Document:

EX-10.9

 Exhibit 10.9 
  

 
  

THE PENNANT GROUP, INC. 

2019 LONG TERM INCENTIVE PLAN 
  

 
  

 THE PENNANT GROUP, INC. 

2019 LONG TERM INCENTIVE PLAN 

Section 1. Purpose 
 The purpose of
the Plan is to promote the interests of the Company by aiding the Company in attracting and retaining employees, officers, consultants, independent contractors and directors capable of assuring the future success of the Company and its Affiliates,
to offer such persons incentives to continue in the employ or service of the Company or its Affiliates and to afford such persons an opportunity to acquire a proprietary interest, or otherwise increase their proprietary interest, in the Company.

 Section 2. Definitions 
 As used
in the Plan, the following terms shall have the meanings set forth below: 
 (a) “Affiliate” shall mean (i) any entity
that, directly or indirectly through one or more intermediaries, is controlled by the Company, (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee and (iii) The Ensign Group,
Inc. and its subsidiaries and affiliates. 
 (b) “Award” shall mean any Restricted Stock granted under the Plan. 

(c) “Award Agreement” shall mean any written agreement, contract or other instrument or document evidencing an Award granted
under the Plan. Each Award Agreement shall be subject to the applicable terms and conditions of the Plan and any other terms and conditions (not inconsistent with the Plan) determined by the Committee. 

(d) “Board” shall mean the Board of Directors of Pennant. 

(e) “Cause” shall mean (i) the willful and continued failure by Participant 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) Participant’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 Participant 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 Participant’s part shall be considered “willful” unless done or omitted to be done, by Participant 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 Participant, 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 Participant 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. 

 (f) “Change in Control” shall mean a change in ownership or control of the
Company effected through any of the following transactions: (i) a merger, consolidation or other reorganization unless securities representing more than 50% of the total combined voting power of the voting securities of the successor
corporation are immediately thereafter beneficially owned, directly or indirectly and in substantially the same proportion, by the persons who beneficially owned the Company’s outstanding voting securities immediately prior to such transaction;
(ii) a sale, transfer or other disposition of all or substantially all of the Company’s assets; or (iii) the acquisition, directly or indirectly, by any person or related group of persons (other than the Company or a person that
directly or indirectly controls, is controlled by, or is under common control with, the Company), of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more
than 50% of the total combined voting power of the Company’s outstanding securities pursuant to a tender or exchange offer made directly to the Company’s stockholders. Change in Control shall not include an Initial Public Offering
(“IPO”) by the Company of its equity securities to the public pursuant to an effective registration statement filed under the Securities Act of 1933, as amended, or under any similar law then in effect. 

(g) “Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated
thereunder. 
 (h) “Committee” shall mean a committee of the Board appointed to administer the Plan; provided if there is no
compensation committee, the Board means the compensation committee of the Board. 
 (i) “Company” shall mean The Pennant
Group, Inc., a Delaware Corporation, and any successor corporation. 
 (j) “Director” shall mean a member of the Board of
Directors of the Company. 
 (k) “Eligible Person” shall mean any employee, officer, consultant, independent contractor or
director providing services to the Company or any Affiliate who the Committee determines to be an Eligible Person. An Eligible Person must be a natural person. 

(l) “Equity Restructuring” shall mean a dividend or other distribution (whether in the form of cash, Shares, other securities
or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or exchange of
Shares or other securities of the Company, issuance of warrants or other rights to purchase Shares or other securities of the Company or other similar corporate transaction or event that affects the Shares such that an adjustment is necessary in
order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan. 
 (m)
“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 
 (n) “Market Value” shall
mean, for purposes of the Plan, unless otherwise required by any applicable provision of the Code or any regulations issued thereunder, the market value as determined by the Committee in good faith in whatever manner it considers appropriate, taking
into account the requirements of Section 409A of the Code and any other applicable laws, rules or regulations. 

