Exhibit 10.1





Exhibit 10.1




THE ENSIGN GROUP, INC.

RESTRICTED STOCK AWARD

TERMS AND CONDITIONS




These RESTRICTED STOCK AWARD TERMS AND CONDITIONS are an integral part of the foregoing Notice
Restricted Stock Award (the “Notice,” and together with these Terms and Conditions, the
“Restricted Stock Agreement” or this “Agreement”) made by The Ensign Group, Inc., a
Delaware corporation (the “Company”) to the individual “Grantee” named therein. All
capitalized terms used herein but not defined in this Restricted Stock Agreement shall have the
meanings given to them in The Ensign Group, Inc. 2007 Omnibus Incentive Plan (the “Plan”),
the terms and conditions of which are incorporated herein by this reference.



1. Definitions. For the purposes of this Agreement, the following terms shall have
the meanings set forth below:



“Cause” shall mean (i) the willful and continued failure by Grantee substantially to
perform his or her duties and obligations (other than any such failure resulting from his or her
incapacity due to physical or mental illness), (ii) Grantee’s conviction or plea bargain of any
felony or gross misdemeanor involving moral turpitude, fraud or misappropriation of funds, or (iii)
the willful engaging by Grantee in misconduct which causes substantial injury to the Company or its
affiliates, its other employees or the employees of its affiliates or its clients or the clients of
its affiliates, whether monetarily or otherwise. For purposes of this paragraph, no action or
failure to act on Grantee’s part shall be considered “willful” unless done or omitted to be done,
by Grantee in bad faith and without reasonable belief that his or her action or omission was in the
best interests of the Company. However, if the term or concept has been defined in an employment
agreement between the Company and Grantee, then Cause shall have the definition set forth in such
employment agreement. The foregoing definition shall not in any way preclude or restrict the right
of the Company (or any Affiliate) to discharge or dismiss Grantee or other person providing Service
to the Company (or any Affiliate) for any other acts or omissions but such other acts or omissions
shall not be deemed, for purposes of this Agreement, to constitute grounds for termination for
Cause.



“Disability” shall mean Grantee’s inability, due to illness, accident, injury,
physical or mental incapacity or other disability, to carry out effectively his or her duties and
obligations as an employee of the Company or to participate effectively and actively in the
management of the Company for a period of at least 90 consecutive days or for shorter periods
aggregating at least 120 days (whether or not consecutive) during any twelve-month period, as
determined in the reasonable judgment of the Board.



“Vested Shares” shall mean (i) all Shares issued pursuant to this Agreement that are
vested pursuant to Section 3 hereof and (ii) all Shares issued with respect to the Common Stock
referred to in clause (i) above by way of stock dividend or stock split or in connection with any
conversion, merger, consolidation or recapitalization or other reorganization affecting the Shares.
Vested Shares shall continue to be Vested Shares in the hands of any holder other than Grantee
(except for the Company and purchasers pursuant to a public offering under the Securities Act), and
each such transferee thereof shall succeed to the rights and obligations of a holder of Vested
Shares hereunder.



2. Issuance of Stock. In partial consideration for Grantee’s services to the Company,
Grantee has been issued                      Shares (the “Restricted Stock”).




3. Vesting.



(a) Normal Vesting. Except as set forth in this Restricted Stock Agreement, the
Restricted Stock shall vest in accordance with the schedule set forth in the Notice and shall
become fully vested on the fifth anniversary of the date hereof (the “Vesting Date”). The
Corporation shall deliver a certificate(s) (or other evidence of ownership, such as book entry) for
the Vested Shares to Grantee as soon as practical after each Vesting Date pursuant to the Section
4(d) hereof.


 


 









 





(b) If Grantee’s employment with the Company terminates for any reason prior to the Vesting
Date (except as provided in Section 3(c)) all unvested Restricted Stock shall be forfeited and
automatically transferred to the Company without consideration on the date of Grantee’s employment
termination and Grantee shall have no further rights with respect to the Restricted Stock. For
purposes of this Agreement, employment with a Subsidiary of the Corporation shall be considered
employment with the Corporation.



(c) Effect on Vesting in Case of Employment Termination. Notwithstanding Section 3(b)
above, the following special vesting rules shall apply if Grantee’s employment with the Company
terminates prior to the Vesting Date:




(i) Death or Disability. If Grantee dies or becomes subject to any Disability
prior to the Vesting Date, his or her Restricted Stock shall vest on a pro rata basis
according to the number of days elapsed since the date hereof and the date of his or her
death or Disability. Any portion of Grantee’s Restricted Stock that was not vested on the
date of Grantee’s death or Disability pursuant to this Section 3(b)(i) shall be forfeited to
the Company.




