EX-10.22 8 a2175777zex-10_22.htm EXHIBIT 10.22
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Exhibit 10.22

$20,000,000.00


AMENDMENT NO. 2 TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

originally dated as of March 25, 2004 by and among

THE ENSIGN GROUP, INC., ENSIGN WHITTIER WEST LLC,
ENSIGN WHITTIER EAST LLC, ENSIGN SANTA ROSA LLC, ENSIGN PANORAMA LLC, ENSIGN SABINO LLC,
ENSIGN SAN DIMAS LLC, ENSIGN MONTGOMERY LLC,
ENSIGN PALM I LLC, ENSIGN SONOMA LLC, ENSIGN CLOVERDALE LLC,
ENSIGN WILLITS LLC, ENSIGN PLEASANTON LLC,
24TH STREET HEALTHCARE ASSOCIATES LLC,
GLENDALE HEALTHCARE ASSOCIATES LLC,
ATLANTIC MEMORIAL HEALTHCARE ASSOCIATES, INC.,
ROSE PARK HEALTHCARE ASSOCIATES, INC.,
LEMON GROVE HEALTH ASSOCIATES LLC,
PRESIDIO HEALTH ASSOCIATES LLC, BELL VILLA CARE ASSOCIATES LLC,
DOWNEY COMMUNITY CARE LLC, COSTA VICTORIA HEALTHCARE LLC,
WEST ESCONDIDO HEALTHCARE LLC, REDBROOK HEALTHCARE ASSOCIATES LLC,
HB HEALTHCARE ASSOCIATES LLC, NORTH MOUNTAIN HEALTHCARE LLC,
PARK WAVERLY HEALTHCARE LLC, SUNLAND HEALTH ASSOCIATES LLC,
VISTA WOODS HEALTH ASSOCIATES LLC, CITY HEIGHTS HEALTH ASSOCIATES LLC,
CLAREMONT FOOTHILLS HEALTH ASSOCIATES LLC,
C STREET HEALTH ASSOCIATES LLC, VICTORIA VENTURA HEALTHCARE LLC
RADIANT HILLS HEALTH ASSOCIATES LLC, HIGHLAND HEALTHCARE LLC,
GATE THREE HEALTHCARE LLC, SOUTHLAND MANAGEMENT LLC,
MANOR PARK HEALTHCARE LLC, NORTHERN OAKS HEALTHCARE, INC.,
SALADO CREEK SENIOR CARE, INC., MCALLEN COMMUNITY HEALTHCARE, INC.,
WELLINGTON HEALTHCARE, INC.
(collectively, "Borrower")

and

GENERAL ELECTRIC CAPITAL CORPORATION
("Lender")

Amended as of March 25, 2007


AMENDMENT NO. 2 TO AMENDED AND
RESTATED LOAN AND SECURITY AGREEMENT

        THIS AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (this "Amendment") is made as of this 25th day of March 2007, by and among THE ENSIGN GROUP, INC., a Delaware corporation, ENSIGN WHITTIER WEST LLC, a Nevada limited liability company, ENSIGN WHITTIER EAST LLC, a Nevada limited liability company, ENSIGN SANTA ROSA LLC, a Nevada limited liability company, and ENSIGN PANORAMA LLC, a Nevada limited liability company, ENSIGN SABINO LLC, a Nevada limited liability company, ENSIGN SAN DIMAS LLC, a Nevada limited liability company, ENSIGN MONTGOMERY LLC, a Nevada limited liability company, ENSIGN CLOVERDALE LLC, a Nevada limited liability company, ENSIGN PALM I LLC, a Nevada limited liability company, ENSIGN SONOMA LLC, a Nevada limited liability company, ENSIGN WILLITS LLC, a Nevada limited liability company, ENSIGN PLEASANTON LLC, a Nevada limited liability company, 24th STREET HEALTHCARE ASSOCIATES LLC, a Nevada limited liability company, GLENDALE HEALTHCARE ASSOCIATES LLC, a Nevada limited liability company, ATLANTIC MEMORIAL HEALTHCARE ASSOCIATES, INC., a Nevada corporation, and ROSE PARK HEALTHCARE ASSOCIATES, INC., a Nevada corporation, LEMON GROVE HEALTH ASSOCIATES LLC, a Nevada limited liability company, PRESIDIO HEALTH ASSOCIATES LLC, a Nevada limited liability company, BELL VILLA CARE ASSOCIATES LLC, a Nevada limited liability company, DOWNEY COMMUNITY CARE LLC, a Nevada limited liability company, COSTA VICTORIA HEALTHCARE LLC, a Nevada limited liability company, WEST ESCONDIDO HEALTHCARE LLC, a Nevada limited liability company, REDBROOK HEALTHCARE ASSOCIATES LLC, a Nevada limited liability company, HB HEALTHCARE ASSOCIATES LLC, a Nevada limited liability company, NORTH MOUNTAIN HEALTHCARE LLC, a Nevada limited liability company, PARK WAVERLY HEALTHCARE LLC, a Nevada limited liability company, SUNLAND HEALTH ASSOCIATES LLC, a Nevada limited liability company, VISTA WOODS HEALTH ASSOCIATES LLC, a Nevada limited liability company, CITY HEIGHTS HEALTH ASSOCIATES LLC, a Nevada limited liability company, CLAREMONT FOOTHILLS HEALTH ASSOCIATES LLC, a Nevada limited liability company, C STREET HEALTH ASSOCIATES LLC, a Nevada limited liability company, and VICTORIA VENTURA HEALTHCARE LLC, a Nevada limited liability company, RADIANT HILLS HEALTH ASSOCIATES LLC, a Nevada limited liability company, HIGHLAND HEALTHCARE LLC, a Nevada limited liability company, GATE THREE HEALTHCARE LLC, a Nevada limited liability company, SOUTHLAND MANAGEMENT LLC, Nevada limited liability company, MANOR PARK HEALTHCARE LLC, a Nevada limited liability company, NORTHERN OAKS HEALTHCARE, INC., a Nevada corporation, SALADO CREEK SENIOR CARE, INC., a Nevada corporation, McALLEN COMMUNITY HEALTHCARE,  INC., a Nevada corporation, WELLINGTON HEALTHCARE, INC., a Nevada corporation (collectively "Borrower"), and GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation ("Lender").


