord on the assets of such Subsidiary will cease to  have the relative lien priority necessary for such Liens and security interests to be permitted  pursuant to Section 7.2(i); and  (v) such Subsidiary is not a tenant under any PropCo Master Lease.  (b) Upon any such Excluded Subsidiary Designation after the Closing Date, the  Borrower and its Subsidiaries shall be deemed to have made an Investment in such Excluded  Subsidiary in an amount equal to the Excluded Subsidiary Designation Amount.  (c) Borrower may revoke any Excluded Subsidiary Designation of a Subsidiary as an  Excluded Subsidiary (an “Excluded Subsidiary Revocation”), whereupon such Subsidiary shall  cease to be an Excluded Subsidiary, if:  (i) no Default or Event of Default shall have occurred and be continuing at the  time and immediately after giving effect to such Excluded Subsidiary Revocation;  (ii) all Liens and Indebtedness of such Excluded Subsidiary and its Subsidiaries  outstanding immediately following such Excluded Subsidiary Revocation would, if  incurred at the time of such Excluded Subsidiary Revocation, have been permitted to be  incurred for all purposes of this Agreement; and  (iii) such Subsidiary (and any other applicable Loan Party) executes and delivers  the documents and takes the actions described in Section 5.12(a) as if such Subsidiary was  a Joining Guarantor.  (d) All Excluded Subsidiary Designations and Excluded Subsidiary Revocations  occurring after the Closing Date must be evidenced by a certificate of a Responsible Officer of the  Borrower delivered to the Administrative Agent certifying compliance with the foregoing  provisions of this Section 5.18(a) (in the case of any such Excluded Subsidiary Designations) and  of Section 5.18(c) (in the case of any such Excluded Subsidiary Revocations).  (e) If the Borrower designates a Guarantor as an Excluded Subsidiary in accordance  with this Section 5.18, the Obligations of such Guarantor under the Loan Documents shall  terminate and be of no further force and effect and all Liens granted by such Guarantor under the  applicable Collateral Documents shall terminate and be released and be of no further force and  effect, and all Liens on the Capital Stock and debt obligations of such Guarantor shall be  terminated and released and of no further force and effect, in each case, without any action required  by the Administrative Agent.  At the Borrower’s request, the Administrative Agent will execute  and deliver any instrument evidencing such termination and the Administrative Agent shall take  all actions appropriate in order to effect such termination and release of such Liens and without  recourse or warranty by the Administrative Agent (including the execution and delivery of  

 

  121  appropriate UCC termination statements and such other instruments and releases as may be  necessary and appropriate to effect such release).  Any such foregoing actions taken by the  Administrative Agent shall be at the sole cost and expense of the Borrower.  Section 5.19. Anti-Corruption Laws; Sanctions.  The Borrower will comply and  conduct its, and cause its Subsidiaries to comply and conduct their, business in compliance in all  material respects with the Anti-Corruption Laws and all applicable Sanctions and institute and  maintain policies and procedures designed to promote and achieve compliance by the Borrower  and its Subsidiaries and their respective directors, officers, employees, agents and Affiliates with  such Anti-Corruption Laws and Sanctions.  ARTICLE VI    FINANCIAL COVENANTS  The Borrower covenants and agrees that so long as any Lender has a Commitment  hereunder or any Obligation remains unpaid or outstanding:   Section 6.1. Total Leverage Ratio.  The Borrower will maintain, as of the end of each  Test Period, commencing with the Test Period ended on September 30, 2019, a Total Leverage  Ratio of not greater than 3.003.75:1.00 (the “Maximum Total Leverage Threshold”); provided that  if the aggregate consideration paid in connection with all Permitted Acquisitions or other  Acquisitions permitted hereunder consummated during any six (6) consecutive month period  exceeds $50,000,000, then, at the election of the Borrower by written notice to the Administrative  Agent (with a description in reasonable detail of the Permitted Acquisitions or other Acquisitions  permitted hereunder consummated during such period and the consideration paid), the Maximum  Total Leverage Threshold shall be increased to 3.504.25:1.00 for the current Fiscal Quarter and  the immediately following three Fiscal Quarters; provided, further, that the Maximum Total  Leverage Threshold shall not be increased pursuant to the preceding proviso (i) more than four  times (or with respect to more than twelve Fiscal Quarters) during the term of this Agreement and  (ii) unless in the most recently ended four consecutive Fiscal Quarter period there shall be at least  one Fiscal Quarter in respect of which the Maximum Total Leverage Threshold has not been  increased.  Section 6.2. Interest/Rent Coverage Ratio.  The Borrower will maintain, as of the end  of each Test Period, commencing with the Test Period ended on September 30, 2019, an  Interest/Rent Coverage Ratio of not less than 1.50:1.00.  ARTICLE VII    NEGATIVE COVENANTS  The Borrower covenants and agrees that until Payment in Full of the Obligations:   Section 7.1. Indebtedness and Preferred Equity.  The Borrower will not, and will not  permit any of its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness, except:   (a) Indebtedness created pursuant to the Loan Documents;  

 

  122  (b) Indebtedness of the Borrower and its Subsidiaries existing on the date  hereofSecond Amendment Effective Date and set forth on Schedule 7.1 and extensions, renewals  and replacements of any such Indebtedness that do not increase the outstanding principal amount  thereof (immediately prior to giving effect to such extension, renewal or replacement) or shorten  the maturity or the weighted average life thereof;   (c) Indebtedness of the Borrower or any of its Subsidiaries incurred to finance  the acquisition, construction or improvement of any fixed or capital assets, including Capital Lease  Obligations (it being understood that the completion of the construction or development of  additional beds at existing facilities or new facilities shall constitute the acquisition of property),  and any Indebtedness assumed in connection with the acquisition of any such assets or secured by  a Lien on any such assets (provided that such Indebtedness is incurred prior to or within 90 days  after such acquisition or the completion of such construction or improvements), and extensions,  renewals, refinancings or replacements of any such Indebtedness that do not increase the  outstanding principal amount thereof (immediately prior to giving effect to such extension,  renewal, refinancing or replacement, other than in an amount not to exceed unpaid interest and  fees and expenses incurred in connection therewith) or shorten the maturity or the weighted  average life thereof; provided that the aggregate principal amount of such Indebtedness at any time  outstanding does not exceed the greater of $70,000,000 and 40.0% of Consolidated EBITDA for  the most recently ended Test Period; provided, further, that the aggregate principal amount of  Capital Lease Obligations that are permitted under subsection (j) of this Section shall not be  included in calculating the aggregate principal amount of Indebtedness for purposes of the  limitation set forth in this subsection;  (d) Indebtedness of the Borrower owing to any Subsidiary and of any  Subsidiary owing to the Borrower or any other Subsidiary; provided that any such Indebtedness  that is owed by a Subsidiary that is not a Subsidiary Loan Party shall be subject to Section 7.4;  (e) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any  Subsidiary of Indebtedness of the Borrower or any other Subsidiary; provided that Guarantees by  any Loan Party of Indebtedness of any Subsidiary that is not a Subsidiary Loan Party shall be  subject to Section 7.4; provided, further, that Ensign may Guarantee on an unsecured basis all  Indebtedness permitted under Section 7.1(h);  (f) Indebtedness of any Person which becomes a Subsidiary (other than an  Excluded Subsidiary) after the date of this Agreement and Indebtedness secured by assets acquired  by the Borrower or any of its Subsidiaries (other than an Excluded Subsidiary) after the date of  this Agreement; provided that in each case (i) such Indebtedness exists at the time that such Person  becomes a Subsidiary or such asset is acquired and is not created in contemplation of or in  connection with such Person becoming a Subsidiary or such asset being acquired, and (ii) the  aggregate principal amount of all such Indebtedness permitted hereunder at any time outstanding  shall not exceed the greater of $70,000,000 and 40.0% of Consolidated EBITDA for the most  recently ended Test Period;  (g) Hedging Obligations permitted by Section 7.10;   (h) Indebtedness of an Excluded Subsidiary secured by Liens permitted by  Section 7.2(f) in an aggregate principal amount, when taken together with the aggregate amount  

 

  123  of Investments in any Excluded Subsidiaries made pursuant to Section 7.4(h) that remain  outstanding at such time (other than any portion of such Investment made in reliance on the  Available Amount), for all such Indebtedness not to exceed at any time outstanding the greater of  (x) $350,000,000 and (y) an amount equal to (I) Consolidated EBITDA for the most recently ended  Test Period multiplied by (II) two; provided that, at the time of and immediately after giving effect  to the incurrence or assumption of any such Indebtedness, (A) no Default or Event of Default shall  exist and (B) the Borrower and its Subsidiaries shall be in pro forma compliance with Sections 6.1  and 6.2 as of the most recently ended Test Period, calculated as if all such Indebtedness had been  incurred as of the first day of the relevant period for testing compliance;   (i) other unsecured Indebtedness of the Borrower or its Subsidiaries; provided  that, at the time of and immediately after giving effect to any such Indebtedness, (A) no Default  or Event of Default shall exist and (B) the Borrower and its Subsidiaries shall be in pro forma  compliance with Sections 6.1 and 6.2 as of the most recently ended Test Period, calculated as if  all such Indebtedness had been incurred as of the first day of the relevant period for testing  compliance;  (j) Capital Lease Obligations incurred in connection with any Permitted  Acquisition structured as a capital lease;  (k) unsecured Indebtedness of a Subsidiary Loan Party owing to its landlord or  Affiliates of such landlord under a lease of Real Estate for loans advanced by such landlord or its  Affiliates for the purpose of funding capital expenditures with  respect to healthcare facilities  located on such Real Estate, provided that the aggregate amount of Indebtedness at any time  outstanding pursuant to this Section 7.1(k) shall not exceed the greater of $70,000,000 and 40.0%  of Consolidated EBITDA for the most recently ended Test Period;  (l) Indebtedness in respect of workers’ compensation claims, self-insurance  obligations, performance bonds, surety appeal or similar bonds, completion guarantees and letters  of credit arising in the ordinary course of its business;   (m) Indebtedness arising from the honoring by a bank or other financial  institution of a check, draft or similar instrument drawn against insufficient funds in the ordinary  course of business; provided, however, that such Indebtedness is extinguished within five (5)  Business Days of its incurrence;  (n) Indebtedness arising in connection with endorsement of instruments for  deposit in the ordinary course of business;  (o) Indebtedness consisting of the financing of insurance premiums in the  ordinary course of business; and  (p) other Indebtedness of the Borrower or its Subsidiaries in an aggregate  principal amount at any time outstanding not to exceed the greater of $70,000,000 and 40.0% of  Consolidated EBITDA for the most recently ended Test Period.  The Borrower will not, and will not permit any Subsidiary to, issue any preferred  stock or other preferred equity interest that (i) matures or is mandatorily redeemable pursuant to a  

 

  124  sinking fund obligation or otherwise, (ii) is or may become redeemable or repurchaseable by the  Borrower or such Subsidiary at the option of the holder thereof, in whole or in part, or (iii) is  convertible or exchangeable at the option of the holder thereof for Indebtedness or preferred stock  or any other preferred equity interest described in this paragraph, on or prior to, in the case of  clause (i), (ii) or (iii), the date that is 180 days after the later of the Revolving Commitment  Termination Date and the then latest Maturity Date.  Section 7.2. Liens.  The Borrower will not, and will not permit any of its Subsidiaries  to, create, incur, assume or suffer to exist any Lien on any of its assets or property now owned or  hereafter acquired, except:  (a) Liens securing the Obligations; provided that no Liens may secure Hedging  Obligations or Bank Product Obligations without securing all other Obligations on a basis at least  pari passu with such Hedging Obligations or Bank Product Obligations and subject to the priority  of payments set forth in Section 2.21 and Section 8.2;  (b) Permitted Encumbrances;  (c) Liens on any property or asset existing on the date hereof and set forth on  Schedule 7.2; provided that such Liens shall not apply to any other property or asset of the  Borrower or any Subsidiary;  (d) purchase money Liens upon or in any fixed or capital assets to secure the  purchase price or the cost of construction or improvement of such fixed or capital assets or to  secure Indebtedness incurred solely for the purpose of financing the acquisition, construction or  improvement of such fixed or capital assets (including Liens securing any Capital Lease  Obligations); provided that (i) any such Lien secures Indebtedness permitted by Section 7.1(c), (ii)  any such Lien attaches to such asset concurrently or within 90 days after the acquisition or the  completion of the construction or improvements thereof (or, in the case of an extension,  refinancing, replacement or renewal, at the time of such extension, refinancing, replacement or  renewal), (iii) any such Lien does not extend to any other asset other than accessions and  reasonable extensions thereof, and (iv) the Indebtedness secured thereby does not exceed the cost  (including interest costs) of acquiring, constructing or improving such fixed or capital assets;  (e) any Lien (x) existing on any asset of any Person at the time such Person  becomes a Subsidiary of the Borrower, (y) existing on any asset of any Person (other than any  Subsidiary of the Borrower) at the time such Person is merged with or into the Borrower or any of  its Subsidiaries, or (z) existing on any asset prior to the acquisition thereof by the Borrower or any  of its Subsidiaries; provided that (i) any such Lien was not created in the contemplation of any of  the foregoing and (ii) any such Lien secures only those obligations which it secures on the date  that such Person becomes a Subsidiary or the date of such merger or the date of such acquisition;   (f) Liens on the assets of, and Capital Stock in, any Excluded Subsidiary;  provided that (i) to the extent any such Lien secures Indebtedness, any such Lien secures only  Indebtedness permitted by Section 7.1(h), (ii) no such Lien is prohibited by any other Contractual  Obligation of the Borrower or any of its Subsidiaries and (iii) at the time of and immediately after  giving effect to any such Lien (which for Liens on the assets of, and Capital Stock in, any Excluded  Subsidiary that is designated pursuant to Section 5.18(a)(iv)(z) shall be the date of such  

 

  125  designation), (A) no Default or Event of Default shall exist and (B) the Borrower and its  Subsidiaries shall be in pro forma compliance with Sections 6.1 and 6.2 as of the most recently  ended Test Period, calculated as if all Indebtedness secured by such Lien had been incurred as of  the first day of the relevant period for testing compliance and all Acquisitions permitted hereunder  since the end of such Test Period had been consummated as of the first day of the relevant period  for testing compliance;   (g) [Reserved];   (h) extensions, renewals, or replacements of any Lien referred to in subsections  (b) through (g) of this Section; provided that the principal amount of the Indebtedness secured  thereby is not increased (other than in an amount not to exceed unpaid interest and fees, and  expenses incurred in connection therewith) and that any such extension, renewal or replacement is  limited to the assets originally encumbered thereby;  (i) to the extent required by the landlord under a lease of Real Estate entered  into by a Subsidiary Loan Party with a landlord that is not (x) an Affiliate of the Borrower or (y)  a PropCo Landlord, Liens on the assets of a Subsidiary Loan Party or such Subsidiary Loan Party’s  Subsidiaries (but not, for the avoidance of doubt, on the Capital Stock of such Subsidiary Loan  Party or such Subsidiary Loan Party’s Subsidiaries) to secure the obligations of such Subsidiary  Loan Party under such lease; provided that such Subsidiary Loan Party and its Subsidiaries shall  not be required to become Excluded Subsidiaries on account of such lease and shall instead be  Subsidiary Loan Parties to the extent any such lien granted to or in favor of such landlord is subject  to a customary intercreditor agreement between the Administrative Agent and the landlord under  such lease that provides that any such Liens of such landlord on accounts receivable (and proceeds  thereof, books and records related thereto and  accounts into which the same are deposited) of such  Subsidiary Loan Party or such Subsidiary Loan Party’s Subsidiary (collectively, “Accounts  Collateral”) shall be junior to the Lien of the Administrative Agent on such Accounts Collateral;  provided further that, to the extent any such intercreditor agreement provides that the Liens of such  landlord on Accounts Collateral that are initially junior to the Lien of the Administrative Agent on  such Accounts Collateral are to become senior to the Lien of the Administrative Agent on such  Accounts Collateral, such Liens of such landlord on Accounts Collateral shall cease to be permitted  pursuant to this clause (i) on the date that is 75 days prior to the date provided in such intercreditor  agreement whereupon the Liens of such landlord on Accounts Collateral will cease to be junior to  the Liens of the Administrative Agent on such Accounts Collateral; and  (j) Liens on the assets of the Borrower or its Subsidiaries not otherwise  permitted by this Section 7.2, securing an aggregate principal amount of obligations at any time  outstanding not to exceed the greater of $70,000,000 and 40.0% of Consolidated EBITDA for the  most recently ended Test Period.  Section 7.3. Fundamental Changes.  (a) Neither Ensign nor Ensign REIT will, nor will Ensign or Ensign REIT  permit any of their respective Subsidiaries to, merge into or consolidate into any other Person, or  permit any other Person to merge into or consolidate with it, or sell, lease, transfer or otherwise  dispose of (in a single transaction or a series of transactions) all or substantially all of the assets of  the Borrower and its Subsidiaries on a consolidated basis (in each case, whether now owned or  

 

