Document:

EX-10.5

 Exhibit 10.5 

TRANSITION SERVICES AGREEMENT 

by and between 
 THE
ENSIGN GROUP, INC. 
 and 

CARETRUST REIT, INC. 

dated as of 

                    , 2014

 TABLE OF CONTENTS 

 

							
	 ARTICLE I 

DEFINITIONS
  
	    
   

 

	Section 1.1	 	 Certain Definitions
	  	 	1	  
	Section 1.2	 	 Interpretation
	  	 	3	  
	  
 ARTICLE II

 
 SERVICES

 
	  
   

 
   

 

		 		  			
	Section 2.1	 	 Services
	  	 	4	  
	Section 2.2	 	 Additional Services
	  	 	4	  
	Section 2.3	 	 No Violations
	  	 	5	  
	Section 2.4	 	 Third-Party Providers
	  	 	5	  
	Section 2.5	 	 Independent Contractor
	  	 	5	  
	Section 2.6	 	 Employees and Representatives
	  	 	5	  
	Section 2.7	 	 Access
	  	 	6	  
	Section 2.8	 	 Service Coordinators; Disputes
	  	 	6	  
	  
 ARTICLE III

 
 PAYMENT

 
	  
   

 
   

 

	Section 3.1	 	 Pricing
	  	 	6	  
	Section 3.2	 	 Taxes
	  	 	6	  
	Section 3.3	 	 Billing and Payment
	  	 	7	  
	Section 3.4	 	 Budgeting and Accounting
	  	 	7	  
	  
 ARTICLE IV

 
 DISCLAIMER OF REPRESENTATIONS AND WARRANTIES

 
	  
   

 
   

 

	Section 4.1	 	 Disclaimer
	  	 	7	  
	Section 4.2	 	 As Is; Where Is
	  	 	8	  
	  
 ARTICLE V

 
 INDEMNIFICATION; LIMITATION OF LIABILITY

 
	  
   

 
   

 

	Section 5.1	 	 Indemnification by Ensign
	  	 	8	  
	Section 5.2	 	 Limitation of Liability
	  	 	8	  
	Section 5.3	 	 Indemnification Procedure; Other Rights
	  	 	8	  

  
 i 

							
	 ARTICLE VI 

FORCE MAJEURE
  
	    
   

 

	Section 6.1	 	 General
	  	 	8	  
	Section 6.2	 	 Notice
	  	 	9	  
	Section 6.3	 	 Subcontractors; Fees
	  	 	9	  
	Section 6.4	 	 Limitations
	  	 	9	  
	  
 ARTICLE VII

 
 TERM AND TERMINATION

 
	  
   

 
   

 

	Section 7.1	 	 Term and Termination of Services
	  	 	9	  
	Section 7.2	 	 Effect of Termination
	  	 	10	  
	  
 ARTICLE VIII

 
 CONFIDENTIALITY

 
	  
   

 
   

 

	Section 8.1	 	 Confidentiality
	  	 	11	  
	Section 8.2	 	 System Security
	  	 	11	  
	  
 ARTICLE IX

 
 MISCELLANEOUS

 
	  
   

 
   

 

	Section 9.1	 	 Further Assurances
	  	 	11	  
	Section 9.2	 	 Amendments and Waivers
	  	 	12	  
	Section 9.3	 	 Entire Agreement
	  	 	12	  
	Section 9.4	 	 Third-Party Beneficiaries
	  	 	12	  
	Section 9.5	 	 Notices
	  	 	12	  
	Section 9.6	 	 Counterparts; Electronic Delivery
	  	 	12	  
	Section 9.7	 	 Severability
	  	 	12	  
	Section 9.8	 	 Assignability; Binding Effect
	  	 	13	  
	Section 9.9	 	 Governing Law
	  	 	13	  
	Section 9.10	 	 Construction
	  	 	13	  
	Section 9.11	 	 Performance
	  	 	13	  
	Section 9.12	 	 Title and Headings
	  	 	13	  
	Section 9.13	 	 Exhibits
	  	 	14	  
	
	 Exhibit A – Ensign Transitional Services 
	   

  
 ii 

 TRANSITION SERVICES AGREEMENT 

THIS TRANSITION SERVICES AGREEMENT (as the same may be amended or supplemented from time to time, this “Agreement”) is
entered into as of                     , 2014, by and between The Ensign Group, Inc., a Delaware corporation (“Ensign”), and
CareTrust REIT, Inc., a Maryland corporation (“CareTrust”). Ensign and CareTrust are sometimes referred to herein individually as a “Party,” and collectively as the “Parties.” Capitalized terms used
but not otherwise defined herein shall have the respective meanings set forth in Section 1.1. 
 RECITALS 

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

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

WHEREAS, in connection with the transactions contemplated by the Separation Agreement, CareTrust desires to procure certain services from
Ensign, and Ensign is willing to provide such services to CareTrust, during a transition period commencing on the Distribution Date, on the terms and subject to the conditions set forth in this Agreement; 

WHEREAS, each Party desires to set forth in this Agreement the principal terms and conditions pursuant to which it will provide or receive
such services; and 
 WHEREAS, the execution of this Agreement by the Parties is a condition precedent to the consummation of the
transactions contemplated by the Separation Agreement. 
 NOW, THEREFORE, in consideration of the foregoing premises and the mutual
agreements contained herein and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereby agree as follows: 

ARTICLE I 

DEFINITIONS 

Section 1.1 Certain Definitions. Capitalized terms used but not defined in this Agreement shall have the respective meanings ascribed
to such terms in the Separation Agreement. As used in this Agreement (including in Exhibit A), the following capitalized terms shall have the following meanings, applicable both to the singular and the plural forms of the terms
described: 

  
 1 

 “Additional Interest” has the meaning set forth in Section 3.3(b). 

“Additional Services” has the meaning set forth in Section 2.2. 

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

“Adjusted Hourly Rate” for an employee means such employee’s Hourly Rate multiplied by
            . 
 “Agreement” has the meaning set
forth in the preamble to this Agreement. 
 “Bankruptcy Code” means 11 U.S.C. §§ 101 et seq., as amended. 

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

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

“Hourly Rate” for an employee during a given pay period means such employee’s salary (including bonus) and fully
burdened benefits for such pay period divided by the number of hours in such pay period assuming no holidays or other work absences occur during such pay period. 

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

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

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

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

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

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

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

“Service Costs” means the amounts to be paid by CareTrust to Ensign for Services provided pursuant to this Agreement. 

“Services” means the services identified in Exhibit A. 

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

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

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

  
 2 

 Section 1.2 Interpretation. In this Agreement, unless the context clearly indicates
otherwise: 
 (a) words used in the singular include the plural and words used in the plural include the singular; 

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

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

(f) reference to any agreement, instrument or other document means such agreement, instrument or other document as amended, supplemented and
modified from time to time to the extent permitted by the provisions thereof and by this Agreement; 
 (g) reference to any Law means such
Law (including any and all rules and regulations promulgated thereunder) as amended, modified, codified or reenacted, in whole or in part, and in effect at the time of determining compliance or applicability; 

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

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

  
 3 

 ARTICLE II 

SERVICES 
 Section
2.1 Services. 
 (a) Except as set forth in Exhibit A, Ensign shall use commercially reasonable efforts to provide (or to cause
another applicable member of the Ensign Group to provide) to CareTrust (or another applicable member of the CareTrust Group) the Services in a manner, scope, nature, timeliness and quality consistent with the manner, scope, nature, timeliness and
quality in which such Services (i) were provided to CareTrust (or such other applicable member of the CareTrust Group) prior to the Distribution Date by Ensign (or such other applicable member of the Ensign Group) and (ii) are provided
after the Distribution Date by Ensign (or such other applicable member of the Ensign Group) for its own business. 
 (b) For those Services
provided to CareTrust prior to the Distribution Date, CareTrust shall use the Services for substantially the same purposes and in substantially the same manner (including as to volume, amount, level or frequency, as applicable) as such Services have
been used immediately prior to the Distribution Date; provided that Exhibit A shall control the scope of and any limitation on the Services to be provided (to the extent set forth therein) including any Services that were not
previously provided to CareTrust prior to the Distribution Date, unless otherwise agreed in writing. 
 (c) The Parties acknowledge the
transitional nature of the Services and agree to cooperate in good faith and to use commercially reasonable efforts to effectuate a smooth transition of the Services from Ensign to CareTrust (or its designee). 

Section 2.2 Additional Services. If CareTrust reasonably determines that additional transition services not listed in
Exhibit A are necessary after the Distribution Date, CareTrust shall provide written notice to Ensign requesting Ensign (i) to provide additional (including as to volume, amount, level or frequency, as applicable) or different
services that Ensign is not expressly obligated to provide under this Agreement, if such services are of the type and scope provided by any member of the Ensign Group (including any employee of any member of the Ensign Group) for CareTrust prior to
the Distribution Date, or (ii) expand the scope of any Service (such additional or expanded services, the “Additional Services”). Ensign shall consider such request in good faith and shall use commercially reasonable efforts to
provide any such Additional Service; provided that no member of the Ensign Group shall be obligated to perform any Additional Services if such member, in its reasonable judgment, does not have adequate resources to perform such Additional
Services or if the provision of such Additional Services would interfere with the operation of the Ensign Business. Ensign shall notify CareTrust within ten (10) calendar days of receipt of such request as to whether it will or will not provide
the Additional Services. If Ensign agrees to provide Additional Services pursuant to this Section 2.2, then the Parties shall in good faith negotiate the terms of a supplement to Exhibit A which will describe in reasonable detail
the Additional Services, project scope, term, price and payment terms to be charged for such Additional Services. Once agreed to in writing, the supplement to Exhibit A shall be deemed part of this Agreement as of such date, and the
Additional Services shall be deemed “Services” provided hereunder, in each case, subject to the terms and conditions of this Agreement. 

  
 4 

 Section 2.3 No Violations. Notwithstanding anything to the contrary in this Agreement,
neither Party (nor any member of its respective Group) shall be required to perform Services hereunder or to take any actions relating thereto that conflict with or violate any applicable Law or any material Contract, sublicense, authorization,
certification or permit. 
 Section 2.4 Third-Party Providers. 

