Exhibit 10.6

EMPLOYEE MATTERS AGREEMENT

BY AND BETWEEN THE ENSIGN GROUP, INC. AND

CARETRUST REIT, INC.

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EMPLOYEE MATTERS AGREEMENT

This EMPLOYEE MATTERS AGREEMENT (this “Agreement”), dated as of May 30, 2014 is
by and between THE ENSIGN GROUP, INC., a Delaware corporation (“Ensign”) and
CARETRUST REIT, INC., a Maryland corporation and a direct, wholly owned
subsidiary of Ensign (“CareTrust”). Ensign and CareTrust are sometimes referred
to herein individually as a “Party,” and collectively as the “Parties.”

WHEREAS, Ensign and CareTrust have entered into a Separation and Distribution
Agreement, dated as of May 23, 2014 (the “Separation Agreement”), pursuant to
which Ensign will reorganize its assets and liabilities into two companies:
(i) Ensign which, following consummation of the transaction contemplated by the
Separation Agreement, will own and conduct the Ensign Business; and
(ii) CareTrust which, following consummation of the transaction contemplated by
the Separation Agreement, will own and conduct the CareTrust Business; and

WHEREAS, as contemplated by the Separation Agreement, Ensign and CareTrust
desire to enter into this Agreement to provide for the allocation of assets,
liabilities and responsibilities with respect to certain matters relating to
employees (including employee compensation and benefit plans and programs)
between them.

NOW, THEREFORE, the Parties, intending to be legally bound, agree as follows:

ARTICLE I

DEFINITIONS

Capitalized terms used but not defined herein shall have the respective meanings
ascribed to them in the Separation Agreement. For purposes of this Agreement the
following terms shall have the following meanings:

1.1 “CareTrust 401(k) Plan” means the tax-qualified 401(k) defined contribution
savings plan to be established by CareTrust or a CareTrust Group member prior to
the Effective Time.

1.2 “CareTrust Employee,” means any individual who, as of the Effective Time, is
either actively employed by or then on a short-term leave of absence from
CareTrust or a CareTrust Group member (including maternity, paternity, family,
sick, short-term disability leave, qualified military service under the
Uniformed Services Employment and Reemployment Rights Act of 1994, and leave
under the Family Medical Leave Act and other approved leaves) or who is so
employed by Ensign or an Ensign Group member and who is primarily engaged in
providing services to the CareTrust Business as of the date hereof. A list of
the CareTrust Employees is set forth on Schedule 1.2.

1.3 “CareTrust Health and Welfare Plans” has the meaning set forth in
Section 4.1.

 

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1.4 “CareTrust Incentive Award Plan” means the CareTrust REIT, Inc. and CTR
Partnership, L.P. Incentive Award Plan adopted or to be adopted by CareTrust and
CTR Partnership, L.P. prior to the Effective Time.

1.5 “CareTrust Participant” means any individual who is a CareTrust Employee or
a Former CareTrust Employee, and any beneficiary, dependent, or alternate payee
of such individual, as the context requires.

1.6 “Effective Time” means 11:59 p.m. (Pacific time), on May 31, 2014.

1.7 “Ensign Defined Contribution Plan” means the Ensign Services, Inc. 401(k)
Retirement Savings Plan.

1.8 “Ensign Employee” means any individual who, as of the Effective Time, is
either actively employed by or then on a leave of absence from Ensign or an
Ensign Group member (including maternity, paternity, family, sick, short-term or
long-term disability leave, qualified military service under the Uniformed
Services Employment and Reemployment Rights Act of 1994, and leave under the
Family Medical Leave Act and other approved leaves), but does not include any
CareTrust Employee.

1.9 “Ensign Equity-Based Plans” means The Ensign Group, Inc. 2001 Stock Option,
Deferred Stock and Restricted Stock Plan, The Ensign Group, Inc. 2005 Stock
Incentive Plan and The Ensign Group, Inc. 2007 Omnibus Incentive Plan, each as
amended from time to time.