RECITALS

        A.    Pursuant to that certain Amended and Restated Loan and Security Agreement dated as of March 25, 2004 by and between Borrower and Lender (as amended, modified and restated from time to time, the "Loan Agreement"), the parties have established certain financing arrangements that allow funds to be borrowed from Lender in accordance with the terms and conditions set forth in the Loan Agreement.

        B.    The parties now desire to amend the Loan Agreement in accordance with the terms and conditions set forth below.

        NOW, THEREFORE, in consideration of the premises set forth above, the terms and conditions contained in this Amendment, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties have agreed to the following amendments to the Loan

2


Agreement. Capitalized terms used but not defined in this Amendment shall have the meanings that are set forth in the Loan Agreement.

        1.    Amendment to Loan Agreement.    Section 2.8(a) of the Loan Agreement is hereby amended by deleting the existing Section 2.8(a) in its entirety and by inserting in lieu thereof the following new Section 2.8(a):

        "(a) Subject to Lender's right to cease making Revolving Credit Loans to Borrower upon or after any Event of Default, this Agreement shall be in effect until June 22, 2007, unless terminated as provided in this Section 2.8 (the "Term"); provided, however, that notwithstanding anything set forth in this Agreement to the contrary (including, without limitation, Section 6.23), in no event shall Borrower be entitled to terminate this Agreement prior to the repayment in full of all amounts owed to Lender pursuant to the Real Estate Loan Documents."

        2.    Confirmation of Representations and Warranties.    Borrower hereby (a) confirms that all of the representations and warranties set forth in Article IV of the Loan Agreement are true and correct, and (b) specifically represents and warrants to Lender that it has good and marketable title to all of its respective Collateral, free and clear of any lien or security interest in favor of any other person or entity, except as identified in Schedule 1.39 and Schedule 4.19 to the Loan Agreement, each as updated, and as otherwise permitted pursuant to the Loan Agreement.

        3.    Effective Date.    This Amendment shall be effective upon (a) Lender's receipt of this Amendment executed by a duly authorized member and/or officer of each Borrower and (b) the receipt by Lender of the Fee as defined herein.

        4.    Fees and Expenses.    

            (a)   As consideration for Lender's agreement to negotiate and execute this Amendment, Borrower agrees to pay Lender on the date of this Amendment an amendment fee equal to Twenty Five Thousand and No/100 Dollars ($25,000.00) (the "Fee") which Fee shall be deemed to have been earned in full by Lender as of the date of this Amendment. Borrower hereby authorizes Lender to deduct such from the Revolving Credit Loan(s) made to Borrower until such Fee is paid in full. In the event that Borrower refinances all of the Loans under this Loan Agreement with Lender through a $20 million credit facility, the terms of which are substantially similar to the terms set forth in that certain Proposal Letter dated as of March 15, 2007 ("Potential Refinancing") on or before the expiration of the Term, Lender shall credit the Fee amount towards any closing fees incurred in connection with the Potential Refinancing.

            (b)   In addition to the Fee, Borrower shall be responsible for the payment of all costs and expenses incurred by Lender in connection with the preparation of this Amendment including any and all fees and expenses of Lender's in-house counsel.

        5.    Updated Schedules.    As a condition precedent to Lender's agreement to enter into this Amendment, and in order for this Amendment to be effective, Borrower shall revise, update and deliver to Lender all Schedules to the Loan Agreement to update all information as necessary to make the Schedules previously delivered correct. Borrower hereby represents and warrants that the information set forth on the attached Schedules is true and correct as of the date of this Amendment. The attached Schedules are hereby incorporated into the Loan Agreement as if originally set forth therein.

        6.    Enforceability.    This Amendment constitutes the legal, valid and binding obligation of each Borrower and is enforceable against each such Borrower in accordance with its terms.

3


        7.    Reference to the Effect on the Loan Agreement.    

            (a)   Upon the effectiveness of this Amendment, each reference in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or words of similar import shall mean and be a reference to the Loan Agreement as amended by this Amendment.

            (b)   Except as specifically amended above, the Loan Agreement and all other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed.

            (c)   The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided in this Amendment, operate as a waiver of any right, power or remedy of Lender, nor constitute a waiver of any provision of the Loan Agreement or any other documents, instruments and agreements executed or delivered in connection with the Loan Agreement.

            (d)   This Amendment (together with any other document executed in connection herewith) is not intended to be, nor shall it be construed as, a novation of the Loan Agreement.

        8.    Governing Law.    This Amendment shall be governed by and construed in accordance with the laws of the State of Maryland.

        9.    Headings.    Section headings in this Amendment are included for convenience of reference only and shall not constitute a part of this Amendment for any other purpose.

        10.    Counterparts.    This Amendment may be executed in counterparts, and such counterparts taken together shall be deemed to constitute one and the same instrument.

[SIGNATURES FOLLOW]

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        IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this Amendment to be executed as of the date first written above.


