Document:

EX-10.5

 Exhibit 10.5 

THE PENNANT GROUP, INC. 

2019 OMNIBUS INCENTIVE PLAN 

Section 1. Purpose 
 The purpose of
the Plan is to promote the interests of the Company and its stockholders by aiding the Company in attracting and retaining officers, consultants, independent contractors and Directors capable of assuring the future success of the Company and to
attract and retain officers, employees and independent contractors and directors for its Affiliates, to offer Eligible Persons incentives to continue in the Company’s, or its Affiliates’ employ or service, as applicable, and to afford
Eligible 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 and (ii) any entity in which the Company has a significant equity interest, in each case as determined by the Committee. 

(b) “Annual Meeting” shall mean the Company’s regular annual meeting of stockholders 

(c) “Automatic Stock Grant Program” shall mean the Directors’ Automatic Stock Grant Program described in
Section 6(i) of the Plan. 
 (d) “Award” shall mean any Option, Stock Appreciation Right, Restricted Stock, Restricted
Stock Unit, Performance Award, Dividend Equivalent, Other Stock Grant, or Other Stock-Based Award granted under the Plan. 
 (e)
“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. 
 (f) “Board” shall
mean the Board of Directors of the Company. 
 (g) “Cause” shall mean the occurrence of any of the following:
(i) Participant’s personal dishonesty, willful misconduct, or breach of fiduciary duty involving personal profit, (ii) Participant’s continuing intentional or habitual failure to perform stated duties,
(iii) Participant’s violation of any law (other than minor traffic violations or similar misdemeanor offenses not involving moral turpitude), (iv) Participant’s material breach of any provision of an employment or independent
contractor agreement with the Company, or (v) any other act or omission by a Participant that, in the opinion of the Committee, could reasonably be expected to adversely affect the Company’s business, financial condition, prospects and/or
reputation. In each of the foregoing subclauses (i) through (v), whether or not a “Cause” event has occurred will be determined by the Committee in its sole discretion or, in the case of Participants who are Directors or officers or
persons subject to Section 16 of the Exchange Act, the Board, each of whose determination shall be final, conclusive and binding. A Participant’s Service shall be deemed to have terminated for Cause if, after the Participant’s Service
has terminated, facts and circumstances are discovered that would have justified a termination for Cause, including, without limitation, violation of material Company policies or breach of noncompetition, confidentiality or other restrictive
covenants that may apply to the Participant. 
 (h) “Change in Control” shall mean a change in ownership or control of the
Company effected through the consummation of 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 (or its ultimate parent company) 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; (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 or (iv) a majority of the members of the Board are replaced during any 12-month period by board of directors whose appointment or election is not endorsed by a majority of the member of the Board before the date of appointment or election. To the extent necessary to comply with
Section 409A, a Change in Control must also constitute a Section 409A “change in control event”. 
 (i)
“Code” shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations promulgated thereunder. 

(j) “Committee” shall mean a committee of Directors designated by the Board to administer the Plan, which shall initially be
the Compensation Committee. The Committee shall be comprised of at least two Directors but not less than such number of Directors as shall be required to permit Awards granted under the Plan to qualify under
Rule 16b-3, and each member of the Committee shall be a Rule 16b-3 “Non-Employee Director.” 

(k) “Company” shall mean The Pennant Group, Inc., a Delaware corporation, and any successor corporation. 

(l) “Compensation Committee” shall mean the compensation committee of the Board. 

(m) “Director” shall mean a member of the Board, including any Non-Employee Director.

 (n) “Dividend Equivalent” shall mean any right granted under Section 6(e) of the Plan. 

(o) “Eligible Person” shall mean any Person who/that is an employee, officer, consultant, independent contractor or Director
providing Services to the Company or any Affiliate who the Committee determines to be an Eligible Person. 
 (p) “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. 
 (q) “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended. 

(r) “Fair Market Value” shall mean, with respect to any property (including, without limitation, any Shares or other
securities), the fair market value of such property determined by the Committee pursuant to such methods or procedures as shall be established from time to time by the Committee. Notwithstanding the foregoing and unless otherwise determined by the
Committee, the Fair Market Value of a Share as of a given date shall be the closing sale price of one Share as reported on the Nasdaq Stock Market or such other principal United States securities market for such Shares on the date as of which
Fair Market Value is being determined, if the Shares are then listed on the Nasdaq Stock Market or another principal United States securities market for such Shares. 

(s) “Fiscal Year” shall mean the Company’s fiscal year. 

(t) “Full Value Award” shall mean any Award of Shares under this Plan or an Award payable in Shares, other than an Option, a
Stock Appreciation Right or other purchase right for which the Participant pays fair market value for the Shares measured as of the date of grant. 

  
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 (u) “Incentive Stock Option” shall mean an option granted under
Section 6(a) of the Plan that is intended to qualify as an “incentive stock option” in accordance with the terms of Section 422 of the Code or any successor provision. 

(v) “Non-Employee Director” shall mean any Director who is not also an employee of the
Company or an Affiliate within the meaning of Rule 16b-3 (which term “Non-Employee Director” is defined in this paragraph for purposes of the definition
of “Committee” only and is not intended to define such term as used elsewhere in the Plan). 
 (w) “Non-Qualified Stock Option” shall mean an option granted under Section 6(a) of the Plan that is not an Incentive Stock Option. 

(x) “Option” shall mean an Incentive Stock Option or a Non-Qualified
Stock Option. 
 (y) “Other Stock Grant” shall mean any right granted under Section 6(f) of the Plan. 

(z) “Other Stock-Based Award” shall mean any right granted under Section 6(g) of the Plan. 

(aa) “Participant” shall mean an Eligible Person designated to be granted an Award under the Plan. 