1.10 “Ensign Health and Welfare Plans” means the health and welfare plans
sponsored and maintained by Ensign or any Ensign Group member immediately prior
to the Effective Time which provide group health, life, dental, accidental death
and dismemberment, health care reimbursements, dependent care assistance and
disability benefits.

1.11 “Ensign Option” means an option to purchase shares of Ensign Common Stock
granted by Ensign prior to the Effective Time pursuant to an Ensign Equity-Based
Plan.

1.12 “Ensign Participant” means any individual who is an Ensign Employee or a
Former Ensign Employee, and any beneficiary, dependent, or alternate payee of
such individual, as the context requires.

1.13 “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended. Reference to a specific provision of ERISA also includes any proposed,
temporary, or final regulation in force under that provision.

1.14 “Former Ensign Employee” means any individual other than a Former CareTrust
Employee whose employment with either Party or any of its respective
Subsidiaries and Affiliates terminated for any reason before the Effective Time.

1.15 “Former CareTrust Employee,” means any individual whose employment with
either Party or any of its respective Subsidiaries and Affiliates terminated for
any reason before the Effective Time, and who was primarily engaged in providing
services to the CareTrust Business as of the date of his or her termination of
employment.

 

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1.16 “Participating Company” means (a) Ensign and (b) any Person (other than an
individual) that Ensign has approved for participation in, and which is
participating in, a Plan.

1.17 “Plan,” when immediately preceded by “Ensign,” means any plan, policy,
program, payroll practice, on-going arrangement, contract, trust, insurance
policy or other agreement or funding vehicle (including an Ensign Health and
Welfare Plan) for which the eligible classes of participants include employees
or former employees of Ensign or an Ensign Group member (which may include
employees of CareTrust Group members prior to the Effective Time), and when
immediately preceded by “CareTrust,” means any plan, policy, program, payroll
practice, on-going arrangement, contract, trust, insurance policy or other
agreement or funding vehicle (including a CareTrust Health and Welfare Plan) for
which the eligible classes of participants are limited to employees or former
employees (and their eligible dependents) of CareTrust or a CareTrust Group
member, but no other Ensign Group member.

1.18 “Purging Distribution” means the dividend CareTrust will declare to its
stockholders, in connection with its election to be taxed as a real estate
investment trust (a “REIT”) for U.S. federal income tax purposes, to distribute
any accumulated earnings and profits relating to its real property assets and
attributable to any pre-REIT years to comply with certain REIT qualification
requirements.

1.19 “Restricted Stock Award,” when immediately preceded by “Ensign,” means a
share of Ensign Common Stock granted by Ensign prior to the Effective Time
pursuant to an Ensign Equity-Based Plan which is subject to vesting and
forfeiture restrictions and when immediately preceded by “CareTrust,” means a
share of CareTrust Common Stock, which is granted pursuant to the CareTrust
Incentive Award Plan as part of the adjustment to Ensign Restricted Stock Awards
as set forth in Section 5.2 which is subject to vesting and forfeiture
restrictions.

ARTICLE II

TRANSFER OF CARETRUST EMPLOYEES; GENERAL PRINCIPLES

2.1 Transfer of Employment of Certain CareTrust Employees. Ensign and CareTrust
will cause the employment of each CareTrust Employee who is not employed by a
CareTrust Group member as of the date hereof to be transferred to a CareTrust
Group member prior to the Effective Time. Such individuals are separately
identified on Schedule 1.2.