 
 
LENDER:

 
 
GE HFS HOLDINGS, INC.
f/k/a Heller Healthcare Finance, Inc.
a Delaware corporation

 
 
By:
/s/  MATTHEW SAWYER      
    Name: Matthew Sawyer
Title: Duly Authorized Signatory

5

      BORROWER:

ATTEST/WITNESS:
 
THE ENSIGN GROUP, INC.
a Delaware corporation

By:
/s/  ALAN J. NORMAN      
 
By:
/s/  CHRISTOPHER R. CHRISTENSEN      
  Alan J. Norman     Christopher R. Christensen
  Vice President     President

 
 
 
ENSIGN WHITTIER WEST LLC
ENSIGN WHITTIER EAST LLC
ENSIGN PANORAMA LLC
LEMON GROVE HEALTH ASSOCIATES LLC
BELL VILLA CARE ASSOCIATES LLC
DOWNEY COMMUNITY CARE LLC
COSTA VICTORIA HEALTHCARE LLC
WEST ESCONDIDO HEALTHCARE LLC
HB HEALTHCARE ASSOCIATES LLC
VISTA WOODS HEALTH ASSOCIATES LLC
CITY HEIGHTS HEALTH ASSOCIATES LLC
C STREET HEALTH ASSOCIATES LLC
VICTORIA VENTURA HEALTH CARE LLC
GATE THREE HEALTHCARE LLC
SOUTHLAND MANAGEMENT LLC
MANOR PARK HEALTHCARE LLC
each, a Nevada limited liability company

ATTEST/WITNESS:
 
By:
The Flagstone Group, Inc.
Its Sole Member

By:
/s/  SOON BURNAM      
 
By:
/s/  V. JAY BRADY      
  Soon Burnam     V. Jay Brady
  Treasurer     President

 
 
 
ENSIGN SANTA ROSA LLC
ENSIGN MONTGOMERY LLC
ENSIGN CLOVERDALE LLC
ENSIGN SONOMA LLC
ENSIGN WILLITS LLC
ENSIGN PLEASANTON LLC
each, a Nevada limited liability company

ATTEST/WITNESS:
 
By:
Northern Pioneer Healthcare, Inc.
Its Sole Member

By:
/s/  SOON BURNAM      
 
By:
/s/  CORY E. MONETTE      
  Soon Burnam     Cory E. Monette
  Treasurer     President
         

6


 
 
 
ENSIGN SAN DIMAS LLC
ENSIGN PALM I LLC
REDBROOK HEALTHCARE ASSOCIATES LLC
CLAREMONT FOOTHILLS HEALTH ASSOCIATES LLC
each, a Nevada limited liability company

ATTEST/WITNESS:
 
By:
Touchstone Care, Inc.
Its Sole Member

By:
/s/  SOON BURNAM      
 
By:
/s/  JOHN ALBRECHTSEN      
  Soon Burnam     John Albrechtsen
  Treasurer     President

 
 
 
ENSIGN SABINO LLC
24TH STREET HEALTHCARE ASSOCIATES LLC
GLENDALE HEALTHCARE ASSOCIATES LLC
PRESIDIO HEALTH ASSOCIATES LLC
NORTH MOUNTAIN HEALTHCARE LLC
PARK WAVERLY HEALTHCARE LLC
SUNLAND HEALTH ASSOCIATES LLC
RADIANT HILLS HEALTH ASSOCIATES LLC
HIGHLAND HEALTHCARE LLC
each, a Nevada limited liability company

ATTEST/WITNESS:
 
By:
Bandera Healthcare, Inc.
Its Sole Member

By:
/s/  SOON BURNAM      
 
By:
/s/  MICHAEL C. DALTON      
  Soon Burnam     Michael C. Dalton
  Treasurer     President

 
 
 
ATLANTIC MEMORIAL HEALTHCARE ASSOCIATES, INC.
ROSE PARK HEALTHCARE ASSOCIATES, INC.
ATTEST/WITNESS:   each, a Nevada corporation

By:
/s/  SOON BURNAM      
 
By:
/s/  CHRISTOPHER R. CHRISTENSEN      
  Soon E. Burnam     Christopher R. Christensen
        President

 
 
 
NORTHERN OAKS HEALTHCARE, INC.
SALADO CREEK SENIOR CARE, INC.
MCALLEN COMMUNITY HEALTHCARE, INC.
WELLINGTON HEALTHCARE, INC.
ATTEST/WITNESS:   each, a Nevada corporation

By:
/s/  SOON BURNAM      
 
By:
/s/  CHRISTOPHER R. CHRISTENSEN      
  Soon E. Burnam     Christopher R. Christensen
        President

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LIST OF SCHEDULES

Schedule 1.39 — Permitted Liens
Schedule 4.1 — Subsidiaries
Schedule 4.5 — Litigation
Schedule 4.13 — Non-Compliance with Law
Schedule 4.14 — Environmental Matters
Schedule 4.15 — Places of Business with patient census
Schedule 4.16 — Licenses
Schedule 4.17 — Stock Ownership
Schedule 4.19 — Borrowings and Guarantees
Schedule 4.21 — Trade Names
Schedule 4.22 — Joint Ventures
Schedule 7.12 — Transactions with Affiliates

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EXHIBIT A
SCHEDULES TO AMENDMENT NO. 2 TO
AMENDED & RESTATED LOAN AGREEMENT

Sched
   Description
   Matters Covered
1.39   Permitted Liens:   (i)    Landlord's liens, both statutory and contractual, contained in or created by the various leases, security agreement, pledges and related documentation covering the locations described in Schedule 4.15, but only to the extent that such liens are contractually subordinated to Lender's liens and security interests pursuant to agreements between Lender and such landlords that are satisfactory to Lender