(ii) Termination by the Company Without Cause. If Grantee is terminated by the
Company without Cause prior to the Vesting Date, his or her Restricted Stock shall vest on a
pro rata basis according to the number of days elapsed since the date hereof and the date of
such termination. Any portion of Grantee’s Restricted Stock that was not vested on the date
of such termination without cause pursuant to this Section 3(b)(ii) shall be forfeited to
the Company.




4. Restrictions on Transfer.



(a) Non-Transferability. Restricted Stock, and any rights and interests with respect
thereto, issued under this Agreement and the Plan shall not, prior to vesting, be sold, exchanged,
transferred, assigned or otherwise disposed of in any way by the Grantee (or any beneficiary(ies)
of the Grantee), other than by testamentary disposition by the Grantee or the laws of descent and
distribution. Any such Restricted Stock, and any rights and interests with respect thereto, shall
not, prior to vesting, be pledged or encumbered in any way by the Grantee (or any beneficiary(ies)
of the Grantee) and shall not, prior to vesting, be subject to execution, attachment or similar
legal process. Any attempt to sell, exchange, transfer, assign, pledge, encumber or otherwise
dispose of in any way any of the Restricted Stock, or the levy of any execution, attachment or
similar legal process upon the Restricted Stock, contrary to the terms and provisions of this
Agreement and/or the Plan shall be null and void and without legal force or effect.



(b) Securities Laws Restrictions on Transfer of Vested Shares. Grantee understands
and hereby acknowledges that, in addition to transfer restrictions in this Agreement, federal and
state securities laws govern and restrict Grantee’s right to offer, sell or otherwise dispose of
any Vested Shares unless such offer, sale or other disposition thereof is registered or qualified
under the Securities Act and applicable state securities laws, or in the opinion of the Company’s
counsel, such offer, sale or other disposition is exempt from registration or qualification
thereunder. Grantee agrees that he or she shall not offer, sell or otherwise dispose of any Vested
Shares in any manner which would: (i) require the Company to file any registration statement with
the Securities and Exchange Commission (or any similar filing under state law) or to amend or
supplement any such filing or (ii) violate or cause the Company to violate the Securities Act, the
rules and regulations promulgated thereunder or any other state or federal law. Grantee further
understands that the certificates for any Vested Shares shall bear such legends as the Company
deems necessary or desirable in connection with the Securities Act or other rules, regulations or
laws. Grantee may not sell, transfer or dispose of any Vested Shares (except pursuant to an
effective registration statement under the Securities Act) without first obtaining from the Company
an opinion of the Company’s counsel that registration under the Securities Act or any applicable
state securities law is not required in connection with such transfer. If requested, Grantee
agrees to provide the Company with written assurances, in form and



 


 









 






substance satisfactory to the
Company, that (1) the proposed disposition does not require registration of the Shares under the
Securities Act or (2) all appropriate action necessary for compliance with the registration
requirements of the Securities Act or any exemption from registration available under the
Securities Act (including Rule 144) has been taken. When shares of Restricted Stock awarded by
this Agreement become
Vested Shares and after the conditions of this section 4(d) have been satisfied, the Grantee
shall be entitled to receive unrestricted Shares and if the Grantee’s stock is certificated and
contain legends restricting the transfer of such Shares, the Grantee shall be entitled to receive
new stock certificates free of such legends (except any legends requiring compliance with
securities laws). In connection with the delivery of the unrestricted Shares pursuant to this
Agreement, the Grantee agrees to execute any documents reasonably requested by the Company.



(c) Restrictive Legend. The certificates representing the Restricted Stock, if any,
shall bear the following legend:




“THE SECURITIES REPRESENTED BY THIS CERTIFICATE WERE ORIGINALLY ISSUED ON                ,
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
“ACT”), OR UNDER ANY STATE SECURITIES LAWS AND MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN EXEMPTION FROM REGISTRATION THEREUNDER. THE
SECURITIES REPRESENTED BY THIS CERTIFICATE ARE ALSO SUBJECT TO ADDITIONAL
RESTRICTIONS ON TRANSFER, REPURCHASE RIGHTS AND FORFEITURE PROVISIONS AND CERTAIN
OTHER AGREEMENTS SET FORTH IN A RESTRICTED STOCK AGREEMENT BETWEEN THE COMPANY AND
                     DATED AS OF           ,           , A COPY OF WHICH MAY BE OBTAINED BY THE
HOLDER HEREOF AT THE COMPANY’S PRINCIPAL PLACE OF BUSINESS WITHOUT CHARGE.”



