Exhibit 10.4

 

FORM OF RESTRICTED STOCK UNIT AGREEMENT FOR NON-EMPLOYEE DIRECTORS

 

This Restricted Stock Unit Agreement (this “Agreement”) is made and entered into
as of [DATE] (the “Grant Date”) by and between Target Hospitality Corp., a
Delaware corporation (the “Company”), and [DIRECTOR NAME] (the “Participant”).
This Agreement is being entered into pursuant to the Target Hospitality Corp.
2019 Incentive Award Plan (the “Plan”). Capitalized terms used in this Agreement
but not defined herein will have the meaning ascribed to them in the Plan.

 

1.                                      Grant of Restricted Stock Units.
Pursuant to Section 9 of the Plan, the Company hereby issues to the Participant
on the Grant Date an Award consisting of [NUMBER] Restricted Stock Units (the
“Restricted Stock Units”). Each Restricted Stock Unit represents the right to
receive one Common Share, subject to the terms and conditions set forth in this
Agreement and the Plan. The Restricted Stock Units shall be credited to a
separate account maintained for the Participant on the books and records of the
Company (the “Account”). All amounts credited to the Account shall continue for
all purposes to be part of the general assets of the Company.

 

2.                                      Consideration. The grant of the
Restricted Stock Units is made in consideration of the services to be rendered
by the Participant to the Company.

 

3.                                      Vesting. Except as otherwise provided
herein or in the Plan, provided that the Participant remains in continuous
service through the applicable vesting date, the Restricted Stock Units will
vest in accordance with the schedule set forth in the chart below (the period
during which restrictions apply, the “Restricted Period”). Once vested, the
Restricted Stock Units shall become “Vested Units.”

 

Vesting Date

 

Percentage of Vested Units

 

Number of Vested Units

 

The first anniversary of the Grant Date or, if earlier, the date of the first
Annual Meeting of the Stockholders of the Company following the Grant Date

 

100

%

 

 

 

4.                                      Termination of Service/Change in
Control.

 

4.1                               The vesting schedule above notwithstanding, if
the Participant’s service terminates for any reason at any time before all of
the Restricted Stock Units have vested, the Participant’s unvested Restricted
Stock Units shall be automatically forfeited upon such termination of service
and neither the Company nor any Affiliate shall have any further obligations to
the Participant under this Agreement.

 

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4.2                               Notwithstanding any provision of this
Agreement or the Plan to the contrary, upon the occurrence of a Change in
Control, any Restricted Period in effect on the date of the Change in Control
shall expire as of such date and any unvested Restricted Stock Units shall vest.

 

5.                                      Restrictions. Subject to any exceptions
set forth in this Agreement or the Plan, during the Restricted Period and until
such time as the Restricted Stock Units are settled, the Restricted Stock Units
or the rights relating thereto may not be assigned, alienated, pledged,
attached, sold or otherwise transferred or encumbered by the Participant. Any
attempt to assign, alienate, pledge, attach, sell or otherwise transfer or
encumber the Restricted Stock Units or the rights relating thereto shall be
wholly ineffective and, if any such attempt is made, the Restricted Stock Units
will be forfeited by the Participant and all of the Participant’s rights to such
units shall immediately terminate without any payment or consideration by the
Company. Notwithstanding the foregoing, the Restricted Stock Units may be
transferred during the Restricted Period to a Permitted Transferee with the
prior written consent of the Committee, in accordance with Section 16(b)(ii) of
the Plan. Any Permitted Transferee shall be bound by and subject to all of the
terms and conditions of this Agreement and the Plan relating to the transferred
Restricted Stock Units except as otherwise provided in Section 16(b)(iii) of the
Plan.  The Company shall cooperate with any Permitted Transferee and the
Company’s transfer agent in effectuating any transfer permitted under this
Agreement.