  126  hereafter acquired) or liquidate or dissolve; provided that if, at the time thereof and immediately  after giving effect thereto, no Default or Event of Default shall have occurred and be continuing,  (i) Ensign and Ensign REIT may merge with a Person if Ensign or Ensign REIT, as the case may  be, is the surviving Person, (ii) any Subsidiary of Ensign (other than Ensign REIT) may merge  with a Person if such Subsidiary is the surviving person (provided that if any such Subsidiary is a  Subsidiary Loan Party, such Subsidiary Loan Party shall be the surviving Person), (iii) any  Subsidiary may sell, transfer, lease or otherwise dispose of all or substantially all of its assets to  the Borrower or to a Subsidiary Loan Party, (iv) any Subsidiary (other than Ensign REIT) may  liquidate or dissolve if the Borrower determines in good faith that such liquidation or dissolution  is in the best interests of the Borrower and is not materially disadvantageous to the Lenders;  provided that if such Subsidiary is a Subsidiary Loan Party, the assets of such Subsidiary shall be  distributed to the Borrower or a Subsidiary Loan Party, (v) subject to clause (ii), any Subsidiary  (other than Ensign REIT) may merge, dissolve or consolidate in connection with the  consummation of any Permitted Acquisition, and (vi) any Subsidiary that is not a Loan Party may  sell, transfer, lease or otherwise dispose of all or substantially all of its assets to the Borrower or  any Subsidiary of the Borrower.  (b) The Borrower will not, and will not permit any of its Subsidiaries to, engage  in any business other than businesses of the type conducted by the Borrower and its Subsidiaries  on the date hereof and businesses ancillary or reasonably related to, or extensions of, the business  of the Borrower and its Subsidiaries.  Section 7.4. Investments, Loans.  The Borrower will not, and will not permit any of its  Subsidiaries to, purchase, hold or acquire (including pursuant to any merger with any Person that  was not a wholly owned Subsidiary prior to such merger) any Capital Stock, evidence of  Indebtedness or other securities (including any option, warrant, or other right to acquire any of the  foregoing) of, make or permit to exist any loans or advances to, Guarantee any obligations of, or  make or permit to exist any investment or any other interest in, any other Person (all of the  foregoing being collectively called “Investments”), or purchase or otherwise acquire (in one  transaction or a series of transactions) any assets of any other Person that constitute a business  unit, or create or form any Subsidiary, except:   (a) (x) Investments existing on the date hereof in Excluded Subsidiaries that are  set forth on Schedule 7.4 and (y) other Investments (other than Permitted Investments) existing on  the date hereof (including Investments in Subsidiaries but excluding, for the avoidance of doubt,  Investments in Pennant Subsidiaries from and after consummation of the Pennant Transaction);  (b) Permitted Investments;  (c) Permitted Alternative Investments;  (d) Guarantees by the Borrower and its Subsidiaries constituting Indebtedness  permitted by Section 7.1; provided that the aggregate principal amount of Indebtedness of  Subsidiaries that are not Subsidiary Loan Parties that is Guaranteed by any Loan Party shall be  subject to the limitation set forth in subsection (e) of this Section;  (e) Investments made by the Borrower in or to any Subsidiary and by any  Subsidiary to the Borrower or in or to another Subsidiary; provided that, with respect to any such  

 

  127  Investments that consist of Investments by the Loan Parties in or to, and Guarantees by the Loan  Parties of Indebtedness of, Excluded Subsidiaries or Subsidiaries that are not Loan Parties, if the  Total Leverage Ratio for the most recently ended four consecutive Fiscal Quarter period for which  financial statements were required to have been delivered pursuant to Section 5.1(a) or (b)  (calculated on a pro forma basis as if such Investment (and any other Investments or Restricted  Payments that occur subsequent to such four consecutive Fiscal Quarter period for which the pro  forma financial effect of such events has been calculated under this Agreement) had been made on  the first day of such four consecutive Fiscal Quarter period), exceeds 1.75:1.00 then, at the time of  and immediately after giving effect to such Investment, the aggregate outstanding amount of  Investments by the Loan Parties that were made by the Loan Parties at a time when the Total  Leverage Ratio (calculated on a pro forma basis after giving effect to such Investments) is greater  than 1.75:1.00 in or to, and Guarantees by the Loan Parties of Indebtedness of, (x) Excluded  Subsidiaries (including all such Investments and Guarantees existing on the Closing Date) shall  not exceed the greater of $70,000,000 and 40.0% of Consolidated EBITDA for the most recently  ended four consecutive Fiscal Quarter period for which financial statements were required to have  been delivered pursuant to Section 5.1(a) or (b) and (y) Subsidiaries that are not Subsidiary Loan  Parties (other than Excluded Subsidiaries) (including all such Investments and Guarantees existing  on the Closing Date) shall not exceed at any time the sum of (A) the greater of $35,000,000 and  20.0% of Consolidated EBITDA for the most recently ended four consecutive Fiscal Quarter  period for which financial statements were required to have been delivered pursuant to Section  5.1(a) or (b) plus (B) the Available Amount, in each case, excluding Investments permitted under  the succeeding proviso; provided, further, that (i) Guarantees of Indebtedness of Excluded  Subsidiaries shall not be permitted except (x) Excluded Subsidiaries may Guarantee Indebtedness  of other Excluded Subsidiaries and (y) Ensign may Guarantee on an unsecured basis all  Indebtedness of Excluded Subsidiaries permitted under Section 7.1(h) (and make payments  thereunder to the extent such payment is permitted as an Investment hereunder at such time), (ii)  additional Investments in Excluded Subsidiaries pursuant to Section 7.1(h) below shall be  permitted subject to the limitations set forth therein and (iii) in the case of Investments in Excluded  Subsidiaries pursuant to this clause (e), at the time of and immediately after giving effect to any  such Investment, (A) no Default or Event of Default shall exist and (B) the Borrower and its  Subsidiaries shall be in pro forma compliance with Sections 6.1 and 6.2 as of the most recently  ended Test Period, calculated as if such Investment had been made as of the first day of the relevant  period for testing compliance;  (f) loans or advances to employees, officers or directors of the Borrower or any  of its Subsidiaries in the ordinary course of business for travel, relocation and related expenses;  provided that the aggregate amount of all such loans and advances does not exceed $3,000,000 at  any time outstanding;  (g) Hedging Transactions permitted by Section 7.10;   (h) (y) Investments in Excluded Subsidiaries made for the purpose of financing  the construction, development, refurbishment or expansion of any health care facility and (z)  Investments constituting Excluded Subsidiary Designation Amounts (other than, in the case of this  clause (z), cash or cash equivalents funded by any Loan Party into an Excluded Subsidiary prior  to such Subsidiary being designated as an Excluded Subsidiary, except to the extent of cash or  cash equivalents funded for the purpose of financing the Permitted Acquisition of such Subsidiary  

 

  128  or the construction, development, refurbishment or expansion of any health care facility); provided  that the aggregate amount of Investments in Excluded Subsidiaries made for the purpose of  financing the construction, development, refurbishment or expansion of any health care facility  and Excluded Subsidiary Designation Amounts, together with the amount of any then outstanding  Indebtedness that was incurred or assumed pursuant to Section 7.1(h) and any other then  outstanding Investment in any Excluded Subsidiary arising pursuant to this Section 7.4(h) (in each  case, without duplication), shall not exceed at any time the sum of (A) the greater of (x)  $350,000,000 and (y) an amount equal to (I) Consolidated EBITDA for the most recently ended  four consecutive Fiscal Quarter period for which financial statements were required to have been  delivered pursuant to Section 5.1(a) or (b) multiplied by (II) two plus (B) the Available Amount;   (i) with respect to the Insurance Subsidiaries only, (A) commercial paper  having, at the time of acquisition thereof, a short-term rating from S&P or Moody’s of at least A- 1/P-1; (B) certificates of deposit, bankers’ acceptances and time deposits issued or guaranteed by  or placed with, and money market deposit accounts issued or offered by, any commercial bank or  other financial institution that has total assets of not less than $500,000,000 or the equivalent  thereof at the time of acquisition thereof; (C) other securities, including, without limitation,  corporate debt, having, at the time of acquisition thereof, a long-term rating from S&P or Moody’s  of at least A-/A3; and (D) mutual funds investing primarily in any one or more of the foregoing;   (j) other Investments that in the aggregate do not exceed at any time  outstanding the greater of $70,000,000 and 40.0% of Consolidated EBITDA for the most recently  ended Test Period;  (k) Investments held by a Subsidiary Loan Party that is acquired after the  Closing Date, or of a Person (other than a Subsidiary of the Borrower) merged or consolidated  with or into the Borrower or a Subsidiary Loan Party, in each case in accordance with the terms of  this Agreement to the extent that such Investments were not made in contemplation of or in  connection with such acquisition, merger or consolidation and were in existence on the date of  such acquisition, merger or consolidation (such Investments, “Acquired Investments”); provided,  however, that Acquired Investments shall not include (and in no event shall this Section 7.4(k)  permit) Investments in or with respect to Excluded Subsidiaries (including, for the avoidance of  doubt, Investments constituting Excluded Subsidiary Designation Amounts); and  (l) Permitted Acquisitions.  The amount of any Investment (other than Investments made using the Available Amount) shall  be deemed to be the amount actually invested, without adjustment for subsequent increases or  decreases in the value of such Investment but determined net of all payments received with respect  to such Investment whether constituting sale proceeds thereof, dividends, distributions, interest,  return of capital or otherwise, and the amount of any Investment constituting a Guarantee shall be  reflective of the principal amount subject to such Guarantee from time to time.  Notwithstanding the foregoing, in no event shall any Excluded Subsidiary make, purchase, hold  or acquire any Investments in the Capital Stock of any Loan Party.  

 

  129  Section 7.5. Restricted Payments.  The Borrower will not, and will not permit any of  its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted  Payment, except:   (i) dividends payable by Ensign solely in interests of any class of its  common equity;  (ii) Restricted Payments made by any Subsidiary to Ensign or to another  Subsidiary, on at least a pro rata basis with any other shareholders if such Subsidiary is  not wholly owned by Ensign and other wholly owned Subsidiaries of Ensign;   (iii) other Restricted Payments so long as (x) no Default or Event of  Default shall have occurred and be continuing at the time such Restricted Payment is paid,  and (y) the aggregate amount of all such Restricted Payments made by Ensign in any Fiscal  Year does not exceed 25% of Consolidated Net Income (if greater than $0) earned during  the immediately preceding Fiscal Year;  (iv) Ensign may repurchase common stock or common stock options  from present or former officers, directors or employees (or heirs of, estates of or trusts  formed by such Persons) of the Borrower or any Subsidiary upon the death, disability,  retirement or termination of employment or position of such officer, director or employee  or pursuant to the terms of any stock option plan or like agreement; provided, however,  that the aggregate amount of payments under this clause (except to the extent made with  Equity Issuance Proceeds received for such purpose that are not used to increase the  Available Amount or otherwise applied to increase basket capacity hereunder) shall not  exceed the lesser of (i) $6,000,000 in any Fiscal Year or (ii) $30,000,000 during the term  of this Agreement (not including any such payments made prior to the Closing Date);  (v) other Restricted Payments (including, for the avoidance of doubt,  payments with respect to subordinated Indebtedness) in an aggregate amount not to exceed  $15,000,000 in any Fiscal Year;  (vi) the Borrower and its Subsidiaries may (x) repurchase Capital Stock  to the extent deemed to occur upon exercise of stock options, warrants or rights in respect  thereof to the extent such Capital Stock represents a portion of the exercise price of such  options, warrants or rights in respect thereof and (y) make payments in respect of  withholding or similar taxes payable or expected to be payable by any present or former  member of management, director, officer, employee, or consultant of the Borrower or any  of its Subsidiaries or family members, spouses or former spouses, heirs of, estates of or  trusts formed by such Persons in connection with the exercise of stock options or grant,  vesting or delivery of Capital Stock; provided, however, that the aggregate amount of  payments under this clause (y) (except to the extent made pursuant to a stock option plan  or incentive plan) shall not exceed the lesser of (i) $6,000,000 in any Fiscal Year or  (ii) $30,000,000 during the term of this Agreement (not including any such payments made  prior to the Closing Date);  

 

  130  (vii) the Borrower and its Subsidiaries may make Restricted Payments to  allow the payment of cash in lieu of the issuance of fractional shares upon the exercise of  options or, warrants or rights or upon the conversion or exchange of or into Capital Stock,  or payments or distributions to dissenting stockholders pursuant to applicable law;  (viii) in addition to the other Restricted Payments otherwise permitted  under this Section 7.5, the Borrower and its Subsidiaries may make additional Restricted  Payments in an amount not to exceed the Available Amount;   (ix) the refinancing of any Indebtedness that is subordinated to the  Obligations; provided that (A) no Default or Event of Default shall have occurred and be  continuing or would result therefrom; (B) any such refinancing Indebtedness shall (x) not  have a stated maturity or, other than in the case of a revolving credit facility, a Weighted  Average Life to Maturity that is shorter than that of the Indebtedness being refinanced, (y)  if the Indebtedness being refinanced is subordinated to the Obligations by its terms or by  the terms of any agreement or instrument relating to such Indebtedness, be at least as  subordinate to the Obligations as the Indebtedness being refinanced (and unsecured if the  refinanced Indebtedness is unsecured) and (z) be in a principal amount that does not exceed  the principal amount so refinanced, plus, accrued interest, plus, any premium or other  payment required to be paid in connection with such refinancing, plus, the amount of fees  and expenses of the Borrower or any of its Subsidiaries incurred in connection with such  refinancing, plus, any unutilized commitments thereunder; and (C) the obligors on such  refinancing Indebtedness shall be the obligors on such Indebtedness being refinanced;  provided, further, however, that (i) the borrower of the refinancing indebtedness shall be  the Borrower or the borrower of the Indebtedness being refinanced, (ii) any Loan Party  shall be permitted to guarantee any such refinancing Indebtedness of any other Loan Party  and (iii) any non-Loan Party shall be permitted to guarantee any such refinancing  Indebtedness of any other non-Loan Party;  (x) in addition to the other Restricted Payments otherwise permitted  under this Section 7.5, the Borrower and its Subsidiaries may make additional Restricted  Payments so long as (A) no Default or Event of Default shall have occurred and be  continuing or would result therefrom, and (B) the Total Leverage Ratio for the most  recently ended four consecutive Fiscal Quarter period for which financial statements were  required to have been delivered pursuant to Section 5.1(a) or (b) (calculated on a pro forma  basis as if such Restricted Payment (and any other Restricted Payment or Investment that  occurs subsequent to such four consecutive Fiscal Quarter period for which the pro forma  financial effect of such events has been calculated under this Agreement) had been made  on the first day of such four consecutive Fiscal Quarter period) does not exceed 2.00:1.00;  and  (xi) Restricted Payments necessary to effect the Pennant Transaction  pursuant to the Pennant Transaction Documents, including the distribution of all of the  Capital Stock of the Pennant Subsidiaries to the shareholders of Ensign.    Section 7.6. Sale of Assets.  The Borrower will not, and will not permit any of its  Subsidiaries to, convey, sell, lease, assign, transfer or otherwise dispose of any of its assets,  

 

  131  business or property or, in the case of any Subsidiary (other than an Immaterial Subsidiary), any  shares of such Subsidiary’s Capital Stock, in each case whether now owned or hereafter acquired,  to any Person other than the Borrower or any wholly owned Subsidiary of the Borrower (or to  qualify directors if required by applicable law), except:  (a) the sale or other disposition of obsolete or worn out property or other  property not necessary for operations or no longer useful in the business disposed of in the ordinary  course of business;   (b) the sale of inventory and Permitted Investments in the ordinary course of  business;  (c) dispositions of cash and cash equivalents;  (d) dispositions of equipment to the extent that (i) such equipment is exchanged  for credit against the purchase price of similar replacement equipment and (ii) the proceeds of such  disposition are applied in whole or in part to purchases of such replacement equipment;  (e) assets sold in connection with condemnation, eminent domain or insurance  claims; and  (f) asset sales or other dispositions; provided that (i) at the time of such sale or  other disposition, no Event of Default then exists or would arise therefrom, (ii) the Borrower or  any of its Subsidiaries shall receive not less than 75% of such consideration in the form of (x) cash  or Permitted Investments or (y) real property (and improvements thereon related to one or more  healthcare facilities) acquired in an exchange pursuant to or intended to qualify under Section 1031  (or any successor section) of the Code (it being understood that for the purposes of clause (f)(ii)(x),  the following shall be deemed to be cash:  (A) any liabilities (as shown on Ensign’s most recent  balance sheet provided hereunder or in the footnotes thereto) of the Borrower or such Subsidiary,  other than liabilities that are by their terms subordinated to the payment in cash of the Obligations,  that are assumed by the transferee with respect to the applicable sale or disposition and for which  all of its Subsidiaries shall have been validly released by all applicable creditors in writing, (B)  any securities received by such Subsidiary from such transferee that are converted by such  Subsidiary into cash or Permitted Investments (to the extent of the cash or Permitted Investments  received) within one hundred and eighty (180) days following the closing of the applicable  disposition and (C) any Designated Non-Cash Consideration received in respect of such  disposition having an aggregate fair market value, taken together with all other Designated Non- Cash Consideration received pursuant to this clause (C) that is at that time outstanding, not in  excess of $1,000,000, with the fair market value of each item of Designated Non-Cash  Consideration being measured at such date of receipt or such agreement, as applicable, and without  giving effect to subsequent changes in value) and (iii) such sale or other disposition shall be for  fair market value (as determined by the Borrower in good faith).    Section 7.7. Transactions with Affiliates.  The Borrower will not, and will not permit  any of its Subsidiaries to, sell, lease or otherwise transfer any property or assets to, or purchase,  lease or otherwise acquire any property or assets from, or otherwise engage in any other  transactions with, any of its Affiliates, except:   

 