 
 
 
 
(ii)    (a) The lien of the Deed of Trust and Assignment of Rents by and between Ensign Southland LLC as Trustor and Continental Wingate Associates, Inc. as Beneficiary, affecting the California Property and recorded January 30, 2001 at Document No. 01-0161647 in the office of the Los Angeles County Recorder, securing indebtedness in the original principal amount of $7,455,100, (b) all liens created or extended in connection with that certain Second Amended and Restated Loan Agreement for a loan in the amount of $64,692,11.67 by and among Valley Health Holdings LLC, Sky Holdings AZ LLC, Terrace Holdings AZ LLC, Plaza Health Holdings LLC, Rillito Holdings LLC, Mountainview Communitycare LLC, Meadowbrook Health Associates LLC, Cedar Avenue Holdings LLC, Granada Investments LLC, as borrowers, and General Electric Capital Corporation, as lender, dated December 29, 2006; and (c) the lien of the Deed of Trust and Security Agreement encumbering TEGI subsidiary Cherry Hill Health Holdings, Inc.'s Pacific Care Center facility, Hoquiam, Washington, securing a non-prepayable assumed $2,475,000 loan that existed when the property was acquired in 2006.

 
 
 
 
(iii)    Liens permitted to be created by Sections 6.23 and 7.1(d) of the Loan Agreement.

4.1
 
Subsidiaries:
 
See attached organizational chart for existing subsidiaries of The Ensign Group, Inc.

4.5
 
Pending or Threatened Litigation:
 
There is currently no pending or threatened litigation which the Borrower believes would materially threaten Borrower's viability or ability to repay the Obligations; further, all claims pending or threatened against the Borrower are either covered by insurance or, to the extent they are not, Borrower believes it has accrued adequate reserves in connection therewith.

4.8
 
Defaults:
 
Relating to the representations in Section 4.8 of the Loan Agreement, and without admitting any default, reference is made to Schedule 4.5 above.

4.13
 
Non-compliance with Law:
 
To the best of the actual knowledge of the officers of Borrower, there does not currently exist any material non-compliance with applicable laws.

 
 
 
 
 

4.14
 
Environmental Matters:
 
To the best of the actual knowledge of the officers of The Ensign Group, Inc., there are no material adverse environmental matters associated with any of the properties occupied by TEGI's operating subsidiaries which require remediation or pose a present threat of material harm or liability.
         

Exh A-1


4.15
 
Places of Business with patient census:
 
See consolidated Schedule 4.15(a)/4.16 and Schedule 4.15(b) at the end of this Exhibit A.

4.16
 
Licenses:
 
The entity which currently holds or possesses the right to use the operating license for each of the facilities is as shown in consolidated Schedule 4.15(a)/4.16.

4.17
 
Stock Ownership:
 
See separate Schedule 4.17 at the end of this Exhibit A.

4.19
 
Borrowings:
 
Other than normal trade creditors, some or all of the entities comprising the Borrower are currently indebted to the following creditors in the following manners and amounts:

 
 
 
 
    a.    General Electric Capital Corporation; $20,000,000 Revolving Credit Facility for working capital.

 
 
 
 
    b.    General Electric Capital Corporation; $64,692,111.67 fixed asset loan secured by Deeds of Trust encumbering the assets owned by Valley Health Holdings LLC, Sky Holdings AZ LLC, Terrace Holdings AZ LLC, Ensign Highland LLC, Plaza Health Holdings LLC, Rillito Holdings LLC, Mountainview Communitycare LLC, Cedar Avenue Holdings LLC and Granada Investments LLC.

 
 
 
 
    c.    Continental Wingate Associates, Inc.; $7,455,100 HUD-insured Loan secured by a Deed of Trust and Assignment of Rents on Ensign Southland LLC's Southland Care Center & Home facility, Norwalk, California.

 
 
 
 
    d.    Wells Fargo Bank, N.A.; $2,475,000 loan secured by a Deed of Trust and Security Agreement on Cherry Hill Health Holdings, Inc.'s Pacific Care Center facility, Hoquiam, Washington.

4.20
 
Labor Disputes:
 
A union organizing election was held at Sonoma Healthcare Center in May, 2002 at which a majority of the approximately 60 employees classified as Housekeeping, Laundry and CNAs voted to have union representation from SEIU Local 250. On August 30, 2004, the National Labor Relations Board certified the union. The union has requested bargaining, and bargaining is ongoing. Operations at the facility and throughout the company have not been materially disrupted by union issues at any time since the original organizing election.

4.22
 
Joint Ventures:
 
None

7.12
 
Transactions with Affiliates:
 
Pursuant to an internal corporate restructuring the entire equity interests in various operating entities were assigned by The Ensign Group, Inc. to its several regional subsidiaries as set forth on the attached organization chart.
         

Exh A-2


 
 
 
 
Where an affiliate of The Ensign Group, Inc. owns the real property underlying a facility, the real estate holding subsidiary and the operating subsidiary enter into a lease agreement with respect to the facility. The attached organization chart indicates those instances where TEGI affiliates own the occupied property. The standard lease form used for such affiliate transactions has been reviewed and approved by Lender's counsel in connection with the fixed asset financing referenced in Schedule 1.39(ii)(b) above.

 
 
 
 
Ensign Facility Services, Inc., a subsidiary of TEGI, has entered into separate Consulting Services Agreements with each of the operating subsidiaries listed in the attached organizational chart, to provide centralized accounting, legal, risk management, information technology human resources and similar support and services. A standard management fee which does not exceed five percent (5%) of monthly revenues is charged for such services.