(d) Restrictions on Transfer after Vesting. The transfer or sale of Vested Shares in
accordance with this Section 4 of this Agreement shall be subject to the Company Policy Regarding
Insider Trading, as amended from time to time, including any preclearance procedures or black-out
periods that specifically apply to Grantee.



5. Conformity with Plan. The Restricted Stock is intended to conform in all respects
with, and is subject to all applicable provisions of, the Plan (which is incorporated herein by
reference). Inconsistencies between this Agreement and the Plan shall be resolved in accordance
with the terms of the Plan. By executing and returning the enclosed copy of this Agreement,
Grantee acknowledges receipt of this Agreement and the Plan and agrees to be bound by all of the
terms of this Agreement and the Plan.



6. Rights of Employment. Nothing in this Agreement shall interfere with or limit in
any way the right of the Company to terminate Grantee’s employment at any time (with or without
Cause), nor confer upon Grantee any right to continue in the employ of the Company for any period
of time or to continue his or her present (or any other) rate of compensation, and in the event of
Grantee’s termination of employment (including, but not limited to, termination by the Company
without Cause), any portion of Grantee’s Restricted Stock that was not previously vested shall be
forfeited, except as otherwise provided herein. Nothing in this Agreement shall confer upon
Grantee any right to be selected again as a Plan participant, and nothing in the Plan or this
Agreement shall provide for any adjustment to the number of shares of Restricted Stock upon the
occurrence of subsequent events except as provided in Section 8 below.




7. Withholding of Taxes.



(a) The Grantee shall, immediately upon notification of the amount due, if any, pay to the
Company in cash or by check or direct a broker to sell a sufficient number of shares from the
Grantee’s brokerage account and deliver the proceeds to the Company, in either case, in the amount
necessary to satisfy any applicable federal, state and local tax withholding requirements. If
additional withholding is or



 


 









 






becomes required (as a result of the vesting of any Restricted Stock
or as a result of disposition of Vested Shares) beyond any amount deposited before delivery of the
certificates, the Grantee shall pay such amount to the Company, in cash or by check, on demand.
The Company shall be entitled, if necessary or desirable, to withhold from Grantee any amounts due
and payable by the Company, including wages, to Grantee (or secure payment from Grantee in lieu of
withholding), the amount of any withholding or other tax due from the
Company with respect to any Restricted Stock issuable under this Agreement, and the Company
may defer such issuance unless indemnified by Grantee to its satisfaction. Grantee acknowledges
that he or she has reviewed with his or her own tax advisors the federal, state, local and foreign
tax consequences of this investment and the transactions contemplated by this Agreement. Grantee is
relying solely on such advisors and not on any statements or representations of the Company or any
of its agents. Grantee understands that he or she (and not the Company) shall be responsible for
any tax liability that may arise as a result of the transactions contemplated by this Agreement.
Grantee further understands that Section 83 of the Code, taxes as ordinary income the difference
between the purchase price, if any, for the Shares and the fair market value of the Shares as of
the date the forfeiture provisions in Section 3 lapse. Grantee understands that the he or she may
elect to be taxed at the time the Restricted Stock is issued rather than when and as the forfeiture
provisions lapse expires by filing an election under Section 83(b) of the Code with the IRS within
30 days from the date of hereof. THE FORM FOR MAKING THIS SECTION 83(b) ELECTION IS ATTACHED TO
THIS AGREEMENT AS EXHIBIT A AND GRANTEE (AND NOT THE COMPANY OR ANY OF ITS AGENTS) SHALL BE
SOLELY RESPONSIBLE FOR APPROPRIATELY FILING SUCH FORM, EVEN IF GRANTEE REQUESTS THE COMPANY OR ITS
AGENTS TO MAKE THIS FILING ON GRANTEE’S BEHALF.



8. Adjustments. In the event of a reorganization, recapitalization, stock dividend or
stock split, or combination or other change in the Shares, the Board or the Committee shall make
such adjustments in the number and type of shares of Grantee’s Restricted Stock as the Board or
Committee reasonably determine to be appropriate, provided that any such adjustments shall not
adversely affect the Grantee.