  132  (a) in the ordinary course of business at prices and on terms and conditions not  less favorable to the Borrower or such Subsidiary than could be obtained on an arm’s-length basis  from unrelated third parties;   (b) transactions between or among the Borrower and its Subsidiaries in the  ordinary course of business; and  (c) any Restricted Payment permitted by Section 7.5 and Investments permitted  by Section 7.4.   Section 7.8. Restrictive Agreements.  The Borrower will not, and will not permit any  of its  Subsidiaries to, directly or indirectly, enter into, incur or permit to exist any agreement  (including any lease of Real Estate) that prohibits, restricts or imposes any condition upon (a) the  ability of the Borrower or any of its Subsidiaries to create, incur or permit any Lien as security for  the Obligations upon any of its assets or properties, whether now owned or hereafter acquired, or  (b) the ability of any of its Subsidiaries to pay dividends or other distributions with respect to its  Capital Stock, to make or repay loans or advances to the Borrower or any other Subsidiary thereof,  to Guarantee Indebtedness of the Borrower or any other Subsidiary thereof or to transfer any of its  property or assets to the Borrower or any other Subsidiary thereof; provided that (i) the foregoing  shall not apply to restrictions or conditions imposed by law or by this Agreement or any other Loan  Document or any Spin-Off Document, (ii) the foregoing shall not apply to customary restrictions  and conditions contained in agreements relating to the sale of a Subsidiary pending such sale,  provided such restrictions and conditions apply only to the Subsidiary that is to be sold and such  sale is permitted hereunder, (iii) the foregoing shall not apply to restrictions contained in the leases  of Real Estate listed on Schedule 7.8 as in effect as of the ClosingSecond Amendment Effective  Date, (iv) the foregoing shall not apply to restrictions or conditions imposed by any agreement  relating to secured Indebtedness permitted by this Agreement if such restrictions and conditions  apply only to the property or assets securing such Indebtedness, (v) the foregoing shall not apply  to customary provisions in leases restricting the assignment thereof, (vi) the foregoing shall not  apply to Excluded Subsidiaries or the Capital Stock of Excluded Subsidiaries, (vii) the foregoing  shall not apply to restrictions in Indebtedness described in Section 7.1(f) to the extent relating  solely to the applicable assets or Persons acquired after the Closing Date in connection with the  assumption of such Indebtedness, (viii) the foregoing shall not apply to restrictions in leases of  Real Estate binding upon the tenants thereunder (or guarantors thereof), (ix) the foregoing shall  not apply to Indebtedness permitted under Section 7.1(i) to the extent the restrictions thereunder  are no more restrictive, in any material respect, taken as a whole, than such restrictions contained  herein, (x) the foregoing shall not apply to customary restrictions in joint venture arrangements,  provided that such restrictions are limited to the assets of such joint ventures and the Capital Stock  of the Persons party to such joint venture arrangements and (xi) the foregoing shall not apply to  customary non-assignment provisions in contracts entered into in the ordinary course of business,  provided that such restrictions are limited to the assets subject to such contracts and the Capital  Stock of the Persons party to such contracts.   Section 7.9. Sale and Leaseback Transactions.  The Borrower will not, and will not  permit any of its Subsidiaries to, enter into any arrangement, directly or indirectly, whereby it shall  sell or transfer any property, real or personal, used or useful in its business, whether now owned  or hereinafter acquired, and thereafter rent or lease such property or other property that it intends  

 

  133  to use for substantially the same purpose or purposes as the property sold or transferred (each, a  “Sale/Leaseback Transaction”), unless at the time such Sale/Leaseback Transaction is entered into  (a) no Default or Event of Default has occurred and is continuing, (b) after giving pro forma effect  to such Sale/Leaseback Transaction, the Borrower and its Subsidiaries are in compliance with the  financial covenants set forth in Article VI and (c) the Borrower has delivered a certificate to the  Lenders certifying the conditions set forth in clauses (a) and (b) and setting forth in reasonable  detail calculations demonstrating pro forma compliance with the financial covenants set forth in  Article VI.  Section 7.10. Hedging Transactions.  The Borrower will not, and will not permit any of  its Subsidiaries to, enter into any Hedging Transaction, other than Hedging Transactions entered  into in the ordinary course of business to hedge or mitigate risks to which the Borrower or any of  its Subsidiaries is exposed in the conduct of its business or the management of its liabilities,  including, without limitation, any Hedging Transaction entered into in order to hedge against  fluctuations in interest rates or currency values that arise in connection with any Borrowing or any  other Indebtedness.  Solely for the avoidance of doubt, the Borrower acknowledges that a Hedging  Transaction entered into for speculative purposes or of a speculative nature (which shall be deemed  to include any Hedging Transaction under which the Borrower or any of its Subsidiaries is or may  become obliged to make any payment (i) in connection with the purchase by any third party of any  Capital Stock or any Indebtedness or (ii) as a result of changes in the market value of any Capital  Stock or any Indebtedness) is not a Hedging Transaction entered into in the ordinary course of  business to hedge or mitigate risks.  Section 7.11. Amendment to Material Documents.  The Borrower will not, and will not  permit any of its Subsidiaries to, amend, modify or waive any of its rights under (a) its certificate  of incorporation, bylaws or other organizational documents or (b) any Material Agreements, in  each case in any manner that is materially adverse to the interests of the Lenders or the  Administrative Agent.  Section 7.12. PropCo Master Leases.  The Borrower will not, and will not permit any of  its Subsidiaries to, terminate or allow or consent to the termination of any PropCo Master Lease  or enter into any amendment, waiver or modification to any PropCo Master Lease if (i) such  amendment, waiver or modification could reasonably be expected to have a Material Adverse  Effect or (ii) after giving pro forma effect to such amendment, waiver or modification, the  Borrower will not be in compliance with the provisions of Article VI; provided that,  notwithstanding the foregoing, the Borrower will not, and will not permit any of its Subsidiaries  to, allow any amendment, waiver or modification of any PropCo Master Lease that (i) shortens the  term of such PropCo Master Lease to less than twelve (12) years (including extension or renewal  options) from the date of such amendment, waiver or modification, (ii) amends, waives or modifies  Articles X, XI, or XVI of such PropCo Master Lease (including by amendment of the defined  terms used therein) in a manner adverse in any material respects to the interests of the Secured  Parties or (iii) amends, waives or modifies Section 5.13 of such PropCo Master Lease to the extent  adversely impacting the ability of the Secured Parties to obtain or maintain a Lien on any assets of  the Borrower or any of its Subsidiaries (other than the leasehold interests in such PropCo Master  Lease), in each case, without the consent of the Required Lenders.  No tenant under any PropCo  Master Lease shall transfer its rights or obligations under such PropCo Master Lease to any Person  other than to the Borrower or any other Loan Party; provided, however, that no such transfer shall  

 

  134  be permitted hereunder unless expressly permitted under such PropCo Master Lease or consented  to in writing by landlord under such PropCo Master Lease.  Section 7.13. Accounting Changes.  The Borrower will not, and will not permit any of  its Subsidiaries to, change the fiscal year of the Borrower or of any of its Subsidiaries, except to  change the fiscal year of a Subsidiary to conform its fiscal year to that of Ensign.  Section 7.14. Government Regulation.  The Borrower will not, and will not permit any  of its Subsidiaries to, be or become subject at any time to any law, regulation or list of any  Governmental Authority of the United States (including, without limitation, the OFAC list) that  prohibits or limits the Lenders or the Administrative Agent from making any advance or extension  of credit to the Borrower or from otherwise conducting business with the Loan Parties.   Section 7.15. Sanctions.  The Borrower will not, and will not permit any of its  Subsidiaries to, use any Loan or Letter of Credit or the proceeds of any Loan and/or Letter of  Credit, or lend, contribute or otherwise make available any Loan or Letter Credit or the proceeds  of any Loan or Letter of Credit to any Sanctioned Person, to fund any activities of or business with  any Sanctioned Person or in any Sanctioned Country, or in any other manner that will result in a  violation by any Person (including any Person participating in the transaction, whether as a Lead  Arranger, the Administrative Agent, a Lender (including a Swingline Lender) or an Issuing Bank  or otherwise) of Sanctions.  Section 7.16. Anti-Corruption Laws.  The Borrower will not, and will not permit any of  its Subsidiaries to, use any Loan or Letter of Credit or the proceeds therefrom for any purpose that  would violate any Anti-Corruption Laws.  ARTICLE VIII    EVENTS OF DEFAULT  Section 8.1. Events of Default.  If any of the following events (each, an “Event of  Default”) shall occur:  (a) the Borrower shall fail to pay any principal of any Loan or of any  reimbursement obligation in respect of any LC Disbursement, when and as the same shall become  due and payable, whether at the due date thereof or at a date fixed for prepayment or otherwise; or  (b) the Borrower shall fail to pay any interest on any Loan or any fee or any  other amount (other than an amount payable under subsection (a) of this Section or an amount  related to a Bank Product Obligation) payable under this Agreement or any other Loan Document,  when and as the same shall become due and payable, and such failure shall continue unremedied  for a period of five (5) days; or  (c) any representation or warranty made or deemed made by or on behalf of the  Borrower or any of its Subsidiaries in or in connection with this Agreement or any other Loan  Document (including the Schedules attached hereto and thereto), or in any amendments or  modifications hereof or waivers hereunder, or in any certificate, report, financial statement or other  document submitted to the Administrative Agent or the Lenders by any Loan Party or any  

 

  135  representative of any Loan Party pursuant to or in connection with this Agreement or any other  Loan Document shall prove to be incorrect in any material respect (other than any representation  or warranty that is expressly qualified by a Material Adverse Effect or other materiality, in which  case such representation or warranty shall prove to be incorrect in any respect) when made or  deemed made or submitted; or  (d) the Borrower shall fail to observe or perform any covenant or agreement  contained in Section 5.3 (with respect to the Borrower’s legal existence), Section 5.18 or Article  VI or VII; or  (e) (i) any Loan Party shall fail to observe or perform any covenant or  agreement  contained in Section 5.1 or 5.2, and such failure shall remain unremedied for fifteen  (15) days after the earlier of (x) any Responsible Officer of the Borrower becomes aware of such  failure, or (y) notice thereof shall have been given to the Borrower by the Administrative Agent or  any Lender, or (ii) any Loan Party shall fail to observe or perform any covenant or agreement  contained in this Agreement (other than those referred to in subsections (a), (b), (d) and (e)(i) of  this Section) or any other Loan Document or related to any Bank Product Obligation, and such  failure shall remain unremedied for 30 days after the earlier of (x) any Responsible Officer of the  Borrower becomes aware of such failure, or (y) notice thereof shall have been given to the  Borrower by the Administrative Agent or any Lender; or  (f) the Borrower or any of its Subsidiaries (whether as primary obligor or as  guarantor or other surety) shall fail to pay any principal of, or premium or interest on, any Material  Indebtedness that is outstanding, when and as the same shall become due and payable (whether at  scheduled maturity, required prepayment, acceleration, demand or otherwise), and such failure  shall continue after the applicable grace period, if any, specified in the agreement or instrument  evidencing or governing such Indebtedness; or any other event shall occur or condition shall exist  under any agreement or instrument relating to any Material Indebtedness and shall continue after  the applicable grace period, if any, specified in such agreement or instrument, if the effect of such  event or condition is to accelerate, or permit the acceleration of, the maturity of such Indebtedness;  or any Material Indebtedness shall be declared to be due and payable, or required to be prepaid or  redeemed (other than by a regularly scheduled required prepayment or redemption), purchased or  defeased, or any offer to prepay, redeem, purchase or defease such Indebtedness shall be required  to be made, in each case prior to the stated maturity thereof (excluding (i) any prepayment or  redemption requirements in connection with a sale of assets that secures Material Indebtedness to  the extent such Material Indebtedness is repaid in connection with such sale and (ii) any offer to  prepay or redeem Indebtedness of any Person or securing any assets acquired in a Permitted  Acquisition); or  (g) the Borrower or any of its Material Subsidiaries shall (i) commence a  voluntary case or other proceeding or file any petition seeking liquidation, reorganization or other  relief under any federal, state or foreign bankruptcy, insolvency or other similar law now or  hereafter in effect or seeking the appointment of a custodian, trustee, receiver, liquidator or other  similar official of it or any substantial part of its property, (ii) consent to the institution of, or fail  to contest in a timely and appropriate manner, any proceeding or petition described in clause (i) of  this subsection, (iii) apply for or consent to the appointment of a custodian, trustee, receiver,  liquidator or other similar official for the Borrower or any such Material Subsidiary or for a  

 

  136  substantial part of its assets, (iv) file an answer admitting the material allegations of a petition filed  against it in any such proceeding, (v) make a general assignment for the benefit of creditors, or  (vi) take any action for the purpose of effecting any of the foregoing; or  (h) an involuntary proceeding shall be commenced or an involuntary petition  shall be filed seeking (i) liquidation, reorganization or other relief in respect of the Borrower or  any of its Material Subsidiaries or its debts, or any substantial part of its assets, under any federal,  state or foreign bankruptcy, insolvency or other similar law now or hereafter in effect or (ii) the  appointment of a custodian, trustee, receiver, liquidator or other similar official for the Borrower  or any of its Material Subsidiaries or for a substantial part of its assets, and in any such case, such  proceeding or petition shall remain undismissed for a period of 60 days or an order or decree  approving or ordering any of the foregoing shall be entered; or  (i) the Borrower or any of its Material Subsidiaries shall become unable to pay,  shall admit in writing its inability to pay, or shall fail to pay, its debts as they become due; or  (j) (i) an ERISA Event shall have occurred, (ii) there is or arises an Unfunded  Pension Liability (not taking into account Plans with negative Unfunded Pension Liability), or (iii)  there is or arises any potential Withdrawal Liability, which, with respect to any of the foregoing  clauses (i) through (iii), could reasonably be expected, either individually or in the aggregate, to  have a Material Adverse Effect; or   (k) any judgment or order for the payment of money in excess of $35,000,000  in the aggregate, to the extent not adequately covered by insurance as to which a solvent insurance  company has not contested or denied coverage, shall be rendered against the Borrower or any of  its Subsidiaries, and there shall be a period of 60 consecutive days during which (i) a stay of  enforcement of such judgment or order, by reason of a pending appeal or otherwise, shall not be  in effect or (ii) such judgment or order shall remain undischarged, unvacated or unbonded; or  (l) any non-monetary judgment or order shall be rendered against the Borrower  or any of its Subsidiaries that could reasonably be expected, either individually or in the aggregate  for all such events, to have a Material Adverse Effect, and there shall be a period of 60 consecutive  days during which a stay of enforcement of such judgment or order, by reason of a pending appeal  or otherwise, shall not be in effect; or  (m) a Change in Control shall occur or exist; or  (n) (i) there shall occur any revocation, suspension, termination, rescission,  non-renewal or forfeiture or any similar final administrative action with respect to one or more  Health Care Permits, Third Party Payor Programs or Third Party Payor Authorizations that could  reasonably be expected, either individually or in the aggregate, to have a Material Adverse Effect  or (ii) the Borrower or any of its Subsidiaries shall be named in any action, fully or partially  unsealed, in which the United States has affirmatively intervened, alleging violation of the federal  False Claims Act or any other applicable law and, in connection with such action, the Borrower  shall have offered, agreed or paid to, or received a final judgment requiring payment to, any  Governmental Authority for payment of any settlement, fine, penalty or overpayment in excess  of $50,000,000; or  

 

  137  (o) any material provision of the Guaranty and Security Agreement or any other  Collateral Document shall for any reason cease to be valid and binding on, or enforceable against,  any Loan Party, or any Loan Party shall so state in writing, or any Loan Party shall seek to  terminate its obligation under the Guaranty and Security Agreement or any other Collateral  Document (other than the release of any guaranty or collateral to the extent permitted pursuant to  Section 9.11); or  (p) any Lien purported to be created under any Collateral Document (with  respect to a material portion of the Collateral) shall fail or cease to be, or shall be asserted by any  Loan Party not to be, a valid and perfected Lien on any Collateral, with the priority required by  the applicable Collateral Documents (other than as a result of the failure by the Administrative  Agent to take any action within its control); or  (q) (i) any PropCo Master Lease shall terminate or otherwise cease to be  effective, other than upon the expiration or termination thereof with respect to any particular  property or properties pursuant to Section 10.4 or Article XI of such PropCo Master Lease or  pursuant to an amendment, waiver or modification of such PropCo Master Lease not prohibited  by Section 7.12 of this Agreement, or an “Event of Default” (as defined in such PropCo Master  Lease) shall have occurred and is continuing under Section 12.1.1, Section 12.1.2, Section 12.1.3  (for the avoidance of doubt, in the case of Sections 12.1.2 and 12.1.3, after the expiration of the  applicable cure period set forth therein), Section 12.1.15, Section 12.1.16 (other than with respect  to Section 5.11 and 5.12.3 thereof), or Section 16.1 of such PropCo Master Lease, or the landlord  under such PropCo Master Lease shall have given the tenant under such PropCo Master Lease  notice of termination of such PropCo Master Lease following an “Event of Default” (as defined in  such PropCo Master Lease) or the landlord has issued a “Termination Notice” pursuant to Section  12.2.6 of the PropCo Master Lease or (ii) any event of the type described in the foregoing clause  (i) shall have occurred with respect to any Material Master Lease;  then, and in every such event (other than an event with respect to the Borrower described in  subsection (g), (h) or (i) of this Section) and at any time thereafter during the continuance of such  event, the Administrative Agent may, and upon the written request of the Required Lenders shall,  by notice to the Borrower, take any or all of the following actions, at the same or different times:  (i) terminate the Commitments, whereupon the Commitment of each Lender shall terminate  immediately, (ii) declare the principal of and any accrued interest on the Loans, and all other  Obligations owing hereunder, to be, whereupon the same shall become, due and payable  immediately, without presentment, demand, protest or other notice of any kind, all of which are  hereby waived by the Borrower, (iii) exercise all remedies contained in any other Loan Document  and (iv) exercise any other remedies available at law or in equity; provided that, if an Event of  Default with respect to the Borrower specified in either subsection (g), (h) or (i) shall occur, the  Commitments shall automatically terminate and the principal of the Loans then outstanding,  together with accrued interest thereon, and all fees and all other Obligations shall automatically  become due and payable, without presentment, demand, protest or other notice of any kind, all of  which are hereby waived by the Borrower.  Section 8.2. Application of Proceeds from Collateral.  All proceeds from each sale of,  or other realization upon, all or any part of the Collateral by any Secured Party after an Event of  Default arises shall be applied as follows:   