2.2 Assumption and Retention of Liabilities. Ensign and CareTrust intend that
employment-related Liabilities associated with Ensign Participants are to be
retained or assumed by Ensign or another Ensign Group member, and
employment-related Liabilities associated with CareTrust Participants are to be
assumed by CareTrust or another CareTrust Group member, in each case, except as
specifically set forth herein. Accordingly, as of the Effective Time:

(a) Ensign or another member of the Ensign Group hereby retains or assumes and
agrees to pay, perform, fulfill, and discharge, except as expressly provided in
this Agreement, (i) all Liabilities arising under or related to Ensign Plans,
(ii) all employment or service-related Liabilities with respect to (A) all
Ensign Participants and (B) any individual who

 

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is, or was, an independent contractor, temporary employee, temporary service
worker, consultant, freelancer, agency employee, leased employee, on-call
worker, incidental worker, or non-payroll worker or in any other employment or
similar relationship primarily connected to Ensign or another Ensign Group
member and (iii) any Liabilities expressly transferred to an Ensign Group member
under this Agreement; and

(b) CareTrust or another member of the CareTrust Group hereby retains or assumes
and agrees to pay, perform, fulfill, and discharge, except as expressly provided
in this Agreement, (i) all Liabilities arising under or related to CareTrust
Plans from and after the Effective Time, (ii) all employment or service-related
Liabilities relating to periods from and after the Effective Time with respect
to (A) all CareTrust Participants and (B) any individual who is, or was, an
independent contractor, temporary employee, temporary service worker,
consultant, freelancer, agency employee, leased employee, on-call worker,
incidental worker, or non-payroll worker or in any other employment or similar
relationship primarily connected to CareTrust or another CareTrust Group member
and (iii) any Liabilities expressly transferred to a CareTrust Group member
under this Agreement.

2.3 CareTrust Participation in the Ensign Plans. Effective as of the Effective
Time, each CareTrust Group member shall cease to be a Participating Company in
any Ensign Plan, and Ensign and CareTrust shall take all necessary action before
the Effective Time to effectuate such cessation as a Participating Company.

2.4 Sponsorship of the CareTrust Plans. Effective no later than immediately
prior to the Effective Time, Ensign and CareTrust shall take such actions (if
any) as are required to cause CareTrust or another CareTrust Group member to
assume sponsorship of, and all Liabilities with respect to, each CareTrust Plan.

2.5 No Duplication of Benefits; Service and Other Credit. Ensign and CareTrust
shall adopt, or cause to be adopted, all reasonable and necessary amendments and
procedures to prevent CareTrust Participants from receiving duplicative benefits
from the Ensign Plans and the CareTrust Plans. With respect to CareTrust
Employees, each CareTrust Plan shall provide that for purposes of determining
eligibility to participate, vesting, and entitlement to benefits (but not for
accrual of pension benefits under any defined benefit pension plan), service
prior to the Effective Time with an Ensign Group member shall be treated as
service with the applicable CareTrust Group member. Such service also shall
apply for purposes of satisfying any waiting periods, evidence of insurability
requirements, or the application of any preexisting condition limitations under
any CareTrust Plan. Each CareTrust Plan shall, to the extent practicable, waive
pre-existing condition limitations with respect to CareTrust Employees.
CareTrust shall honor any deductible, co-payment and out-of-pocket maximums
incurred by the CareTrust Employees and their eligible dependents under the
Ensign Plans in which they participated immediately prior to the Effective Time
during the portion of the calendar year prior to the Effective Time in
satisfying any deductibles, co-payments or out-of-pocket maximums under the
CareTrust Plans in which they are eligible to participate after the Effective
Time in the same plan year in which such deductibles, co-payments or
out-of-pocket maximums were incurred.

 

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2.6 Reimbursements. From time to time after the Effective Time, the Parties
shall promptly reimburse one another, upon reasonable request of the Party
requesting reimbursement and the presentation by such Party of such
substantiating documentation as the other Party shall reasonably request, for
the cost of any Liabilities satisfied or assumed by the Party requesting
reimbursement or its Affiliates that are made pursuant to this Agreement, the
responsibility of the other Party or any of its Affiliates.

2.7 Approval of Plan. (i) Prior to the Effective Time, Ensign shall cause
CareTrust to adopt the CareTrust Incentive Award Plan and (ii) at or prior to
the Effective Time, Ensign and CareTrust shall take all actions as may be
necessary to approve the CareTrust Incentive Award Plan in order to satisfy the
requirements of the applicable rules and regulations of the NASDAQ.