(bb) “Performance Award” shall mean any right granted under Section 6(d) of the Plan. 

(cc) “Performance Goal” shall mean a performance goal selected by the Committee, which may include one or more of the
following performance goals, either individually, alternatively or in any combination, applied on a corporate, subsidiary or business unit basis: revenue, cash flow, gross profit, earnings before interest and taxes, earnings before interest, taxes,
depreciation and amortization and net earnings, earnings per share, margins (including one or more of gross, operating and net income margins), returns (including one or more of return on assets, equity, investment, capital and revenue and total
stockholder return), stock price, economic value added, working capital, market share, cost reductions, workforce satisfaction and diversity goals, employee retention, customer satisfaction, completion of key projects and strategic plan development
and implementation. Such goals may reflect absolute entity or business unit performance or a relative comparison to the performance of a peer group of entities or other external measure of the selected performance criteria. The Committee shall
establish the Performance Goals for a Performance Award on or before the 90th day of the applicable performance period for which Performance Goals are established and in no event after 25% of
the applicable performance period has elapsed and in any event when the achievement of the applicable Performance Goals remains substantially uncertain. The Committee may appropriately adjust any evaluation of performance under such Performance
Goals to exclude the effect of certain events, including without limitation any of the following events: asset write-downs; litigation or claim judgments or settlements; changes in tax law, accounting principles or other such laws or provisions
affecting reported results; severance, contract termination and other costs related to exiting certain business activities; and gains or losses from the disposition of businesses or assets, from the early extinguishment of debt or items
incorporated in the Company’s reporting. 
 (dd) “Person” shall mean any individual or entity, including a corporation,
partnership, limited liability company, association, joint venture or trust. 
 (ee) “Plan” shall mean The Pennant
Group, Inc. 2019 Omnibus Incentive Plan, as amended from time to time, the provisions of which are set forth herein. 
 (ff)
“Restricted Stock” shall mean any Share granted under Section 6(c) of the Plan (or any Share issued pursuant to an Option that is early exercised). 

(gg) “Restricted Stock Unit” shall mean any unit granted under Section 6(c) of the Plan evidencing the right to receive a
Share (or evidencing the right to receive a cash payment equal to the Fair Market Value of a Share if explicitly so provided in the Award Agreement) at some future date. 

(hh) “Rule 16b-3” shall mean
Rule 16b-3 promulgated by the Securities and Exchange Commission under the Exchange Act, or any successor rule or regulation. 

  
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 (ii) “Section 409A” shall mean Section 409A of the
Code and the applicable Treasury Regulations promulgated thereunder. 
 (jj) “Securities Act” shall mean the Securities Act
of 1933, as amended. 
 (kk) “Separation From Service” has the meaning provided to such term under Section 409A and the
regulations promulgated thereunder. 
 (ll) “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. 
 (mm)
“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. 
 (nn) “Specified Employee” has the meaning provided to such term under
Section 409A and the regulations promulgated thereunder. 
 (oo) “Stock Appreciation Right” shall mean any right
granted under Section 6(b) of the Plan. 
 (pp) “Substitute Awards” shall mean the Awards granted or Shares issued
by the Company in assumption of, or in substitution or exchange for, awards previously granted, or the right or obligation to make future awards, in each case by a company acquired by the Company or any Affiliate or with which the Company or any
Affiliate combines. 
 Section 3. Administration 

(a) Power and Authority of the Committee. The Plan shall be administered by the Committee. Any Awards made solely to members of the
Committee, however, should also be authorized by a disinterested majority of the Board. 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) modify or amend the terms and conditions of any Award or Award Agreement and accelerate the exercisability of any Option or waive any
restrictions relating to any Award or extending the period of exercisability for an 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; (ix) include in an Award Agreement a requirement that, under certain circumstances, acceleration of vesting (or compensation payable)
with respect to such Award shall be reduced (or eliminated) to the extent that such reduction (or elimination) would, after taking into account any other payments in the nature of compensation to which the Participant would have a right to receive
from the Company and any other Person contingent upon the occurrence of a Change in Control, prevent the occurrence of a “parachute payment” as defined under Code Section 280G; (x) granting Awards to Eligible Persons who are
foreign nationals on such terms and conditions different from those specified in the Plan, which may be necessary or desirable to foster and promote achievement of the purposes of the Plan, and adopting such modifications, procedures, and/or
subplans (with any such subplans attached as appendices to the Plan) and the like as may be necessary or desirable to comply with provisions of the laws or regulations of other countries or jurisdictions to ensure the viability of the benefits from
Awards granted to Participants employed in such countries or jurisdictions, or to meet the requirements that permit the Plan to operate in a qualified or tax efficient manner, and/or comply with applicable foreign laws or regulations; and
(xi) 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

  
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any holder or beneficiary of any Award and shall receive the maximum deference permitted under applicable law. The administration of the Automatic Stock Grant Program, however, shall be
self-executing in accordance with the terms of that program so that neither the Board nor any Committee shall exercise any discretionary functions with respect to any Awards made under that program. If at any time (including after a notice of
exercise has been delivered) the Committee (or the Board), reasonably believes that a Participant has committed an act of Cause (which includes a failure to act), the Committee (or Board) may suspend the Participant’s right to exercise any
Award (or vesting or settlement of any Award) pending a determination of whether there was in fact an act of Cause. If the Committee (or the Board) determines a Participant has committed an act of Cause, neither the Participant nor his or her estate
shall be entitled to exercise any outstanding Award whatsoever and all of Participant’s outstanding Awards shall then terminate without consideration. The expenses of the Plan shall be borne by the Company. 

Section 4. Shares Available for Awards 

(a) Shares Available. Subject to adjustment as provided in Section 4(c) of the Plan, a maximum number of
[        ] shares may be issued pursuant to the Plan (the “Share Limit”). Such Shares may be in whole or in part authorized and unissued or held by the Company as treasury shares. 