 

6.                                      Rights as Shareholder; Dividend
Equivalents.

 

6.1                               The Participant shall not have any rights of a
shareholder with respect to the Common Shares underlying the Restricted Stock
Units unless and until the Restricted Stock Units vest and are settled by the
issuance of such Common Shares. Upon and following the settlement of the
Restricted Stock Units, the Participant shall be the record owner of the Common
Shares underlying the Restricted Stock Units unless and until such shares are
sold or otherwise disposed of, and as record owner shall be entitled to all
rights of a shareholder of the Company (including voting rights).

 

6.2                               In the event that the Company pays any cash
dividends on its Common Shares between the Grant Date and the date when the
Restricted Stock Units are settled in accordance with Section 7 hereof or are
forfeited, the Participant’s Account shall be credited on the date such dividend
is paid to shareholders with an amount equal to all cash dividends that would
have been paid to the Participant if one Common Share had been issued on the
Grant Date for each Restricted Stock Unit granted to the Participant (“Dividend
Equivalents”). Dividend Equivalents shall be credited to the Participant’s
Account and interest may be credited on the amount of cash Dividend Equivalents
credited to the Participant’s Account at a rate and subject to such terms as
determined by the Committee. Dividend Equivalents credited to the Participant’s
Account shall be subject to the same vesting and other restrictions as the
Restricted Stock Units to which they are attributable and shall be paid on the
same date that the Restricted Stock Units to which they are attributable are
settled in accordance with Section 7 hereof. Dividend Equivalents credited to
the Participant’s Account shall be distributed in cash or, at the discretion of
the Committee, in Common Shares having a Fair Market Value equal to the amount
of the Dividend Equivalents and interest, if any. Any accumulated and unpaid
Dividend

 

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Equivalents attributable to Restricted Stock Units that are cancelled will not
be paid and will be immediately forfeited upon cancellation of the Restricted
Stock Units.

 

7.                                      Payment/Settlement of Restricted Stock
Units.

 

7.1                               As soon as practicable following, but in no
event more than 30 days after, the earlier of (a) the date on which the
Participant terminates service as a director of the Company, provided that such
termination constitutes a “separation from service” under Section 409A of the
Code, or (b) the date of a Change in Control, provided that such Change in
Control constitutes a change in ownership or effective control of the Company or
a change in the ownership of a substantial portion of the assets of the Company
within the meaning of Treas. Reg. Section 1.409A-3(i)(5), the Company shall
(i) issue and deliver to the Participant, or his or her beneficiary, without
charge, the number of Common Shares equal to the number of Vested Units, and
(ii) enter the Participant’s name on the books of the Company as the shareholder
of record with respect to the Common Shares delivered to the Participant;
provided, however, that the Committee may, in its sole discretion elect to
(x) pay cash or part cash and part Common Share in lieu of delivering only
Common Shares in respect of the Restricted Stock Units or (y) defer the delivery
of Common Shares (or cash or part Common Shares and part cash, as the case may
be) beyond the expiration of the Restricted Period if such delivery would result
in a violation of applicable law until such time as is no longer the case. If a
cash payment is made in lieu of delivering Common Shares, the amount of such
payment shall be equal to the Fair Market Value of the Common Shares as of the
date on which the Restricted Period lapsed with respect to the Restricted Stock
Units, less an amount equal to any required tax withholdings.

 

7.2                               In the event the Participant is a “specified
employee” as determined pursuant to Section 409A of the Code, at the time that
the Participant receives a payment in connection with the Participant’s
“separation from service” as determined pursuant to Section 409A of the Code
(other than for death), the payment shall instead be made on the earlier of the
first U.S. business day after the date that is (a) six months following the
Participant’s separation from service as determined pursuant to Section 409A of
the Code or (b) the date of the Participant’s death to the extent such delayed
payment is otherwise required to avoid a prohibited distribution under
Section 409A of the Code.

 

8.                                      No Rights to Continued Service. Neither
the Plan nor this Agreement shall confer upon the Participant any right to be
retained in any position, as a director of the Company or any Affiliate or in
any other capacity. Further, nothing in the Plan or this Agreement shall be
construed to limit the discretion of the Company or an Affiliate to terminate
the Participant’s service with the Company or an Affiliate at any time.