2.8 Delivery of Shares; Registration Statement. From and after the Effective
Time, CareTrust shall have sole responsibility for delivery of shares of
CareTrust Common Stock pursuant to awards issued under a CareTrust Plan in
satisfaction of any obligations to deliver such shares under the CareTrust
and/or Ensign Plans (including delivery to Ensign Employees and Former Ensign
Employees) and shall do so without compensation from any Ensign Group member.
CareTrust shall cause a registration statement on Form S-8 (or other appropriate
form) to be filed with respect to such issued or issuable shares as soon as
practicable following the Effective Time and shall cause such registration to
remain in effect for so long as there may be an obligation to deliver CareTrust
shares under such CareTrust and/or Ensign Plans. Ensign shall use commercially
reasonable efforts to assist CareTrust in completing such registration.
CareTrust and Ensign shall cooperate to establish a procedure whereby the other
Party shall be promptly informed of the obligation to deliver shares to a
current or Former CareTrust Employee or an Ensign Employee, as the case may be.

ARTICLE III

DEFINED CONTRIBUTION PLAN

3.1 401(k) Plan.

(a) Establishment of Plan and Trust. Ensign and CareTrust shall adopt or cause
to be adopted the CareTrust 401(k) Plan and any trust agreements or other plan
documents reasonably necessary and shall cause trustees to be appointed for such
plan. Such actions shall be completed as soon as practicable following the
Effective Time. Such plan shall accept rollovers from the Ensign Defined
Contribution Plan in accordance with its terms and applicable Law.

(b) Service Crediting. In determining whether a CareTrust Employee is vested in
his or her account under the CareTrust 401(k) Plan, the CareTrust 401(k) Plan
shall credit each CareTrust Employee with all the individual’s service credited
under the Ensign Defined Contribution Plan.

 

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ARTICLE IV

HEALTH AND WELFARE PLANS

4.1 Cessation of Participation in Ensign Health and Welfare Plans. As soon as
practicable following the Effective Time, CareTrust shall establish health and
welfare plans (the “CareTrust Health and Welfare Plans”) for the CareTrust
Employees. As of the Effective Time, CareTrust Employees shall cease to
participate in the Ensign Health and Welfare Plans.

4.2 Allocation of Health and Welfare Plan Liabilities. All outstanding
Liabilities relating to, arising out of, or resulting from health and welfare
coverage or claims incurred by or on behalf of CareTrust Employees or their
covered dependents under the Ensign Health and Welfare Plans on or before the
Effective Time shall be assumed by CareTrust upon the Effective Time.

4.3 Vacation and Paid Time Off. As of the Effective Time, the applicable
CareTrust Group Member shall credit each CareTrust Employee with the unused
vacation days and personal and sickness days that such individual has accrued
immediately prior to the Effective Time in accordance with the vacation and
personnel policies applicable to such employee immediately prior to the
Effective Time; provided, however, that with respect to any CareTrust Employee
who does not consent to such treatment in writing, such individual will instead
receive a cash payment from Ensign immediately prior to the Effective Time with
respect thereto. To the extent that any such time is credited by CareTrust
rather than a cash payment being made with respect thereto by Ensign, Ensign
shall provide CareTrust with a lump sum cash amount no later than thirty
(30) days following the Effective Time with a value equal to such credited time.

ARTICLE V

EQUITY COMPENSATION AND OTHER BENEFITS

5.1 Awards under the Ensign Equity-Based Plans. The treatment of the Ensign
Options and Ensign Restricted Stock Awards as set forth below shall be subject
to Section 2.04 of the Tax Matters Agreement between the parties, dated as of
the date hereof.

(a) Options. No Options will be held by any CareTrust Employee or Former
CareTrust Employee as of the Distribution Date, other than then-vested Ensign
Options which remain exercisable for a period of time following such
individual’s termination of employment with Ensign in accordance with the terms
of such Options. Each Ensign Option that is outstanding immediately prior to the
Distribution Date shall be adjusted in accordance with the equitable adjustment
provisions set forth in the Ensign Equity Plans.