(a) Each Party shall use commercially reasonable efforts to obtain any required consents, licenses or approvals of the providers
(“Third-Party Providers”) of any products or services required to be used in providing any Services pursuant to this Agreement (“Third-Party Products and Services”). The Parties understand and agree that provision
of any Services requiring the use of any Third-Party Products and Services shall be subject to receipt of any required consents, licenses or approvals of the applicable Third-Party Providers. 

(b) With respect to the Services, (i) CareTrust hereby consents to Ensign’s use of any Third-Party Provider(s) named in
Exhibit A with respect to such Services (“Known Third-Party Providers”) and (ii) if, after the date of this Agreement, Ensign reasonably determines that it requires the use of Third-Party Providers in addition to
the Known Third-Party Providers (“Additional Third-Party Providers”) in providing such Services, the use of such Additional Third-Party Providers shall require the written consent of CareTrust’s Service Coordinator and, subject
to Section 2.4(c), such consent will not be unreasonably withheld, conditioned or delayed. 
 (c) Notwithstanding the foregoing, in
those instances in which the use of Third-Party Products and Services will require payment of additional consideration by CareTrust and the payment of such additional consideration is not contemplated by this Agreement (including
Exhibit A) or has not been previously agreed by the Parties, then (i) Ensign will provide CareTrust with thirty (30) calendar days’ prior written notice detailing the amount of such additional consideration and
(ii) CareTrust will then have the option to (A) procure its own Third-Party Products and Services at its own expense or (B) authorize Ensign to incur the required additional consideration on its behalf and at CareTrust’s expense
and such additional consideration will be deemed a Service Cost under this Agreement. 
 Section 2.5 Independent Contractor. Ensign
(and each applicable member of the Ensign Group) shall act under this Agreement solely as an independent contractor, and not as an agent, of CareTrust (and each applicable member of the CareTrust Group). 

Section 2.6 Employees and Representatives. Unless otherwise agreed in writing, each employee and representative of Ensign (or a member
of the Ensign Group) that provides Services to CareTrust (or a member of the CareTrust Group) pursuant to this Agreement (a) shall be deemed for all purposes to be an employee or representative of Ensign (or such member of the Ensign
Group) and not an employee or representative of CareTrust (or such member of the CareTrust Group) and (b) shall be under the direction, control and supervision of Ensign (or such member of the Ensign Group), and Ensign (or such member of the
Ensign Group) 

  
 5 

 
shall have the sole right to exercise all authority with respect to the employment (including termination of employment) and assignment of such employee or representative and shall have the sole
responsibility to pay for all personnel and other related expenses, including salary or wages, of such employee or representative. 

Section 2.7 Access. CareTrust shall provide (or cause any applicable member of the CareTrust Group to provide) Ensign (or any
applicable member of the Ensign Group) such reasonable access to the employees, representatives, facilities and books and records of CareTrust (or such member of the CareTrust Group) as Ensign (or such member of the Ensign Group) shall reasonably
request in order to enable Ensign (or such member of the Ensign Group) to provide any Services required under this Agreement. Any member of the Ensign Group receiving access pursuant to this Section 2.7 must conform with the confidentiality and
security provisions in Article VIII, as applicable. 
 Section 2.8 Service Coordinators; Disputes. Each Party shall appoint a
representative to act as the primary contact with respect to the provision of the Services (each such person, a “Service Coordinator”). The initial Service Coordinator for CareTrust shall be Suzanne Snapper, and the initial Service
Coordinator for Ensign shall be William M. Wagner. The Service Coordinators shall meet as expeditiously as possible to resolve any dispute under this Agreement (including, but not limited to, any disputes relating to payments under
Article III), and any dispute that is not resolved by the Service Coordinators within thirty (30) calendar days shall be deemed a Dispute under the Separation Agreement and shall be resolved in accordance with the dispute resolution
procedures set forth in Article X of the Separation Agreement. Each Party may treat an act of the other Party’s Service Coordinator as being authorized by such other Party without inquiring whether such Service Coordinator had authority to
so act; provided that no Service Coordinator shall have authority to amend this Agreement. Each Party shall advise the other Party promptly in writing of any change in its respective Service Coordinator, setting forth the name of the
replacement Service Coordinator, and stating that the replacement Service Coordinator is authorized to act for such Party in accordance with this Section 2.8. 

ARTICLE III 

PAYMENT 
 Section
3.1 Pricing. All Services provided by Ensign (or another applicable member of the Ensign Group) shall be charged to CareTrust at the fees for such Services determined in accordance with Exhibit A, and the Service Costs shall be
payable by CareTrust in the manner set forth in Section 3.3. 
 Section 3.2 Taxes. The Parties acknowledge that fees charged for
Services may be subject to goods and service taxes, value added taxes, sales taxes or similar taxes (collectively, “Sales Taxes”). With respect to all Services provided under this Agreement, (a) Ensign shall be liable for
reporting and paying the Sales Taxes or any other applicable taxes imposed on fees received for providing such Services and (b) CareTrust shall reimburse Ensign for the amount of such taxes paid on fees received for providing such Services.
CareTrust shall be liable for any applicable use taxes imposed on Services received. 

  
 6 

 Section 3.3 Billing and Payment. 

(a) Within fifteen (15) calendar days after the end of each month, Ensign will invoice CareTrust for the applicable Service Costs on a
monthly basis, in arrears, for the prior month just ended. The invoice shall set forth in reasonable detail for the period covered by such invoice (i) the Services rendered, (ii) the Service Costs for each type of Service provided and
(iii) such additional information as may be reasonably requested by CareTrust. 
 (b) CareTrust agrees to pay all of the Service Costs
on or before thirty (30) calendar days after the date on which an invoice for Service Costs is delivered to CareTrust (the “Payment Date”) by check or wire transfer of immediately available funds to an account designated in
writing from time to time by Ensign. If CareTrust fails to pay any monthly payment on or before the Payment Date, CareTrust shall be obligated to pay, in addition to the amount due pursuant to such invoice, interest on such amount at a rate per
annum equal to 5% (“Additional Interest”). Unless otherwise agreed in writing between the Parties, all payments made pursuant to this Agreement shall be made in U.S. dollars. 

(c) Notwithstanding the foregoing, if CareTrust in good faith disputes any invoiced charge, payment of such charge shall be made only after
mutual resolution of such dispute. CareTrust agrees to notify Ensign promptly, and in no event later than the relevant Payment Date, of any disputed charge. Additional Interest shall not accrue on any amount in dispute, and no default shall be
alleged until after the relevant Payment Date. 
 (d) During the term of this Agreement, each Party shall keep such books, records and
accounts as are reasonably necessary to verify the calculation of the fees and related expense for Services provided hereunder. Ensign shall provide documentation supporting any amounts invoiced pursuant to this Section 3.3 as CareTrust may
from time to time reasonably request. CareTrust shall have the right to review such books, records and accounts at any time during normal business hours upon reasonable written notice, and CareTrust agrees to conduct any such review in a manner so
as not to unreasonably interfere with Ensign’s normal business operations. 
 Section 3.4 Budgeting and Accounting. Upon
reasonable request, each Party will cooperate with the other Party with respect to budgeting and accounting matters relating to the Services. 

ARTICLE IV 

DISCLAIMER OF REPRESENTATIONS AND WARRANTIES 

Section 4.1 Disclaimer. EXCEPT AS EXPRESSLY PROVIDED IN SECTION 2.1, CARETRUST ACKNOWLEDGES AND AGREES THAT ENSIGN (AND EACH MEMBER OF
THE ENSIGN GROUP) MAKES NO REPRESENTATIONS OR WARRANTIES (INCLUDING WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR GUARANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO ANY SERVICES PROVIDED HEREUNDER. 

  
 7 

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

INDEMNIFICATION; LIMITATION OF LIABILITY 

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

Section 5.2 Limitation of Liability. 

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

(b) ENSIGN’S TOTAL LIABILITY TO CARETRUST UNDER THIS AGREEMENT FOR ANY CLAIM SHALL NOT EXCEED, IN THE AGGREGATE, AN AMOUNT EQUAL TO THE
TOTAL AMOUNT PAID BY CARETRUST FOR SERVICES UNDER THIS AGREEMENT. 
 Section 5.3 Indemnification Procedure; Other Rights. All claims
for indemnification pursuant to Section 5.1 shall be made in accordance with the procedures set forth in Section 9.4 of the Separation Agreement and shall be subject to Sections 9.5 through 9.10 of the Separation Agreement. 

ARTICLE VI 

FORCE MAJEURE 

Section 6.1 General. If Ensign (or any member of the Ensign Group) is prevented from or delayed in complying, in whole or in part, with
any of the terms or provisions of this Agreement by reason of fire, flood, storm, earthquake, strike, walkout, lockout or other labor trouble or shortage, delays by unaffiliated suppliers or carriers, shortages of fuel, power, raw materials or
components, equipment failure, any law, order, proclamation, regulation, 

  
 8 

 
ordinance, demand, seizure or requirement of any Governmental Authority, riot, civil commotion, war, rebellion, act of terrorism, nuclear or other accident, explosion, casualty, pandemic, act of
God, or act, omission or delay in acting by any Governmental Authority or by CareTrust (or any member of the CareTrust Group) or any other cause, whether or not of a class or kind listed in this sentence, which is beyond the reasonable control of
Ensign (or any other applicable member of the Ensign Group), then upon notice to CareTrust pursuant to Section 6.2, the affected provisions and/or other requirements of this Agreement shall be suspended during the period of such disability and,
unless otherwise set forth herein to the contrary, Ensign (and any applicable member of the Ensign Group) shall have no liability to CareTrust (or any member of the CareTrust Group) in connection therewith. 

Section 6.2 Notice. Upon becoming aware of a disability causing a delay in the performance or preventing performance of any Services to
be provided by Ensign (or another member of the Ensign Group) under this Agreement, Ensign shall promptly notify CareTrust in writing of the existence of such disability and the anticipated duration of the disability. 

Section 6.3 Subcontractors; Fees. CareTrust shall have the right, but not the obligation, to hire or engage one or more subcontractors
to perform the Services affected by the disability for the duration of the period during which such disability delays or prevents the performance of such Services by Ensign, it being agreed that the fees paid or payable under this Agreement with
respect to the Services affected by the disability shall be reduced (or refunded, if applicable) on a dollar-for-dollar basis for all amounts paid by CareTrust to such subcontractors; provided that Ensign shall not be responsible for the
amount of fees charged by any such subcontractors to perform such Services to the extent they exceed the fees payable under this Agreement for such Services. 