 

9.                                      Adjustments. In the event of any change
to the outstanding Common Shares or the capital structure of the Company
(including, without limitation, a Change in Control), if required, the
Restricted Stock Units shall be adjusted or terminated in any manner as
contemplated by Section 12 of the Plan.

 

10.                               Beneficiary Designation. The Participant may
file with the Committee a written designation of one or more persons as the
beneficiary(ies) who shall be entitled to his or her

 

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rights under this Agreement and the Plan, if any, in case of his or her death,
in accordance with Section 16(f) of the Plan.

 

11.                               Tax Liability and Withholding.

 

11.1                        The Participant shall be required to pay, and the
Company shall have the right and is authorized to withhold, from any cash,
Common Shares, other securities or other property deliverable under this
Agreement or from any fees or other amounts owing to the Participant, the amount
of any required withholding taxes in respect of the Restricted Stock Units and
to take all such other action as the Committee deems necessary to satisfy all
obligations for the payment of such withholding taxes in accordance with
Section 16(c) of the Plan. The Committee may permit the Participant to satisfy
any federal, state or local tax withholding obligation by any of the following
means, or by a combination of such means of the Plan, (a) tendering a cash
payment, (b) authorizing the Company to withhold Common Shares from the Common
Shares otherwise issuable or deliverable to the Participant as a result of the
vesting of the Restricted Stock Units (provided, however, that no Common Shares
shall be withheld with a value exceeding the maximum amount of tax required to
be withheld by law), or (c) delivering to the Company previously owned and
unencumbered Common Shares. Notwithstanding the foregoing, in the event the
Participant fails to provide timely payment of all sums required to satisfy any
applicable federal, state and local withholding obligations in respect of the
Restricted Stock Units, the Company shall treat such failure as an election by
the Participant to satisfy all or any portion of the Participant’s required
payment obligation pursuant to Section 11.1(b) above.

 

11.2                        Notwithstanding any action the Company takes with
respect to any or all income tax, social insurance, payroll tax, or other
tax-related withholding (“Tax-Related Items”), the ultimate liability for all
Tax-Related Items is and remains the Participant’s responsibility and the
Company (a) makes no representation or undertakings regarding the treatment of
any Tax-Related Items in connection with the grant, vesting or settlement of the
Restricted Stock Units or the subsequent sale of any shares; and (b) does not
commit to structure the Restricted Stock Units to reduce or eliminate the
Participant’s liability for Tax-Related Items.

 

12.                               Compliance with Law. The issuance and transfer
of Common Shares shall be subject to compliance by the Company and the
Participant with all applicable requirements of federal and state securities
laws and with all applicable requirements of any stock exchange on which the
Common Shares may be listed. No Common Shares shall be issued pursuant to
Restricted Stock Units unless and until any then applicable requirements of
state or federal laws and regulatory agencies have been fully complied with to
the satisfaction of the Company and its counsel. The Participant understands
that the Company is under no obligation to register the Common Shares with the
Securities and Exchange Commission, any state securities commission or any stock
exchange to effect such compliance.

 

13.                               Notices. Any notice required to be delivered
to the Company under this Agreement shall be in writing and addressed to the
General Counsel & Secretary of the Company at the Company’s principal corporate
offices. Any notice required to be delivered to the Participant under this
Agreement shall be in writing and addressed to the Participant at the
Participant’s address as shown in the records of the Company. Either party may
designate

 

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another address in writing (or by such other method approved by the Company)
from time to time.

 

14.                               Governing Law. This Agreement will be
construed and interpreted in accordance with the laws of the State of New York
without regard to conflict of law principles.

 

15.                               Interpretation. Any dispute regarding the
interpretation of this Agreement shall be submitted by the Participant or the
Company to the Committee (excluding the Participant if the Participant serves on
the Committee) for review. The resolution of such dispute by the Committee shall
be final and binding on the Participant and the Company.