(b) Restricted Stock.

(i) Restricted Stock. No Restricted Stock Awards will be held by any CareTrust
Employee or Former CareTrust Employee as of the Distribution Date. Upon the
Effective Time, holders of Ensign Restricted Stock Awards will become entitled
to CareTrust Restricted Stock Awards equal to a number of shares of CareTrust
Common Stock to which all other holders of shares of Ensign Common Stock become
entitled pursuant to the Distribution.

 

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(ii) Restricted Stock Award Terms.

(1) Service. Each Ensign Restricted Stock Award shall be subject to the same
terms and conditions as set forth in the original Ensign Restricted Stock Award,
except as set forth below. Each CareTrust Restricted Stock Award issued pursuant
to this Section 5.2(b) shall be subject to the same terms and conditions as set
forth in the related Ensign Restricted Stock Award before the Effective Time,
except as set forth below. For purposes of the vesting and termination
provisions of the CareTrust Restricted Stock Awards, continued service with an
Ensign Group member shall be considered to be continued service with CareTrust.

(2) Purging Distribution. Upon declaration of the Purging Distribution, holders
of CareTrust Restricted Stock Awards will be entitled to receive the Purging
Distribution with respect to the CareTrust Common Stock subject to such award on
the same date or dates that the Purging Distribution is payable on CareTrust
Common Stock to stockholders of CareTrust generally.

(3) Partial Interests in Shares. To the extent that any adjustment described in
this Section 5.2(b) results in any fractional interest in shares, such
fractional interest shall be rounded down to the nearest whole share. No
fractional interests shall be payable in cash or otherwise.

(c) Administration. Each of Ensign and CareTrust shall establish an appropriate
administration system in order to handle exercises and delivery of shares in an
orderly manner and provide reasonable levels of service for equity award
holders.

(d) No Effect on Subsequent Awards. The provisions of this Section 5.2 shall
have no effect on the terms and conditions of equity and equity-based awards
granted following the Effective Time by Ensign or CareTrust.

ARTICLE VI

GENERAL AND ADMINISTRATIVE

6.1 Sharing of Participant Information. To the maximum extent permitted under
applicable Law, Ensign and CareTrust shall share, and shall cause each member of
its respective Group to share, with each other and their respective agents and
vendors all participant information reasonably necessary for the efficient and
accurate administration of each of the Ensign Plans and the CareTrust Plans.
Ensign and CareTrust and their respective authorized agents shall, subject to
applicable laws on confidentiality, be given reasonable and timely access to,
and may make copies of, all information relating to the subjects of this
Agreement in the custody of the other Party, to the extent necessary for such
administration. Until the Effective Time, all participant information shall be
provided in the manner and medium applicable to Participating Companies in the
Ensign Plans generally, and thereafter until the time at which the Parties
subsequently determine, all participant information shall be provided in a
manner and medium that are compatible with the data processing systems of Ensign
as in effect as of the Effective Time, unless otherwise agreed to by Ensign and
CareTrust.

 

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6.2 Audit Rights with Respect to Information Provided. Each of Ensign and
CareTrust, and their duly authorized representatives, shall have the right to
conduct reasonable audits with respect to all information provided to it by the
other Party. The Parties shall cooperate to determine the procedures and
guidelines for conducting audits under this Section 6.2, which shall require
reasonable advance notice by the auditing Party. The auditing Party shall have
the right to make copies of any records at its expense, subject to applicable
Law.

6.3 Fiduciary Matters. Ensign and CareTrust each acknowledge that actions
required to be taken pursuant to this Agreement may be subject to fiduciary
duties or standards of conduct under ERISA or other applicable Law, and no Party
shall be deemed to be in violation of this Agreement if it fails to comply with
any provisions hereof based upon its good faith determination (as supported by
advice from counsel experienced in such matters) that to do so would violate
such a fiduciary duty or standard. Each Party shall be responsible for taking
such actions as are deemed necessary and appropriate to comply with its own
fiduciary responsibilities and shall fully release and indemnify the other Party
for any Liabilities caused by the failure to satisfy any such responsibility.