 

  138  (a) first, to the reimbursable expenses of the Administrative Agent incurred in  connection with such sale or other realization upon the Collateral, until the same shall have  been paid in full;  (b) second, to the fees, all amounts owed pursuant to Erroneous Payment  Subrogation Rights, and other reimbursable expenses of the Administrative Agent, the  Swingline Lender and each Issuing Bank then due and payable pursuant to any of the Loan  Documents, until the same shall have been paid in full;   (c) third, to all reimbursable expenses, if any, of the Lenders then due and  payable pursuant to any of the Loan Documents, until the same shall have been paid in full;  (d) fourth, to the fees and interest then due and payable under the terms of this  Agreement, until the same shall have been paid in full;   (e) fifth, to the aggregate outstanding principal amount of the Loans, the LC  Exposure, the Bank Product Obligations and the Hedging Obligations that constitute  Obligations, until the same shall have been paid in full, allocated pro rata among the  Secured Parties based on their respective pro rata shares of the aggregate amount of such  Loans, LC Exposure, Bank Product Obligations and Hedging Obligations;  (f) sixth, to additional cash collateral for the aggregate amount of all  outstanding Letters of Credit until the aggregate amount of all cash collateral held by the  Administrative Agent pursuant to this Agreement is at least 103% of the LC Exposure after  giving effect to the foregoing clause fifth; and  (g) seventh, to the extent any proceeds remain, to the Borrower or as otherwise  provided by a court of competent jurisdiction.  All amounts allocated pursuant to the foregoing clauses third through fifth to the  Lenders as a result of amounts owed to the Lenders under the Loan Documents shall be allocated  among, and distributed to, the Lenders pro rata based on their respective Pro Rata Shares; provided  that all amounts allocated to that portion of the LC Exposure comprised of the aggregate undrawn  amount of all outstanding Letters of Credit pursuant to clauses fifth and sixth shall be distributed  to the Administrative Agent, rather than to the Lenders, and held by the Administrative Agent in  an account in the name of the Administrative Agent for the benefit of each Issuing Bank and the  Lenders as cash collateral for the LC Exposure, such account to be administered in accordance  with Section 2.22(g).  All cash collateral for LC Exposure shall be applied to satisfy drawings  under the Letters of Credit as they occur; if any amount remains on deposit on cash collateral after  all letters of credit have either been fully drawn or expired, such remaining amount shall be applied  to other Obligations, if any, in the order set forth above.  Notwithstanding the foregoing, Bank Product Obligations and Hedging Obligations  shall be excluded from the application described above if the Administrative Agent has not  received written notice thereof, together with such supporting documentation as the Administrative  Agent may request, from the Bank Product Provider or the Lender-Related Hedge Provider, as the  case may be.  Each Bank Product Provider or Lender-Related Hedge Provider that has given the  notice contemplated by the preceding sentence shall, by such notice, be deemed to have  

 

  139  acknowledged and accepted the appointment of the Administrative Agent pursuant to the terms of  Article IX hereof for itself and its Affiliates as if a “Lender” party hereto.  ARTICLE IX    THE ADMINISTRATIVE AGENT  Section 9.1. Appointment of the Administrative Agent.   (a) Each Lender irrevocably appoints SunTrustTruist Bank as the  Administrative Agent and authorizes it to take such actions on its behalf and to exercise such  powers as are delegated to the Administrative Agent under this Agreement and the other Loan  Documents, together with all such actions and powers that are reasonably incidental thereto.  The  Administrative Agent may perform any of its duties hereunder or under the other Loan Documents  by or through any one or more sub-agents or attorneys-in-fact appointed by the Administrative  Agent.  The Administrative Agent and any such sub-agent or attorney-in-fact may perform any  and all of its duties and exercise its rights and powers through their respective Related Parties.  The  exculpatory provisions set forth in this Article shall apply to any such sub-agent, attorney-in-fact  or Related Party and shall apply to their respective activities in connection with the syndication of  the credit facilities provided for herein as well as activities as the Administrative Agent.    (b) Each Issuing Bank shall act on behalf of the Revolving Lenders with respect  to any Letters of Credit issued by it and the documents associated therewith until such time and  except for so long as the Administrative Agent may agree at the request of the Required Lenders  to act for such Issuing Bank with respect thereto; provided that each Issuing Bank shall have all  the benefits and immunities (i) provided to the Administrative Agent in this Article with respect  to any acts taken or omissions suffered by such Issuing Bank in connection with Letters of Credit  issued by it or proposed to be issued by it and the application and agreements for letters of credit  pertaining to the Letters of Credit as fully as if the term “Administrative Agent” as used in this  Article included such Issuing Bank with respect to such acts or omissions and (ii) as additionally  provided in this Agreement with respect to such Issuing Bank.  Section 9.2. Nature of Duties of the Administrative Agent and the Other Agents.   The Administrative Agent and the other Agents shall not have any duties or obligations except  those expressly set forth in this Agreement and the other Loan Documents.  Without limiting the  generality of the foregoing, (a) the Administrative Agent and the other Agents shall not be subject  to any fiduciary or other implied duties, regardless of whether a Default or an Event of Default has  occurred and is continuing, (b) the Administrative Agent and the other Agents shall not have any  duty to take any discretionary action or exercise any discretionary powers, except those  discretionary rights and powers expressly contemplated by the Loan Documents that the  Administrative Agent is required to exercise in writing by the Required Lenders (or such other  number or percentage of the Lenders as shall be necessary under the circumstances as provided in  Section 10.2), provided that the Administrative Agent shall not be required to take any action that,  in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that  is contrary to any Loan Document or applicable law, including for the avoidance of doubt any  action that may be in violation of the automatic stay under any Debtor Relief Law or that may  effect a forfeiture, modification or termination of property of a Defaulting Lender in violation of  

 

  140  any Debtor Relief Law, and (c) the Administrative Agent and each other Agent shall not have any  duty or responsibility to disclose, and shall not be liable for the failure to disclose to any Lender  or Issuing Bank, any credit or other information concerning the business, prospects, operations,  property, financial and other condition or creditworthiness of any of the Loan Parties or any of  their Affiliates that is communicated to, obtained by or in the possession of the Administrative  Agent, such other Agent or any of their respective Related Parties in any capacity, except for  notices, reports and other documents expressly required to be furnished to the Lenders and Issuing  Banks by the Administrative Agent herein or in any other Loan Document.  The Administrative  Agent shall not be liable for any action taken or not taken by it, its sub-agents or its attorneys-in- fact with the consent or at the request of the Required Lenders (or such other number or percentage  of the Lenders as shall be necessary under the circumstances as provided in Section 10.2) or in the  absence of its own gross negligence or willful misconduct (as determined by a court of competent  jurisdiction by final and non-appealable judgment).  The Administrative Agent shall not be  responsible for the negligence or misconduct of any sub-agents or attorneys-in-fact selected by it  with reasonable care.  The Administrative Agent shall not be deemed to have knowledge of any  Default or Event of Default unless and until written notice thereof (which notice shall include an  express reference to such event being a “Default” or “Event of Default” hereunder) is given to the  Administrative Agent by the Borrower or any Lender, and the Administrative Agent and each other  Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement,  warranty or representation made in or in connection with any Loan Document, (ii) the contents of  any certificate, report or other document delivered hereunder or thereunder or in connection  herewith or therewith, (iii) the performance or observance of any of the covenants, agreements, or  other terms and conditions set forth in any Loan Document, (iv) the validity, enforceability,  effectiveness or genuineness of any Loan Document or any other agreement, instrument or  document, or (v) the satisfaction of any condition set forth in Article III or elsewhere in any Loan  Document, other than to confirm receipt of items expressly required to be delivered to the  Administrative Agent.  The Administrative Agent may consult with legal counsel (including  counsel for the Borrower) concerning all matters pertaining to such duties.      Section 9.3. Lack of Reliance on the Agents, the Issuing Banks and the Lenders.   Each Lender and each Issuing Bank expressly acknowledges that none of the Agents has made any  representation or warranty to it, and that no act by any Agent hereafter taken, including any consent  to, and acceptance of any assignment or review of the affairs of any Loan Party or any Affiliate  thereof, shall be deemed to constitute any representation or warranty by any Agent to any Issuing  Bank or Lender as to any matter, including whether any Agent disclosed material information in  its (or its Related Parties’) possession.  Each Lender and each Issuing Bank represents to each  Agent, each other Issuing Bank and each other Lender that it has, independently and without  reliance upon any Agent, any other Issuing Bank, any other Lender or any of their Related Parties  and based on such documents and information as it has deemed appropriate, made its own credit  analysis of, appraisal of, and investigation into, the business, prospects, operations, property,  financial and other condition and creditworthiness of the Loan Parties and their Subsidiaries, and  all applicable bank or other regulatory laws relating to the transactions contemplated hereby, and  made its own decision to enter into this Agreement and to extend credit to the Borrower hereunder.   Each Lender and each Issuing Bank also acknowledges that it will, independently and without  reliance upon any Agent, any other Issuing Bank, any other Lender or any of their Related Parties  and based on such documents and information as it shall from time to time deem appropriate,  continue to make its own credit analysis, appraisals and decisions in taking or not taking any action  

 

  141  under or based on this Agreement, any other Loan Document or any related agreement or any  document furnished hereunder or thereunder, and to make such investigations as it deems  necessary to inform itself as to the business, prospects, operations, property, financial and other  condition and creditworthiness of the Loan Parties.  Each Lender and each Issuing Bank represents  and warrants that (i) the Loan Documents set forth the terms of a commercial lending facility and  (ii) it is engaged in making, acquiring or holding commercial loans in the ordinary course and is  entering into this Agreement as a Lender or Issuing Bank for the purpose of making, acquiring or  holding commercial loans and providing other facilities set forth herein as may be applicable to  such Lender or Issuing Bank, and not for the purpose of purchasing, acquiring or holding any other  type of financial instrument, and each Lender and each Issuing Bank agrees not to assert a claim  in contravention of the foregoing. Each Lender and each Issuing Bank represents and warrants that  it is sophisticated with respect to decisions to make, acquire and/or hold commercial loans and to  provide other facilities set forth herein, as may be applicable to such Lender or such Issuing Bank,  and either it, or the Person exercising discretion in making its decision to make, acquire and/or  hold such commercial loans or to provide such other facilities, is experienced in making, acquiring  or holding such commercial loans or providing such other facilities.  Section 9.4. Certain Rights of the Administrative Agent.  If the Administrative Agent  shall request instructions from the Required Lenders with respect to any action or actions  (including the failure to act) in connection with this Agreement, the Administrative Agent shall be  entitled to refrain from such act or taking such act unless and until it shall have received  instructions from such Lenders, and the Administrative Agent shall not incur liability to any Person  by reason of so refraining.  Without limiting the foregoing, no Lender shall have any right of action  whatsoever against the Administrative Agent as a result of the Administrative Agent acting or  refraining from acting hereunder in accordance with the instructions of the Required Lenders  where required by the terms of this Agreement.  Section 9.5. Reliance by the Administrative Agent.  The Administrative Agent shall  be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request,  certificate, consent, statement, instrument, document or other writing (including any electronic  message, posting or other distribution) believed by it to be genuine and to have been signed, sent  or made by the proper Person.  The Administrative Agent may also rely upon any statement made  to it orally or by telephone and believed by it to be made by the proper Person and shall not incur  any liability for relying thereon.  The Administrative Agent may consult with legal counsel  (including counsel for the Borrower), independent public accountants and other experts selected  by it and shall not be liable for any action taken or not taken by it in accordance with the advice of  such counsel, accountants or experts.  Section 9.6. The Administrative Agent in its Individual Capacity.  The bank serving  as the Administrative Agent shall have the same rights and powers under this Agreement and any  other Loan Document in its capacity as a Lender as any other Lender and may exercise or refrain  from exercising the same as though it were not the Administrative Agent; and the terms “Lenders”,  “Required Lenders”, “Required Revolving Lenders”, or any similar terms shall, unless the context  clearly otherwise indicates, include the Administrative Agent in its individual capacity.  The bank  acting as the Administrative Agent and its Affiliates may accept deposits from, lend money to, and  generally engage in any kind of business with the Borrower or any Subsidiary or Affiliate of the  Borrower as if it were not the Administrative Agent hereunder.  

 

  142  Section 9.7. Successor Administrative Agent.  (a) The Administrative Agent may resign at any time by giving notice thereof  to the Lenders and the Borrower.  Upon any such resignation, the Required Lenders shall have the  right to appoint a successor Administrative Agent, subject to approval by the Borrower provided  that no Default or Event of Default shall exist at such time.  If no successor Administrative Agent  shall have been so appointed, and shall have accepted such appointment within 30 days after the  retiring Administrative Agent gives notice of resignation, then the retiring Administrative Agent  may, on behalf of the Lenders, appoint a successor Administrative Agent, which shall be a  commercial bank organized under the laws of the United States or any state thereof or a bank  which maintains an office in the United States, having a combined capital and surplus of at least  $500,000,000.  (b) Upon the acceptance of its appointment as the Administrative Agent  hereunder by a successor, such successor Administrative Agent shall thereupon succeed to and  become vested with all the rights, powers, privileges and duties of the retiring Administrative  Agent, and the retiring Administrative Agent shall be discharged from its duties and obligations  under this Agreement and the other Loan Documents.  If, within 45 days after written notice is  given of the retiring Administrative Agent’s resignation under this Section, no successor  Administrative Agent shall have been appointed and shall have accepted such appointment, then  on such 45th day (i) the retiring Administrative Agent’s resignation shall become effective, (ii) the  retiring Administrative Agent shall thereupon be discharged from its duties and obligations under  the Loan Documents and (iii) the Required Lenders shall thereafter perform all duties of the  retiring Administrative Agent under the Loan Documents until such time as the Required Lenders  appoint a successor Administrative Agent as provided above.  After any retiring Administrative  Agent’s resignation hereunder, the provisions of this Article shall continue in effect for the benefit  of such retiring Administrative Agent and its representatives and agents in respect of any actions  taken or not taken by any of them while it was serving as the Administrative Agent.   (c) In addition to the foregoing, if a Lender becomes, and during the period it  remains, a Defaulting Lender, and if any Default has arisen from a failure of the Borrower to  comply with Section 2.26(a), then each Issuing Bank and the Swingline Lender may, upon prior  written notice to the Borrower and the Administrative Agent, resign as an Issuing Bank or as  Swingline Lender, as the case may be, effective at the close of business Atlanta, Georgia time on  a date specified in such notice (which date may not be less than five (5) Business Days after the  date of such notice).   Section 9.8. Withholding Tax  .      (a)  To the extent required by any applicable law, the Administrative Agent may  withhold from any payment to any Lender an amount equivalent to any applicable withholding  tax.  If the Internal Revenue Service or any authority of the United States or any other jurisdiction  asserts a claim that the Administrative Agent did not properly withhold tax from amounts paid to  or for the account of any Lender (because the appropriate form was not delivered or was not  properly executed, or because such Lender failed to notify the Administrative Agent of a change  in circumstances that rendered the exemption from, or reduction of, withholding tax ineffective,  

 

  143  or for any other reason), such Lender shall indemnify the Administrative Agent (to the extent that  the Administrative Agent has not already been reimbursed by the Borrower and without limiting  the obligation of the Borrower to do so) fully for all amounts paid, directly or indirectly, by the  Administrative Agent as tax or otherwise, including penalties and interest, together with all  expenses incurred, including legal expenses, allocated staff costs and any out of pocket expenses;  provided that if the Administrative Agent is subsequently reimbursed by the Borrower or any other  Loan Party for any such amounts, the Administrative Agent shall reasonably promptly refund to  the applicable Lender the amount of any excess reimbursement.  (b) Without duplication of any indemnity provided under subsection (a) of this  Section, each Lender shall also indemnify the Administrative Agent, within 10 days after demand  therefor, for (i) any Indemnified Taxes or Other Taxes attributable to such Lender (to the extent  that the Administrative Agent has not already been reimbursed by the Borrower and without  limiting the obligation of the Borrower to do so); provided that if the Administrative Agent is  subsequently reimbursed by the Borrower or any other Loan Party for any such amounts, the  Administrative Agent shall reasonably promptly refund to the applicable Lender the amount of  any excess reimbursement, (ii) any Taxes attributable to such Lender’s failure to comply with the  provisions of Section 10.4(d) relating to the maintenance of a Participant Register and (iii) any  Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the  Administrative Agent in connection with any Loan Document, and any reasonable expenses  arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally  imposed or asserted by the relevant Governmental Authority.  A certificate as to the amount of  such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive  absent manifest error.  Each Lender hereby authorizes the Administrative Agent to set off and  apply any and all amounts at any time owing to such Lender under any Loan Document or  otherwise payable by the Administrative Agent to the Lender from any other source against any  amount due to the Administrative Agent under this subsection.  Section 9.9. The Administrative Agent May File Proofs of Claim.  (a) In case of the pendency of any receivership, insolvency, liquidation,  bankruptcy, reorganization, arrangement, adjustment, composition or other judicial proceeding  relative to any Loan Party, the Administrative Agent (irrespective of whether the principal of any  Loan or any Revolving Credit Exposure shall then be due and payable as herein expressed or by  declaration or otherwise and irrespective of whether the Administrative Agent shall have made  any demand on the Borrower) shall be entitled and empowered, by intervention in such proceeding  or otherwise:  (i) to file and prove a claim for the whole amount of the principal and  interest owing and unpaid in respect of the Loans or Revolving Credit Exposure and all  other Obligations that are owing and unpaid and to file such other documents as may be  necessary or advisable in order to have the claims of the Lenders, each Issuing Bank and  the Administrative Agent (including any claim for the reasonable compensation, expenses,  disbursements and advances of the Lenders, each Issuing Bank and the Administrative  Agent and its agents and counsel and all other amounts due the Lenders, each Issuing Bank  and the Administrative Agent under Section 10.3) allowed in such judicial proceeding; and  