 

16.                               Participant Bound by Plan. This Agreement is
subject to all terms and conditions of the Plan as approved by the Company’s
shareholders. The terms and provisions of the Plan as it may be amended from
time to time are hereby incorporated herein by reference. In the event of a
conflict between any term or provision contained herein and a term or provision
of the Plan, the applicable terms and provisions of the Plan will govern and
prevail.

 

17.                               Successors and Assigns. The Company may assign
any of its rights under this Agreement. This Agreement will be binding upon and
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer set forth herein, this Agreement will be binding
upon the Participant and the Participant’s beneficiaries, executors,
administrators and the person(s) to whom the Restricted Stock Units may be
transferred by will or the laws of descent or distribution.

 

18.                               Severability. The invalidity or
unenforceability of any provision of the Plan or this Agreement shall not affect
the validity or enforceability of any other provision of the Plan or this
Agreement, and each provision of the Plan and this Agreement shall be severable
and enforceable to the extent permitted by law. If any provision of the Plan or
any Award or Award agreement is or becomes or is deemed to be invalid, illegal,
or unenforceable in any jurisdiction or as to any person or entity or Award, 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 the
applicable laws, or if it cannot be construed or deemed amended without, in the
determination of the Committee, materially altering the intent of the Plan or
the Award, such provision shall be construed or deemed stricken as to such
jurisdiction, person or entity or Award and the remainder of the Plan and any
such Award shall remain in full force and effect.

 

19.                               Discretionary Nature of Plan. The Plan is
discretionary and may be amended, cancelled or terminated by the Company at any
time, in its discretion. The grant of the Restricted Stock Units in this
Agreement does not create any contractual right or other right to receive any
Restricted Stock Units or other Awards in the future. Future Awards, if any,
will be at the sole discretion of the Company. Any amendment, modification, or
termination of the Plan shall not constitute a change or impairment of the terms
and conditions of the Participant’s service with the Company.

 

20.                               Amendment. The Committee has the right to
amend, alter, suspend, discontinue or cancel Restricted Stock Units,
prospectively or retroactively; provided that no such

 

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amendment shall adversely affect the Participant’s material rights under this
Agreement without the Participant’s consent.

 

21.                               Section 409A. This Agreement is intended to
comply with Section 409A of the Code or an exemption thereunder and shall be
construed and interpreted in a manner consistent with the requirements for
avoiding additional taxes or penalties under Section 409A of the Code.
Notwithstanding the foregoing, the Company makes no representations that the
payments and benefits provided under this Agreement comply with Section 409A of
the Code and in no event shall the Company be liable for all or any portion of
any taxes, penalties, interest or other expenses that may be incurred by the
Participant on account of non-compliance with Section 409A of the Code.

 

22.                               Counterparts. This Agreement may be executed
in counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. Counterpart signature
pages to this Agreement transmitted by facsimile transmission, by electronic
mail in portable document format (.pdf), or by any other electronic means
intended to preserve the original graphic and pictorial appearance of a
document, will have the same effect as physical delivery of the paper document
bearing an original signature.

 

23.                               Acceptance. The Participant hereby
acknowledges receipt of a copy of the Plan and this Agreement. The Participant
has read and understands the terms and provisions thereof, and accepts
Restricted Stock Units subject to all of the terms and conditions of the Plan
and this Agreement. The Participant acknowledges that there may be adverse tax
consequences upon the vesting or settlement of the Restricted Stock Units or
disposition of the underlying shares and that the Participant should consult a
tax advisor prior to such vesting, settlement or disposition.

 

[SIGNATURE PAGE FOLLOWS]

 

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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first above written.

 

 

TARGET HOSPITALITY CORP.

 

 

 

By:

 

 

Name:

 

Title:

 

 

 

[PARTICIPANT NAME]

 

 

 

By:

 

 

Name:

 

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