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

TERM AND TERMINATION 

Section 7.1 Term and Termination of Services. 

(a) Subject to Section 7.1(c) and except as otherwise set forth in Exhibit A, each of the Services shall be provided for the term
specified in Section 7.1(b); provided that CareTrust shall have the right to terminate one or more of the Services that it receives under this Agreement at the end of a designated month by giving Ensign at least thirty (30) calendar
days’ prior written notice of such termination. Except as otherwise agreed, each Service may only be terminated as a whole, and partial termination of a Service shall not be permitted without the prior approval of Ensign, such approval not to
be unreasonably withheld or 

  
 9 

 
delayed. The Parties shall cooperate with each other in good faith in their efforts to reasonably effect early termination of Services, including, where applicable, partial termination, and to
agree in good faith upon appropriate reduction of the charges hereunder in connection with such early termination. 
 (b) Except as set
otherwise forth in Exhibit A, the provision of Services under this Agreement shall terminate upon the earlier of (a) the cessation of all Services pursuant to Section 7.1(a), or (b) the first anniversary of the Distribution
Date; provided that CareTrust shall have the one-time right to extend the provision of Services under this Agreement until the second anniversary of the Distribution Date by providing Ensign with written notice thereof at least sixty
(60) calendar days prior to the first anniversary of the Distribution Date. This Agreement, except for Section 2.1 and Section 2.2, shall survive the termination of Services, and any such termination shall not affect any payment
obligation for Services rendered prior to termination. 
 (c) Notwithstanding the foregoing: (i) the Parties may terminate the
provision of Services under this Agreement by mutual written consent and (ii) the Parties each reserve the right to immediately terminate the provision of Services under this Agreement by written notice to the other Party in the event that such
other Party shall have (A) applied for or consented to the appointment of a receiver, trustee or liquidator; (B) admitted in writing an inability to pay debts as they mature; (C) made a general assignment for the benefit of creditors;
or (D) filed a voluntary petition, or have filed against it a petition, for an order of relief under the Bankruptcy Code. 
 Section
7.2 Effect of Termination. 
 (a) Termination or expiration of Services under this Agreement shall not release a Party from any
liability or obligation which already has accrued as of the effective date of such termination or expiration, and shall not constitute a waiver or release of, or otherwise be deemed to adversely affect, any rights, remedies or claims, which a Party
may have hereunder at law, equity or otherwise or which may arise out of or in connection with such termination or expiration. 
 (b) As
promptly as practicable following termination of any Service, and the payment by CareTrust of all amounts owing hereunder, Ensign shall return all reasonably available material, inventory and other property of the CareTrust Group held by the Ensign
Group and shall deliver copies of all of the CareTrust Group’s records maintained by the Ensign Group with regard to such Service in Ensign’s standard format and media. Ensign shall deliver such property and records to such location or
locations as reasonably requested by CareTrust. Arrangements for shipping, including the cost of freight and insurance, and the reasonable cost of packing incurred by Ensign shall be borne by CareTrust. 

  
 10 

 ARTICLE VIII 

CONFIDENTIALITY 

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

Section 8.2 System Security. 

(a) If Ensign (or a member of the Ensign Group) is given access to the computer systems or software (collectively, “Systems”)
of CareTrust (or a member of the CareTrust Group) in connection with the provision of any Services, Ensign shall comply (or cause such member of the Ensign Group to comply) with all of the system security policies, procedures and requirements
(collectively, “Security Regulations”) of CareTrust (or such member of the CareTrust Group), and shall not (or shall cause such member the Ensign Group not to) tamper with, compromise or circumvent any security or audit measures
employed by CareTrust (or such member of the CareTrust Group). Ensign shall (or shall cause such member of the Ensign Group to) access and use only those Systems of CareTrust (or such member of the CareTrust Group) for which it has been granted the
right to access and use. 
 (b) Ensign shall use commercially reasonable efforts to ensure that only those of its personnel (or the
personnel of such member of the Ensign Group) who are specifically authorized to have access to the Systems of CareTrust (or such member of the CareTrust Group) gain such access, and use commercially reasonable efforts to prevent unauthorized
access, use, destruction, alteration or loss of information contained therein, including notifying its personnel (or the personnel of such member of its Group) of the restrictions set forth in this Agreement and of the Security Regulations. 

ARTICLE IX 

MISCELLANEOUS 

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

  
 11 

 Section 9.2 Amendments and Waivers. 

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

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

Section 9.6 Counterparts; Electronic Delivery. This Agreement may be executed in multiple counterparts, each of which when executed
shall be deemed to be an original, but all of which together shall constitute one and the same agreement. Execution and delivery of this Agreement or any other documents pursuant to this Agreement by facsimile or other electronic means shall be
deemed to be, and shall have the same legal effect as, execution by an original signature and delivery in person. 
 Section 9.7
Severability. If any term or other provision of this Agreement or the Exhibits attached hereto is determined by a nonappealable decision by a court, administrative agency or arbitrator to be invalid, illegal or incapable of being enforced by
any rule of law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any
manner materially adverse to either Party. Upon such determination 

  
 12 

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

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

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

  
 13 

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

[Signature Page Follows] 

  
 14 

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

			
	THE ENSIGN GROUP, INC.
		
	By:	 	 
		 	Name: Christopher R. Christensen
		 	Title: President and Chief Executive Officer

  

			
	CARETRUST REIT, INC.
		
	By:	 	 
		 	Name: Gregory K. Stapley
		 	Title: President and Chief Executive Officer

 EXHIBIT A 

ENSIGN TRANSITIONAL SERVICES 
 Ensign
agrees to provide (or to cause another applicable member of the Ensign Group to provide) to CareTrust (or another applicable member of the CareTrust Group), upon request and within a reasonable time, the following transitional period services (the
“Services”). Ensign shall be entitled to receive reimbursement from CareTrust for such Services as set forth below. 
 Services 

 

	1.	Human Resource Services. 

  

	 	a.	Standard Services. The human resource services to be provided by Ensign to CareTrust (the “HR Services”) will consist primarily of supporting the transition of CareTrust employees to
CareTrust’s contracted Professional Employer Organization (“PEO”). Such transition of responsibilities would include, for example and not by way of limitation, supporting employee transition management tasks, providing records
and information relative to current and historical employee benefits, payroll and workers’ compensation, recruiting, risk/safety management, training and development. All employee files and records of continuing CareTrust employees will be
transferred to CareTrust on the effective date of this Agreement. 

  

	 	b.	Special Requirements. The planned provision of the HR Services is based on current facts and circumstances and what Ensign and CareTrust know about CareTrust’s continuing employees, programs and policies
today, and the planned transition to the PEO in the future. Any changes or modifications such as (but not limited to) new pay programs, designs, benefits, acquisitions, dispositions, collectively bargained changes, and changes to eligible
compensation that are implemented should be communicated to Ensign’s Human Resources Department as soon as possible (and in advance if possible). 

  

	 	c.	Term. From the Distribution Date to the date that CareTrust files its Quarterly Report on Form 10-Q with respect to the quarter ended September 30, 2014. 

 

	2.	Accounting Services. 

  

	 	a.	Standard Services. The accounting services to be provided by Ensign to CareTrust are as follows: 

  

	 	i.	Provide accounting for the three independent living facilities that CareTrust will retain in the Spin-Off until such time these locations convert to CareTrust’s systems. 

	 	ii.	Certain reconciliations, subledger maintenance procedures related to the fixed asset accounting function until such time the tracking of assets is converted to CareTrust systems. 

 

	 	iii.	Processing and maintenance accounts payable function until such time the conversion of CareTrust’s new accounting system is complete. 

 

	 	b.	Conversion Support. Ensign personnel will provide a reasonable level of assistance to CareTrust, and will facilitate the support of third-party software providers, as reasonably required during the conversion to
standalone CareTrust financial systems. During this financial systems conversion process, CareTrust will have access to CareTrust data in all accounting and related modules, including, but not limited to, accounts receivable; accounts payable; and
fixed assets. 

  

	 	c.	Term: From the Distribution Date to the date that CareTrust files its Quarterly Report on Form 10-Q with respect to the quarter ended September 30, 2014. 

 

	3.	Legal & Compliance Services. 

  

	 	a.	Legal Services. Ensign will provide information, required documentation and support in the event of any litigation. Support for litigation arising from or in connection with events that occurred prior to the
Effective Time shall be covered by the indemnification provisions of the Separation Agreement and not by this Agreement. Ensign will also provide access to historical documentation, books and records needed to prosecute, defend or avoid litigation,
defaults or other adverse events, upon request. 

  

	 	b.	Compliance Services. Ensign’s Chief Compliance Officer shall serve as CareTrust’s Chief Compliance Officer. Ensign shall provide CareTrust with full access to its compliance and training programs and
systems to the extent necessary for CareTrust to comply with the terms and conditions of Ensign’s Corporate Integrity Agreement (“CIA”), for so long as, and notwithstanding anything in this Agreement to the contrary, CareTrust
remains subject to the CIA, unless such service is earlier terminated by CareTrust. Ensign shall provide periodic reports regarding CareTrust employees relative to compliance testing and reporting obligations, and shall include CareTrust’s
compliance statistics in its regular reports to the government and its agents so as to timely fulfill CareTrust’s reporting requirements. 

  

	4.	Information Systems Services. 

  

	 	a.	Standard Services. The information systems services (“IS Services”) to be provided by Ensign to CareTrust will consist primarily of: 

 

	 	i.	Coordinating with the third-party vendor, which will maintain and administer CareTrust’s computer and data storage systems, office and mobile telephones, email and other technology tools and resources, and
providing technical support therefor while CareTrust and its personnel and systems remain housed, in whole or part, in the Ensign offices; 

	 	ii.	Coordinating with the third-party vendor, which will assist in the orderly procurement, setup and installation of network equipment, communication lines, Internet connectivity, computers, servers, peripherals, phones,
copiers and other technology equipment and systems for CareTrust’s new offices; 

  

	 	iii.	Coordinating with the third party vendor to setup of CareTrust’s new information technology (“IT”) network and systems and the transitioning of all CareTrust IT data to the new IT network,
including supporting the following: systems administration, network administration, application support, email, and electronic records maintenance. 