(b) Accounting for Awards. To the extent that (i) Options or Stock Appreciation Rights granted under the Plan shall expire
unexercised, are cancelled, forfeited, terminated or are not distributed, or (ii) Shares subject to Awards under the Plan shall be, cancelled, forfeited, terminated or are settled in cash in lieu of Shares, such Shares shall immediately become
available for grant under the Plan, as applicable, and shall increase the number of Shares available for purposes of the Plan. To the extent that Options, Stock Appreciation Rights or Shares awarded under this Plan shall be cancelled, forfeited
or terminated (or are settled in cash in lieu of Shares), such Shares shall be added back to the Plan on the same basis and subject to the same ratio that applied when they were granted and shall increase the number of Shares available for purposes
of the Plan. Shares delivered in payment of the purchase price in connection with the exercise of any Award, Shares repurchased on the open market with proceeds received by the Company from stock exercises, Shares delivered or withheld to pay tax
withholding obligations or otherwise under the Plan and Shares not issued upon the net settlement or net exercise of Stock Appreciation Rights shall be added to and shall increase the number of Shares available for purposes of the Plan. Stock
Appreciation Rights to be settled in Shares shall be counted in full against the number of Shares available for award under the Plan regardless of the number of Shares issued upon settlement of the Stock Appreciation Rights. 

(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; provided, however, that the number of Shares covered by any Award or to which such Award relates shall always
be rounded down to the nearest 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, if any, as the Committee in its discretion may deem appropriate to reflect such Equity Restructuring with respect to the Share Limit, the ISO Limit, the aggregate 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), 4(b) and 6(d) hereof, the Limitations and Director Grant Limits as each are defined below, and the automatic grant figures set forth in Section 6(i)). 

(d) Substitute Awards. Substitute Awards shall not count toward the Share Limit (or the other limits in Section 4(a)), nor shall
Shares subject to a Substitute Award again be available for Awards under the Plan as provided in Section 4(a). Additionally, in the event that a company acquired by the Company or any Affiliate or with which the Company or any Affiliate
combines has shares available under a pre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of
such pre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration
payable to the holders of common stock of the entities party to such acquisition or combination) may be used for Awards under the Plan and shall not count toward the Share Limit; provided that Awards using such available shares shall not be made
after the date awards or grants could have been made under the terms of the pre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not Employees or Board
members prior to such acquisition or combination. 

  
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 Section 5. Eligibility 

Participation in the Plan shall be limited to Eligible Persons. 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. Notwithstanding the foregoing, an Incentive Stock Option may only be granted to full-time or part-time employees (which term as used herein includes, without limitation, officers and Directors who are also employees), and an
Incentive Stock Option shall not be granted to an employee of an Affiliate unless such Affiliate is also a “subsidiary corporation” of the Company within the meaning of Section 424(f) of the Code or any successor provision. 

Notwithstanding anything to the contrary, the maximum grant date fair value of any Award granted to any
Non-Employee Director during any calendar year will not exceed $500,000, such limit which, for the avoidance of doubt, applies to Awards granted under the Plan only and does not include Shares granted in lieu
of all or any portion of such Non-Employee Director’s cash retainer fees. 
 Section 6. Awards 

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

(i) Exercise Price. The purchase price per Share purchasable under an Option shall be determined by the Committee;
provided, however, that such purchase price shall not be less than 100% of the Fair Market Value of a Share on the date of grant of such Option unless the Committee expressly acknowledges in its granting resolutions that such
Option has been structured to be exempt from or compliant with the requirements of Section 409A. 
 (ii) Option
Term. The term of each Option shall be fixed by the Committee at the time of grant, but shall not be longer than 10 years from the date of grant. 

(iii) Time and Method of Exercise. The Committee shall determine the time or times at which an Option may be exercised
in whole or in part and the method or methods by which, and the form or forms (including, without limitation, cash, Shares, other securities, other Awards or other property, or any combination thereof, having a Fair Market Value on the exercise date
equal to the applicable exercise price) in which payment of the exercise price with respect thereto may be made or deemed to have been made. 

(iv) Incentive Stock Options. Notwithstanding anything in the Plan to the contrary, the following additional provisions
shall apply to the grant of stock options which are intended to qualify as Incentive Stock Options: 
 (A) The Committee
will not grant Incentive Stock Options in which the aggregate Fair Market Value (determined as of the time the option is granted) of the Shares with respect to which Incentive Stock Options are exercisable for the first time by any Participant
during any calendar year (under this Plan and all other plans of the Company and its Affiliates) shall exceed $100,000. 

(B) All Incentive Stock Options must be granted within ten years from the earlier of the date on which this Plan was adopted by
the Board or the date this Plan was approved by the stockholders of the Company. 

  
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 (C) Unless sooner exercised, all Incentive Stock Options shall expire and no
longer be exercisable no later than 10 years after the date of grant; provided, however, that in the case of a grant of an Incentive Stock Option to a Participant who, at the time such Option is granted, owns (within the meaning
of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliate, such Incentive Stock Option shall expire and no longer be exercisable no later than
5 years from the date of grant. 
 (D) The purchase price per Share for an Incentive Stock Option shall be not less
than 100% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option; provided, however, that, in the case of the grant of an Incentive Stock Option to a Participant who, at the time such Option is granted,
owns (within the meaning of Section 422 of the Code) stock possessing more than 10% of the total combined voting power of all classes of stock of the Company or of its Affiliate, the purchase price per Share purchasable under an Incentive Stock
Option shall be not less than 110% of the Fair Market Value of a Share on the date of grant of the Incentive Stock Option. 