9. Rights as a Shareholder. Except as otherwise provided in this Agreement and the
Plan, Grantee shall have all of the rights of a shareholder of the Company with respect to the
Shares of Restricted Stock, including the right to vote such shares and the right to receive
dividends. There is no guarantee by the Company that dividends will be paid. All dividends and
other distributions paid with respect to Restricted Stock, including with respect to unvested
Restricted Stock and whether paid in cash, Shares, or other property, shall be paid by the Company
on the same date that dividend payments are made with respect to all of the Company’s outstanding
Shares.



10. Remedies. The parties hereto shall be entitled to enforce their rights under this
Agreement specifically, to recover damages by reason of any breach of any provision of this
Agreement and to exercise all other rights existing in their favor. The parties hereto acknowledge
and agree that money damages would not be an adequate remedy for any breach of the provisions of
this Agreement and that any party hereto shall be entitled to specific performance and/or
injunctive relief (without posting bond or other security) from any court of law or equity of
competent jurisdiction in order to enforce or prevent any violation of the provisions of this
Agreement.



11. Amendment. Except as otherwise provided herein, any provision of this Agreement
may be amended or waived only with the prior written consent of Grantee and the Company.



12. Successors and Assigns. Except as otherwise expressly provided herein, all
covenants and agreements contained in this Agreement by or on behalf of any of the parties hereto
shall bind and inure to the benefit of the respective successors and permitted assigns of the
parties hereto whether so expressed or not.


 


 









 





13. Severability. Whenever possible, each provision of this Agreement shall be
interpreted in such manner as to be effective and valid under applicable law, but if any provision
of this Agreement is held to be prohibited by or invalid under applicable law, such provision shall
be ineffective only to the extent of such prohibition or invalidity, without invalidating the
remainder of this Agreement.



14. Counterparts. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall constitute an original, but all of which taken together shall
constitute one and the same Agreement.



15. Descriptive Headings. The descriptive headings of this Agreement are inserted for
convenience only and do not constitute a part of this Agreement.



16. Governing Law. The corporate law of the state of Delaware shall govern all
questions concerning the relative rights of the Company and its stockholders. All other questions
concerning the construction, validity and interpretation of this Agreement shall be governed by the
internal law, and not the law of conflicts, of the state of Delaware.



17. Entire Agreement. This Agreement and the Plan constitute the entire understanding
between Grantee and the Company, and supersedes all other agreements, whether written or oral, with
respect to the acquisition by Grantee of Common Stock of the Company. If there are any conflicts
in terms and conditions between this Agreement and the Plan, the terms and conditions of the Plan
shall govern, unless otherwise determined by the Committee or the Board.



* * * * *




 


 









 




			
	
	 	Notice of Restricted Stock Award
	27101 Puerta Real, Suite 450, Mission Viejo, CA 92691	 	 






	 	 	 
	 
	 	 
	Grantee:

	 	Restricted Stock Number:
	 
	 	 
	Address:

	 	Plan: 2007 Omnibus Incentive Plan





Notice is hereby given of the following award (the “Restricted Stock Award”) of Common Stock of The
Ensign Group, Inc. (the “Company”):




			
	 
	 	 
	Grant Date: May 25, 2010
	 	Number of Restricted Stock Shares: ***[
 _____ 
]***
	 	 	 
	Type of Award: Restricted Stock Award	 	 






VESTING



Vesting Schedule: 20% annually, with the first block vesting on the first
(1st) anniversary of the Grant Date



Except as otherwise provided in the Restricted Stock Agreement, the Restricted Stock will be vested
in the Grantee in accordance with the following schedule:




	 	 	 
	On or after each of	 	Number of Restricted Stock Shares
	the following dates	 	vested
	May 25, 2011	 	 
	May 25, 2012	 	 
	May 25, 2013	 	 
	May 25, 2014	 	 
	May 25, 2015	 	 





By accepting this Restricted Stock Award, Grantee acknowledges and agrees that the Restricted Stock
granted herein are subject to and in accordance with the terms of (i) the enclosed RESTRICTED STOCK
AWARD TERMS AND CONDITIONS (together with this Notice of Restricted Stock Award, the “Restricted
Stock Agreement”), and (ii) THE ENSIGN GROUP, INC. 2007 OMNIBUS INCENTIVE PLAN (the “Plan), both of
which are incorporated herein by this reference. All capitalized terms in this Notice of Restricted
Stock Award shall have the meaning assigned to them in the Restricted Stock Agreement or the Plan.



EXECUTED AND DELIVERED as of the Grant Date set forth above.




	 	 	 	 	 
	 	The Ensign Group, Inc., 

a Delaware corporation

 	 
	 	By:  	 	 
	 	 	Gregory K. Stapley 	 
	 	 	Secretary