  
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 (o) “Participant” shall mean an Eligible Person designated to be granted an
Award under the Plan. 
 (p) “Person” shall mean any individual or entity, including a corporation, partnership, limited
liability company, association, joint venture or trust. 
 (q) “Plan” shall mean The Pennant Group, Inc. 2019 Long Term
Incentive Plan, as amended from time to time, the provisions of which are set forth herein. 
 (r) “Securities Act” shall
mean the Securities Act of 1933, as amended. 
 (s) “Service” shall mean the Participant’s performance of services for
the Company (or any Affiliate) in the capacity of an employee, officer, consultant, independent contractor or director. 
 (t)
“Share” or “Shares” shall mean a share or shares of common stock, $0.001 par value per share, of the Company or such other securities or property as may become subject to Awards pursuant to an adjustment made under
Section 4(c) of the Plan. 
 Section 3. Administration 

(a) Power and Authority of the Committee. The Plan shall be administered by the Committee. Subject to the express provisions of the Plan
and to applicable law, the Committee shall have full power and authority to: (i) designate Participants; (ii) determine the type or types of Awards to be granted to each Participant under the Plan; (iii) determine the number of Shares
to be covered by (or the method by which payments or other rights are to be determined in connection with) each Award; (iv) determine the terms and conditions of any Award or Award Agreement; (v) amend the terms and conditions of any Award
or Award Agreement or waive any restrictions relating to any Award; (vi) determine whether, to what extent and under what circumstances Awards may be exercised in cash, Shares, other securities, other Awards or other property, or canceled,
forfeited or suspended; (vii) interpret and administer the Plan and any instrument or agreement, including an Award Agreement, relating to the Plan; (viii) establish, amend, suspend or waive such rules and regulations and appoint such
agents as it shall deem appropriate for the proper administration of the Plan; and (ix) make any other determination and take any other action that the Committee deems necessary or desirable for the administration of the Plan. Unless otherwise
expressly provided in the Plan, all designations, determinations, interpretations and other decisions under or with respect to the Plan or any Award or Award Agreement shall be within the sole discretion of the Committee, may be made at any time and
shall be final, conclusive and binding upon any Eligible Person and any holder or beneficiary of any Award. 
 (b) Power and Authority of
the Board. Notwithstanding anything to the contrary contained herein, the Board may, at any time and from time to time, without any further action of the Committee, exercise the powers and duties of the Committee under the Plan. 

  
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 Section 4. Shares Available for Awards 

(a) Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, the aggregate number of Shares that may be
issued under the Plan shall be [        ] Shares, or (ii) such lesser number of Shares as determined by the Board. Shares to be issued under the Plan may be either authorized but unissued Shares or Shares
re-acquired and held in treasury. Any Shares that are used by a Participant as full or partial payment to the Company of the purchase price relating to an Award, or in connection with the satisfaction of tax
obligations relating to an Award, shall again be available for granting Awards under the Plan. In addition, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited, or if an Award otherwise terminates
without delivery of any Shares, then the number of Shares counted against the aggregate number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture or termination, shall again be available for granting
Awards under the Plan. 
 (b) Accounting for Awards. For purposes of this Section 4, if an Award entitles the holder thereof to
receive or purchase Shares, the number of Shares covered by such Award or to which such Award relates shall be counted on the date of grant of such Award against the aggregate number of Shares available for granting Awards under the Plan. Any Shares
that are used by a Participant as full or partial payment to the Company of the purchase price relating to an Award or in connection with the satisfaction of tax obligations relating to an Award, shall again be available for granting Awards under
the Plan. In addition, if any Shares covered by an Award or to which an Award relates are not purchased or are forfeited, or if an Award otherwise terminates without delivery of any Shares, then the number of Shares counted against the aggregate
number of Shares available under the Plan with respect to such Award, to the extent of any such forfeiture or termination, shall again be available for granting Awards under the Plan. 