(E) Any Incentive Stock Option authorized under the Plan shall contain such other provisions as the Committee shall deem
advisable, but shall in all events be consistent with and contain all provisions required in order to qualify the Option as an Incentive Stock Option. 

(F) Subject to adjustment as provided in Section 4(c), the maximum aggregate number of Shares that may be issued pursuant
to the exercise of Incentive Stock Options granted under this Plan shall not exceed [        ] Shares (the “ISO Limit”). 

(b) Stock Appreciation Rights. The Committee is hereby authorized to grant Stock Appreciation Rights to Eligible Persons subject to the
terms of the Plan and any applicable Award Agreement. Each Stock Appreciation Right granted under the Plan shall confer on the holder upon exercise the right to receive a whole number of Shares equal to the excess of (a) the Fair Market Value
of one Share on the date of exercise (or, if the Committee shall so determine, at any time during a specified period before or after the date of exercise) over (b) the grant price of the Stock Appreciation Right as determined by the Committee,
which grant price shall not be less than 100% of the Fair Market Value of one Share on the date of grant of the Stock Appreciation Right. The term of any Stock Appreciation Right shall not exceed 10 years. 

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

(i) Restrictions. Shares of Restricted Stock and Restricted Stock Units shall be subject to such restrictions as 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) 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. 
 (iii) Dividends. Dividends payable to holders of Restricted Stock and Restricted Stock Units shall be
handled pursuant to Section 9(s) of the Plan. 

  
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 (iv) Forfeiture. Except as otherwise determined by the Committee,
upon a Participant’s termination of Service (as determined under criteria established by the Committee) during the applicable restriction period, all applicable Shares of Restricted Stock and Restricted Stock Units at such time subject to
restriction shall be forfeited and with Shares of Restricted Stock reacquired by 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 Restricted Stock Units. 
 (d) Performance
Awards. The Committee is hereby authorized to grant Performance Awards to Eligible Persons subject to the terms of the Plan. A Performance Award granted under the Plan (i) may be denominated or payable in cash, Shares (including, without
limitation, Restricted Stock and Restricted Stock Units), other securities, other Awards or other property and (ii) shall confer on the holder thereof the right to receive payments, in whole or in part, upon the achievement of such Performance
Goals during such performance periods as the Committee shall establish. Subject to the terms of the Plan, the Performance Goals to be achieved during any performance period, the length of any performance period, the amount of any Performance Award
granted, the amount of any payment or transfer to be made pursuant to any Performance Award and any other terms and conditions of any Performance Award shall be determined by the Committee. 

(e) Dividend Equivalents. The Committee is hereby authorized to grant Dividend Equivalents to Eligible Persons under which the
Participant shall be entitled to receive payments (in cash, Shares, other securities, other Awards or other property as determined in the discretion of the Committee) equivalent to the amount of cash dividends paid by the Company to holders of
Shares with respect to a number of Shares determined by the Committee. Subject to the terms of the Plan, such Dividend Equivalents may have such terms and conditions as the Committee shall determine except that all Dividend Equivalents shall be
subject to the same vesting conditions as to the underlying Award to which they are attached. 
 (f) Other Stock Grants. The Committee
is hereby authorized, subject to the terms of the Plan, to grant to Eligible Persons Shares without restrictions thereon as are deemed by the Committee to be consistent with the purpose of the Plan. Subject to the terms of the Plan and any
applicable Award Agreement, such Other Stock Grant may have such terms and conditions as the Committee shall determine. 
 (g) Other
Stock-Based Awards. The Committee is hereby authorized to grant to Eligible Persons, subject to the terms of the Plan, such other Awards that are denominated or payable in, valued in whole or in part by reference to, or otherwise based on or
related to, Shares (including, without limitation, securities convertible into Shares), as are deemed by the Committee to be consistent with the purpose of the Plan. Shares or other securities delivered pursuant to a purchase right granted under
this Section 6(g) shall be purchased for such consideration, which may be paid by such method or methods and in such form or forms (including, without limitation, cash, Shares, other securities, other Awards or other property or any combination
thereof), as the Committee shall determine, the value of which consideration, as established by the Committee, shall not be less than 100% of the Fair Market Value of such Shares or other securities as of the date such purchase right is granted
unless the Committee expressly acknowledges in its granting resolutions that such Other Stock-Based Award has been structured to be exempt from or compliant with the requirements of Section 409A. 

(h) General. 

(i) 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. 
 (ii) 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 or in substitution for 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. 

  
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 (iii) 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. Such rules and procedures may include, without limitation, provisions for the payment or crediting of reasonable interest on installment or deferred payments or the grant or crediting of Dividend Equivalents with respect to
installment or deferred payments. 
 (iv) Limits on Transfer of Awards. No Award (other than Other Stock Grants) and
no right under any such Award shall be transferable by a Participant other than by will or by the laws of descent and distribution 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, 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; provided, further, that, if so determined by the Committee, a Participant may, at any time that such Participant holds such Option, transfer a Non-Qualified Stock Option to any “Family Member” (as such term is defined in the General Instructions to Form S-8 (or any successor to such
Instructions or such Form) under the Securities Act), provided that the Participant may not receive any consideration for such transfer, the Family Member may not make any subsequent transfers other than by will or by the laws of descent and
distribution and the Company receives written notice of such transfer. Except as otherwise determined by the Committee, each Award (other than an Incentive Stock Option) 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 (other than an Incentive Stock Option)
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. 

(v) Term of Awards. Subject to Section 6(a)(iv)(C), the term of each Award shall be fixed by the Committee at the
time of grant, but shall not be longer than 10 years from the date of grant. 
 (vi) 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 or other assets 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, unless and until there shall have been compliance with all applicable requirements of applicable securities laws, including the filing and effectiveness of the Form S-8
registration statement for the Shares issuable pursuant to the Plan, and all applicable listing requirements of any stock exchange or trading system, including the Nasdaq Stock Market, on which Common Stock is then traded. 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. 