  

	 	b.	Special Requirements. Ensign and CareTrust have agreed to the following special requirements concerning the IS Services: 

  

	 	i.	Ensign will provide access to historical data relating to acquisition and improvement of the properties comprising CareTrust’s initial portfolio through data extracts. 

 

	 	ii.	Notwithstanding anything herein to the contrary, Ensign will maintain the email addresses “gstapley@ensigngroup.net” and “dsedgwick@ensigngroup.net” and “wwagner@ensigngroup.net” and agrees
to automatically forward all emails received to CareTrust for one (1) year from the Distribution Date. In the event Ensign ever wishes to abandon the ensigngroup.net domain it will instead assign such domain to CareTrust. 

 

	5.	Office Facilities. Ensign shall continue to make available office space in its Service Center offices at 27101 Puerta Real, Suite 450, Mission Viejo, CA for employees and visitors of CareTrust. Such space shall
include Internet and phone service and support, regular receptionist services (e.g., answering phones), use of office networks, copiers, peripherals and systems, and the use of conference and meeting rooms on a reasonably available basis.

 Fees and Expenses 
  

	1.	Services. CareTrust shall reimburse Ensign for the Services based on time spent by Ensign employees on such services at each such employee’s Adjusted Hourly Rate. 

 

	2.	Expenses. Any expenses related to the rendition of the Services, including without limitation costs billed to Ensign by its regular third-party providers whose assistance may be required to the render the
Services, will be billed to CareTrust and reimbursed at cost. 

  

	3.	Office Facilities. CareTrust shall reimburse Ensign for its pro rata share of the office space it uses during its continued occupancy 

 

	4.	Billing. Ensign will provide CareTrust with an itemized invoice for all Services rendered on a monthly basis.EX-10.6

 Exhibit 10.6 

TAX MATTERS AGREEMENT 
 THIS TAX MATTERS
AGREEMENT is dated as of             , 2014, by and among The Ensign Group, Inc. (“Ensign”), a Delaware corporation, by and on behalf of itself and each Affiliate of Ensign (as
determined after the Distribution), and CareTrust REIT, Inc., a Maryland corporation, and currently a direct, wholly owned subsidiary of Ensign (“PropCo”), by and on behalf of itself and each Affiliate of PropCo (as determined after the
Distribution). Capitalized terms used herein and not otherwise defined shall have the meanings ascribed to such terms in the Separation and Distribution Agreement, dated as of             ,
2014. 
 RECITALS 
 WHEREAS, Ensign is
the common parent of an affiliated group whose includible corporations join in the filing of a consolidated U.S. federal income Tax Return (the “Ensign Consolidated Group”); 

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

WHEREAS, the board of directors of Ensign has determined that it is advisable and in the best interests of Ensign and its stockholders to reorganize the
assets and liabilities of Ensign into two companies: (i) Ensign which, following consummation of the transactions contemplated herein, will own and conduct a healthcare services business; and (ii) PropCo which, following consummation of
the transactions contemplated herein, will own and conduct a healthcare real estate business; 
 WHEREAS, on the Distribution Date, Ensign will distribute
all of the issued and outstanding shares of PropCo to the holders of Ensign common stock pursuant to the Distribution; 
 WHEREAS, it is the intention of
the Parties that the Contribution and the Distribution qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code; 

WHEREAS, in contemplation of the Reorganization and the Distribution, Ensign and PropCo desire to set forth their agreement as to the rights and obligations
of Ensign, PropCo, and their respective Affiliates with respect to the responsibility, handling and allocation of federal, state and local Taxes, and various other Tax matters. 

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

“Adjustment” means an adjustment of any item of income, gain, loss, deduction, credit or any other item affecting Taxes of a taxpayer pursuant to a
Final Determination. 

  
 1 

 “Affiliate” means any corporation, partnership, limited liability company, or other entity directly or
indirectly Controlled by the entity in question. 
 “After Tax Amount” means any additional amount necessary to reflect (through a gross-up
mechanism) the hypothetical Tax consequences of the receipt or accrual of any payment required to be made under this Agreement (including payment of an additional amount or amounts hereunder and the effect of the deductions available for interest
paid or accrued and for Taxes such as state and local income Taxes), determined by using the highest marginal corporate Tax rate (or rates, in the case of an item that affects more than one Tax) for the relevant taxable period (or portion thereof).

 “Agreement” means this Tax Matters Agreement, including any schedules, exhibits, and appendices attached hereto. 

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

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

“Contribution” means the contribution by Ensign of the assets described in Article II of the Separation and Distribution Agreement to PropCo in
exchange for (i) the assumption or incurrence, as applicable, by PropCo and certain of its Subsidiaries of the PropCo Liabilities, (ii) the issuance by PropCo to Ensign or its Subsidiaries of shares of PropCo Common Stock, and
(iii) the distribution by PropCo, directly or indirectly, to Ensign of the PropCo Cash Payment, all as more fully described in the Separation and Distribution Agreement and the Ancillary Agreements. 

“Control” means the ownership of stock or other securities possessing at least 50 percent of the total combined voting power of all classes of
securities entitled to vote. 
 “Deferred Tax Assets” means, as of a given date, the amount of deferred Tax benefits that would be recognized as
assets on a business enterprise’s balance sheet computed in accordance with GAAP. 
 “Deferred Tax Liabilities” means, as of a given date,
the amount of deferred Tax liabilities that would be recognized as liabilities on a business enterprise’s balance sheet computed in accordance with GAAP. 

“Deferred Taxes” means, as of a given date, the amount of Deferred Tax Assets, less the amount of Deferred Tax Liabilities. 

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

“Ensign Consolidated Group” has the meaning set forth in the recitals. 

“Ensign Group” means all entities that are Affiliates of Ensign immediately after the Distribution, and entities that become Affiliates thereafter.

  
 2 

 “Ensign Representation Letter” means an officer’s certificate in which certain representations,
warranties and covenants are made on behalf of Ensign and its Affiliates in connection with the issuance of the Tax Opinions or Tax Ruling. 
 “Equity
Award” means employee restricted stock, employee stock options, or deferred compensation granted, awarded or otherwise paid to a service provider by Ensign or a member of the PropCo Group, as the case may be. 

“FIN 48” means Financial Accounting Standard Board Interpretation Number 48: Accounting for Uncertainty in Income Taxes. 

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

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

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

“IRS” means the United States Internal Revenue Service. 

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

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

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

“Party” means each of Ensign and PropCo. 

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

  
 3 

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

“Pre-Distribution Period” means any tax year or other taxable period that ends on or before the Distribution Date and, in the case of any Straddle
Period, that part of the tax year or other taxable period through the end of the day on the Distribution Date. 
 “PropCo Group” means PropCo and
Affiliates of PropCo immediately after the Distribution, and entities that become Affiliates thereafter. 
 “PropCo Representation Letter” means
an officer’s certificate in which certain representations, warranties, and covenants are made on behalf of PropCo and its Affiliates in connection with the issuance of Tax Opinions or a Tax Ruling. 

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

“REIT” has the meaning prescribed in Section 4.02(e). 

“Representation Letters” means the Ensign Representation Letter (or Letters) and the PropCo Representation Letter (or Letters). 

“Responsible Party” has the meaning prescribed in Section 5.03(a). 

“Ruling Documents” means the Ruling Request, the appendices, attachments and exhibits thereto, and any additional or supplemental information
submitted to the IRS in connection with the Ruling Request and the Tax Ruling. 
 “Ruling Request” means the private letter ruling request filed
by Ensign with the IRS dated August 22, 2013, pertaining to certain Tax aspects of the Reorganization and the Distribution, and any supplemental submissions related thereto. 

“Separation and Distribution Agreement” means that Separation and Distribution Agreement by and between Ensign and PropCo, dated as of
[            ], 2014. 
 “Separation Taxes” means any federal, state, and local Income
Tax imposed on or assessed against Ensign or the Ensign Consolidated Group in connection with the Contribution and Distribution that would not have occurred had the Contribution and Distribution not occurred. 

“Straddle Period” means any taxable period beginning on or before the Distribution Date and ending after the Distribution Date. 

“Tax” and “Taxes” means any income, gross income, gross receipts, profits, capital stock, franchise, withholding, payroll, social
security, workers’ compensation, unemployment, disability, property, ad valorem, value added, stamp, excise, severance, occupation, service, sales, use, license, lease, transfer, import, export, alternative minimum, estimated or other tax
(including any fee, assessment, or other charge in the nature of or in lieu of any tax), imposed by any governmental entity or political subdivision thereof, and any interest, penalty, additions to tax, or additional amounts in respect of the
foregoing. 

  
 4 

 “Tax Attributes” means net operating losses, capital losses, investment tax credit carryovers, earnings
and profits, foreign tax credit carryovers, overall foreign losses, previously taxed income, separate limitation losses, deductions, credits or other comparable items, and assets basis, that could affect a Tax liability for a past or future taxable
period. 
 “Taxing Authority” means any national, municipal, governmental, state, federal or other body, or any quasi-governmental or private
body, having jurisdiction over the assessment, determination, collection or imposition of any Tax (including the IRS). 
 “Tax Controversy” has
the meaning prescribed in Section 5.01(a). 
 “Tax Detriment” means, without double counting, the sum of (i) the amount of the increase
in the Tax liability of an entity (or of the consolidated or combined group of which it is a member), whether temporary or permanent, for any taxable period that arises, or may arise in the future, as a result of any adjustment to, or addition or
deletion of, a Tax Item in the computation of the Tax liability of the entity (or the consolidated or combined group of which it is a member), and (ii) the amount by which the entity’s (or consolidated or combined group of which it is a
member) Deferred Taxes are increased as a result of such adjustment, addition, or deletion. 
 “Tax-Free Status of the Transactions” means the
tax-free treatment accorded to certain of the Transactions as set forth in the Tax Ruling and the Tax Opinions. 
 “Tax Item” means any item of
income, gain, loss, deduction, credit, recapture of credit, or any other item (including the basis or adjusted basis of property) which increases or decreases Income Taxes paid or payable in any taxable period. 

“Tax Opinions” means the opinions rendered by Skadden, Arps, Slate, Meagher & Flom LLP and KPMG LLP, respectively, with respect to certain
Tax aspects of the Distribution. 
 “Tax Proceeding” means any audit, assessment of Taxes, pre-filing agreement, other examination by any Taxing
Authority, proceeding, appeal of a proceeding or litigation relating to Taxes, whether administrative or judicial, including proceedings relating to competent authority determinations. 