(c) Adjustments. In the event of any Equity Restructuring, the number and type of Shares (or other securities or other property) subject
to outstanding Awards, and the purchase price or exercise price with respect to any Award will be proportionately adjusted to avoid dilution or enlargement of rights resulting from such event; provided, however, that the number of
Shares covered by any Award or to which such Award relates shall always be a whole number. The adjustments provided under this Section 4(c) shall be nondiscretionary and shall be final and binding on the affected Participant and the Company.
The Committee shall make such proportionate adjustments to appropriately reflect such Equity Restructuring with respect to the number and kind of Shares that may be issued under the Plan (including, but not limited to, adjustments of the limitations
in Sections 4(a) hereof). Notwithstanding the above, in the event (i) of any reorganization, merger, consolidation, split-up, spin-off, combination, repurchase or
exchange of Shares or other securities of the Company or any other similar corporate transaction or event or (ii) the Company shall enter into a written agreement to undergo such a transaction or event, any or all outstanding Awards may be
canceled and the holders of any such Awards that are otherwise vested, may be paid in cash, the value of such Awards based upon the price per share of capital stock received or to be received by other stockholders of the Company in such event.
Notwithstanding anything to the contrary herein, any such adjustment will be made in accordance with the provisions of Section 409A of the Code to the extent applicable. 

  
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 Section 5. Eligibility 

Any Eligible Person shall be eligible to be designated a Participant. In determining which Eligible Persons shall receive an Award and the
terms of any Award, the Committee may take into account the nature of the services rendered by the respective Eligible Persons, their present and potential contributions to the success of the Company or such other factors as the Committee, in its
discretion, shall deem relevant. 
 Section 6. Awards 

(a) Restricted Stock Awards. The Committee is hereby authorized to grant Restricted Stock to Eligible Persons with the following terms
and conditions and with such additional terms and conditions not inconsistent with the provisions of the Plan, the terms and conditions of any Award, as the Committee shall determine: 

(i) Restrictions. Shares of Restricted Stock shall be subject to such restrictions the Committee may impose (including,
without limitation, a restriction on or prohibition against the right to receive any dividend or other right or property with respect thereto), which restrictions may lapse separately or in combination at such time or times, in such installments or
otherwise as the Committee may deem appropriate. 
 (ii) Vesting of Restricted Stock Awards. A Restricted Stock Award
shall vest in accordance with the schedule designated by the Committee as set forth in the Award Notice. 
 (iii) Issuance
of Shares. Any Restricted Stock granted under the Plan may be evidenced in such manner as the Board may deem appropriate, including book-entry registration or issuance of a stock certificate or certificates, which certificate or certificates
shall be held by the Company. Such certificate or certificates shall be registered in the name of the Participant and shall bear an appropriate legend referring to the restrictions and possible forfeiture applicable to such Restricted Stock as set
forth in the Award Agreement. 
 (iv) Forfeiture. Except as otherwise determined by the Committee, (A) upon a
Participant’s termination of Service (as determined under criteria established by the Committee) during the applicable restriction period or prior to the vesting of such Awards, all applicable Shares of Restricted Stock at such time subject to
restriction shall be forfeited to the Company; (B) upon a Participant’s death or disability all applicable Shares of Restricted Stock at such time subject to restriction or that are not vested shall be forfeited to the Company,
provided, however, that the Committee may, when it finds that a waiver would be in the best interest of the Company, waive in whole or in part any or all remaining restrictions with respect to Shares of Restricted Stock or any such
award. 
 (b) General Consideration for Awards. Awards may be granted for no cash consideration or for any cash or other consideration
as determined by the Committee and required by applicable law. 

  
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 (i) Awards May Be Granted Separately or Together. Awards may, in the
discretion of the Committee, be granted either alone or in addition to, in tandem with any other Award or any award granted under any plan of the Company or any Affiliate. Awards granted in addition to or in tandem with other Awards or in addition
to or in tandem with awards granted under any such other plan of the Company or any Affiliate may be granted either at the same time as or at a different time from the grant of such other Awards or awards. 

(ii) Forms of Payment under Awards. Subject to the terms of the Plan and of any applicable Award Agreement, payments or
transfers to be made by the Company or an Affiliate upon the grant, exercise or payment of an Award may be made in such form or forms as the Committee shall determine (including, without limitation, cash, Shares, other securities, other Awards or
other property or any combination thereof), and may be made in a single payment or transfer, in installments or on a deferred basis, in each case in accordance with rules and procedures established by the Committee. 