(vii) Prohibition on Repricing. Except as provided in Section 4(c) of the Plan, no Option or Stock Appreciation
Right may be amended to reduce its initial exercise or grant price and no Option or Stock Appreciation Right shall be canceled and replaced with either cash or Shares or with Options or Stock Appreciation Rights having a lower exercise or grant
price, without the approval of the stockholders of the Company. In addition, no re-load Options may be granted without the approval of the stockholders of the Company. 

(i) Directors’ Automatic Stock Grant Program. 

  
 -9- 

 (i) Automatic Quarterly Restricted Stock Awards. Beginning with the
Adoption Date, each Non-Employee Director serving as a duly elected or appointed Class I, Class II, or Class III Director on the first day of each fiscal quarter shall receive 750 Shares for
each fiscal quarter of service. Shares granted pursuant to the Automatic Stock Grant Program shall vest in accordance with the schedule designated by the Committee as set forth in the Award Agreement. There shall be no limit on the number of Shares
any one Non-Employee Director may receive over his or her period of Board service pursuant to the Automatic Stock Grant Program, and Non-Employee Directors who have
previously been employees of the Company (or any Affiliate) or who have received one or more Awards from the Company prior to becoming a Non-Employee Director shall nevertheless be eligible to receive Shares
pursuant to the Automatic Stock Grant Program over their period of continued Board service. Non-Employee Directors must be serving as a member of the Board on the first day of the fiscal quarter in question to
be eligible to receive an Award under this subsection. If a Non-Employee Director ceases to serve as a member of the Board for any reason, such Non-Employee Director
shall no longer be eligible or entitled to receive any Awards contemplated by this subsection. Non-Employee Directors elected to fill less than a three-year term will receive a pro rata stock award 

(ii) Timing of Awards. Awards made pursuant to the Automatic Stock Grant Program shall be granted on the fifteenth (15th) day of the first month of the fiscal quarter for which the Non-Employee Director qualifies for such Award, provided that such day is not a Saturday, Sunday
or holiday observed by the NASDAQ Stock Market. In the event that the fifteenth (15th) day of the first month of the fiscal quarter is a Saturday, Sunday or holiday observed by the NASDAQ Stock
Market, the Shares shall be issued on the next regular business and trading day following the fifteenth (15th) day of the first month of the fiscal quarter. 

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, notwithstanding any other provision of the Plan or any Award Agreement, without the approval of the stockholders of the Company, no such amendment, alteration, suspension, discontinuation or termination shall be made that, absent
such approval: 
 (i) violates the rules or regulations of the National Association of Securities Dealers, Inc. or any
other securities exchange that are applicable to the Company; 
 (ii) causes the Company to be unable, under the Code,
to grant Incentive Stock Options under the Plan; 
 (iii) increases the number of shares authorized under the Plan as
specified in Section 4(a); or 
 (iv) permits the award of Options or Stock Appreciation Rights at a price less than
100% of the Fair Market Value of a Share on the date of grant of such Option or Stock Appreciation Right, as prohibited by Sections 6(a)(i) and 6(b) of the Plan or the repricing of Options or Stock Appreciation Rights, as prohibited by
Section 6(h)(vii) of the Plan. 
 (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. 

  
 -10- 

 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 Fair Market Value equal to the amount of such taxes (but only up to the maximum amount permitted to be withheld under applicable laws or regulations or financial accounting rules and without
causing the Award to be classified as a liability under financial accounting rules) 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 Fair Market Value equal to the amount of such taxes (but only up to the maximum amount permitted to be withheld under applicable laws or regulations or financial accounting rules and without causing the Award to be classified as a liability
under financial accounting rules). 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. A grant of any type made hereunder in any one year to an Eligible Person shall neither guarantee nor preclude a
further grant of that or any other type of Award to such Eligible Person in that year or subsequent years. 
 (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. 

(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. Except with respect to Shares of Restricted Stock as to which the Participant has been granted the right to vote, neither a Participant nor the Participant’s legal representative shall be, or have any of the rights and
privileges of, a stockholder of the Company with respect to any Shares issuable to such Participant upon the exercise or payment of any Award, in whole or in part, unless and until such Shares have been issued in the name of such Participant or such
Participant’s legal representative without restrictions thereto. 
 (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,
or as giving a Director of the Company or an Affiliate the right to continue as a Director or an Affiliate of the Company or any Affiliate, 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, or terminate the term of a Director of the Company or an Affiliate, 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 Participant 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 Participant ceasing to 

  
 -11- 

 
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)
Transferability. Unless the Committee determines otherwise, no Award granted under the Plan shall be transferable by a Participant other than by will or the laws of descent and distribution or, with respect to such grants other than grants of
Incentive Stock Options, to a Participant’s Family Member by gift or a qualified domestic relations order as defined by the Code. Unless the Committee determines otherwise, an Option or SAR may be exercised only by the Participant thereof; by
his or her Family Member if such person has acquired the Option or SAR by gift or qualified domestic relations order; by his or her executor or administrator or the executor or administrator of the estate of any of the foregoing or any person to
whom the Option is transferred by will or the laws of descent and distribution; or by his or her guardian or legal representative or the guardian or legal representative of any of the foregoing; provided that Incentive Stock Options may be exercised
by any Family Member, guardian or legal representative only if permitted by the Code and any regulations thereunder. All provisions of the Plan shall in any event continue to apply to any Award granted under the Plan and transferred as permitted by
this Section 9(g), and any transferee of any such Award shall be bound by all provisions of the Plan as and to the same extent as the applicable original Participant. 

(h) 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. 
 (i)
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. 