— See Attached Schedules 4.1, 4.15(a)/4.16, 4.15(b) and 4.17 —

Exh A-3


Schedule 4.1
Subsidiaries

The Ensign Group, Inc.
(Delaware Corporate; Qualified in California)
The Flagstone group, Inc.
   Bandera Healthcare, Inc.
   Milestone Healthcare, Inc.
   Keystone Care, Inc.
   Northern Pioneer Healthcare, Inc.
   Touchstone Care, Inc.
SOUTHERN CALIFORNIA   ARIZONA   UTAH   TEXAS   NORTHERN CALIFORNIA   SOUTHERN CALIFORNIA

Arroyo Vista Nursing Center
City Heights Health Associates LLC**
Parmunitum LLC*
 
Catalina Healthcare Center
Presidio Health Associates LLC**
Rillito Holdings LLC
 
Arlington Hills Healthcare Center
Avenues Healthcare, Inc.
Tenth East Holdings LLC
 
Cambridge Health & Rehabilitation Center
Richmond Senior Services, Inc.**
Golfview Holdings LLC
 
Cloverdale Healthcare Center
Ensign Cloverdale LLC**
 
Brookside Healthcare Center
Redbrook Healthcare Associates LLC**
Atlantic Memorial Healthcare Center
Atlantic Memorial Healthcare Associates, Inc.**		   Coronado Healthcare Center
North Mountain Healthcare LLC**
Adipiscor LLC*		   Holladay Healthcare Center
Olympus Health, Inc.
Cottonwood Health Holdings LLC		   Cambridge Square Retirement Center
Rosenburg Senior Living, Inc.**
Avenue N Holdings LLC		   Northbrook Nursing & Rehabilitation Center
Ensign Willits LLC**		   Claremont Care Center
Claremont Foothills Health Associates LLC**
Parmonitum LLC*
Brookfield Healthcare Center
Downey Community Care LLC**
Moenium Holdings LLC*		   Desert Sky Health and Rehabilitation Center
Glendale Healthcare Associates LLC**
Sky Holdings AZ LLC		   Mt. Ogden Health & Rehabilitation Center
Washington Heights Healthcare, Inc.		   Carrollton Health & Rehabilitation Center
Carrollton Heights Healthcare, Inc.
Trinity Mill Holdings LLC		   Park View Gardens at Montgomery
Ensign Montgomery LLC**
Mountainview Communitycare LLC		   Arbor Glen Care Center
Ensign San Dimas LLC**
Camarillo Healthcare Center
Camarillo Community Care, Inc.**
Granada Investments LLC		   Desert Terrace Nursing Center
24th Street Healthcare Associates LLC**
Terrace Holdings AZ LLC		   IDAHO
Pocatello Care and Rehabilitation Center
Pocatello Health Services, Inc.		   Lake Village Nursing & Rehabilitation Center
Grand Villa Phx. Inc.
Verde Villa Holdings LLC		   Sonoma Healthcare Center
Ensign Sonoma LLC**		   Premier Care Center for Palm Springs
Ensign Palm I LLC**
Carmel Mountain Rehabilitation & Healthcare Center
Bernardo Heights Healthcare, Inc.**
CM Health Holdings LLC		   East Mesa Healthcare Center
Sunland Health Associates LLC**
Adipiscor LLC*		       Northern Oaks Living & Rehabilitation Center
Northern Oaks Healthcare, Inc.**		   Summerfield Health Care Center
Ensign Santa Rosa LLC**		   Upland Rehabilitation and Care Center
Upland Community Care, Inc.**
Cedar Avenue Holdings LLC
Glenwood Care Center
C Street Health Associates LLC**		   Grand Court of Mesa
Brown Road Senior Housing LLC**
Mosnium Holdings LLC*		       Salado Creek Living & Rehabilitation Center
Salado Creek Senior Care, Inc.**		   Ukiah Convalescant Hospital
Ensign Pleasanton LLC**		    
Lemon Grove Care & Rehabilitation Center
Lemon Grove Health Associates LLC**		   Greenfields Assisted Living
Greenfields Assisted Living LLC**		       The Village Care Center
McAllan Community Healthcare, Inc.**		        
Mission Care Center
Ramon Healthcare Associates, Inc.**		   Highland Manor Health & Rehabilitation Center
Highland Healthcare LLC**
Ensign Highland LLC		       Timberwood Nursing & Rehabilitation Center
Livingston Care Associates, Inc.**
Polk Health Holdings LLC		        
Palm Terrace Healthcare & Rehabilitation Center
Gate Three Healthcare LLC**		   North Mountain Medical & Rehabilitation Center
Radiant Hills Health Associates LLC**
Valley Health Holdings LLC		       Wellington Place Living & Rehabilitation Center
Wellington Healthcare, Inc.**		        
Palomar Vista Healthcare Center
West Escondido Healthcare LLC**		   Sabino Canyon Rehabilitation and Care Center
Ensign Sabino LLC**
Meadowbrook Health Associates LLC		       Willow Bend Nursing & Rehabilitation Center
Town East Healthcare, Inc.
Mesquite Health Holdings LLC		        
Panorama Gardens Nursing & Rehabilitation Center
Ensign Panorama LLC**		   Waverly Park Healthcare Center
Park Waverly Healthcare LLC**
Adipiscor LLC*		                
Rosa Villa Healthcare Center
Bell Villa Care Associates LLC**
Moenium Holdings LLC*		   Osborn Health and Rehabilitation
RenewCare of Scottsdale, Inc.		                