(iii) Limits on Transfer of Awards. No Award and no right under any such Award shall be transferable by a Participant
and the Company shall not be required to recognize any attempted assignment of such rights by any Participant; provided, however, that, if so determined by the Committee or as set forth in the terms and conditions of any Awards (which
have been previously approved by the Committee), a Participant may, in the manner established by the Committee, designate a beneficiary or beneficiaries to exercise the rights of the Participant and receive any property distributable with respect to
any Award upon the death of the Participant. Except as otherwise determined by the Committee or as set forth in the terms and conditions of any Awards (which have been previously approved by the Committee), each Award or right under any such Award
shall be exercisable during the Participant’s lifetime only by the Participant or, if permissible under applicable law, by the Participant’s guardian or legal representative. Except as otherwise determined by the Committee, no Award or
right under any such Award may be pledged, alienated, attached or otherwise encumbered, and any purported pledge, alienation, attachment or other encumbrance thereof shall be void and unenforceable against the Company or any Affiliate. 

(iv) Restrictions; Securities Exchange Listing. All Shares or other securities delivered under the Plan pursuant to any
Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan, applicable federal or state securities laws and regulatory requirements, and the Committee may
direct appropriate stop transfer orders and cause other legends to be placed on the certificates for such Shares or other securities to reflect such restrictions. If the Shares or other securities are traded on a securities exchange, the Company
shall not be required, and shall have no liability for failure, to deliver any Shares or other securities covered by an Award unless and until such Shares or other securities have been and continue to be admitted for trading on such securities
exchange. No Shares shall be issued or delivered pursuant to the Plan, and the Company shall have no liability for failure to issue or deliver Shares under the Plan, if doing so would violate any internal policies of the Company. 

  
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 Section 7. Amendment and Termination; Adjustments 

(a) Amendments to the Plan. The Board may amend, alter, suspend, discontinue or terminate the Plan at any time; provided,
however, that, such amendment, alteration, suspension, discontinuation or termination shall be consistent with the terms the Securities Act. 

(b) Amendments to Awards. The Committee may waive any conditions of or rights of the Company under any outstanding Award, prospectively
or retroactively. Except as otherwise provided herein or in an Award Agreement, the Committee may not amend, alter, suspend, discontinue or terminate any outstanding Award, prospectively or retroactively, if such action would adversely affect the
rights of the holder of such Award, without the consent of the Participant or holder or beneficiary thereof. 
 (c) Correction of Defects,
Omissions and Inconsistencies. The Committee may correct any defect, supply any omission or reconcile any inconsistency in the Plan or in any Award or Award Agreement in the manner and to the extent it shall deem desirable to implement or
maintain the effectiveness of the Plan. 
 Section 8. Income Tax Withholding 

In order to comply with all applicable federal, state or local income tax laws or regulations, the Company may take such action as it deems
appropriate to ensure that all applicable federal, state or local payroll, withholding, income or other taxes, which are the sole and absolute responsibility of a Participant, are withheld or collected from such Participant. In order to assist a
Participant in paying all or a portion of the federal, state and local taxes to be withheld or collected upon exercise or receipt of (or the lapse of restrictions relating to) an Award, the Committee, in its discretion and subject to such additional
terms and conditions as it may adopt, may permit the Participant to satisfy such tax obligation by (i) electing to have the Company withhold a portion of the Shares otherwise to be delivered upon exercise or receipt of (or the lapse of
restrictions relating to) such Award with a Market Value equal to the amount of such taxes (up to the maximum marginal tax rate in the Participant’s jurisdiction) or (ii) delivering to the Company Shares other than Shares issuable upon
exercise or receipt of (or the lapse of restrictions relating to) such Award with a Market Value equal to the amount of such taxes (but only to the extent of the minimum amount required to be withheld under applicable laws or regulations). The
election, if any, must be made on or before the date that the amount of tax to be withheld is determined. 
 Section 9. General Provisions 

(a) No Rights to Awards. No Eligible Person or other Person shall have any claim to be granted any Award under the Plan, and there is no
obligation for uniformity of treatment of Eligible Persons or holders or beneficiaries of Awards under the Plan. The terms and conditions of Awards need not be the same with respect to any Participant or with respect to different Participants. 