 

  144  (ii) to collect and receive any monies or other property payable or  deliverable on any such claims and to distribute the same.  (b) Any custodian, receiver, assignee, trustee, liquidator, sequestrator or other  similar official in any such judicial proceeding is hereby authorized by each Lender and each  Issuing Bank to make such payments to the Administrative Agent and, if the Administrative Agent  shall consent to the making of such payments directly to the Lenders and each Issuing Bank, to  pay to the Administrative Agent any amount due for the reasonable compensation, expenses,  disbursements and advances of the Administrative Agent and its agents and counsel, and any other  amounts due the Administrative Agent under Section 10.3.  Nothing contained herein shall be deemed to authorize the Administrative Agent to  authorize or consent to or accept or adopt on behalf of any Lender or any Issuing Bank any plan  of reorganization, arrangement, adjustment or composition affecting the Obligations or the rights  of any Lender or to authorize the Administrative Agent to vote in respect of the claim of any  Lender in any such proceeding.  Section 9.10. Authorization to Execute Other Loan Documents.  Each Lender hereby  authorizes the Administrative Agent to execute on behalf of all Lenders all Loan Documents  (including, without limitation, the Collateral Documents and any subordination agreements  permitted hereunder) other than this Agreement, subject to any approval of the Lenders or the  Required Lenders required by the Loan Documents.  Section 9.11. Collateral and Guaranty Matters.  The Lenders irrevocably authorize the  Administrative Agent, at its option and discretion to effectuate the releases and subordination  agreements contemplated by Section 10.17.  Upon request by the Administrative Agent at any  time, the Required Lenders will confirm in writing the Administrative Agent’s authority to release  its interest in particular types or items of property or to release any Loan Party from its obligations  under the applicable Collateral Documents pursuant to Section 10.17.    Section 9.12. Co-Documentation Agents;Co- Co-Syndication Agents; Lead Arrangers.   Each Lender hereby designates BBVA USA, Citizens Bank, N.A., Fifth Third Bank and Wells Fargo  Bank, National Association as Co-Documentation Agents (the “Co-Documentation Agents”) and  agrees that the Co-Documentation Agents shall have no duties or obligations under any Loan  Documents to any Lender or any Loan Party.  Each Lender hereby designates Bank of America,  N.A. and Regions Bank, Citibank, N.A., Fifth Third Bank, National Association, Regions  Capital Markets and Wells Fargo Bank, National Association as Co-Syndication Agents (the  “Co-Syndication Agents”) and agrees that the Co-Syndication Agents shall have no duties or  obligations under any Loan Documents to any Lender or any Loan Party. Each Lender agrees that  the Lead Arrangers shall have no duties or obligations under any Loan Documents to any Lender  or any Loan Party.  Section 9.13. Right to Realize on Collateral and Enforce Guarantee.    Anything contained in any of the Loan Documents to the contrary notwithstanding, the Borrower,  the Administrative Agent and each Lender hereby agree that (i) no Lender shall have any right  individually to realize upon any of the Collateral or to enforce the Collateral Documents, it being  understood and agreed that all powers, rights and remedies hereunder and under the Collateral  

 

  145  Documents may be exercised solely by the Administrative Agent, and (ii) in the event of a  foreclosure by the Administrative Agent on any of the Collateral pursuant to a public or private  sale or other disposition, the Administrative Agent or any Lender may be the purchaser or licensor  of any or all of such Collateral at any such sale or other disposition and the Administrative Agent,  as agent for and representative of the Lenders (but not any Lender or Lenders in its or their  respective individual capacities unless the Required Lenders shall otherwise agree in writing), shall  be entitled, for the purpose of bidding and making settlement or payment of the purchase price for  all or any portion of the Collateral sold at any such public sale, to use and apply any of the  Obligations as a credit on account of the purchase price for any collateral payable by the  Administrative Agent at such sale or other disposition.  Section 9.14. Secured Bank Product Obligations and Hedging Obligations.  No Bank  Product Provider or Lender-Related Hedge Provider that obtains the benefits of Section 8.2, the  Collateral Documents or any Collateral by virtue of the provisions hereof or of any other Loan  Document shall have any right to notice of any action or to consent to, direct or object to any action  hereunder or under any other Loan Document or otherwise in respect of the Collateral (including  the release or impairment of any Collateral) other than in its capacity as a Lender and, in such case,  only to the extent expressly provided in the Loan Documents.  Notwithstanding any other provision  of this Article to the contrary, the Administrative Agent shall not be required to verify the payment  of, or that other satisfactory arrangements have been made with respect to, Bank Product  Obligations and Hedging Obligations unless the Administrative Agent has received written notice  of such Obligations, together with such supporting documentation as the Administrative Agent  may request, from the applicable Bank Product Provider or Lender-Related Hedge Provider, as the  case may be.  Section 9.15. Certain ERISA Matters.  (a) Each Lender (x) represents and warrants, as of the date such Person became  a Lender party hereto,  and (y) covenants, from the date such Person became a Lender party hereto  to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative  Agent and the Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt,  to or for the benefit of the Borrower or any other Loan Party, that at least one of the following is  and will be true:  (i) such Lender is not using “plan assets” (within the meaning of  Section 3(42) of ERISA or otherwise for purposes of Title I of ERISA or Section 4975 of  the Code) of one or more Benefit Plans in connection with the Loans, the Letters of Credit  or the Commitments,  (ii) the prohibited transaction exemption set forth in one or more PTEs,  such as PTE 84-14 (a class exemption for certain transactions determined by independent  qualified professional asset managers), PTE 95-60 (a class exemption for certain  transactions involving insurance company general accounts), PTE 90-1 (a class exemption  for certain transactions involving insurance company pooled separate accounts), PTE 91- 38 (a class exemption for certain transactions involving bank collective investment funds)  or PTE 96-23 (a class exemption for certain transactions determined by in-house asset  managers), is applicable so as to exempt from the prohibitions of Section 406 of ERISA  

 

  146  and Section 4975 of the Code such Lender’s entrance into, participation in, administration  of and performance of the Loans, the Letters of Credit, the Commitments and this  Agreement,  (iii) (A) such Lender is an investment fund managed by a “Qualified  Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such  Qualified Professional Asset Manager made the investment decision on behalf of such  Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit,  the Commitments and this Agreement, (C) the entrance into, participation in,  administration of and performance of the Loans, the Letters of Credit, the Commitments  and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of  PTE 84-14 and (D) to the best knowledge of such Lender, the requirements of subsection  (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into,  participation in, administration of and performance of the Loans, the Letters of Credit, the  Commitments and this Agreement, or  (iv) such other representation, warranty and covenant as may be agreed  in writing between the Administrative Agent, in its sole discretion, and such Lender.  (b) In addition, unless either (1) sub-clause (i) in the immediately preceding  clause (a) is true with respect to a Lender or (2) a Lender has provided another representation,  warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a),  such Lender further (x) represents and warrants, as of the date such Person became a Lender party  hereto, and (y) covenants, from the date such Person became a Lender party hereto to the date such  Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and the  Lead Arrangers and their respective Affiliates, and not, for the avoidance of doubt, to or for the  benefit of the Borrower or any other Loan Party, that none of the Administrative Agent or the Lead  Arrangers or any of their respective Affiliates is a fiduciary with respect to the assets of such  Lender involved in the Loans, the Letters of Credit, the Commitments and this Agreement  (including in connection with the reservation or exercise of any rights by the Administrative Agent  under this Agreement, any Loan Document or any documents related to hereto or thereto).  Section 9.16. Erroneous Payments.  (a) If the Administrative Agent notifies a Lender, an Issuing Bank or a  Secured Party, or any Person who has received funds on behalf of a Lender, an Issuing Bank  or a Secured Party (any such Lender, Issuing Bank, Secured Party or other recipient, a  “Payment Recipient”) that the Administrative Agent has determined in its sole discretion  (whether or not after receipt of any notice under immediately succeeding paragraph (b)) that  any funds received by such Payment Recipient from the Administrative Agent or any of its  Affiliates were erroneously transmitted to, or otherwise erroneously or mistakenly received  by, such Payment Recipient (whether or not known to such Lender, Issuing Bank, Secured  Party or other Payment Recipient on its behalf) (any such funds, whether received as a  payment, prepayment or repayment of principal, interest, fees, distribution or otherwise,  individually and collectively, an “Erroneous Payment”) and demands the return of such  Erroneous Payment (or a portion thereof), such Erroneous Payment shall at all times remain  the property of the Administrative Agent and shall be segregated by the Payment Recipient  

 

  147  and held in trust for the benefit of the Administrative Agent, and such Lender, Issuing Bank  or Secured Party shall (or, with respect to any Payment Recipient who received such funds  on its behalf, shall cause such Payment Recipient to) promptly, but in no event later than two  (2) Business Days thereafter, return to the Administrative Agent the amount of any such  Erroneous Payment (or portion thereof) as to which such a demand was made, in same day  funds (in the currency so received), together with interest thereon in respect of each day from  and including the date such Erroneous Payment (or portion thereof) was received by such  Payment Recipient to the date such amount is repaid to the Administrative Agent in same  day funds at the greater of the Federal Funds Rate and a rate determined by the  Administrative Agent in accordance with banking industry rules on interbank compensation  from time to time in effect.  A notice of the Administrative Agent to any Payment Recipient  under this paragraph (a) shall be conclusive, absent manifest error.  (b) Without limiting immediately preceding paragraph (a), each Lender,  each Issuing Bank, each Secured Party, or any other Person who has received funds on behalf  of a Lender, an Issuing Bank or any Secured Party, hereby further agrees that if it receives  a payment, prepayment or repayment (whether received as a payment, prepayment or  repayment of principal, interest, fees, distribution or otherwise) from the Administrative  Agent (or any of its Affiliates) (x) that is in a different amount than, or on a different date  from, that specified in a notice of payment, prepayment or repayment sent by the  Administrative Agent (or any of its Affiliates) with respect to such payment, prepayment or  repayment, (y) that was not preceded or accompanied by a notice of payment, prepayment  or repayment sent by the Administrative Agent (or any of its Affiliates), or (z) that such  Lender, Issuing Bank or Secured Party, or other such recipient, otherwise becomes aware  was transmitted, or received, in error or by mistake (in whole or in part) in each case:   (i) (A) in the case of immediately preceding clauses (x) or (y), an  error shall be presumed to have been made (absent written confirmation from the  Administrative Agent to the contrary) or (B) an error has been made (in the case of  immediately preceding clause (z)), in each case, with respect to such payment,  prepayment or repayment; and  (ii) such Lender, Issuing Bank or Secured Party shall (and shall  cause any other recipient that receives funds on its respective behalf to) promptly  (and, in all events, within one Business Day of its knowledge of such error) notify  the Administrative Agent of its receipt of such payment, prepayment or repayment,  the details thereof (in reasonable detail) and that it is so notifying the Administrative  Agent pursuant to this Section 9.16(b).  (c) Each Lender, Issuing Bank and Secured Party hereby authorizes the  Administrative Agent to set off, net and apply any and all amounts at any time owing to such  Lender, Issuing Bank or Secured Party under any Loan Document, or otherwise payable or  distributable by the Administrative Agent to such Lender, Issuing Bank or Secured Party  from any source, against any amount due to the Administrative Agent under immediately  preceding paragraph (a) or under the indemnification provisions of this Agreement.  

 

  148  (d) In the event that an Erroneous Payment (or portion thereof) is not  recovered by the Administrative Agent for any reason, after demand therefor by the  Administrative Agent in accordance with immediately preceding paragraph (a), from any  Lender or Issuing Bank that has received such Erroneous Payment (or portion thereof)  (and/or from any Payment Recipient who received such Erroneous Payment (or portion  thereof) on its respective behalf) (such unrecovered amount, an “Erroneous Payment Return  Deficiency”), upon the Administrative Agent’s notice to such Lender or Issuing Bank at any  time, (i) such Lender or Issuing Bank shall be deemed to have assigned its Loans (but not its  Commitments) of the relevant Class with respect to which such Erroneous Payment was  made (the “Erroneous Payment Impacted Class”) in an amount equal to the Erroneous  Payment Return Deficiency (or such lesser amount as the Administrative Agent may specify)  (such assignment of the Loans (but not Commitments) of the Erroneous Payment Impacted  Class, the “Erroneous Payment Deficiency Assignment”) at par plus any accrued and unpaid  interest (with the assignment fee to be waived by the Administrative Agent in such instance),  and is hereby (together with the Borrower) deemed to execute and deliver an Assignment  and Assumption (or, to the extent applicable, an agreement incorporating an Assignment  and Assumption by reference pursuant to a Platform as to which the Administrative Agent  and such parties are participants) with respect to such Erroneous Payment Deficiency  Assignment, and such Lender or Issuing Bank shall deliver any promissory notes evidencing  such Loans to the Borrower or the Administrative Agent, (ii) the Administrative Agent as  the assignee Lender shall be deemed to acquire the Erroneous Payment Deficiency  Assignment, (iii) upon such deemed acquisition, the Administrative Agent as the assignee  Lender shall become a Lender or Issuing Bank, as applicable, hereunder with respect to such  Erroneous Payment Deficiency Assignment and the assigning Lender or assigning Issuing  Bank shall cease to be a Lender or Issuing Bank, as applicable, hereunder with respect to  such Erroneous Payment Deficiency Assignment, excluding, for the avoidance of doubt, its  obligations under the indemnification provisions of this Agreement and its applicable  Commitments which shall survive as to such assigning Lender or assigning Issuing Bank,  and (iv) the Administrative Agent may reflect in the Register its ownership interest in the  Loans subject to the Erroneous Payment Deficiency Assignment.  The Administrative Agent  may, in its discretion, sell any Loans acquired pursuant to an Erroneous Payment Deficiency  Assignment and upon receipt of the proceeds of such sale, the Erroneous Payment Return  Deficiency owing by the applicable Lender or Issuing Bank shall be reduced by the net  proceeds of the sale of such Loan (or portion thereof), and the Administrative Agent shall  retain all other rights, remedies and claims against such Lender or Issuing Bank (and/or  against any recipient that receives funds on its respective behalf).  For the avoidance of  doubt, no Erroneous Payment Deficiency Assignment will reduce the Commitments of any  Lender or Issuing Bank and such Commitments shall remain available in accordance with  the terms of this Agreement.  In addition, each party hereto agrees that, except to the extent  that the Administrative Agent has sold a Loan (or portion thereof) acquired pursuant to an  Erroneous Payment Deficiency Assignment, and irrespective of whether the Administrative  Agent may be equitably subrogated, the Administrative Agent shall be contractually  subrogated to all the rights and interests of the applicable Lender, Issuing Bank or Secured  Party under the Loan Documents with respect to each Erroneous Payment Return  Deficiency (the “Erroneous Payment Subrogation Rights”).  