Sch. 4.1-1

Royal Court Healthcare
Ensign Whittier West LLC**		                    
Sea Cliff Healthcare Center
HB Healthcare Associates LLC**		                    
Shoreline Healthcare Center
Rose Park Healthcare Associates, Inc.**
Long Beach Health Associates LLC		                    
Southland Care Center
Southland Management LLC**
Ensign Southland LLC		                    
Victoria Care Center
Victoria Ventura Healthcare LLC**		       Miscellaneous
(Held by The Ensign Group, Inc.)		        
Victoria Healthcare Center
Costa Victoria Healthcare LLC**		   WASHINGTON
Emerald Hills Healthcare Center
Lynnwood Health Services, Inc.**
Snohomish Health Holdings LLC		   SERVICE CENTER
Ensign Facilty Services, Inc.
(Nevada Corporation; Qualified in California)		        
Vista Knoll Specialized Care Facility
Vista Woods Health Associates LLC**
Parmonitum LLC*		   Pacific Care Center
Hoquiam Healthcare, Inc.**
Cherry Health Holdings, Inc.		   SELF-INSURANCE
Standardbearer Insurance Company, Ltd.
(Cayman Islands Exempted Company)		        
Whittier Hills Health Care Center**
Ensign Whittier East LLC		   Park Manor Rehabilitation Center
Manor Park Healthcare LLC**
Plaza Health Holdings LLC		   SHELF ENTITIES
Ensign Bellflower LLC
East Escondido Healthcare LLC
Ensign Napa LLC
Walnut Grove Campuscare LLC		        

KEY

Line 1:  Facility Name

Line 2:  Operating Entity: Held, as represented, by an operating group

Line 3:  Holding Entity: All held directly by The Ensign Group, Inc.

*
Master tenant/sublessor

**
Entire equity interest assigned to applicable regional subsidiary in corporate restructuring.

Unless noted otherwise, all entities are organized in Nevada and qualified to do business where located.

All subsidiaries are wholly owned.

Sch. 4.1-2


Consolidated Schedule 4.15(a)/4.16
Places of Business with Trade Names and Record Owner Data
(As of March 1, 2007)
(See separate Schedule 4.15(a) for Census Data)

Place of Business
   Address
   Licensee
   Record Owner
Arbor Glen Care Center   1033 East Arrow Highway   Glendora, CA 91740   Ensign San Dimas LLC   Health Care Investors III
Arlington Hills Healthcare Center   165 South 1000 East   Salt Lake City, UT 84102   Avenues Healthcare, Inc.   Tenth East Holdings LLC
Arroyo Vista Nursing Center   3022 45th Street   San Diego, CA 92105   City Heights Health Assoc LLC   OHI Asset (CA), LLC
Atlantic Memorial Healthcare Center   2750 Atlantic Avenue   Long Beach, CA 90806   Atlantic Memorial H'care Assoc, Inc.   RMA Land, LLC
Brookfield Healthcare Center   9300 Telegraph Road   Downey, CA 90240   Downey Comm'ty Care LLC   Healthcare Investors, III
Brookside Healthcare Center   105 Terracina Blvd.   Redlands, CA 92373   Redbrook H'care Associates LLC   James F. Cotter
Camarillo Healthcare Center   205 Granada Street   Camarillo, CA 93010   Camarillo Com'ty Care, Inc.   Granada Investments LLC
Cambridge Health & Rehabilitation Center   1106 Golfview   Richmond, TX 77469   Richmond Senior Services, Inc.   Golfview Holdings LLC
Cambridge Square Retirement Center   2700 Avenue N   Rosenberg, TX 77471   Rosenburg Senior Living, Inc.   Avenue N Holdings LLC
Carrollton Health & Rehabilitation Center   1618 Kirby Road   Carrollton, TX 75006   Carrollton Heights Healthcare, Inc.   Trinity Mill Holdings LLC
Claremont Care Center   219 East Foothill Blvd.   Pomona, CA 91768   Claremont F'thills Health Assoc LLC   OHI Asset (CA), LLC
Carmel Mtn Rehab & Healthcare Center   11895 Avenue of Industry   San Diego, CA 92128   Bernardo Heights Healthcare, Inc.   CM Holdings LLC
Catalina Healthcare Center   2611 North Warren Ave.   Tucson, AZ 85719   Presidio Health Associates LLC   Rillito Holdings LLC
Cloverdale Healthcare Center   300 Cherry Creek Road   Cloverdale, CA 95425   Ensign Cloverdale LLC   James F. Cotter
Coronado Healthcare Center   11411 North 19th Avenue   Phoenix, AZ 85029   North Mountain Healthcare LLC   Coronado Corporation
Desert Sky Health & Rehabilitation Center   5125 North 58th Avenue   Glendale, AZ 85301   Glendale H'care Associates LLC   Sky Holdings AZ LLC
Desert Terrace Nursing Center   2509 North 24th Street   Phoenix, AZ 85008   24th Street H'care Assoc LLC   Terrace Holdings AZ LLC
The Ensign Group, Inc.
Ensign Facility Services, Inc.		   27101 Puerta Real, Suite 450   Mission Viejo, CA 92691   N/A   Mission Ridge Associates, L.L.C.
East Mesa Healthcare Center   51 South 48th Street   Mesa, Arizona 85206   Sunland Health Associates LLC   LTC Partners VI, L.P.
Emerald Hills Healthcare Center   5821 188th Street SW   Lynnwood, WA 98037   Lynnwood Health Services, Inc.   Snohomish Health Holdings LLC
Glenwood Care Center   1300 North C Street   Oxnard, CA 93030   C Street Health Associates LLC   Oxnard Investments, L.P.
Grand Court of Mesa   262 East Brown Road   Mesa, AZ 85201   Brown Road Sr Housing LLC   Moenium Holdings LLC
Greenfields Assisted Living Community   723 East 2nd Avenue   Mesa, AZ 85204   Greenfields Assisted Livg LLC   Cascade Gardens Associates, L.P.
Highland Manor Health & Rehab Center   4635 N. 14th Street   Phoenix, AZ 85014   Highland Healthcare LLC   Ensign Highland LLC