(b) Award Agreements. No Participant will have rights under an Award granted to such Participant unless and until an Award Agreement
shall have been duly executed on behalf of the Company and, if requested by the Company, signed by the Participant. 

  
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 (c) Plan Provisions Control. In the event that any provision of an Award Agreement
conflicts with or is inconsistent in any respect with the terms of the Plan as set forth herein or subsequently amended, the terms of the Plan shall control. 

(d) No Rights of Stockholders. Neither a Participant nor the Participant’s legal representative shall have any voting rights,
dividend rights, or cash dividend rights with respect to any Award or issuance of Shares under this plan other than those rights that are mandated by operation of law. 

(e) No Limit on Other Compensation Arrangements. Nothing contained in the Plan shall prevent the Company or any Affiliate from adopting
or continuing in effect other or additional compensation arrangements, and such arrangements may be either generally applicable or applicable only in specific cases. 

(f) No Right to Employment. The grant of an Award shall not be construed as giving a Participant the right to be retained in the employ,
nor will it affect in any way the right of the Company or an Affiliate to terminate a Participant’s employment or Service at any time, with or without cause. In addition, the Company or an Affiliate may at any time dismiss a Participant from
employment, free from any liability or any claim under the Plan or any Award, unless otherwise expressly provided in the Plan or in any Award Agreement. Nothing in this Plan shall confer on any person any legal or equitable right against the Company
or any Affiliate, directly or indirectly, or give rise to any cause of action at law or in equity against the Company or an Affiliate. The Awards granted hereunder shall not form any part of the wages or salary of any Eligible Person for purposes of
severance pay or termination indemnities, irrespective of the reason for termination of employment. Under no circumstances shall any person ceasing to be an employee of the Company or any Affiliate be entitled to any compensation for any loss of any
right or benefit under the Plan which such employee might otherwise have enjoyed but for termination of employment, whether such compensation is claimed by way of damages for wrongful or unfair dismissal, breach of contract or otherwise. By
participating in the Plan, each Participant shall be deemed to have accepted all the conditions of the Plan and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby. 

(g) Governing Law. The validity, construction and effect of the Plan or any Award, and any rules and regulations relating to the Plan or
any Award, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Delaware. 
 (h)
Severability. If any provision of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such
provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such
provision shall be stricken as to such jurisdiction or Award, and the remainder of the Plan or any such Award shall remain in full force and effect. 

(i) No Trust or Fund Created. Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind
or a fiduciary relationship between the Company or any Affiliate and an Eligible Person or any other Person. To the extent that any Person acquires a right to receive payments from the Company or any Affiliate pursuant to an Award, such right shall
be no greater than the right of any unsecured general creditor of the Company or any Affiliate. 

  
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 (j) Other Benefits. No compensation or benefit awarded to or realized by any
Participant under the Plan shall be included for the purpose of computing such Participant’s compensation under any compensation-based retirement, disability, or similar plan of the Company unless required by law or otherwise provided by such
other plan. 
 (k) No Fractional Shares. No fractional Shares shall be issued or delivered pursuant to the Plan or any Award, and the
Committee shall determine whether cash shall be paid in lieu of any fractional Shares or whether such fractional Shares or any rights thereto shall be canceled, terminated or otherwise eliminated. 

(l) Headings. Headings are given to the Sections and subsections of the Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction or interpretation of the Plan or any provision thereof. 

(m) Conditions Precedent to Issuance of Shares. Shares shall not be issued, and the Company shall not have any liability for failure to
issue Shares, pursuant to the exercise or payment of the purchase price relating to an Award unless such exercise or payment and the issuance and delivery of such Shares pursuant thereto shall comply with all relevant provisions of law, including,
without limitation, the Securities Act, the Exchange Act, the rules and regulations promulgated thereunder, the requirements of any applicable Stock Exchange and the Delaware General Corporation Law. As a condition to the exercise or payment of the
purchase price relating to such Award, the Company may require that the person exercising or paying the purchase price represent and warrant that the Shares are being purchased only for investment and without any present intention to sell or
distribute such Shares if, in the opinion of counsel for the Company, such a representation and warranty is required by law. 
 Section 10.
Effective Date of the Plan 
 The Plan shall be effective as of [•], 2019. 