 

  149  (e) The parties hereto agree that an Erroneous Payment shall not pay,  prepay, repay, discharge or otherwise satisfy any Obligations owed by the Borrower or any  other Loan Party, except, in each case, to the extent such Erroneous Payment is, and solely  with respect to the amount of such Erroneous Payment that is, comprised of funds received  by the Administrative Agent from the Borrower or any other Loan Party for the purpose of  making such Erroneous Payment.  (f) To the extent permitted by applicable law, no Payment Recipient shall  assert any right or claim to an Erroneous Payment, and hereby waives, and is deemed to  waive, any claim, counterclaim, defense or right of set-off or recoupment with respect to any  demand, claim or counterclaim by the Administrative Agent for the return of any Erroneous  Payment received, including without limitation waiver of any defense based on “discharge  for value” or any similar doctrine.  (g) Each party’s obligations, agreements and waivers under this Section  9.16 shall survive the resignation or replacement of the Administrative Agent, any transfer  of rights or obligations by, or the replacement of, a Lender or Issuing Bank, the termination  of the Commitments and/or the repayment, satisfaction or discharge of all Obligations (or  any portion thereof) under any Loan Document.    ARTICLE X    MISCELLANEOUS  Section 10.1. Notices.  (a) Written Notices.    (i) Except in the case of notices and other communications expressly  permitted to be given by telephone, all notices and other communications to any party  herein to be effective shall be in writing and shall be delivered by hand or overnight courier  service, mailed by certified or registered mail or sent by telecopy, as follows:   To the Borrower: The Ensign Group, Inc.   27101 Puerta Real, Suite 450   Mission Viejo, CA 92691   Attention: Suzanne D. Snapper, Chief Financial  Officer   Telecopy Number: (949) 540-3003   Email: SSnapper@EnsignServices.net    With a copy to: Ensign Services, Inc.   27101 Puerta Real, Suite 450   Mission Viejo, CA 92691   Attention: General Counsel  

 

  150   Telecopy Number: (949) 540-3007  Email: legal@ensignservices.net     To the Administrative Agent: SunTrustTruist Bank  3333 Peachtree Road214 N. Tryon Street   7th14th Floor   Charlotte, NC 28202   Atlanta, Georgia 30326  Attention: Portfolio Manager   Email:  Katherine.Bass@SunTrustkatie.lundin@truist.com  With copies to (for   informational purposes only):   SunTrustTruist Bank   3333 Peachtree Road   Atlanta, Georgia 30326   Attn: Ron CaldwellStates Clawson   Telecopy Number: (404) 926-5248   Email:  Ron.Caldwell@SunTruststates.clawson@truist.com     SunTrustTruist Bank   Agency Services    303 Peachtree Street, N.E. / 25th Floor   Atlanta, Georgia 30308   Attention: Agency Services Manager   Telecopy Number: (404) 221-2001   and   Latham & Watkins LLP   355 South Grand Avenue, Suite 100   Los Angeles, CA 90071-1560   Attention: Jason Bosworth   Telecopy Number: (213) 891-8291  Email: jason.bosworth@lw.com  To the Issuing Bank: SunTrustTruist Bank   Attn: Standby Letter of Credit Dept.  245 Peachtree Center Ave., 17th FL  Atlanta, GA  30303   Telephone: (800) 951-7847   Telecopy Number: (801) 567-6205   Email: LCandTradeServices@SunTrusttruist.com  

 

  151  To the Swingline Lender: SunTrustTruist Bank   Agency Services   303 Peachtree Street, N.E. / 25th Floor   Atlanta, Georgia 30308   Attention: Agency Services Manager   Telecopy Number: (404) 221-2001  To any other Lender: the address set forth in the Administrative  Questionnaire  or the Assignment and Acceptance executed by  such  Lender   Any party hereto may change its address or telecopy number for notices and other  communications hereunder by notice to the other parties hereto.  All such notices and other  communications shall be effective upon actual receipt by the relevant Person or, if  delivered by overnight courier service, upon the first Business Day after the date deposited  with such courier service for overnight (next-day) delivery or, if sent by telecopy, upon  transmittal in legible form by facsimile machine or, if mailed, upon the third Business Day  after the date deposited into the mail or, if delivered by hand, upon delivery; provided that  notices delivered to the Administrative Agent, any Issuing Bank or the Swingline Lender  shall not be effective until actually received by such Person at its address specified in this  Section.  (ii) Any agreement of the Administrative Agent, any Issuing Bank or  any Lender herein to receive certain notices by telephone or facsimile is solely for the  convenience and at the request of the Borrower.  The Administrative Agent, each Issuing  Bank and each Lender shall be entitled to rely on the authority of any Person purporting to  be a Person authorized by the Borrower to give such notice and the Administrative Agent,  each Issuing Bank and the Lenders shall not have any liability to the Borrower or other  Person on account of any action taken or not taken by the Administrative Agent, any  Issuing Bank or any Lender in reliance upon such telephonic or facsimile notice.  The  obligation of the Borrower to repay the Loans and all other Obligations hereunder shall not  be affected in any way or to any extent by any failure of the Administrative Agent, any  Issuing Bank or any Lender to receive written confirmation of any telephonic or facsimile  notice or the receipt by the Administrative Agent, any Issuing Bank or any Lender of a  confirmation which is at variance with the terms understood by the Administrative Agent,  such Issuing Bank and such Lender to be contained in any such telephonic or facsimile  notice.  (b) Electronic Communications.    (i) Notices and other communications to the Lenders and each Issuing  Bank hereunder may be delivered or furnished by electronic communication (including  e-mail and Internet or intranet websites) pursuant to procedures approved by the  Administrative Agent, provided that the foregoing shall not apply to notices to any Lender  or any Issuing Bank pursuant to Article II unless such Lender, such Issuing Bank, as  applicable, and the Administrative Agent have agreed to receive notices under any Section  thereof by electronic communication and have agreed to the procedures governing such  

 

  152  communications.  The Administrative Agent or the Borrower may, in its discretion, agree  to accept notices and other communications to it hereunder by electronic communications  pursuant to procedures approved by it; provided that approval of such procedures may be  limited to particular notices or communications.   (ii) Unless the Administrative Agent otherwise prescribes, (i) notices  and other communications sent to an e-mail address shall be deemed received upon the  sender’s receipt of an acknowledgement from the intended recipient (such as by the “return  receipt requested” function, as available, return e-mail or other written acknowledgement);  provided that if such notice or other communication is not sent during the normal business  hours of the recipient, such notice or communication shall be deemed to have been sent at  the opening of business on the next Business Day for the recipient, and (ii) notices or  communications posted to an Internet or intranet website shall be deemed received upon  the deemed receipt by the intended recipient at its e-mail address as described in the  foregoing clause (i) of notification that such notice or communication is available and  identifying the website address therefor.   (c) Certification of Public Information.  The Borrower and each Lender  acknowledge that certain of the Lenders may be Public Lenders and, if documents or notices  required to be delivered pursuant to Section 5.1 or Section 5.2 otherwise are being distributed  through Syndtrak, Intralinks or any other Internet or intranet website or other information platform  (the “Platform”), any document or notice that the Borrower has indicated contains Non-Public  Information shall not be posted on that portion of the Platform designated for such Public Lenders.   The Borrower agrees to clearly designate all information provided to the Administrative Agent by  or on behalf of the Borrower which is suitable to make available to Public Lenders.  If the Borrower  has not indicated whether a document or notice delivered pursuant to Section 5.1 or Section 5.2  contains Non-Public Information, the Administrative Agent reserves the right to post such  document or notice solely on that portion of the Platform designated for Lenders who wish to  receive Non-Public Information.   (d) Private Side Information Contacts.  Each Public Lender agrees to cause at  least one individual at or on behalf of such Public Lender to at all times have selected the “Private  Side Information” or similar designation on the content declaration screen of the Platform in order  to enable such Public Lender or its delegate, in accordance with such Public Lender’s compliance  procedures and applicable law, including Unites States federal and state securities laws, to make  reference to information that is not made available through the “Public Side Information” portion  of the Platform and that may contain Non-Public Information with respect to the Borrower, its  Affiliates or any of their securities or loans for purposes of United States federal or state securities  laws.  In the event that any Public Lender has determined for itself not to access any information  disclosed through the Platform or otherwise, such Public Lender acknowledges that (i) other  Lenders may have availed themselves of such information and (ii) neither the Borrower nor the  Administrative Agent has any responsibility for such Public Lender’s decision to limit the scope  of the information it has obtained in connection with this Agreement and the other Loan  Documents.  Section 10.2. Waiver; Amendments.  

 

  153  (a) No failure or delay by the Administrative Agent, any Issuing Bank or any  Lender in exercising any right or power hereunder or under any other Loan Document, and no  course of dealing between the Borrower and the Administrative Agent or any Lender, shall operate  as a waiver thereof, nor shall any single or partial exercise of any such right or power, or any  abandonment or discontinuance of steps to enforce such right or power, preclude any other or  further exercise thereof or the exercise of any other right or power hereunder or thereunder.  The  rights and remedies of the Administrative Agent, each Issuing Bank and the Lenders hereunder  and under the other Loan Documents are cumulative and are not exclusive of any rights or remedies  provided by law.  No waiver of any provision of this Agreement or of any other Loan Document  or consent to any departure by the Borrower therefrom shall in any event be effective unless the  same shall be permitted by subsection (b) of this Section, and then such waiver or consent shall be  effective only in the specific instance and for the purpose for which given.  Without limiting the  generality of the foregoing, the making of a Loan or the issuance of a Letter of Credit shall not be  construed as a waiver of any Default or Event of Default, regardless of whether the Administrative  Agent, any Lender or any Issuing Bank may have had notice or knowledge of such Default or  Event of Default at the time.  (b) Subject to Section 2.16(b), no amendment or waiver of any provision of this  Agreement or of the other Loan Documents (other than the Fee Letter), nor consent to any  departure by the Borrower therefrom, shall in any event be effective unless the same shall be in  writing and signed by the Borrower and the Required Lenders, or the Borrower and the  Administrative Agent with the consent of the Required Lenders, and then such amendment, waiver  or consent shall be effective only in the specific instance and for the specific purpose for which  given; provided that, in addition to the consent of the Required Lenders, no amendment, waiver or  consent shall:  (i)  extend or increase the Commitment of any Lender without the  written consent of such Lender;  (ii)  reduce the principal amount of any Loan or LC Disbursement or  reduce the rate of interest thereon, or reduce any fees payable hereunder or in any other  Loan Document, without the written consent of each Lender directly affected thereby  (provided that any change to the calculation of the Total Leverage Ratio or the component  definitions used therein shall not require consent of each Lender directly affected thereby  and shall only be subject to Required Lender approval);   (iii)  postpone the date fixed for any payment (other than any mandatory  prepayment) of any principal of, or interest on, any Loan or LC Disbursement or any fees  hereunder or reduce the amount of, waive or excuse any such payment, or postpone the  scheduled date for the termination or reduction of any Commitment, without the written  consent of each Lender directly affected thereby (provided that any change to the  calculation of the Total Leverage Ratio or the component definitions used therein shall not  require consent of each Lender directly affected thereby and shall only be subject to  Required Lender approval);   

 

  154  (iv)  change Section 2.21(b) or (c) or Section 8.2 in a manner that would  alter the pro rata sharing of payments required thereby, without the written consent of each  Lender directly affected thereby;   (v)  change any of the provisions of this subsection (b) or the percentage  set forth in the definition of “Required Lenders” or any other provision hereof specifying  the number or percentage of Lenders which are required to waive, amend or modify any  rights hereunder or make any determination or grant any consent hereunder, without the  consent of each Lender;   (vi)  release all or substantially all of the guarantors, or limit the liability  of all or substantially all of the guarantors, under any guaranty agreement guaranteeing any  of the Obligations, without the written consent of each Lender; or   (vii)  release all or substantially all collateral (if any) securing any of the  Obligations, without the written consent of each Lender;  provided, further, that (x) no such amendment, waiver or consent shall amend, modify or otherwise  affect the rights, duties or obligations of the Administrative Agent, the Swingline Lender or any  Issuing Bank without the prior written consent of such Person, and (y) no amendment, waiver or  consent shall, unless signed by the Borrower and the Required Revolving Lenders, or the Borrower  and the Administrative Agent with the consent of the Required Revolving Lenders:   (1) amend or waive compliance with the conditions precedent to the  obligations of the Revolving Lenders to make any Revolving Loan or LC Disbursement;    (2) amend or waive non-compliance with any provision of Section  2.12(d);     (3) waive any Default or Event of Default for the purpose of satisfying  the conditions precedent to the obligations of the Revolving Lenders to make any  Revolving Loan or LC Disbursement; or  (4) change any of the provisions of this clause (y);    provided, further, that no such amendment, waiver or consent shall change the number or  percentage contained in the definition of “Required Revolving Lenders” or any other provision  hereof specifying the number or percentage of Revolving Lenders which are required to waive,  amend or modify any rights hereunder or make any determination or grant any consent hereunder,  without the consent of each Revolving Lender.    (c) Notwithstanding anything to the contrary herein, no Defaulting Lender shall  have any right to approve or disapprove any amendment, waiver or consent hereunder, except that  the Commitment of such Lender may not be increased or extended, and amounts payable to such  Lender hereunder may not be permanently reduced, without the consent of such Lender (other than  reductions in fees and interest in which such reduction does not disproportionately affect such  Lender).  Notwithstanding anything contained herein to the contrary, this Agreement may be  amended and restated without the consent of any Lender (but with the consent of the Borrower  

 

  155  and the Administrative Agent) if, upon giving effect to such amendment and restatement, such  Lender shall no longer be a party to this Agreement (as so amended and restated), the  Commitments of such Lender shall have terminated (but such Lender shall continue to be entitled  to the benefits of Sections 2.18, 2.19, 2.20 and 10.3), such Lender shall have no other commitment  or other obligation hereunder and such Lender shall have been paid in full all principal, interest  and other amounts owing to it or accrued for its account under this Agreement.  (d) Notwithstanding the foregoing, this Agreement may be amended (or  amended and restated) with the written consent of the Required Lenders, Administrative Agent  and Borrower (a) to add one or more additional credit facilities to this Agreement and to permit  extensions of credit from time to time outstanding thereunder and the accrued interest and fees in  respect thereof to share ratably in the benefits of this Agreement and the other Loan Documents  with the Term Loans and the Revolving Loans and the accrued interest and fees in respect thereof  and (b) to include appropriately the Lenders holding such credit facilities in any determination of  the Required Lenders.  (e) Notwithstanding anything to the contrary herein, any Loan Document may  be waived, amended, supplemented or modified pursuant to an agreement or agreements in writing  entered into by the Borrower and the Administrative Agent (without the consent of any Lender)  solely to effect administrative changes that are not adverse to any Lender or to correct  administrative errors or omissions or to cure an ambiguity, defect or error (including, without  limitation, to revise the legal description of any Collateral), or to grant a new Lien for the benefit  of the Secured Parties or extend an existing Lien over additional property.  Notwithstanding  anything to the contrary herein, (A) additional extensions of credit consented to by the Required  Lenders shall be permitted hereunder on a ratable basis with the existing Loans (including as to  proceeds of, and sharing in the benefits of, Collateral and sharing of prepayments), and (B) the  Administrative Agent shall enter into the intercreditor agreement upon the request of the Borrower  as contemplated by Section 7.2(i) solely to the extent such intercreditor agreement is reasonably  acceptable to the Administrative Agent.  Section 10.3. Expenses; Indemnification.  (a) The Borrower shall pay (i) all reasonable, documented out-of-pocket costs  and expenses of the Administrative Agent, the Lead Arrangers and their Affiliates, including the  reasonable fees, charges and disbursements of one outside counsel for the Administrative Agent,  the Lead Arrangers and their Affiliates, in connection with the syndication of the credit facilities  provided for herein, the preparation and administration of the Loan Documents and any  amendments, modifications or waivers thereof (whether or not the transactions contemplated in  this Agreement or any other Loan Document shall be consummated), (ii) all reasonable,  documented out-of-pocket expenses incurred by any Issuing Bank in connection with the issuance,  amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder  and (iii) all documented out-of-pocket costs and expenses which shall be limited, in the case of  outside counsel, to the reasonable fees, charges and disbursements of one outside counsel to the  Secured Parties, taken as a whole, any applicable local counsel required for the Secured Parties in  any applicable jurisdiction and any special regulatory counsel (and, solely in the case of a conflict  of interest, one additional of each such counsel for each group of similarly situated Secured  Parties)) incurred by the Administrative Agent, any Issuing Bank or any Lender in connection with  

 

  156  the enforcement or protection of its rights in connection with this Agreement, including its rights  under this Section, or in connection with the Loans made or any Letters of Credit issued hereunder,  including all such out-of-pocket expenses incurred during any workout, restructuring or  negotiations in respect of such Loans or Letters of Credit.  (b) The Borrower shall indemnify the Administrative Agent (and any sub-agent  thereof), each Lender and each Issuing Bank, and each Related Party of any of the foregoing  Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee  harmless from, any and all losses, claims, penalties, damages, liabilities and related expenses  (including the reasonable and documented fees, charges and disbursements of one primary counsel  for the Indemnitees, taken as a whole, any local counsel for the Indemnitees in any applicable  jurisdiction and any special regulatory counsel (and, solely in the case of a conflict of interest, one  additional of each such counsel for each group of similarly situated Indemnitees)) incurred by any  Indemnitee or asserted against any Indemnitee by any third party or by the Borrower or any other  Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this  Agreement, any other Loan Document or any agreement or instrument contemplated hereby or  thereby, the performance by the parties hereto of their respective obligations hereunder or  thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan  or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by  any Issuing Bank to honor a demand for payment under a Letter of Credit if the documents  presented in connection with such demand do not strictly comply with the terms of such Letter of  Credit), (iii) any actual or alleged presence or Release of Hazardous Materials on or from any  property owned or operated by the Borrower or any of its Subsidiaries, or any Environmental  Liability related in any way to the Borrower or any of its Subsidiaries, or (iv) any actual or  prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether  based on contract, tort or any other theory, whether brought by a third party or by the Borrower or  any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that  such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims,  penalties, damages, liabilities or related expenses are determined by a court of competent  jurisdiction by final and non-appealable judgment to have resulted from (x) the gross negligence  or willful misconduct of such Indemnitee or (y) a material breach of such Indemnitee’s obligations  hereunder or under any other Loan Document.  No Indemnitee shall be liable for any damages  arising from the use by others of any information or other materials obtained through Syndtrak,  Intralinks or any other Internet or intranet website, except as a result of such Indemnitee’s gross  negligence or willful misconduct as determined by a court of competent jurisdiction in a final and  non-appealable judgment.   (c) The Borrower shall pay, and hold the Administrative Agent, each Issuing  Bank and each of the Lenders harmless from and against, any and all present and future stamp,  documentary, and other similar taxes with respect to this Agreement and any other Loan  Documents, any collateral described therein or any payments due thereunder, and save the  Administrative Agent, each Issuing Bank and each Lender harmless from and against any and all  liabilities with respect to or resulting from any delay or omission to pay such taxes.  (d) To the extent that the Borrower fails to pay any amount required to be paid  to the Administrative Agent, any Issuing Bank or the Swingline Lender under subsection (a), (b)  or (c) hereof, each Lender severally agrees to pay to the Administrative Agent, the applicable  