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

 “Tax Ruling” means the IRS private letter ruling issued to Ensign on February 12, 2014 in connection with the Ruling Request. 

  
 5 

 “Treasury Regulations” means the final and temporary (but not proposed) income tax regulations
promulgated under the Code, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations). 

“Unqualified Tax Opinion” means a “will” opinion, without substantive qualifications, of a nationally recognized law or accounting firm,
which firm is reasonably acceptable to Ensign, to the effect that a transaction will not affect the Tax-Free Status of the Transactions. 

ARTICLE II. RESPONSIBILITY FOR TAXES 

2.01 Responsibility and Indemnification for Taxes. 

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

(b) For the avoidance of doubt, all references to Taxes or Tax liabilities in this Agreement refer to the actual amounts of Taxes paid or due
and do not apply to items or adjustments to items shown solely on a Party’s balance sheet or other financial statement. There shall be no adjustments, payments, or obligations among the Parties made pursuant to this agreement for any gains or
losses with respect to amounts shown on a Party’s balance sheet or other financial statements and not specifically allocated herein, including but not limited to FIN 48 reserves, Deferred Tax Assets, Deferred Tax Liabilities, and other Tax
accounting entries. 
 (c) Payments to Taxing Authorities and between the Parties, as the case may be, shall be made in accordance with the
provisions of this Agreement. 
 2.02 Indemnification. 

(a) Generally 
 (i)
Ensign. 
 Except as set forth in Sections 2.02(a)(ii) and 2.02(b), Ensign shall be responsible for and shall indemnify and hold
PropCo and its Affiliates harmless from and against 
 (A) all Tax liability imposed on members of the Ensign Group or the PropCo Group for
all Pre-Distribution Periods, and 
 (B) all Tax liability imposed on members of the Ensign Group for all Post-Distribution Periods. 

(ii) PropCo. 

  
 6 

 Except as set forth in Sections 2.02(a)(i) and 2.02(b), PropCo shall be responsible for and shall
indemnify and hold Ensign and its Affiliates harmless from and against 
 (A) all Tax liability imposed on members of the PropCo Group for
all Post-Distribution Periods, and 
 (B) Subject to Section 2.03, the responsibility for any Tax incurred in a Straddle Period by any
member of the PropCo Group shall be allocated between the Pre-Distribution Period and the Post-Distribution Period as if such member closed its financial accounting records as of the Distribution Date and determined the Tax attributable to the
Pre-Distribution Period by applying the method of tax accounting that has historically been used for the business of such member. 
 (b)
Separation Taxes  
 (i) Ensign. 

Ensign shall be responsible for and shall indemnify and hold PropCo and its Affiliates harmless from and against 

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

(B) 100% of all Separation Taxes arising out of, based upon, or relating or attributable to any breach by Ensign of any representation,
warranty, covenant, or obligation contained in this Agreement, any other Ancillary Agreement, the Ruling Request, the Ruling Documents, the Tax Opinions, any Ensign Representation Letter, or otherwise made by Ensign in connection with the
Distribution, but excluding for this purpose the breach of any representations (including those described in Section 4.01(b)(i)) not concerning a Party’s plan or intention with respect to actions or operations after the Distribution Date,
and 
 (C) 100% of all Separation Taxes arising from any event following the Distribution involving the stock or assets of Ensign or any of
its Affiliates which causes the Distribution to be a Taxable event to Ensign as a result of the application of Section 355(e) of the Code or a similar provision of state or local Tax law. 

(ii) PropCo. 

  
 7 

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

(B) 100% of all Separation Taxes arising out of, based upon, or relating or attributable to any breach by PropCo of any representation,
warranty, covenant, or obligation contained in this Agreement, any other Ancillary Agreement, the Ruling Request, the Ruling Documents, the Tax Opinions, any PropCo Representation Letter, or otherwise made by PropCo in connection with the
Distribution, but excluding for this purpose the breach of any representations (including those described in Section 4.01(a)(i)) not concerning a Party’s plan or intention with respect to actions or operations after the Distribution Date,
and 
 (C) 100% of all Separation Taxes arising from any event post-Distribution involving the stock or assets of PropCo or any of its
Affiliates which causes the Distribution to be a Taxable event to Ensign as a result of the application of Section 355(e) of the Code or a similar provision of state or local Tax law. 

(c) Transfer Taxes. Notwithstanding anything to the contrary herein, all transfer, documentary, sales, use, stamp, registration and
other such similar Taxes, and all conveyance fees, recording charges and other fees and charges (including any penalties and interest) incurred in connection with consummation of the transactions contemplated by this Agreement (“Transfer
Taxes”) shall be paid by PropCo, and PropCo will file all necessary Tax Returns and other documentation with respect to all such Transfer Taxes, and, if required by applicable law, Ensign will, and will cause its Affiliates to, join in the
execution of any such Tax Returns and other documentation; provided, however, if the Ensign fails to join in the execution of any such Tax Returns and other documentation then PropCo shall be authorized to execute such Tax Returns and other
documentation on behalf of Ensign. 
 2.03 Allocation of Certain Income Taxes and Income Tax Items. 

(a) If Ensign, PropCo, or any of their respective Affiliates is permitted but not required under applicable federal, state, or local Tax laws
to treat the Distribution Date as the last day of a taxable period, then, in accordance with Section 2.02(a)(ii)(B), the parties shall treat such day as the last day of a taxable period under such applicable Tax law, and shall file any
elections necessary or appropriate to such treatment; provided that this Section 2.03(a) shall not be construed to require Ensign or PropCo to change its taxable year. 

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

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

2.04 Treatment of Equity Awards. 

(a) To the extent permitted by law, Ensign (or the appropriate Ensign Affiliate) shall be entitled to and shall claim all federal income Tax
deductions or other Tax benefits resulting from the grant of any Equity Awards prior to the Distribution, including with respect to any PropCo Restricted Stock Award (as defined in the Employee Matters Agreement) issued pursuant to
Section 5.2(b) of the Employee Matters Agreement between the Parties, entered into as of the date hereof (the “Employee Matters Agreement”) due to an individual holding an Ensign Restricted Stock Award (as defined in the Employee
Matters Agreement). 
 (b) To the extent permitted by law, with respect to Equity Awards granted after the Distribution Date, the Party that
grants the award shall be entitled to claim any Tax deduction or other benefit resulting from the grant and/or vesting of the award. 
 (c)
If, pursuant to a Final Determination, all or any part of a Tax deduction claimed by Ensign pursuant to Section 2.04(a) is disallowed, then, to the extent permitted by law, PropCo (or the appropriate PropCo Affiliate) shall claim such Tax
deduction. If PropCo (or its Affiliate) realizes a Tax benefit from the claiming of such Tax deduction, PropCo shall pay the amount of such Tax benefit to Ensign net of any Tax Detriment suffered by PropCo or its Affiliate in connection therewith.

  
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 (d) Ensign shall withhold applicable Taxes and satisfy applicable Tax reporting obligations with
respect to the taxation of the Equity Awards referred to in Section 2.04(a). The Party granting the award and claiming the deduction shall withhold applicable Taxes and satisfy applicable Tax reporting obligations with respect to the taxation
of the Equity Awards referred to in Section 2.04(b). The Parties to this Agreement shall cooperate so as to permit the party initially claiming such deduction to discharge any applicable Tax withholding and Tax reporting obligations. 

2.05 Tax Refunds. 
 (a)
Except as provided in Section 2.04(c), the benefit of any Tax credits, Tax Attributes, and any refund or credit of any overpayment of Taxes or estimated Tax liabilities (“Refunds”), including any corresponding benefit arising out of
or related to any Tax liability that is the subject of this Agreement, will remain with the party entitled to the benefit under applicable Tax law, as modified by any applicable audit agreements or past practice of Ensign and its Affiliates. No
payments shall be made between the Parties to account for such adjustment. 
 (b) Except as provided in Section 2.06, Ensign shall be
entitled to all Refunds for Taxes for which Ensign is responsible pursuant to Article II, and PropCo shall be entitled to all Refunds for Taxes for which PropCo is responsible pursuant to Article II. A Party receiving a Refund to which the other
Party is entitled pursuant to this Agreement shall pay the amount to which such other Party is entitled within ten (10) days after the receipt of the Refund. 

(c) In the event of an Adjustment relating to Taxes for which one Party is responsible pursuant to Article II which would have given rise to a
Refund but for an offset against the Taxes for which the other Party is or may be responsible pursuant to Article II (the “Benefited Party”), then the Benefited Party shall pay to the other Party, within ten (10) days of the Final
Determination of such Adjustment an amount equal to the lesser of (i) the amount of such hypothetical Refund or (ii) the amount of such reduction in the Taxes of the Benefited Party, in each case, plus interest at the rate set forth in
Section 6621(a)(1) of the Code on such amount for the period from the filing date of the Tax Return that would have given rise to such Refund to the payment date. 

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

(e) To the extent that the amount of any Refund under this Section 2.05 or Section 2.06(b), as applicable, is later reduced by a
Taxing Authority or in a Tax Proceeding, 

  
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such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 2.05 or Section 4.02(b), as applicable, and an appropriate adjusting payment
shall be made. 
 2.06 Carrybacks. 

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

(ii) Subject to Section 2.06(c) and (d), in the event that any member of the Ensign Group realizes any loss, credit or other Tax
Attribute in a Post-Distribution Period of such member, such member may elect to carry back such loss, credit or other Tax Attribute to a Pre-Distribution Period or Straddle Period of such member. PropCo shall cooperate with Ensign and such member
in seeking from the appropriate Taxing Authority any Refund that reasonably would result from such carryback (including by filing an amended Tax Return) at Ensign’s cost and expense; provided, that PropCo shall not be required to seek such
Refund and Ensign and such member shall not be permitted to seek such Refund, in each case to the extent that such Refund would reasonably be expected to materially adversely impact PropCo (including through an increase in Taxes or a loss or
reduction of a Tax Attribute regardless of whether or when such Tax Attribute otherwise would have been used), in each case without the prior written consent of PropCo, which consent shall not be unreasonably withheld or delayed. Ensign (or such
member) shall be entitled to any Refund realized by any member of the PropCo Group or the Ensign Group resulting from such carryback. 
 (c)
Except as otherwise provided by applicable Law, if any loss, credit or other Tax Attribute of the Ensign Business and the PropCo Business both would be eligible to be carried back or carried forward to the same Pre-Distribution Period (had such
carryback been the only carryback to such taxable period), any Refund resulting therefrom shall be allocated between Ensign and PropCo proportionately based on the relative amounts of the Refunds to which the Ensign Business and the PropCo Business,
respectively, would have been entitled had such carryback been the only carryback to such taxable period. 