Sch. 4.15(a)/4.16-1

Place of Business
   Address
   Licensee
   Record Owner
Holladay Healthcare Center   4782 South Holladay Blvd.   Salt Lake City, UT 84117   Olympus Health, Inc.   Cottonwood Health Holdings LLC
Lake Village Nursing & Rehab. Center   169 Lake Park Road   Lewisville, TX 75057   Grand Villa PHX, Inc. †   Verde Villa Holdings LLC
Lemon Grove Care & Rehab Center   8351 Broadway   Lemon Grove, CA 91945   Lemon Grove Health Assoc LLC   MCS PGCH LLC et al
Mission Care & Rehabilitation Center   4800 Delta Avenue   Rosemead, CA 91770   Ramon Healthcre Assoc, Inc.   Rosemead Assisted L.P.
Mt. Ogden Health and Rehabilitat'n Center   375 East 5350 South   Washington Terr., UT 84405   Washington H'ts Healthcare, Inc.   St. Benedict's Hospital
North Mountain Medical & Rehab Center   9155 North 3rd Street   Phoenix, AZ 85020   Radiant Hills Health Assoc LLC   Valley Health Holdings LLC
Northern Oaks Living & Rehab Center   2722 Old Anson Road   Abilene, TX 79603   Northern Oaks Healthcare, Inc.   James F. Cotter
Northbrook Nursing and Rehab Center   64 Northbrook Way   Willits, CA 95490   Ensign Willits LLC   James F. Cotter
Osborn Health and Rehabilitation   3333 North Civic Center Plaza   Scottsdale, AZ 85251   RenewCare of Scottsdale, Inc.   Nationwide Health Properties, Inc.
Pacific Care Center   3035 Cherry Street   Hoquiam, WA 98550   Hoquiam Healthcare, Inc.   Cherry Health Holdings, Inc.
Palm Terrace Healthcare & Rehab Center   24962 Calle Aragon   Laguna Woods, CA 92637   Gate Three Healthcare LLC   Laguna Hills Assisted I L.P.
Palomar Vista Healthcare Center   201 North Fig Street   Escondido, CA 92025   West Escondido Healthcare LLC   Neale A. Perkins
Panorama Gardens Nursing & Reh Center   9541 Van Nuys Blvd.   Panorama City, CA 91402   Ensign Panorama LLC   Vannovi Properties, LLC
Park Manor Rehabilitation Center   1710 Plaza Way   Walla Walla, WA 99362   Manor Park Healthcare LLC   Health Care Property Investors, Inc.
Park View Gardens at Montgomery   3751 Montgomery Drive   Santa Rosa, CA 95405   Ensign Montgomery LLC   Mountainview Communitycare LLC
Pocatello Care and Rehabilitation Center   527 Memorial Drive   Pocatello, ID 83201   Pocatello Health Services, Inc.   Portneuf Medical Center
Premier Care Center for Palm Springs   2990 East Ramon Road   Palm Springs, CA 92264   Ensign Palm I LLC   Coachella House, Inc.
Rose Villa Healthcare Center   9028 Rose Street   Bellflower, CA 90706   Bell Villa Care Associates LLC   Healthcare Investors, III
Royal Court Healthcare   12385 E. Washington Blvd   Whittier, CA 90606   Ensign Whittier West LLC   Whittier West, L.L.C.
Sabino Canyon Rehab & Care Center   5830 East Pima   Tucson, AZ 85712   Ensign Sabino LLC   Tucson-Cal Associates, LLC
Salado Creek Living & Rehab Center   603 Corrine   San Antonio, TX 78218   Salado Creek Senior Care, Inc.   James F. Cotter
Sea Cliff Healthcare Center   18811 Florida Street   Huntington Bch, CA 92648   HB Healthcare Associates LLC   Huntington Beach Convalescent Hospital Asset Corporation
Shoreline Healthcare Center   4029 East Anaheim St.   Long Beach, CA 90804   Rose Park H'care Associates, Inc.   Long Beach Health Associates LLC
Sonoma Healthcare Center   1250 Broadway   Sonoma, CA 95476   Ensign Sonoma LLC   James F. Cotter
Southland & Southland Living   11701 Studebaker Road   Norwalk, CA 90650   Southland Management LLC   Ensign Southland LLC

Sch. 4.15(a)/4.16-2

Place of Business
   Address
   Licensee
   Record Owner
Summerfield Healthcare Center   1280 Summerfield Road   Santa Rosa, CA 95405   Ensign Santa Rosa LLC   Summerfield Development Co.
Timberwood Nursing & Rehabilit'n Center   4001 Highway 59 North   Livingston, TX 77351   Livingston Care Associates, Inc.   Polk Health Holdings LLC
Ukiah Convalescent Hospital   1349 South Dora   Ukiah, CA 95482   Ensign Pleasanton LLC   Ukiah SNF, LLC
Upland Rehabilitation & Care Center   1221 East Arrow Hwy   Upland, CA 91786-4911   Upland Comty Care, Inc.   Cedar Avenue Holdings LLC
The Village Care Center   615 No. Ware Road   McAllen, TX 78501   McAllen Comm'ty Healthcare, Inc.   James F. Cotter
Victoria Care Center   5445 Everglades Street   Ventura, CA 93003   Victoria Ventura Healthcare LLC   SHP Lexington, LLC
Victoria Healthcare Center   340 Victoria Street   Costa Mesa, CA 92627   Costa Victoria Healthcare LLC   Eugene Woods, et al
Vista Knoll Specialized Care Facility   2000 Westwood Road   Vista, CA 92083   Vista Woods Health Assoc LLC   OHI Asset (CA), LLC
Waverly Park Healthcare Center   2001 N. Park Avenue   Tucson, AZ 85719   Park Waverly Healthcare LLC   Park Villa Corporation
Wellington Place Living & Rehab Center   1802 So. 31st   Temple, TX 76504   Wellington Healthcare, Inc.   James F. Cotter
Whittier Hills Healthcare Center   10426 Bogardus Avenue   Whittier, CA 90603   Ensign Whittier East LLC   Whittier East, L.L.C.
Willowbend Nursing & Rehab. Center   2231 Highway 80 East   Mesquite, TX 75150   Town East Healthcare, Inc.   Mesquite Health Holdings LLC