 

  157  Issuing Bank or the Swingline Lender, as the case may be, such Lender’s pro rata share (in  accordance with its respective Revolving Commitment (or Revolving Credit Exposure, as  applicable) and Term Loan determined as of the time that the unreimbursed expense or indemnity  payment is sought) of such unpaid amount; provided that the unreimbursed expense or indemnified  payment, claim, damage, liability or related expense, as the case may be, was incurred by or  asserted against the Administrative Agent, the applicable Issuing Bank or the Swingline Lender in  its capacity as such.  (e) To the extent permitted by applicable law, each party hereto waives, and  agrees not to assert, any claim against any other party hereto, on any theory of liability, for special,  indirect, consequential or punitive damages (as opposed to actual or direct damages) arising out  of, in connection with or as a result of this Agreement, any other Loan Document or any agreement  or instrument contemplated hereby, the transactions contemplated therein, any Loan or any Letter  of Credit or the use of proceeds thereof.  (f) All amounts due under this Section shall be payable promptly after written  demand therefor.  Section 10.4. Successors and Assigns.  (a) The provisions of this Agreement shall be binding upon and inure to the  benefit of the parties hereto and their respective successors and assigns permitted hereby, except  that the Borrower may not assign or otherwise transfer any of its rights or obligations hereunder  without the prior written consent of the Administrative Agent and each Lender, and no Lender  may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee  in accordance with the provisions of subsection (b) of this Section, (ii) by way of participation in  accordance with the provisions of subsection (d) of this Section or (iii) by way of pledge or  assignment of a security interest subject to the restrictions of subsection (f) of this Section (and  any other attempted assignment or transfer by any party hereto shall be null and void).  Nothing in  this Agreement, expressed or implied, shall be construed to confer upon any Person (other than  the parties hereto, their respective successors and assigns permitted hereby, Participants to the  extent provided in subsection (d) of this Section and, to the extent expressly contemplated hereby,  the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable  right, remedy or claim under or by reason of this Agreement.  (b) Any Lender may at any time assign to one or more assignees all or a portion  of its rights and obligations under this Agreement (including all or a portion of its Commitments,  Loans and other Revolving Credit Exposure at the time owing to it); provided that any such  assignment shall be subject to the following conditions:   (i)   Minimum Amounts.    (A)  in the case of an assignment of the entire remaining amount of the  assigning Lender’s Commitments, Loans and other Revolving Credit Exposure at  the time owing to it or in the case of an assignment to a Lender, an Affiliate of a  Lender or an Approved Fund, no minimum amount need be assigned; and  

 

  158  (B)  in any case not described in subsection (b)(i)(A) of this Section, the  aggregate amount of the Commitment (which, in the case of Revolving  Commitments,  includes Revolving Loans and Revolving Credit Exposure  outstanding thereunder) or, if the applicable Commitment is not then in effect, the  principal outstanding balance of the Loans and/or Revolving Credit Exposure, as  applicable, of the assigning Lender subject to each such assignment (determined as  of the date the Assignment and Acceptance with respect to such assignment is  delivered to the Administrative Agent or, if “Trade Date” is specified in the  Assignment and Acceptance, as of the Trade Date) shall not be less than $1,000,000  with respect to Term Loans and $5,000,000 with respect to Revolving Loans and  Revolving Commitments and in minimum increments of $1,000,000, unless each  of the Administrative Agent and, so long as no Event of Default has occurred and  is continuing, the Borrower otherwise consents (each such consent not to be  unreasonably withheld, conditioned or delayed).   (ii)   Proportionate Amounts.  Each partial assignment shall be made as  an assignment of a proportionate part of all the assigning Lender’s rights and obligations  under this Agreement with respect to the Loans, other Revolving Credit Exposure or the  Commitments assigned, except that this subsection (b)(ii) shall not prohibit any Lender  from assigning all or a portion of its rights and obligations among separate Commitments  or Classes on a non-pro rata basis.  (iii)   Required Consents.  No consent shall be required for any  assignment except to the extent required by subsection (b)(i)(B) of this Section and, in  addition:  (A)  the consent of the Borrower shall be required (such consent not to  be unreasonably withheld, conditioned or delayed) unless (x) an Event of Default  has occurred and is continuing at the time of such assignment or (y) (1) in the case  of Term Loans such assignment is to a Lender, an Affiliate of such Lender or an  Approved Fund of such Lender, or (2) in the case of Revolving Commitments or  Revolving Loans, such assignment is to a Lender holding Revolving Commitments  or an Affiliate of such Lender or an Approved Fund of such Lender;   (B)  the consent of the Administrative Agent (such consent not to be  unreasonably withheld, conditioned or delayed) shall be required unless (1) such  assignment is of a Term Loan to a Lender, an Affiliate of such Lender or an  Approved Fund of such Lender, or (2) in the case of Revolving Commitments or  Revolving Loans, such assignment is to a Lender holding Revolving Commitments  or an Affiliate of such Lender or an Approved Fund of such Lender; and  (C)  the consent of each Issuing Bank (such consent not to be  unreasonably withheld, conditioned or delayed) shall be required for any  assignment that increases the obligation of the assignee to participate in exposure  under one or more Letters of Credit (whether or not then outstanding), and the  consent of the Swingline Lender (such consent not to be unreasonably withheld,  conditioned or delayed) shall be required for any assignment in respect of the  

 

  159  Revolving Commitments unless such assignment is to a Lender holding Revolving  Commitments or Revolving Loans, an Affiliate of such Lender or an Approved  Fund of such Lender.  (iv)   Assignment and Acceptance.  The parties to each assignment shall  deliver to the Administrative Agent (A) a duly executed Assignment and Acceptance, (B)  a processing and recordation fee of $3,500 (except with respect to any assignment by a  Lender to one of its Affiliates or Approved Funds), (C) an Administrative Questionnaire  unless the assignee is already a Lender and (D) the documents required under Section  2.20(e).  (v)   No Assignment to the Borrower.  No such assignment shall be made  to the Borrower or any of the Borrower’s Affiliates or Subsidiaries.  (vi)   No Assignment to Natural Persons, Defaulting Lenders or  Disqualified Institutions.  No such assignment shall be made to a natural person, a  Defaulting Lender or a Disqualified Institution.  Subject to acceptance and recording thereof by the Administrative Agent pursuant to subsection  (c) of this Section, from and after the effective date specified in each Assignment and Acceptance,  the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned  by such Assignment and Acceptance, have the rights and obligations of a Lender under this  Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by  such Assignment and Acceptance, be released from its obligations under this Agreement (and, in  the case of an Assignment and Acceptance covering all of the assigning Lender’s rights and  obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue  to be entitled to the benefits of Sections 2.18, 2.19, 2.20 and 10.3 with respect to facts and  circumstances occurring prior to the effective date of such assignment; provided that, except to the  extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender  will constitute a waiver or release of any claim of any party hereunder arising from such Lender’s  having been a Defaulting Lender.  Any assignment or transfer by a Lender of rights or obligations  under this Agreement that does not comply with this subsection shall be treated for purposes of  this Agreement as a sale by such Lender of a participation in such rights and obligations in  accordance with subsection (d) of this Section.  If the consent of the Borrower to an assignment is  required hereunder (including a consent to an assignment which does not meet the minimum  assignment thresholds specified above), the Borrower shall be deemed to have given its consent  unless it shall object thereto by written notice to the Administrative Agent within ten (10) Business  Days after notice thereof has actually been delivered by the assigning Lender (through the  Administrative Agent) to the Borrower.  (c) The Administrative Agent, acting solely for this purpose as a non-fiduciary  agent of the Borrower, shall maintain at one of its offices in Atlanta, Georgia a copy of each  Assignment and Acceptance delivered to it and a register for the recordation of the names and  addresses of the Lenders, and the Commitments of, and principal amount of the Loans and  Revolving Credit Exposure owing to, each Lender pursuant to the terms hereof from time to time  (the “Register”).  Information contained in the Register with respect to any Lender shall be  available for inspection by such Lender at any reasonable time and from time to time upon  

 

  160  reasonable prior notice; information contained in the Register shall also be available for inspection  by the Borrower at any reasonable time and from time to time upon reasonable prior notice.  In  establishing and maintaining the Register, the Administrative Agent shall serve as the Borrower’s  agent solely for tax purposes and solely with respect to the actions described in this Section, and  the Borrower hereby agrees that, to the extent SunTrustTruist Bank serves in such capacity,  SunTrustTruist Bank and its officers, directors, employees, agents, sub-agents and Affiliates shall  constitute “Indemnitees”.  (d) Any Lender may at any time, without the consent of, or notice to, the  Borrower, the Administrative Agent, the Swingline Lender or any Issuing Bank, sell participations  to any Person (other than a natural person, a Disqualified Institution, the Borrower or any of the  Borrower’s Affiliates or Subsidiaries) (each, a “Participant”) in all or a portion of such Lender’s  rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or  the Loans owing to it); provided that (i) such Lender’s obligations under this Agreement shall  remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for  the performance of such obligations and (iii) the Borrower, the Administrative Agent, each Issuing  Bank, the Swingline Lender and the other Lenders shall continue to deal solely and directly with  such Lender in connection with such Lender’s rights and obligations under this Agreement.    Any agreement or instrument pursuant to which a Lender sells such a participation  shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve  any amendment, modification or waiver of any provision of this Agreement; provided that such  agreement or instrument may provide that such Lender will not, without the consent of the  Participant, agree to any amendment, modification or waiver with respect to the following to the  extent affecting such Participant: (i) increase the Commitment of such Lender; (ii) reduce the  principal amount of any Loan or LC Disbursement or reduce the rate of interest thereon, or reduce  any fees payable hereunder (excluding the right of any Participant to consent to changes in the  calculation of the Total Leverage Ratio or the component definitions thereof); (iii) postpone the  date fixed for any payment of any principal of, or interest on, any Loan or LC Disbursement or  any fees hereunder or reduce the amount of, waive or excuse any such payment, or postpone the  scheduled date for the termination or reduction of any Commitment (excluding the right of any  Participant to consent to changes in the calculation of the Total Leverage Ratio or the component  definitions thereof); (iv) change Section 2.21(b) or (c) in a manner that would alter the pro rata  sharing of payments required thereby; (v) change any of the provisions of Section 10.2(b) or the  definition of “Required Lenders” or “Required Revolving Lenders” or any other provision hereof  specifying the number or percentage of Lenders which are required to waive, amend or modify  any rights hereunder or make any determination or grant any consent hereunder; (vi) release all or  substantially all of the guarantors, or limit the liability of all or substantially all of the guarantors,  under any guaranty agreement guaranteeing any of the Obligations; or (vii) release all or  substantially all collateral (if any) securing any of the Obligations.  Subject to subsection (e) of  this Section, the Borrower agrees that each Participant shall be entitled to the benefits of Sections  2.18, 2.19, and 2.20 to the same extent as if it were a Lender and had acquired its interest by  assignment pursuant to subsection (b) of this Section; provided that such Participant agrees to be  subject to Section 2.24 as though it were a Lender.  To the extent permitted by law, each Participant  also shall be entitled to the benefits of Section 10.7 as though it were a Lender; provided that such  Participant agrees to be subject to Section 2.21 as though it were a Lender.  

 

  161  Each Lender that sells a participation shall, acting solely for this purpose as a non- fiduciary agent of the Borrower, maintain a register in the United States on which it enters the  name and address of each Participant and the principal amounts (and stated interest) of each  Participant’s interest in the Loans or other obligations under the Loan Documents (the “Participant  Register”); provided that no Lender shall have any obligation to disclose all or any portion of the  Participant Register to any Person (including the identity of any Participant or any information  relating to a Participant's interest in any commitments, loans, letters of credit or other obligations  under any Loan Document) except to the extent that such disclosure is necessary to establish that  such commitment, loan, letter of credit or other obligation is in registered form under Section  5f.103-1(c) or Proposed Section 1.163-5(B) of the United States Treasury Regulations (or, in each  case, any amended or successor version). The entries in the Participant Register shall be  conclusive, absent manifest error, and such Lender shall treat each person whose name is recorded  in the Participant Register as the owner of such participation for all purposes of this Agreement  notwithstanding any notice to the contrary.    (e) A Participant shall not be entitled to receive any greater payment under  Sections 2.18 and 2.20 than the applicable Lender would have been entitled to receive with respect  to the participation sold to such Participant, unless the sale of the participation to such Participant  is made with the Borrower’s prior written consent.  A Participant shall not be entitled to the benefits  of Section 2.20 unless the Borrower is notified of the participation sold to such Participant and  such Participant agrees, for the benefit of the Borrower, to comply with Sections 2.20(e) and (f) as  though it were a Lender (it being understood that the documentation required under Sections  2.20(e) and (f) shall be delivered to the participating Lender).    (f) Any Lender may at any time pledge or assign a security interest in all or any  portion of its rights under this Agreement to secure obligations of such Lender, including, without  limitation, any pledge or assignment to secure obligations to a Federal Reserve Bank; provided  that no such pledge or assignment shall release such Lender from any of its obligations hereunder  or substitute any such pledgee or assignee for such Lender as a party hereto.    (g) The Administrative Agent shall not have any responsibility for ensuring that  an assignee of, or a participant in, a Loan or  Commitment is not a Disqualified Institution, and  shall not have any liability in the event that Loans or  Commitments, or a participation therein, are  transferred to any Disqualified Institution.  (h) For the avoidance of doubt, the addition of any Person to the Disqualified  Institution List shall solely apply prospectively and shall have no effect with respect to any  assignment or participation that occurs or any Loans, Commitments or Revolving Credit Exposure  acquired by such Person, in each case prior to the date such Person is added to the Disqualified  Institution List.  Section 10.5. Governing Law; Jurisdiction; Consent to Service of Process.  (a) This Agreement and the other Loan Documents and any claim, controversy,  dispute or cause of action (whether in contract or tort or otherwise) based upon, arising out of or  relating to this Agreement or any other Loan Document (except, as to any other Loan Document,  

 

  162  as expressly set forth therein) and the transactions contemplated hereby and thereby shall be  construed in accordance with and be governed by the law of the State of New York.   (b) The Borrower hereby irrevocably and unconditionally submits, for itself  and its property, to the exclusive jurisdiction of the United States District Court for the Southern  District of New York, and of the Supreme Court of the State of New York sitting in New York  county, and of any appellate court from any thereof, in any action or proceeding arising out of or  relating to this Agreement or any other Loan Document or the transactions contemplated hereby  or thereby, or for recognition or enforcement of any judgment, and each of the parties hereto hereby  irrevocably and unconditionally agrees that all claims in respect of any such action or proceeding  may be heard and determined in such District Court or New York state court or, to the extent  permitted by applicable law, such appellate court.  Each of the parties hereto agrees that a final  judgment in any such action or proceeding shall be conclusive and may be enforced in other  jurisdictions by suit on the judgment or in any other manner provided by law.  Nothing in this  Agreement or any other Loan Document shall affect any right that the Administrative Agent, any  Issuing Bank or any Lender may otherwise have to bring any action or proceeding relating to this  Agreement or any other Loan Document against the Borrower or its properties in the courts of any  jurisdiction.  (c) The Borrower irrevocably and unconditionally waives any objection which  it may now or hereafter have to the laying of venue of any such suit, action or proceeding described  in subsection (b) of this Section and brought in any court referred to in subsection (b) of this  Section.  Each of the parties hereto irrevocably waives, to the fullest extent permitted by applicable  law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any  such court.  (d) Each party to this Agreement irrevocably consents to the service of process  in the manner provided for notices in Section 10.1.  Nothing in this Agreement or in any other  Loan Document will affect the right of any party hereto to serve process in any other manner  permitted by law.  Section 10.6. WAIVER OF JURY TRIAL.  EACH PARTY HERETO  IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE  LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING  DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY OTHER  LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY  (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).  EACH PARTY  HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY  OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH  OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE  FOREGOING WAIVER, AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER  LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND  CERTIFICATIONS IN THIS SECTION.  Section 10.7. Right of Set-off.  In addition to any rights now or hereafter granted under  applicable law and not by way of limitation of any such rights, each Lender and each Issuing Bank  

 