(j) 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 Participant. To the extent that a Participant 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. 
 (k) 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. 
 (l) 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. 

(m) 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. 

(n) Section 16 Compliance. The Plan is intended to comply in all respects with
Rule 16b-3 or any successor provision, as in effect from time to time, and in all events the Plan shall be construed in accordance with the requirements of
Rule 16b-3. If any Plan provision does not comply with Rule 16b-3 as hereafter amended or interpreted, the provision shall be deemed inoperative. The
Board, in its absolute discretion, may bifurcate the Plan so as to restrict, limit or condition the use of any provision of the Plan with respect to persons who are officers or Directors subject to Section 16 of the Exchange Act without so
restricting, limiting or conditioning the Plan with respect to other Eligible Persons. 

  
 -12- 

 (o) 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 Participant 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. 

(p) Section 409A. Notwithstanding anything in the Plan to the contrary, the Plan and Awards granted hereunder are
intended to be exempt from or comply with the requirements of Section 409A and shall be interpreted in a manner consistent with such intention. In the event that any provision of the Plan or an Award Agreement is determined by the Committee to
not comply with the applicable requirements of Section 409A or the applicable regulations and other guidance issued thereunder, the Committee shall have the authority (but without an affirmative obligation) to take such actions and to make such
changes to the Plan or an Award Agreement as the Committee deems necessary to comply with such requirements. Any payment made pursuant to any Award shall be considered a separate payment and not one of a series of payments for purposes of
Section 409A. Notwithstanding the foregoing or anything elsewhere in the Plan or an Award Agreement to the contrary, if upon a Participant’s Separation From Service he/she is then a Specified Employee, then solely to the extent necessary
to comply with Section 409A and avoid the imposition of taxes under Section 409A, the Company shall defer payment of “nonqualified deferred compensation” subject to Section 409A payable as a result of and within six
(6) months following such Separation From Service under this Plan until the earlier of (i) the first business day of the seventh month following the Participant’s Separation From Service, or (ii) twenty (20) days after the
Company receives written confirmation of the Participant’s death. Any such delayed payments shall be made without interest. While it is intended that all payments and benefits provided under the Plan or an Award will be exempt from or comply
with Section 409A, the Company makes no representation or covenant to ensure that the payments under the Plan or an Award are exempt from or compliant with Section 409A. In no event whatsoever shall the Company be liable if a payment or
benefit under the Plan or an Award is challenged by any taxing authority or for any additional tax, interest or penalties that may be imposed on a Participant by Section 409A or any damages for failing to comply with Section 409A. The
Participant will be entirely responsible for any and all taxes on any benefits payable to such Participant as a result of the Plan or an Award. If the applicable Award Agreement or Participant’s employment agreement provides for
Section 409A related provisions other than what is specified above in this Section 9(p), then such provisions in the Award or employment agreement shall govern. 

(q) Change in Control. In the event that there is a Change in Control and/or the Company is a party to a merger or acquisition or
reorganization or similar transaction, outstanding Awards shall be subject to the merger agreement or other applicable transaction agreement. Such agreement may provide, without limitation, that subject to the consummation of the applicable
transaction, for the assumption (or substitution) of outstanding Awards by the surviving entity or its parent, for their continuation by the Company (if the Company is a surviving corporation), for accelerated vesting, or for their cancellation
either with or without consideration, in all cases without the consent of the Participant. 
 (r) Recoupment of Compensation. The
Company may (i) cause the cancellation of any Award, (ii) require reimbursement of any Award by a Participant and (iii) effect any other right of recoupment of equity or other compensation provided under this Plan or otherwise in
accordance with Company policies as may be adopted and/or modified from time to time by the Company and/or applicable law (each, a “Clawback Policy”). In addition, a Participant may be required to repay to the Company certain
previously paid compensation, whether provided under this Plan or an Award Agreement or otherwise, in accordance with the Clawback Policy. By accepting an Award, a Participant is also agreeing to be bound by the Company’s Clawback Policy which
may be amended from time to time by the Company in its discretion (including without limitation to comply with applicable laws or stock exchange requirements) and is further agreeing that all of the Participant’s Awards may be unilaterally
amended by the Company to the extent needed to comply with the Clawback Policy. 

  
 -13- 

 (s) Dividends. No dividends (that are paid by the Company to holders of Shares) will
be paid or accrued with respect to Options, Stock Appreciation Rights, Restricted Stock Units or unearned Performance Awards; however, dividends may be paid with respect to unvested Restricted Stock awards issued under
the Plan that are subject to time-vesting requirements only. 
 (t) Dissolution. To the extent not previously exercised or
settled, all Awards shall terminate immediately prior to the dissolution or liquidation of the Company and shall be forfeited to the Company (except for repayment of any amounts a Participant had paid to the Company to acquire unvested Shares
underlying the forfeited Awards). 
 Section 10. Effective Date of the Plan 

The Plan shall be effective as of the date of its approval by the Board (the “Adoption Date”), however no Awards may be
granted until the Plan has been approved by Company stockholders. 
 Section 11. Term of the Plan 

No Award shall be granted under the Plan after (a) the tenth anniversary of the Adoption Date, 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. 