Sch. 4.15(a)/4.16-3


Schedule 4.15(b)
Census Data as of 3/1/2007

Facility
   Beds
   Census
The Flagstone Group, Inc. (S.Cal & WA)
Atlantic Memorial   100   90
Palm Terrace   99   91
Sea Cliff   182   179
Sea Cliff ALF   84   57
Shoreline   75   67
Victoria   79   68
Camarillo   114   94
Glenwood   99   88
Mission Care   58   50
Panorama Gardens   149   142
Ventura   187   132
Arroyo Vista   53   51
Carmel Mountain   120   112
Lemon Grove   158   154
Palomar Vista   74   66
Vista Knoll   120   110
Emerald Hills   120   63
Pacific Care   100   78
Park Manor   79   68
Brookfield   70   63
Rose Villa   53   39
Royal Court   162   152
Southland Care   120   116
Southland Home   70   56
Whittier Hills   160   149
Subsidiary Totals   2685   2335
Northern Pioneer (N.Cal)
Cloverdale   72   61
Northbrook   71   42
Park View   116   109
Sonoma   137   107
Summerfield   70   61
Ukiah   58   50
Subsidiary Totals   524   430
Touchstone (S.Cal)
Arbor Glen   95   77
Brookside   97   90
Claremont Care   99   84
Premier Care   99   82
Upland Rehab   203   163
Subsidiary Totals   593   496
Bandera Healthcare, Inc. (AZ)
Catalina   102   90
Sabino Canyon   107   94
Waverly Park   200   77
Desert Sky   186   154
Desert Sky Assisted   105   74
East Mesa   201   152
Grand Court   174   175
Greenfields   141   105
Scottsdale   120   51
Coronado   191   175
Desert Terrace   108   92
Highland Manor   107   87
North Mountain   155   126
Subsidiary Totals   1897   1452
Keystone (TX, UT & ID)        
Cambridge Health and Rehab   118   74
Cambridge Square ALF   44   32
Carrollton Healthcare Center   108   77
Lake Village   120   86
Northern Oaks   96   88
Salado Creek   124   75
The Village   113   78
Timberwood Nursing Home   120   102
Wellington Place   140   81
Willowbend Nursing & Rehab Ctr   162   67
Arlington Hills   108   61
Holladay   120   78
Mt Ogden   108   54
Pocatello Care & Rehab Ctr   88   72
Subsidiary Totals   1569   1025

    
 
 
 
 
The Ensign Group, Inc. Totals   7268   5738
Twelve Month Average   0   0

Sch. 4.15(b)-1


Schedule 4.17
CONFIDENTIAL

The Ensign Group, Inc.
Significant Shareholders		   Balance
Dec 2006		   %
Ownership

Count
 
 
 
 
 
 
1   Roy Christensen   3,910,000   22.12%
2   Christopher R. Christensen and Terri M. Christensen as Co-Trustees of the Christensen Family Trust dated 10/24/05   3,893,000   22.02%
3   Gregory K. Stapley & Deborah S. Stapley as Co-trustees of the Stapley Family Trust uad 04/25/06   1,180,000   6.68%
4   Jay Brady   720,000   4.07%
5   Richard Toolson   600,000   3.39%
6   Alan Norman   309,000   1.75%
7   Blalack Trust   292,000   1.65%
8   Gordon Buechs   120,400   0.68%
9   Thomas Maloof   120,000   0.68%
11   Cory Monette   76,000   0.43%
12   David Sedgwick   45,500   0.26%
13   Mike Dalton   45,500   0.26%
14   Antoinette Hubenette   30,000   0.17%
15   John Albrechtsen   24,500   0.14%
16   Barry Port   9,500   0.05%
17   Other   2,315,200   13.10%
    Common shares issued   13,690,600    
    Common shares reserved for issuance under 2001 Incentive Plan   495,000   2.80%
    Common shares reserved for issuance under 2005 Incentive Plan   749,000   4.24%
    Preferred shares (Common Share equivalent)   2,741,180   15.51%
       
   
    Total Shares Outstanding   17,675,780   100.00%
       
   

Sch. 4.17-1



QuickLinks

AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 2 TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
RECITALS
LIST OF SCHEDULES
EXHIBIT A SCHEDULES TO AMENDMENT NO. 2 TO AMENDED & RESTATED LOAN AGREEMENT
Schedule 4.1 Subsidiaries
Consolidated Schedule 4.15(a)/4.16 Places of Business with Trade Names and Record Owner Data (As of March 1, 2007) (See separate Schedule 4.15(a) for Census Data)
Schedule 4.15(b) Census Data as of 3/1/2007
Schedule 4.17 CONFIDENTIAL