6.4 Consent of Third Parties. If any provision of this Agreement is dependent on
the consent of any third party (such as a vendor or Governmental Authority) and
such consent is withheld, Ensign and CareTrust shall use commercially reasonable
efforts to implement the applicable provisions of this Agreement to the full
extent practicable. If any provision of this Agreement cannot be implemented due
to the failure of such third party to consent, Ensign and CareTrust shall
negotiate in good faith to implement the provision in a mutually satisfactory
manner. The phrase “commercially reasonable efforts” as used herein shall not be
construed to require the incurrence of any non-routine or unreasonable expense
or liability or the waiver of any right.

6.5 Subsequent Transfers of Employment. To the extent that the employment of any
individuals transfers between any Ensign Group member and any CareTrust Group
member in the twenty four (24)-month period following the Effective Time, the
Parties shall use their reasonable efforts to effect the provisions of this
Agreement with respect to the compensation and benefits of such individuals
following such transfer, it being understood that (i) it may not be possible to
replicate the effect of such provisions under such circumstances and
(ii) neither Ensign nor CareTrust shall be bound by the provisions of this
Section 6.5 to assume any Liabilities or transfer any assets. Notwithstanding to
foregoing, for compensation subject to the provisions of Section 409A of the
Code, any such subsequent transfer shall be a separation from service from the
applicable employer for purposes of such compensation, and the consequences of
such separation from service shall be determined in accordance with the terms of
the applicable plan or agreement.

ARTICLE VII

GOVERNING LAW; DISPUTE RESOLUTION

7.1 Governing Law. This Agreement and the legal relations between the Parties
hereto shall be governed by and construed in accordance with the laws of the
State of Delaware, without regard to the conflict of laws rules thereof to the
extent such rules would require the application of the law of another
jurisdiction.

 

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7.2 Dispute Resolution. The provisions of Article X of the Separation Agreement
shall apply, mutatis mutandis, to all disputes, controversies or claims (whether
arising in contract, tort or otherwise) that may arise out of or relate to, or
arise under or in connection with this Agreement or the transactions
contemplated hereby.

ARTICLE VIII

MISCELLANEOUS

8.1 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. 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.

8.2 Amendments and Waivers.

(a) Subject to Section 11.1 of the Separation Agreement and Section 8.12 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.

8.3 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.

 

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8.4 Third-Party Beneficiaries. This Agreement is for the sole benefit of the
Parties and their permitted successors and assigns and nothing in this
Agreement, express or implied, (i) is intended to or shall confer upon any other
Person any legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement, (ii) shall confer any right to employment
or continued employment for any period or terms of employment, (iii) be
interpreted to prevent or restrict the Parties from modifying or terminating any
Ensign Plan or CareTrust Plan or the employment or terms of employment of any
Ensign Employee or CareTrust Employee or (iv) shall establish, modify or amend
any Ensign Plan or CareTrust Plan covering an Ensign Participant, CareTrust
Participant, any collective bargaining agreements, national collective
bargaining agreements, or the terms and conditions of employment applicable to
an Ensign Employee or a CareTrust Employee.

8.5 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.

8.6 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.

8.7 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 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.

8.8 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.

 

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8.9 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.

8.10 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.

8.11 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.

8.12 Termination. Notwithstanding any provision to the contrary, this Agreement
may be terminated at any time prior to the Effective Time by and in the sole
discretion of Ensign without the prior approval of any Person, including
CareTrust. In the event of such termination, this Agreement shall become void
and no Party, or any of its officers and directors shall have any liability to
any Person by reason of this Agreement. After the Effective Time, this Agreement
may not be terminated except by an agreement in writing signed by each of the
Parties.

8.13 Survival of Agreements. Except as otherwise contemplated by this Agreement,
any covenants and agreements of the Parties contained in this Agreement shall
survive the Effective Time and remain in full force and effect in accordance
with their applicable terms.