  
 -14-EX-10.6

 Exhibit 10.6 

Notice of Stock Options 
  

			
	Optionee:	  	Option Number:
		
	Address:	  	Plan: 2019 Omnibus Incentive Plan

 Notice is hereby given of the following Option Award grant (the “Option”) to purchase shares of the Common Stock of
The Pennant Group, Inc. (the “Corporation”): 
  

			
	 Grant Date:
	  	 Number of Option Shares: ***     ***

		
	 Type of Options: Non-Incentive
	  	 Exercise Price Per Share:

 V E S T I N G 

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

Expiration Date: Ten years from the Grant or upon earlier termination of the Option 

Except as otherwise provided in the Option Agreement, the Option may be exercised for vested Shares by Optionee in accordance with the following schedule:

  

			
	 On or after each of

the following dates
	  	 Number of Stock Options vested

 By accepting this Option Award, Optionee acknowledges and agrees that the option rights herein are granted only subject to and
in accordance with the terms of (i) the enclosed NON-INCENTIVE STOCK OPTION AWARD TERMS AND CONDITIONS (together with this Notice of Grant of Stock Options, the “Option Agreement”), and
(ii) THE PENNANT GROUP, INC. 2019 OMNIBUS INCENTIVE PLAN (the “Plan”), both of which are incorporated herein by this reference. Option Shares purchased pursuant to this Option Award can only be acquired subject to the terms set forth
in the Plan and the Option Agreement, whether said options are purchased electronically or in person. All capitalized terms in this Notice of Grant of Stock Options shall have the meaning assigned to them in the Option Agreement or the Plan. 

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

 

			
	 THE PENNANT GROUP, INC.
 a
Delaware corporation

		
	By:	 	      

			
	Name:	 	  

 
			
	Title:	 	  

 THE PENNANT GROUP, INC. 

NON-INCENTIVE STOCK OPTION AWARD 

TERMS AND CONDITIONS 
 These NON-INCENTIVE STOCK OPTION AWARD TERMS AND CONDITIONS are an integral part of the foregoing Notice of Grant of Stock Options (the “Notice,” and together with these Terms and Conditions, the
“Option Agreement”) made by The Pennant Group, Inc., a Delaware corporation (the “Company”) to the individual “Optionee” named therein. All capitalized terms used herein but not defined in
the Option Agreement shall have the meanings given to them in The Pennant Group, Inc. 2019 Omnibus Incentive Plan (the “Plan”), the terms and conditions of which are incorporated herein by this reference. 

1. Grant of Option. The Company hereby grants Optionee, on the date such grant was approved by the Committee (the “Grant
Date”), the option (the “Option”) to purchase all or any part of the number of Option Shares set forth in the Notice (the “Shares”) of Common Stock of the Company at the exercise price per share set forth
in the Notice, according to the terms and conditions set forth in this Option Agreement and in the Plan. The Option will not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as
amended (the “Code”). The Option is issued under the Plan and is subject to its terms and conditions. A copy of the Plan will be furnished upon request of Optionee. 

The Option shall terminate at the close of business on the Expiration Date set forth in the Notice (the “Expiration Date”)
unless sooner terminated or cancelled in accordance with this Option Agreement or the Plan. 
 2. Vesting of Option Rights. 

(a) Except as otherwise provided in this Option Agreement, the Option may be exercised for vested Shares by Optionee in accordance with the
schedule set forth in the Notice. 
 (b) During the lifetime of Optionee, the Option shall be exercisable only by Optionee and shall not be
assignable or transferable by Optionee, other than by will or the laws of descent and distribution; provided however, that Optionee may transfer the Option to any “Family Member” (as such term is defined in the General Instructions
to Form S-8 (or any successor to such Instructions or such Form) under the Securities Act), provided that the Participant may not receive any consideration for such transfer, the Family Member may not
make any subsequent transfers other than by will or by the laws of descent and distribution and the Company receives written notice of such transfer. 

3. Exercise of Option after Death or Termination of Service. The Option shall terminate and may no longer be exercised if Optionee
ceases to provide Service to the Company or its affiliates, except that: 
 (a) If Optionee’s Service shall be terminated for any
reason, voluntary or involuntary, other than for “Cause” (as defined in Section 3(e)) or Optionee’s death or disability (within the meaning of Section 22(e)(3) of the Code), Optionee may at any time within a period of
3 months after such termination exercise the Option to the extent the Option was vested and exercisable by Optionee on the date of the termination of Optionee’s Service. 

(b) If Optionee’s Service is terminated for Cause, the Option shall be terminated as of the date of the act giving rise to such
termination. 
 (c) If Optionee shall die while the Option is still exercisable according to its terms or if Optionee’s Service
is terminated because Optionee has become disabled (within the meaning of Section 22(e)(3) of the Code) while providing Service to the Company and Optionee shall not have fully exercised the Option, such Option may be exercised at any time
within 12 months after Optionee’s death or date of termination of Service for disability by Optionee, personal representatives or administrators or guardians of Optionee as applicable, or by any person or persons to whom the Option is
transferred by will or the applicable laws of descent and distribution, to the extent of the full number of Shares Optionee was entitled to purchase under the Option on (i) the earlier of the date of death or termination of Service or
(ii) the date of termination for such disability, as applicable. 
  