  163  shall have the right, at any time or from time to time upon the occurrence and during the  continuance of an Event of Default, without prior notice to the Borrower, any such notice being  expressly waived by the Borrower to the extent permitted by applicable law, to set off and apply  against all deposits (general or special, time or demand, provisional or final) of the Borrower at  any time held or other obligations at any time owing by such Lender and such Issuing Bank to or  for the credit or the account of the Borrower against any and all Obligations held by such Lender  or such Issuing Bank, as the case may be, irrespective of whether such Lender or such Issuing  Bank shall have made demand hereunder and although such Obligations may be unmatured.  Each  Lender and each Issuing Bank agrees promptly to notify the Administrative Agent and the  Borrower after any such set-off and any application made by such Lender or such Issuing Bank,  as the case may be; provided that the failure to give such notice shall not affect the validity of such  set-off and application.  Each Lender and each Issuing Bank agrees to apply all amounts collected  from any such set-off to the Obligations before applying such amounts to any other Indebtedness  or other obligations owed by the Borrower and any of its Subsidiaries to such Lender or such  Issuing Bank.  Section 10.8. Counterparts; Integration.  This Agreement may be executed by one or  more of the parties to this Agreement on any number of separate counterparts, and all of said  counterparts taken together shall be deemed to constitute one and the same instrument.  This  Agreement, the Fee Letter, the other Loan Documents, and any separate letter agreements relating  to any fees payable to the Administrative Agent and its Affiliates constitute the entire agreement  among the parties hereto and thereto and their Affiliates regarding the subject matters hereof and  thereof and supersede all prior agreements and understandings, oral or written, regarding such  subject matters.  Delivery of an executed counterpart to this Agreement or any other Loan  Document by facsimile transmission or by electronic mail in pdf format shall be as effective as  delivery of a manually executed counterpart hereof.  Section 10.9. Survival.  All covenants, agreements, representations and warranties made  by the Borrower herein and in the certificates, reports, notices or other instruments delivered in  connection with or pursuant to this Agreement shall be considered to have been relied upon by the  other parties hereto and shall survive the execution and delivery of this Agreement and the other  Loan Documents and the making of any Loans and issuance of any Letters of Credit, regardless of  any investigation made by any such other party or on its behalf and notwithstanding that the  Administrative Agent, any Issuing Bank or any Lender may have had notice or knowledge of any  Default or incorrect representation or warranty at the time any credit is extended hereunder, and  shall continue in full force and effect as long as the principal of or any accrued interest on any  Loan or any fee or any other amount payable under this Agreement is outstanding and unpaid or  any Letter of Credit is outstanding and so long as the Commitments have not expired or terminated.   The provisions of Sections 2.18, 2.19, 2.20, and 10.3 and Article IX shall survive and remain in  full force and effect regardless of the consummation of the transactions contemplated hereby, the  repayment of the Loans, the expiration or termination of the Letters of Credit and the Commitments  or the termination of this Agreement or any provision hereof.    Section 10.10. Severability.  Any provision of this Agreement or any other Loan  Document held to be illegal, invalid or unenforceable in any jurisdiction, shall, as to such  jurisdiction, be ineffective to the extent of such illegality, invalidity or unenforceability without  affecting the legality, validity or enforceability of the remaining provisions hereof or thereof; and  

 

  164  the illegality, invalidity or unenforceability of a particular provision in a particular jurisdiction  shall not invalidate or render unenforceable such provision in any other jurisdiction.  Section 10.11. Confidentiality.  Each of the Administrative Agent, the Issuing Banks  and the Lenders agrees to maintain the confidentiality of any information relating to the Borrower  or any of its Subsidiaries or any of their respective businesses, to the extent designated in writing  as confidential and provided to it by the Borrower or any of its Subsidiaries, other than any such  information that is available to the Administrative Agent, any Issuing Bank or any Lender on a  non-confidential basis prior to disclosure by the Borrower or any of its Subsidiaries, except that  such information may be disclosed (i) to any Related Party of the Administrative Agent, any such  Issuing Bank or any such Lender including, without limitation, accountants, legal counsel and  other advisors who need to know such information in connection with the Related Transactions  and are informed of the confidential nature of such information, (ii) pursuant to the order of any  court or administrative agency or in any pending legal or administrative proceeding, or otherwise  as required by applicable law or regulation or compulsory legal process (in which case such  disclosing party agrees to inform the Borrower reasonably promptly thereof prior to such  disclosure to the extent not prohibited by law, rule or regulation), (iii) to the extent requested by  any regulatory agency or authority purporting to have jurisdiction over such disclosing party or its  Affiliates (including any self-regulatory authority such as the National Association of Insurance  Commissioners) (in which case such disclosing party agrees to inform the Borrower reasonably  promptly thereof prior to such disclosure to the extent not prohibited by law, rule or regulation),  (iv) to the extent that such information becomes publicly available other than as a result of a breach  of this Section, or which becomes available to the Administrative Agent, any Issuing Bank, any  Lender or any Related Party of any of the foregoing on a non-confidential basis from a source  other than the Borrower or any of its Subsidiaries that is not, to such disclosing party’s knowledge,  subject to confidentiality obligations to the Borrower and its Subsidiaries, (v) in connection with  the exercise of any remedy hereunder or under any other Loan Documents or any suit, action or  proceeding relating to this Agreement or any other Loan Documents or the enforcement of rights  hereunder or thereunder, (vi) subject to execution by such Person of an agreement containing  provisions substantially the same as those of this Section (or language substantially similar to this  paragraph, including provisions customary in the syndicated loan market), to (A) any assignee of  or Participant in, or any prospective assignee of or Participant in, any of such disclosing party’s  rights or obligations under this Agreement, or (B) any direct or indirect actual or prospective  contractual counterparty (and its Related Parties) to any swap, derivative or similar product that is  to be secured by the Collateral, (vii) to the CUSIP Service Bureau or any similar organization,  (viii) for purposes of establishing a “due diligence” defense, (ix) to the extent that such information  is independently developed by such disclosing party (other than with confidential information  provided to such disclosing party by the Borrower and its Subsidiaries), (x) to industry trade  organizations, general information with respect to this Agreement that is customary for inclusion  in league table measurements or (xi) with the consent of the Borrower.  Any Person required to  maintain the confidentiality of any information as provided for in this Section shall be considered  to have complied with its obligation to do so if such Person has exercised the same degree of care  to maintain the confidentiality of such information as such Person would accord its own  confidential information.  In the event of any conflict between the terms of this Section and those  of any other Contractual Obligation entered into with any Loan Party (whether or not a Loan  Document), the terms of this Section shall govern.  

 

  165  Section 10.12. Interest Rate Limitation.  Notwithstanding anything herein to the  contrary, if at any time the interest rate applicable to any Loan, together with all fees, charges and  other amounts which may be treated as interest on such Loan under applicable law (collectively,  the “Charges”), shall exceed the maximum lawful rate of interest (the “Maximum Rate”) which  may be contracted for, charged, taken, received or reserved by a Lender holding such Loan in  accordance with applicable law, the rate of interest payable in respect of such Loan hereunder,  together with all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to  the extent lawful, the interest and Charges that would have been payable in respect of such Loan  but were not payable as a result of the operation of this Section shall be cumulated and the interest  and Charges payable to such Lender in respect of other Loans or periods shall be increased (but  not above the Maximum Rate therefor) until such cumulated amount, together with interest thereon  at the Federal Funds Rate to the date of repayment (to the extent permitted by applicable law),  shall have been received by such Lender.  Section 10.13. Waiver of Effect of Corporate Seal.  The Borrower represents and  warrants that neither it nor any other Loan Party is required to affix its corporate seal to this  Agreement or any other Loan Document pursuant to any Requirement of Law, agrees that this  Agreement is delivered by the Borrower under seal and waives any shortening of the statute of  limitations that may result from not affixing the corporate seal to this Agreement or such other  Loan Documents.  Section 10.14. Patriot Act and Beneficial Ownership Regulation.  The  Administrative Agent and each Lender hereby notifies the Loan Parties that, pursuant to the  requirements of the Patriot Act and the Beneficial Ownership Regulation, it is required to obtain,  verify and record information that identifies each Loan Party, which information includes the name  and address of such Loan Party and other information that will allow such Lender or the  Administrative Agent, as applicable, to identify such Loan Party in accordance with the Patriot  Act and the Beneficial Ownership Regulation.  The Borrower will, and will cause its Subsidiaries  to, provide documentary and other evidence of the identity of the Loan Parties as may be requested  by the Lenders or the Administrative Agent at any time to enable the Lenders or the Administrative  Agent to verify the identity of the Loan Parties or to comply with any applicable law or regulation,  including, without limitation, Section 326 of the Patriot Act at 31 U.S.C. Section 5318 and the  Beneficial Ownership Regulation.  Section 10.15. No Advisory or Fiduciary Responsibility.  In connection with all  aspects of each transaction contemplated hereby (including in connection with any amendment,  waiver or other modification hereof or of any other Loan Document), the Borrower and each other  Loan Party acknowledges and agrees and acknowledges its Affiliates’ understanding that (i) (A)  the services regarding this Agreement provided by the Administrative Agent and/or the Lenders  are arm’s-length commercial transactions between the Borrower, each other Loan Party and their  respective Affiliates, on the one hand, and the Administrative Agent and the Lenders, on the other  hand, (B) each of the Borrower and the other Loan Parties have consulted their own legal,  accounting, regulatory and tax advisors to the extent they have deemed appropriate, and (C) the  Borrower and each other Loan Party is capable of evaluating and understanding, and understands  and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the  other Loan Documents; (ii) (A) each of the Administrative Agent and the Lenders is and has been  acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has  

 

  166  not been, is not, and will not be acting as an advisor, agent or fiduciary for the Borrower, any other  Loan Party or any of their respective Affiliates, or any other Person, and (B) neither the  Administrative Agent nor any Lender has any obligation to the Borrower, any other Loan Party or  any of their Affiliates with respect to the credit facilities contemplated hereby except those  obligations expressly set forth herein and in the other Loan Documents; and (iii) the Administrative  Agent, the Lenders and their respective Affiliates may be engaged in a broad range of transactions  that involve interests that differ from those of the Borrower, the other Loan Parties and their  respective Affiliates, and each of the Administrative Agent and the Lenders has no obligation to  disclose any of such interests to the Borrower, any other Loan Party or any of their respective  Affiliates.  To the fullest extent permitted by law, each of the Borrower and the other Loan Parties  hereby waives and releases any claims that it may have against the Administrative Agent or any  Lender with respect to any breach or alleged breach of agency or fiduciary duty in connection with  any aspect of any transaction contemplated hereby.    Section 10.16. Location of Closing.  Each Lender and each Issuing Bank  acknowledges and agrees that it has delivered, with the intent to be bound, its executed  counterparts of this Agreement to the Administrative Agent, c/o Latham & Watkins LLP, 885 3rd  Ave, New York, NY 10022.  The Borrower acknowledges and agrees that it has delivered, with  the intent to be bound, its executed counterparts of this Agreement and each other Loan Document,  together with all other documents, instruments, opinions, certificates and other items required  under Section 3.1, to the Administrative Agent, c/o Latham & Watkins LLP, 885 3rd Ave, New  York, NY 10022.  All parties agree that the closing of the transactions contemplated by this  Agreement has occurred in New York.  Section 10.17. Releases of Collateral  .  The Administrative Agent agrees with the Borrower that the Administrative Agent shall:  (a) release any Lien on any property granted to or held by the Administrative  Agent under any Loan Document (i) upon Payment in Full of all Obligations, (ii) when such  property is sold as part of or in connection with any sale permitted hereunder or under any other  Loan Document, (iii) if such release is approved, authorized or ratified in writing in accordance  with Section 10.2 (including, for the avoidance of doubt, termination on or after the Closing Date  of any Control Account Agreements or Sweep Agreements (each as defined in the Existing Credit  Agreement) entered into in connection with the Existing Credit Agreement) or (iv) when such  property is subject to Liens permitted under Section 7.2(d) (solely to the extent required by the  holder of such Lien), (e), (f), and, to the extent relating to extensions, renewals or replacements of  such Liens, Section 7.2(h);  (b) [reserved];  (c) release any Loan Party from its obligations under the applicable Collateral  Documents (i) if such Person ceases to be a Subsidiary as a result of a transaction permitted  hereunder (including, for the avoidance of doubt, the Pennant Subsidiaries upon consummation of  the Pennant Transaction) or (ii) if such Subsidiary becomes an Excluded Subsidiary in accordance  with the requirements set forth in Section 5.18;  

 

  167  (d) release any Lien on any Capital Stock of any Subsidiary that (i) ceases to  be a Subsidiary as a result of any transaction permitted hereunder (including, for the avoidance of  doubt, the Pennant Subsidiaries upon consummation of the Pennant Transaction) or (ii) is an  Excluded Subsidiary; and  (e) subordinate the Liens and security interests of the Administrative Agent on  any Collateral (other than Capital Stock and accounts receivable) to the extent contemplated by,  and in accordance with the requirements of (including, without limitation, that any intercreditor  agreement entered into in connection therewith be reasonably satisfactory to the Administrative  Agent), Section 7.2(i);  in each case, upon delivery by the Borrower of a certificate of a Responsible Officer to the  Administrative Agent requesting and certifying as to the grounds for such release or subordination  pursuant to this Section 10.17, as applicable.    In each case as specified in this Section 10.17, the Administrative Agent is authorized by the  Secured Parties and the Borrower and shall, at the Borrower’s expense, execute and deliver to the  applicable Loan Party such documents as such Loan Party may reasonably request to evidence the  release of such item of Collateral from the Liens granted under the applicable Collateral  Documents, or release such Loan Party from its obligations under the applicable Collateral  Documents, in each case in accordance with the terms of the Loan Documents and this Section.  For the avoidance of doubt, the Secured Parties authorize and direct the Administrative Agent to,  upon consummation of the Pennant Transaction, release each Pennant Subsidiary from its  obligations under the Loan Documents and release the Liens granted under the Collateral  Documents on the assets and Capital Stock of each Pennant Subsidiary.    Section 10.18. Amendment and Restatement.  It is the intention of each of the parties  hereto that (a) the Existing Credit Agreement be amended and restated in its entirety pursuant to  this Agreement so as to preserve the perfection and priority of all security interests securing  indebtedness and obligations under the Existing Credit Agreement, (b) that all Indebtedness and  Obligations of the Borrower and the Guarantors hereunder and under the other Loan Documents  shall be secured by the liens and security interests evidenced under the Loan Documents and (c)  that this Agreement does not constitute a novation or termination of the obligations and liabilities  existing under the Existing Credit Agreement (or serve to terminate Section 10.3 of the Existing  Credit Agreement or any of the Borrower’s obligations thereunder with respect to the  Administrative Agent (as defined in the Existing Credit Agreement) or the Lenders (as defined in  the Existing Credit Agreement) or any other Indemnitee (as defined in the Existing Credit  Agreement)).  The parties hereto further acknowledge and agree that this Agreement constitutes  an amendment of the Existing Credit Agreement made under and in accordance with the terms of  Section 10.2 of the Existing Credit Agreement.  In addition, unless specifically amended hereby  or in connection herewith, each of the Loan Documents shall continue in full force and effect.  This  Agreement restates and replaces, in its entirety, the Existing Credit Agreement; from and after the  Closing Date, any reference in any of the other Loan Documents to the “Credit Agreement” or any  like term shall be deemed to refer to this Agreement.  Each Lender with a Revolving Commitment  on the Closing Date shall be deemed to have agreed that its Revolving Commitment set forth on  Schedule I hereto replaces in its entirety such Lender’s “Revolving Commitment” under the  Existing Credit Agreement (if any).      

 

  168  Section 10.19. Acknowledgement and Consent to Bail-In of EEAAffected Financial  Institutions.  Notwithstanding anything to the contrary in any Loan Document or in any other  agreement, arrangement or understanding among any such parties, each party hereto acknowledges  that any liability of any EEAAffected Financial Institution arising under any Loan Document, to  the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of  an EEAwrite-down and conversion powers of the applicable Resolution Authority and agrees  and consents to, and acknowledges and agrees to be bound by:  (a) the application of any Write-Down and Conversion Powers by an EEAthe  applicable Resolution Authority to any such liabilities arising hereunder which may be payable to  it by any party hereto that is an EEAAffected Financial Institution; and  (b) the effects of any Bail-in Action on any such liability, including, if  applicable (i) a reduction in full or in part or cancellation of any such liability, (ii) a conversion of  all, or a portion of, such liability into shares or other instruments of ownership in such  EEAAffected Financial Institution, its parent undertaking, or a bridge institution that may be  issued to it or otherwise conferred on it, and that such shares or other instruments of ownership  will be accepted by it in lieu of any rights with respect to any such liability under this Agreement  or any other Loan Document or (iii) the variation of the terms of such liability in connection with  the exercise of the Write-Down and Conversion Powers of any EEAwrite-down and conversion  powers of the applicable Resolution Authority.  Section 10.20. Acknowledgement Regarding Any Supported QFCs.  To the extent that  the Loan Documents provide support, through a guarantee or otherwise, for any agreement  providing for any Hedging Transactions or Hedging Obligations, or any other agreement or  instrument that is a QFC (such support, “QFC Credit Support” and each such QFC a “Supported  QFC”), the parties acknowledge and agree as follows with respect to the resolution power of the  Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the  Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations  promulgated thereunder, the “U.S. Special Resolution Regimes”) in respect of such Supported  QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan  Documents and any Supported QFC may in fact be stated to be governed by the laws of the State  of New York and/or of the United States or any other state of the United States):  (a) In the event a Covered Entity that is party to a Supported QFC (each, a  “Covered Party”) becomes subject to a proceeding under a U.S. Special Resolution Regime, the  transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and  obligation in or under such Supported QFC and such QFC Credit Support, and any rights in  property securing such Supported QFC or such QFC Credit Support) from such Covered Party will  be effective to the same extent as the transfer would be effective under the U.S. Special Resolution  Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and  rights in property) were governed by the laws of the United States or a state of the United States.  In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a  proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents  that might otherwise apply to such Supported QFC or any QFC Credit Support that may be  exercised against such Covered Party are permitted to be exercised to no greater extent than such  Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC  

 

  169  and the Loan Documents were governed by the laws of the United States or a state of the United  States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of  the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered  Party with respect to a Supported QFC or any QFC Credit Support.  (remainder of page left intentionally blank)

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