  
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 (d) To the extent the amount of any Refund under this Section 2.06 is later reduced by a
Taxing Authority or a Tax Proceeding, such reduction shall be allocated to the Party to which such Refund was allocated pursuant to this Section 2.06. 

ARTICLE III. TAX RETURNS AND INFORMATION EXCHANGE 

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

(a) Except as provided in Section 3.01(c), Ensign shall prepare and timely file all Tax Returns for Pre-Distribution Periods for Ensign
and its Affiliates, including PropCo and its Affiliates, and all Tax Returns for Straddle Periods for all members of the Ensign Group. In connection with each federal, state, and local Tax Return that is required under this Agreement to be filed by
Ensign for taxable periods ending in 201[4], PropCo shall timely furnish to Ensign Tax information and documents as Ensign may reasonably request. 

(b) To the extent that there are separate state or local Tax Returns attributable to a member of the Ensign Group required to be filed by
members of the PropCo Group with respect to Pre-Distribution Periods, PropCo and Ensign shall cooperate to ensure that such returns are correctly filed by the party required to file such Tax Returns under applicable law. 

(c) PropCo and its Affiliates shall prepare and timely file all Tax Returns for Straddle Periods for all members of the PropCo Group. If
Ensign is responsible under Section 2.02(a) for a portion of any Tax reported on a Straddle Period Tax Return for any member of the PropCo Group, PropCo shall provide Ensign with a copy of such Tax Return at least thirty (30) days prior to
its due date. Ensign shall notify PropCo of any disagreement within 20 days of Ensign’s receipt of such Tax Return. Any dispute shall be resolved pursuant to the procedures provided by this Agreement. 

(d) Subject to the written direction of Ensign, after the date of the Distribution, PropCo shall not file (or allow any PropCo Affiliate to
file) any amended Tax Return or refund claim for any Pre-Distribution Periods. 
 (e) Ensign (and its Affiliates) shall be responsible for
remitting payment of any Taxes shown on a Tax Return which Ensign (or any of its Affiliates) is responsible for filing. PropCo (and its Affiliates) shall be responsible for remitting payment of any Taxes shown on a Tax Return which PropCo (or any of
its Affiliates) is responsible for filing. 
 (f) If Ensign remits a Tax payment, but PropCo is responsible pursuant to Article II for all
or a portion of the Tax shown on the applicable Tax Return, then PropCo shall timely pay to Ensign that portion of the Tax for which PropCo is responsible. If PropCo remits a Tax payment, but Ensign is responsible pursuant to Article II for all or a
portion of the Tax shown on the applicable Tax Return, then Ensign shall timely pay to PropCo that portion of the Tax for which Ensign is responsible. Such payments shall be requested and made in accordance with the notice and payment provisions
contained in Article VI. Nothing in this Section 3.01 shall affect the allocation of responsibility for Taxes as set forth in Article II. 

  
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 3.02 Certain Items Related to Tax Return Preparation. 

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

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

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

  
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 ARTICLE IV. TAX TREATMENT OF THE DISTRIBUTION 

4.01 Representations. 

(a) PropCo. 

(i) Ruling Documents. PropCo hereby represents and warrants that (i) it has examined the Ruling Documents
(including, without limitation, the representations to the extent that they relate to the plans, proposals, intentions, and policies of the PropCo Group), and (ii) to the extent in reference to the PropCo Group, the facts presented and the
representations made therein are true, correct, and complete in all material respects. 
 (ii) Tax-Free Status. PropCo
hereby represents and warrants that it has no plan or intention of taking any action, or failing or omitting to take any action, or knows of any circumstance, that could reasonably be expected to (i) cause the Contribution and the Distribution
to fail to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or (ii) cause any representation or factual statement made in this Agreement, the Separation and Distribution Agreement, the Ancillary
Agreements, the Ruling Request, the Ruling Documents, the Tax Ruling, the Tax Opinions, or any PropCo Representation Letter, as applicable, to be untrue in a manner that would have an adverse effect on the qualification of the Contribution and the
Distribution as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or the tax treatment described in the Tax Ruling or Tax Opinions of certain aspects of the Reorganization and the Distribution. 

(iii) Plan or Series of Related Transactions. 

(A) PropCo hereby represents and warrants that, to the knowledge of PropCo and the management of PropCo, neither the Distribution nor any
related transactions are part of a plan (or series of related transactions) pursuant to which a Person will acquire stock representing a fifty-percent or greater interest (within the meaning of Sections 355(d) and (e) of the Code) in PropCo or
any successor to PropCo. 
 (B) PropCo has no plan or intention to participate in, facilitate, undertake, or otherwise permit any
acquisition of PropCo after the Distribution pursuant to which a direct or indirect acquisition of stock of PropCo would occur, which would result in a direct or indirect acquisition of stock representing a 50 percent or greater interest (within the
meaning of Sections 355(d) and 355(e) of the Code) in PropCo or any successor to PropCo. 
 (C) PropCo and its Affiliates have no plan or
intention to redeem, purchase, or otherwise reacquire more than 20% of the capital stock of PropCo in one or more transactions following the Distribution Date. 

(D) PropCo and its Affiliates have no plan or intention to (i) sell, exchange, distribute, or otherwise dispose of, other than in the
ordinary course of business, all or a substantial part of the assets of any of the trades or businesses relied upon in the Tax Ruling or Tax Opinions to satisfy Section 355(b) of the Code; (ii) discontinue or cause to be discontinued the
active conduct of any of the trades or businesses relied upon in the Tax Ruling or Tax Opinions to satisfy 

  
 14 

 
Section 355(b) of the Code; or (iii) cause the occurrence of any restructuring pursuant to which PropCo ceases to be treated as conducting the trade or businesses relied upon in the Tax
Ruling or Tax Opinions to satisfy Section 355(b) of the Code. 
 (b) Ensign. 

(i) Ruling Documents. Ensign hereby represents and warrants that (i) it has examined the Ruling Documents
(including, without limitation, the representations to the extent that they relate to the plans, proposals, intentions, and policies of the Ensign Group), and (ii) to the extent in reference to the Ensign Group, the facts presented and the
representations made therein are true, correct, and complete in all material respects. 
 (ii) Tax-Free Status. Ensign
hereby represents and warrants that it has no plan or intention of taking any action, or failing or omitting to take any action, or knows of any circumstance, that could reasonably be expected to (i) cause the Contribution and the Distribution
to fail to qualify as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code, or (ii) cause any representation or factual statement made in the Separation and Distribution Agreement, this Agreement, the other Ancillary
Agreements, the Ruling Request, the Ruling Documents, the Tax Ruling, the Tax Opinions, or any Ensign Representation Letter, as applicable, to be untrue in a manner that would have an adverse effect on the qualification of the Contribution and the
Distribution as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or the tax treatment described in the Tax Ruling or Tax Opinions of certain aspects of the Reorganization and the Distribution. 

(iii) Plan or Series of Related Transactions. 

(A) Ensign hereby represents and warrants that, to the knowledge of Ensign and the management of Ensign, neither the Distribution nor any
related transactions are part of a plan (or series of related transactions) pursuant to which a Person will acquire stock representing a fifty-percent or greater interest (within the meaning of Sections 355(d) and (e) of the Code) in Ensign or
any successor to Ensign. 
 (B) Ensign has no plan or intention to participate in, facilitate, undertake or otherwise permit any acquisition
of Ensign after the Distribution pursuant to which a direct or indirect acquisition of stock of Ensign would occur, which would result in a direct or indirect acquisition of stock representing a 50 percent or greater interest (within the meaning of
Sections 355(d) and 355(e) of the Code) in Ensign or any successor to Ensign. 
 (C) Ensign and its Affiliates have no plan or intention to
redeem, purchase or otherwise acquire more than 20% of Ensign’s capital stock in one or more transactions following the Distribution Date. 

(D) Ensign and its Affiliates have no plan or intention to (i) sell, exchange, distribute or otherwise dispose of, other than in the
ordinary course of business, all or a substantial part of the assets of any of the trades or businesses relied upon in the Tax Ruling or Tax Opinions to satisfy Section 355(b) of the Code; (ii) discontinue or cause to be discontinued the
active conduct of any of the trades or businesses relied upon in the Tax Ruling to satisfy Section 355(b) of the 

  
 15 

 
Code, or (iii) cause the occurrence of any restructuring pursuant to which Ensign ceases to be treated as conducting the trade or businesses relied upon in the Tax Ruling or Tax Opinions to
satisfy Section 355(b) of the Code. 
 4.02 Covenants. 

