Company: TH
Filing Date: 2025-04-08
Form Type: DEF 14A
Source: 0001104659-25-032818
Chunk: 69

Company: Target Hospitality Corp.
Filing Date: 2025-04-08
Form: DEF 14A
Chunk 69
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| ​ | 2025proxy statement | ​ | ​ | ​ | 65 | ​ |

TABLE OF CONTENTS PROPOSAL 4: SECOND AMENDMENT TO THE INCENTIVE PLAN Material U.S. Federal Income Tax Consequences The following is a general summary under current law of the principal United States federal income tax consequences related to awards under the Amended Incentive Plan. This summary deals with the general federal income tax principles that apply and is provided only for general information. Other kinds of taxes, such as state, local and foreign income taxes and federal employment taxes, are not discussed. This summary is not intended as tax advice to participants, who should consult their own tax advisors. Non-Qualified Stock Options . If an optionee is granted a non-qualified stock option under the Amended Incentive Plan, the optionee should not have taxable income on the grant of the stock option. Generally, the optionee should recognize ordinary income at the time of exercise in an amount equal to the fair market value of the shares acquired on the date of exercise, less the exercise price paid for the shares. The optionee’s basis in the common stock for purposes of determining gain or loss on a subsequent sale or disposition of such shares generally will be the fair market value of Target Hospitality common stock on the date the optionee exercises such stock option. Any subsequent gain or loss will be taxable as a long-term or short-term capital gain or loss. We or our subsidiaries or affiliates generally should be entitled to a federal income tax deduction at the time and for the same amount as the optionee recognizes ordinary income. Incentive Stock Options . A participant receiving ISOs should not recognize taxable income upon grant. Additionally, if applicable holding period requirements are met, the participant should not recognize taxable income at the time of exercise. However, the excess of the fair market value of the shares of Target Hospitality common stock received over the ISO exercise price is an item of tax preference income potentially subject to the alternative minimum tax. If stock acquired upon exercise of an ISO is held for a minimum of two years from the date of grant and one year from the date of exercise and otherwise satisfies the ISO requirements, the gain or loss (in an amount equal to the difference between the fair market value on the date of disposition and the exercise price) upon disposition of the stock will be treated as a long-term capital gain or loss, and we will not be entitled to any deduction. If the holding period requirements are not met, the ISO will be