 (d) Notwithstanding the above, in no case may the Option be exercised to any extent by
anyone after the Expiration Date. 
 (e) “Cause” shall mean, with respect to a Optionee, the occurrence of any of the following:
(i) Optionee’s personal dishonesty, willful misconduct, or breach of fiduciary duty involving personal profit, (ii) Optionee’s continuing intentional or habitual failure to perform stated duties, (iii) Optionee’s
violation of any law (other than minor traffic violations or similar misdemeanor offenses not involving moral turpitude), (iv) Optionee’s material breach of any provision of an employment or independent contractor agreement with the Company, or
(v) any other act or omission by a Optionee that, in the opinion of the Committee, could reasonably be expected to adversely affect the Company’s business, financial condition, prospects and/or reputation. In each of the foregoing
subclauses (i) through (v), whether or not a “Cause” event has occurred will be determined by the Committee in its sole discretion or, in the case of Optionees who are Directors or officers or persons subject to Section 16 of the
Exchange Act, the Board, each of whose determination shall be final, conclusive and binding. A Optionee’s Service shall be deemed to have terminated for Cause if, after the Optionee’s Service has terminated, facts and circumstances are
discovered that would have justified a termination for Cause, including, without limitation, violation of material Company policies or breach of noncompetition, confidentiality or other restrictive covenants that may apply to the Optionee. The
foregoing definition shall not in any way preclude or restrict the right of the Company (or any Affiliate) to discharge or dismiss Optionee 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 Option Agreement, to constitute grounds for termination for Cause. 
 4.
Method of Exercise of Option. Subject to the foregoing, the Option may be exercised in whole or in part from time to time by serving written notice of exercise on the Company at its principal office or the Company’s designated agent for
such purposes, within the Option period. The notice shall state the number of Shares as to which the Option is being exercised and shall be accompanied by payment of the exercise price. Payment of the exercise price shall be made (i) in cash
(including bank check, valid personal check or money order payable to the Company), or (ii) with the approval of the Company (which may be given in its sole discretion), by delivering to the Company for cancellation shares of the Company’s
Common Stock already owned by Optionee having a Fair Market Value (as defined in the Plan) equal to the full exercise price of the Shares being acquired. Only that portion of the Option covering vested Option Shares is exercisable at any time.
Subject to Section 402 of the Sarbanes- Oxley Act of 2002, to the extent this Option is exercised for vested Shares, the Option may be exercised in whole or in part from time to time through a special sale and remittance procedure pursuant to
which Optionee shall concurrently provide irrevocable instructions (1) to Optionee’s brokerage firm to effect the immediate sale of the purchased Shares and remit to the Company, out of the sale proceeds available on the settlement date,
sufficient funds to cover the aggregate exercise price payable for the purchased Shares plus all applicable income and employment taxes required to be withheld by the Company by reason of such exercise, and (2) to the Company to deliver the
certificates for the purchased Shares directly to such brokerage firm in order to complete the sale. 
 5. Miscellaneous. 

(a) Plan Provisions Control. The Option award memorialized in this Option Agreement is made solely upon the terms and conditions set
forth herein and in the Plan and any related documents. The Option Agreement and the Plan together constitute the entire agreement between the parties hereto with regard to the subject matter hereof. In the event that any provision of the Option
Agreement conflicts with or is inconsistent in any respect with the terms of the Plan, the terms of the Plan shall control. 
 (b) No
Rights of Stockholders. Neither Optionee, Optionee’s legal representative nor a permissible assignee of this Option shall have any of the rights and privileges of a stockholder of the Company with respect to the Shares, unless and until
such Shares have been issued in the name of Optionee, Optionee’s legal representative or permissible assignee, as applicable. 
 (c)
No Right to Employment. The grant of the Option shall not be construed as giving Optionee the right to be retained in the employ of, or as giving a director of the Company or an Affiliate (as defined in the Plan) the right to continue as a
director of the Company or an Affiliate with, the Company or an Affiliate, nor will it affect in any way the right of the Company or an Affiliate to terminate such employment or position at any 

  
 3 

 
time, with or without cause. In addition, the Company or an Affiliate may at any time dismiss Optionee from employment, or terminate the term of a director of the Company or an Affiliate, free
from any liability or any claim under the Plan or the Option Agreement. Nothing in the Option Agreement 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 Option granted hereunder shall not form any part of the wages or salary of Optionee 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 Option Agreement or 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, Optionee shall be deemed to have
accepted all the conditions of the Plan and the Option Agreement and the terms and conditions of any rules and regulations adopted by the Committee and shall be fully bound thereby. 

(d) Governing Law. The validity, construction and effect of the Plan and the Option Agreement, and any rules and regulations relating to
the Plan and the Option Agreement, shall be determined in accordance with the internal laws, and not the law of conflicts, of the State of Delaware. 

(e) Severability. If any provision of the Option Agreement is or becomes or is deemed to be invalid, illegal or unenforceable in any
jurisdiction or would disqualify the Option Agreement under any law deemed applicable by the Committee (as defined in the Plan), 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 Option Agreement, such provision shall be stricken as to such jurisdiction or the Option Agreement, and the remainder of the
Option Agreement shall remain in full force and effect. 
 (f) No Trust or Fund Created. Neither the Plan nor the Option Agreement
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 Optionee or any other person. 

(g) Headings. Headings are given to the Sections and subsections of the Option Agreement 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 Option Agreement or any provision thereof. 

(h) 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 of the Option unless such exercise and the issuance and delivery of the applicable Shares pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of
1933, as amended, the Exchange Act of 1934, as amended, 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 of the purchase
price relating to the Option, 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. 
 (i) Withholding. In
order to provide the Company with the opportunity to claim the benefit of any income tax deduction which may be available to it upon the exercise of the Option and in order to comply with all applicable federal or state income tax laws or
regulations, the Company may take such action as it deems appropriate to insure that, if necessary, all applicable federal or state payroll, withholding, income or other taxes are withheld or collected from Optionee. 

(j) Consultation With Professional Tax and Investment Advisors. The holder of this Option Agreement acknowledges that the grant,
exercise, vesting or any payment with respect to this Option Agreement, and the sale or other taxable disposition of the Shares acquired pursuant to the exercise thereof, may have tax consequences pursuant to the Code or under local, state or
international tax laws. The holder further acknowledges that such holder is relying solely and exclusively on the holder’s own professional tax and investment advisors with respect to any and all such matters (and is not relying, in any manner,
on the Company or any of its employees or representatives). Finally, the holder understands and agrees that any and all tax consequences resulting from the Option Agreement and its grant, exercise, vesting or any payment with respect thereto, and
the sale or other taxable disposition of the Shares acquired pursuant to the Plan, is solely and exclusively the responsibility of the holder without any expectation or understanding that the Company or any of its employees or representatives will
pay or reimburse such holder for such taxes or other items. 

  
 4

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