(a) The Parties shall not, and shall cause their Affiliates not to, take any action or fail to take any action, where such action or failure
would be inconsistent with or have an adverse effect on the qualification of the Contribution and the Distribution as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code or the tax treatment described in the Tax Ruling
or Tax Opinions of certain aspects of the Distribution. 
 (b) Unless otherwise required by a Taxing Authority or applicable law, the
Parties hereby agree to prepare and file all Tax Returns, and to take all other actions, in a manner consistent with past practice. 
 (c)
Unless otherwise required by a Taxing Authority or applicable law, the Parties hereby agree to prepare and file all Tax Returns, and to take all other actions, in a manner consistent with the characterization of the Reorganization and the
Distribution as described in the Ruling Request, the Ruling Documents, the Tax Ruling, the Tax Opinions and the Ancillary Agreements. 
 (d)
Actions Consistent with Representations and Covenants. 
 (i) PropCo shall not, and shall not permit any of its
Affiliates to, take any action or fail to take any action, where such action or failure to act would be inconsistent with or cause to be materially untrue any material, information, covenant, or representation in the Separation and Distribution
Agreement, this Agreement, the other Ancillary Agreements, the Tax Ruling, the Ruling Request, the Ruling Documents (including, without limitation, the representations to the extent that they relate to the plans, proposals, intentions, and policies
of the PropCo Group), the Tax Opinions, or any PropCo Representation Letter. 
 (ii) Ensign shall not, and shall not permit
any of its Affiliates to, take any action or fail to take any action, where such action or failure to act would be inconsistent with or cause to be materially untrue any material, information, covenant, or representation in the Separation and
Distribution Agreement, this Agreement, the other Ancillary Agreements, the Tax Ruling, the Ruling Request, the Ruling Documents (including, without limitation, the representations to the extent that they relate to the plans, proposals, intentions,
and policies of the Ensign Group), the Tax Opinions, or any Ensign Representation Letter. 
 (e) The Parties acknowledge that PropCo intends
to qualify as a real estate investment trust within the meaning of Section 856 of the Code (a “REIT”) for the tax year ending December 31, 2014 and thereafter. Notwithstanding anything to the contrary in this Agreement,
(i) Ensign shall use its best efforts to avoid taking any action and (ii) no action shall be taken pursuant to this Agreement, in each case, that could reasonably be expected, as determined by Propco, to cause PropCo to fail to qualify as
a REIT for any taxable year. In 

  
 16 

 
furtherance of the foregoing, notwithstanding anything to the contrary in Section 3.02(d), Ensign shall provide PropCo the amounts and information relating to the Tax Attributes associated
with PropCo and each of its Affiliates, including the amount of earnings and profits and the Tax bases of the assets and liabilities transferred to PropCo in connection with the Distribution, to the extent reasonably necessary for PropCo to qualify
as a REIT for the tax year ending December 31, 2014. 
 4.03 Procedures Regarding Opinions and Rulings. 

(a) If PropCo notifies Ensign that it desires to take one of the actions described in Section 4.02 (a “Notified Action”),
Ensign shall cooperate with PropCo and use its reasonable best efforts to seek to obtain, as expeditiously as possible, a supplemental ruling from the IRS or an Unqualified Tax Opinion for the purpose of permitting PropCo to take the Notified Action
unless Ensign shall have waived the requirement to obtain such ruling or opinion. If such a ruling is to be sought, Ensign shall apply for such ruling and Ensign and PropCo shall jointly control the process of obtaining such ruling. In no event
shall Ensign be required to file any ruling request under this Section 4.03(a) unless PropCo represents that (i) it has read such ruling request, and (ii) all information and representations, if any, relating to any member of the
PropCo Group, contained in such ruling request documents are (subject to any qualifications therein) true, correct, and complete. PropCo shall reimburse Ensign for all reasonable costs and expenses incurred by the Ensign Group in obtaining a ruling
or an Unqualified Tax Opinion requested by PropCo within ten (10) days after receiving an invoice from Ensign therefor. 
 (b) If
Ensign requests a supplemental ruling or other guidance: (A) Ensign shall keep PropCo informed in a timely manner of all material actions taken or proposed to be taken by Ensign in connection therewith; (B) Ensign shall (i) reasonably
in advance of the submission of any documents relating to the supplemental ruling provide PropCo with a draft thereof, (ii) reasonably consider PropCo’s comments to such draft, (iii) provide PropCo with a final copy of any documents
relating to the supplemental ruling, (iv) provide PropCo with notice reasonably in advance of, and PropCo shall have the right to attend, any meetings with the Taxing Authority (subject to the approval of the Taxing Authority) that relate to
such supplemental ruling, and (v) provide PropCo with a copy of such supplemental ruling. 
 4.04 Enforcement. The Parties
acknowledge that irreparable harm would occur in the event that any of the provisions of this Article IV were not performed in accordance with their specific terms or were otherwise breached. The Parties agree that, in order to preserve the
qualification of the Contribution and the Distribution as a reorganization within the meaning of Sections 368(a)(1)(D) and 355 of the Code, injunctive relief is appropriate to prevent any violation of the foregoing covenants; provided, however, that
injunctive relief shall not be the exclusive legal or equitable remedy for any such violation. 
 ARTICLE V. COOPERATION AND
EXCHANGE OF INFORMATION 
 5.01 Cooperation. 

(a) Notwithstanding anything to the contrary in the Separation and Distribution Agreement or the Ancillary Agreements, Ensign and PropCo shall
cooperate (and 

  
 17 

 
shall cause each of their respective Affiliates to cooperate) fully at such time and to the extent reasonably requested by the other Party in connection with the preparation and filing of any Tax
Return or the conduct of any Tax controversy, including any audit, protest, or claim for refund, competent authority proceeding, or litigation in Tax Court or any other court of competent jurisdiction (a “Tax Controversy”) (including
providing a power of attorney) concerning any issues or any other matter contemplated under this Agreement or otherwise as reasonably requested by the other Party. Each Party shall make its employees and facilities available on a mutually convenient
basis to facilitate such cooperation. 
 (b) Notwithstanding anything to the contrary in this Agreement, if a Party materially fails to
comply with any of its obligations set forth in this Section 5.01, upon reasonable request and notice by the other Party, the non-performing Party shall (i) reimburse the other Party for any internal or incremental costs incurred by such
other Party in having its employees or agents view or obtain such material, and (ii) to the extent such failure results in the imposition of additional Taxes, be liable in full for such additional Taxes. 

5.02 Retention of Records. 

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

(b) If at any time after the Distribution Date a Party proposes to destroy materials or information required to be retained pursuant to
Section 5.02(a), it shall first notify the other Party in writing and such other Party shall be entitled to receive such materials or information proposed to be destroyed if such materials or information relate to the other Party or any of its
Affiliates or any assets held by the other Party’s or any of its Affiliates. 
 5.03 Contest Provisions. 

(a) Except as provided in Sections 5.03(b) and (c) with respect to “reasonable participation,” the Party responsible for Taxes
under Article II (the “Responsible Party”) shall, with respect to a Tax Return, have the exclusive right at its own cost, to control, contest and represent the interests of Ensign, PropCo, and their respective Affiliates in any Tax
Controversy related to such Tax Return. Subject to Sections 5.03(b) and (c), such right to control shall include the right, in the Responsible Party’s reasonable discretion, to resolve, settle or agree to any deficiency, claim or adjustment
proposed, asserted or assessed in connection with or as a result of any such Tax Controversy. 
 (b) Notwithstanding anything to the
contrary in Section 5.03(a), Ensign shall be the Responsible Party with respect to any Tax Controversy that arises with respect to a federal income Tax Return of the Ensign Consolidated Group (including for this purpose, members of the PropCo
Group); provided, however, that at the request of Ensign or at PropCo’s option, PropCo shall reasonably participate as described in Section 5.04 in the contest of a Tax Controversy of the Ensign Consolidated Group for the 2014 calendar
year. 

  
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 (c) Notwithstanding anything to the contrary in Section 5.03(a) and (b), PropCo shall be the
Responsible Party with respect to any Tax Controversy that arises with respect to a federal income Tax Return of the PropCo Group for calendar year 2014; provided, however, that at the request of PropCo or at Ensign’s option, Ensign shall
reasonably participate as described in Section 5.04 in the contest of such Tax Controversy. 
 (d) Notwithstanding anything to the
contrary in Section 5.03(a), with respect to any Straddle Period Tax Return, PropCo shall have the right to control and contest any Tax Controversy related to such Tax Return; provided, however, that at the request of Ensign, Ensign shall
reasonably participate as described in Section 5.04 in such Tax Controversy, or at the request of PropCo, Ensign shall actively participate in contesting and defending any such Tax Controversy. PropCo shall not settle, either administratively
or after the commencement of litigation, such Tax Controversy without the prior written consent of Ensign, which shall not be unreasonably withheld, conditioned, or delayed. Reasonable documented costs incurred by PropCo shall be paid and borne by
the Parties in accordance with their relative share of the reduction of any Tax liabilities (including the avoidance of any increase in Tax liabilities) with respect to any contests described in this Section 5.04(d). If there is no reduction in
Tax liabilities (including the avoidance of any increase in tax liabilities) then any costs incurred resulting from any Tax claim with respect to any contests described in this Section 5.04(d) shall be paid and borne by PropCo. 

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

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

  
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 (b) The non-controlling party shall have the right, at its expense, to be present at, and
participate in, any proceeding relating to such Tax Controversy to the extent allowed by law. 
 (c) The Responsible Party shall not settle,
either administratively or after the commencement of litigation, such Tax Controversy without the prior written consent of the non-controlling party, which shall not be unreasonably withheld, conditioned, or delayed. If the non-controlling party
withholds, conditions, or delays consent in a manner deemed “unreasonable” by the Responsible Party, Article VII shall govern the determination of unreasonable. 

5.05 Information for Shareholders. 

(a) Ensign shall provide each shareholder that receives PropCo stock pursuant to the Distribution with the information necessary for such
shareholder to comply with the requirements of Section 355 of the Code and the Treasury Regulations thereunder with respect to statements that such shareholders must file with their federal income Tax Returns demonstrating the applicability of
Section 355 of the Code to the Distribution. 
 (b) Ensign shall make available on its website the information required by
Section 6045B of the Code with respect to the effect of the Distribution on the basis of Ensign and PropCo stock in the hands of a U.S. taxpayer. 

ARTICLE VI. INDEMNITY OBLIGATIONS AND PAYMENTS 

6.01 Indemnity Obligations. In addition to the obligations set forth in Article II, 

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

(b) The PropCo Group shall indemnify and hold harmless Ensign and any member of the Ensign Group from and against any liability, cost, or
expenses, including, without limitation, any fine, penalty, interest, charge, or accountant’s fee, arising out of fraudulent or negligent information, workpapers, documents, and other items prepared by PropCo or any PropCo Affiliate used in the
preparation of any Tax Return or claim for Refund filed by Ensign or any Ensign Affiliate for any period during which PropCo or any PropCo Affiliate was or has been a member of the Ensign Consolidated Group, or arising out of the untimely provision
of information required to be provided under this Agreement. 
 6.02 Notice. A Party making a claim for indemnification under this
Agreement (the “Indemnified Party”) shall provide the Party from whom such indemnification is sought (the “Indemnifying Party”) with written notice of such claim describing such claim in reasonable detail and accompanied by
reasonable documentation supporting such claim no later than twenty (20) calendar days after the Indemnified Party (i) files a Tax Return reporting Taxes due which 

  
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are subject to reimbursement, or (ii) receives written notice from any Taxing Authority with respect to a Final Determination of Taxes that may be subject to indemnification under this
Agreement; provided, however, that in the event that timely notice is not provided, the Indemnifying Party shall be relieved of its obligation to indemnify the Indemnified Party only to the extent that such delay results in actual increased costs or
actual prejudice. 
 6.03 Payment. In the event that the Indemnifying Party is required to make a payment to the Indemnified Party
pursuant to this Agreement, then to the extent not otherwise provided for in this Agreement or in the Separation and Distribution Agreement, such payment shall be made according to this Section 6.03. 