8.14 Effective Time. This Agreement shall be effective as of 11:59 p.m. (Pacific
time) on May 31, 2014.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
on the date first written above by their respective duly authorized officers.

 

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

 

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

 

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Schedule 1.2

 

First Name

  

Last Name

  

Business Title

  

Location

  

City

  

State

Gregory

   Stapley    President and Chief Executive Officer    CareTrust REIT-HQ   
San Juan Capistrano    CA

William

   Wagner    Chief Financial Officer, Treasurer and Secretary    CareTrust
REIT-HQ    San Juan Capistrano    CA

David

   Sedgwick    Vice President Operations    CareTrust REIT-HQ    Hunt Valley   
MD

Barbara

   Adds    Receptionist    Lakeland Hills Senior Living    Rockwall    TX

Bobbie

   Burnett    Dietary Aide    Lakeland Hills Senior Living    Dallas    TX

Lorisa

   Cogan    Cook    Lakeland Hills Senior Living    Dallas    TX

Keith

   Collins    Receptionist    Lakeland Hills Senior Living    Dallas    TX

Marvisha

   Davis    Dietary Aide    Lakeland Hills Senior Living    Dallas    TX

Shewhate

   Genretensai    Dietary Aide    Lakeland Hills Senior Living    Dallas    TX

Stacy

   Glover    Receptionist    Lakeland Hills Senior Living    Desoto    TX

Juan

   Gonzalez    Cook    Lakeland Hills Senior Living    Dallas    TX

Candi

   Grimwood    Dietary Aide    Lakeland Hills Senior Living    Mesquite    TX

Glen

   Hawkins    Driver    Lakeland Hills Senior Living    Mesquite    TX

Michael

   Hubbard    Cook    Lakeland Hills Senior Living    Dallas    TX

Jermaine

   Kennedy    Maintenance Staff    Lakeland Hills Senior Living    Dallas    TX

Vickie

   Malone    Housekeeping Staff    Lakeland Hills Senior Living    Dallas    TX

Courtney

   Perez    Receptionist    Lakeland Hills Senior Living    Dallas    TX

Mary

   Potter    Housekeeping Staff    Lakeland Hills Senior Living    Dallas    TX

Guadencia

   Rodriguez    Dietary Aide    Lakeland Hills Senior Living    Mesquite    TX

Irene

   Romero    Housekeeping Staff    Lakeland Hills Senior Living    Dallas    TX

Rosalina

   Rubio    Cook    Lakeland Hills Senior Living    Dallas    TX

Stephanie

   Simpson    Activities Supervisor    Lakeland Hills Senior Living    Red Oak
   TX

Maria

   Umanzor    Dietary Aide    Lakeland Hills Senior Living    Dallas    TX

Jane

   Villarreal    Receptionist    Lakeland Hills Senior Living    Dallas    TX

Pamela

   Walker    Property Manager    Lakeland Hills Senior Living    Irving    TX

Benny

   Wilson    Maintenance Staff    Lakeland Hills Senior Living    Dallas    TX

Barbara

   Cruz    Receptionist    St. Joseph Senior Living    Salt Lake City    UT

Doreen

   Echeverria    Property Manager    St. Joseph Senior Living    Kearns    UT

Chrissy

   Hayes    Receptionist    St. Joseph Senior Living    Wvc    UT

Erica

   Kornman    Administrative Support    St. Joseph Senior Living    Sandy    UT

Bobby

   Martinez    Maintenance Staff    St. Joseph Senior Living    Ogden    UT

Gladys

   Medina    Receptionist    St. Joseph Senior Living    Magna    UT

Hortensia

   Vergara    Housekeeping Staff    St. Joseph Senior Living    Salt Lake City
   UT

Donna

   Plemons    Property Manager    The Cottages At Golden Acres    Dallas    TX

Guadalupe

   Rivas    Administrative Support    The Cottages At Golden Acres    Mesquite
   TX

Russell Mark

   Wade    Maintenance Staff    The Cottages At Golden Acres    dallas    TX

 

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