Section 11. Term of the Plan 
 No
Award shall be granted under the Plan after (a) the tenth anniversary of the later of (i) the date on which this Plan was adopted by the Board or (ii) the date this Plan was approved by the stockholders of the Company, or (b) any
earlier date of discontinuation or termination established pursuant to Section 7(a) of the Plan. However, unless otherwise expressly provided in the Plan or in an applicable Award Agreement, any Award theretofore granted may extend beyond such
date, and the authority of the Committee provided for hereunder with respect to the Plan and any Awards, and the authority of the Board to amend the Plan, shall extend beyond the termination of the Plan. 

  
 9EX-10.10

 Exhibit 10.10 

Notice of Restricted Stock Award 
  

			
	Grantee:	  	Restricted Stock Number:
		
	Address:	  	Plan: 2019 Long Term Incentive Plan

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

			
	Grant Date:	  	Number of Restricted Stock Shares1: ***         ***
		
	Type of Award: Restricted Stock	  	

 V E S T I N G 

Vesting Schedule: [Vesting to be inserted at the time of grant.] 

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 the following dates
	 	 Number of Restricted Stock Shares vested

 By accepting this Restricted Stock Award, Grantee acknowledges and agrees that the Restricted Stock Shares 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 PENNANT
GROUP, INC. 2019 LONG TERM 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 of the Plan. 
 EXECUTED AND DELIVERED as of the Grant Date set forth above. 

 

			
	THE PENNANT GROUP, INC.
	a Delaware corporation
		
	By:	 	  

	Name:	 	  

	Title:	 	  

  

	1 	 This amount may be adjusted depending on the ultimate market value of The Pennant Group, Inc. once it is
publicly-traded on a national securities exchange. 

 THE PENNANT 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 Pennant 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 Pennant Group, Inc. 2019 Long
Term 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. 

“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 the number of Shares set forth in the Notice (the “Restricted Stock”), subject to the consummation of the
spin-off of the Company from The Ensign Group, Inc. (the “Transaction”). For the avoidance of doubt, if the Transaction is not consummated, this Agreement and the grant of Restricted Stock
provided for hereunder shall automatically be terminated and void ab initio. 
 3. Vesting. 

(a) Normal Vesting. [Vesting to be inserted at the time of grant and will provide for a "Vesting Date".] 

(b) If Grantee’s employment with the Company terminates for any reason prior to the Vesting Date, 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 Company shall be considered employment with 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, the Plan and 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. 
 (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 Parent 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 7 below. 
 7. Withholding of Taxes. 

(a) Subject to compliance with applicable law and any insider trading policy of the Company, the Company may permit the Grantee to satisfy the
Company’s tax withholding obligations in accordance with procedures established by the Company providing for either (i) delivery by the Grantee to the Company or a broker approved by the Company of properly executed instructions, in a form
approved by the Company previously obtained and held by Grantee in an amount necessary to cover the Company’s withholding obligations, or (ii) payment by check. The Grantee shall deliver written notice of any such permitted election to the
Company on a form specified by the Company for this purpose at least thirty (30) days (or such other period established by the Company) prior to the date on which the Company’s tax withholding obligation arises (the “Withholding
Date”). If the Grantee elects payment by check, the Grantee agrees to deliver a check for the full amount of the required tax withholding to the Company on or before the second business day following the Withholding Date. 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. 

(b) The Company may permit the Grantee to satisfy all or any portion of a Company’s tax withholding obligations by deducting a number of
whole, Vested Shares otherwise deliverable to the Grantee or by the Grantee’s tender to the Company of a number of whole, Vested Shares or Vested Shares acquired otherwise than pursuant to this Agreement having, in any such case, a fair market
value, as determined by the Company as of the date on which the tax withholding obligations arise, up to the maximum marginal tax rates in the Grantee’s jurisdiction. 

(c) 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 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 number and type of shares of Grantee’s Restricted Stock shall be adjusted by the Committee as necessary, 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. 

* * * * *

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