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

(b) Unless otherwise required by any Final Determination and other than for purposes of Section 355(g) of the Code in accordance with the
Tax Ruling, the Parties agree that any payment made by one Party to the other Party (other than payments of interest and payment of After Tax Amounts pursuant to Section 6.03(c)) pursuant to this Agreement shall be treated for all Tax and
financial accounting purposes as payments with respect to stock (dividend distributions or capital contributions, as the case may be) made immediately prior to the Distribution. 

(c) If, pursuant to a Final Determination, it is determined that the receipt or accrual of any payment made under this Agreement (other than
payments of interest) is subject to any Tax, the Party making such payment shall be liable for (i) the After Tax Amount with respect to such payment, and (ii) interest at the rate described in Section 6.03(e) on the amount of such Tax
from the date such Tax is due through the date of payment of such After Tax Amount. The Party making a demand for payment pursuant to this Agreement and for a payment of an After Tax Amount with respect to such payment shall separately specify and
compute such After Tax Amount. However, a Party may choose not to specify an After Tax Amount in a demand for payment pursuant to this Agreement without thereby being deemed to have waived its right subsequently to demand an After Tax Amount with
respect to such payment. 
 (d) In the event that PropCo determines that any payment provided for under this Agreement could reasonably be
expected to give rise to a successful challenge to PropCo’s status as a REIT, then Ensign shall remit such payment in accordance with reasonable written instructions provided by PropCo no less ten (10) business days before such payment is
to be made. 
 (e) Any payment that is required to be made pursuant to this Agreement (i) by PropCo (or a PropCo Affiliate) to Ensign
(or an Ensign Affiliate), or (ii) by Ensign (or an Ensign Affiliate) to PropCo (or a PropCo Affiliate), that is not made on or prior to the date that such payment is required to be made pursuant to this Agreement shall thereafter bear interest
at the rate established for underpayments pursuant to Section 6621(a)(2) of the Code. 

  
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 ARTICLE VII. DISPUTE RESOLUTION 

7.01 All disputes, controversies, or claims arising under or in connection with this Agreement (including any dispute, controversy, or
claim relating to the breach, termination, or validity thereof) between or among any of Ensign or its Affiliates and PropCo or its Affiliates shall be governed by Article X of the Separation and Distribution Agreement or the procedures set forth in
Section 7.02 as determined by the Parties. If the Parties cannot agree as to which procedure will govern such dispute, such dispute shall be resolved pursuant to Article X of the Separation and Distribution Agreement. Each Party agrees that the
procedures set forth in Article X of the Separation and Distribution Agreement or Section 7.02, as determined in Section 7.01, shall be the sole and exclusive remedy in connection with any dispute, controversy, or claim relating to any of
the foregoing matters. 
 7.02 With respect to any dispute governed by this Section 7.02, the Parties shall appoint a nationally
recognized independent public accounting firm (the “Accounting Firm”) to resolve such dispute. In this regard, the Accounting Firm shall make determinations with respect to the disputed items based solely on representations made by Ensign
and PropCo and their respective representatives, and not by independent review, and shall function only as an expert and not as an arbitrator and shall be required to make a determination in favor of one Party only. The Parties shall require the
Accounting Firm to resolve all disputes no later than thirty (30) days after the submission of such dispute to the Accounting Firm, but in no event later than the due date for the payment of Taxes or the filing of the applicable Tax Return, if
applicable, and agree that all decisions by the Accounting Firm with respect thereto shall be final and conclusive and binding on the Parties. The Accounting Firm shall resolve all disputes in a manner consistent with this Agreement and, to the
extent not inconsistent with this Agreement, in a manner consistent with the past practices of Ensign and its Affiliates, except as otherwise required by applicable Law. The Parties shall require the Accounting Firm to render all determinations in
writing and to set forth, in reasonable detail, the basis for such determination. The fees and expenses of the Accounting Firm shall be paid by the non-prevailing Party. 

7.03 In order to facilitate the comprehensive resolution of related disputes, all claims between any of the parties to a Dispute that
arises under or in connection with the Separation and Distribution Agreement, this Agreement, and the other Ancillary Agreements may be brought in a single arbitration. Upon the request of any party to an arbitration proceeding constituted under the
Separation and Distribution Agreement, this Agreement, and the other Ancillary Agreements, the arbitral tribunal shall consolidate such arbitration proceeding with any other arbitration proceeding relating to the Separation and Distribution
Agreement, this Agreement, and the other Ancillary Agreements, if the arbitral tribunal determines that (i) there are issues of fact or law common to the proceedings so that a consolidated proceeding would be more efficient than separate
proceedings, and (ii) no party to the Dispute would be unduly prejudiced as a result of such consolidation through undue delay or otherwise. In the event of different rulings on this question by the arbitral tribunal constituted hereunder and
another arbitral tribunal constituted under the Separation and Distribution Agreement, this Agreement, and the other Ancillary Agreements, the ruling of the arbitral tribunal constituted first in time shall control, and such arbitral tribunal shall
serve as the tribunal for any consolidated arbitration. This Section 7.03 shall not apply to any claims brought under Section 7.02. 

  
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 7.04 In the event of a Dispute, each party to the Dispute shall continue to perform its
obligations under the Separation and Distribution Agreement, this Agreement, and the other Ancillary Agreements in good faith during the resolution of such Dispute as if such Dispute had not arisen, unless and until the Separation and Distribution
Agreement, this Agreement, or the other Ancillary Agreements, as applicable are terminated in accordance with their provisions. 
 ARTICLE
VIII. MISCELLANEOUS 
 8.01 Incorporation by Reference. The following sections of the Separation and Distribution Agreement are
hereby incorporated in this Agreement by reference to the extent not inconsistent with any of the provisions set forth in this Agreement: Section 12.3 (Amendments and Waivers); Section 12.4 (Entire Agreement); Section 12.5 (Survival
of Agreements); Section 12.9 (Counterparts; Electronic Delivery); Section 12.10 (Severability); Section 12.11 (Assignability; Binding Effect); Section 12.12 (Governing Law); Section 12.13 (Construction); Section 12.14
(Performance); and Section 12.15 (Title and Headings). 
 8.02 Third Party Beneficiaries. This Agreement shall be binding upon
and inure solely to the benefit of Ensign, PropCo, and their respective Affiliates, and nothing herein, express or implied, is intended to or shall confer upon any third parties any legal or equitable right, benefit, or remedy of any nature
whatsoever under or by reason of this Agreement. 
 8.03 Effectiveness. This Agreement shall become effective on the Distribution
Date. 
 8.04 Changes in Law. Any reference to a provision of the Code, Treasury Regulations, or a law of another jurisdiction shall
include a reference to any applicable successor provision or law. If, due to any change in applicable law or regulations or their interpretation by any court of law or other governing body having jurisdiction subsequent to the date specified in the
preamble to this Agreement, performance of any provision of this Agreement or any transaction contemplated hereby shall become impracticable or impossible, the Parties shall use their commercially reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated by such provision. 
 8.05 Notices. All notices,
requests, claims, demands and other communications required or permitted hereunder shall be in writing and shall be deemed given or delivered (i) when delivered personally, (ii) if transmitted by facsimile, when confirmation of
transmission is received during the business hours of the recipient or, if after such business hours, on the next business day, (iii) if sent by registered or certified mail, postage prepaid, return receipt requested, on the third business day
after mailing, or (iv) if sent by nationally recognized overnight courier, on the first business day following the date of dispatch; and shall be addressed as follows or to such other address as designated by either Ensign or PropCo, as the
case may be: 
 (a) If to Ensign, at: 

The Ensign Group, Inc. 
 27101
Puerta Real, Suite 450 
 Mission Viejo, California 92691 

Attention: Chad Keetch 

  
 23 

 (b) If to PropCo, at: 

CareTrust REIT, Inc. 
 27101
Puerta Real, Suite 450 
 Mission Viejo, California 92691 

Attention: William M. Wagner 

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

8.07 Expenses. Unless otherwise expressly provided in this Agreement, each Party shall bear any and all expenses that arise from their
respective obligations under this Agreement. 
 8.08 Confidentiality. Each Party shall hold and cause its consultants and advisors to
hold in strict confidence, unless compelled to disclose by judicial or administrative process or, in the opinion of its counsel, by other requirements of law, all information written or oral concerning the other Party hereto furnished it by such
other Party or its representatives pursuant to this Agreement (except to the extent that such information can be shown to have been (i) previously known by the Party to which it was furnished, (ii) in the public domain through no fault of
such Party, or (iii) later lawfully acquired from other sources by the Party to which it was furnished), and each Party shall not release or disclose such information to any other person, except its auditors, attorneys, financial advisors,
bankers, and other consultants and advisors who shall be advised of the provisions of this Section 8.08. Each Party shall be deemed to have satisfied its obligation to hold confidential information concerning or supplied by the other Party if
it exercises the same care as it takes to preserve confidentiality for its own similar information. 
 8.09 Limitation on Damages.
Each Party irrevocably waives, and no Party shall be entitled to seek or receive, consequential, special, indirect or incidental damages (including without limitation damages for loss of profits) or punitive damages, regardless of how such
damages were caused and regardless of the theory of liability; provided that the foregoing shall not limit each Party’s indemnification obligations set forth in the Separation and Distribution Agreement and the Ancillary Agreements. 

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

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

[Signature Page Follows] 

  
 24 

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

					
	THE ENSIGN GROUP, INC.
		
	By:	 	  

		 	Name:	 	Christopher R. Christensen
		 	Title:	 	President and Chief Executive
		 		 	Officer
	
	CARETRUST REIT, INC.
		
	By:	 	  

		 	Name:	 	Gregory K. Stapley
		 	Title:	 	President and Chief Executive Officer

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