EXHIBIT 10.4

CONFIDENTIAL TREATMENT REQUESTED

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PERFORMANCE AWARD AGREEMENT UNDER THE

DYNACQ HEALTHCARE, INC. YEAR-2000 STOCK INCENTIVE PLAN

THIS AWARD AGREEMENT is made and entered into as of July 25, 2008 (the “Date of
Grant”), by and between Dynacq Healthcare, Inc. (the “Company”), and ******
(“Grantee”). To the extent not specifically defined in this Award Agreement, all
capitalized terms used in this Award Agreement will have the same meanings
ascribed to them in the Plan.

BACKGROUND

A.    The Board has adopted, and the Company’s shareholders have approved, the
Dynacq Healthcare, Inc. Year-2000 Stock Incentive Plan (the “Plan”), pursuant to
which Performance Share incentive awards may be granted to Grantees of the
Company and its Subsidiaries and certain other individuals.

B.    The Company or one of its Subsidiaries has agreed to employ the Grantee
and, as an inducement to Grantee accepting such employment, has agreed to grant
to Grantee a Performance Award under the terms of the Plan.

C.    Grantee has agreed to accept such employment and the grant of the
Performance Award under the terms of the Plan and as contained herein.

D.    Pursuant to the Plan, the Company and Grantee agree as follows:

AGREEMENT

1.    Grant of Award. The Company hereby grants to Grantee a Performance Award
of up to 1,000,000 Performance Shares, based on the Performance Objectives and
subject to the terms, conditions, and adjustments set forth in this Award
Agreement. The Performance Award will be equal to *******************. The
Committee or its designee shall certify in writing that these Performance
Objectives have been met prior to the payment of the Performance Award to
Grantee.

2.    Payment of Award. The Performance Award shall be paid exclusively in
Performance Shares, to be paid to Grantee each fiscal quarter during the
Performance Cycle. The number of Performance Shares to be paid to Grantee shall
be determined by dividing the Performance Award for such quarter by $3.74, which
represents the Fair Market Value of a share of Company Common Stock on the Date
of Grant. Subject to early termination of this Award Agreement pursuant to the
terms hereof, as soon as practicable but in no event later than 90 days
following the end of each fiscal quarter during the Performance Cycle and during
the fiscal quarter following the end of such Performance Cycle, the Company will
deliver to Grantee one share of Company Common Stock for each Performance Share
earned under this Award Agreement for such period. Any fractional share amount
shall be rounded down to the nearest

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CONFIDENTIAL TREATMENT REQUESTED

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EXHIBIT 10.4

whole share. A portion of the Performance Award may be withheld to satisfy the
payment of taxes if required by law. The Committee shall cause stock
certificates to be delivered to the Grantee with respect to such Performance
Shares, free of restrictions on transfer.

3.    Award Subject to Plan. This Award is granted under, and is expressly
subject to, the terms and provisions of the Plan, as amended from time to time,
which terms are incorporated herein by reference, and this Award Agreement.

4.    Performance Cycle. The Performance Cycle for this Award shall begin on the
Date of Grant and end on the earlier to occur of (i) ten (10) years after the
Date of Grant, or (ii) the issuance to Grantee of the maximum of 1,000,000
Performance Shares granted under this Award Agreement.

5.    Termination of Employment. This Award Agreement will terminate effective
upon the termination of employment of Grantee with the Company or any of its
Subsidiaries. If Grantee’s employment terminates for any reason after the end of
the Performance Cycle but before Grantee’s receipt of Performance Shares due him
for the previous quarter, Grantee will be entitled to receive any Performance
Shares payable under Section 2 of this Award Agreement. If Grantee’s employment
terminates before the end of the Performance Cycle on account of death,
Disability, Retirement or termination by the Company without Cause, any
Performance Award due hereunder shall be calculated based on ****************
through the date of termination of employment of Grantee, and any Performance
Shares shall be awarded to Grantee or his estate, successor or legal
representative, as the case may be, based on such calculation.

6.    Change in Control. Notwithstanding the foregoing or any provision of the
Plan to the contrary, upon a Change in Control prior to the date on which the
Performance Cycle ends:

 

  (i) Provided that either Grantee continues to be actively employed by the
Company or any Subsidiary on the date of such Change in Control, or such
Grantee’s employment was terminated on account of death, Disability or
Retirement prior to such Change in Control, the Performance Award and the
payment thereof shall be unaffected by such Change in Control and this Award
Agreement shall continue in full force and effect.

 

  (ii) If Grantee’s employment was terminated by the Company without Cause prior
to or effective upon such Change in Control and the Performance Objectives are
ultimately achieved for the fiscal quarter in which the Change in Control
occurred, the Performance Award due under Section 2 hereof shall be paid and
Performance Shares shall be awarded to Grantee for the entire the Performance
Cycle during which the Change in Control occurred.

7.    Grantee Rights. Unless and until the Performance Shares are paid pursuant
to Section 2 hereof, Grantee shall have no rights to own, hold, vote, receive
dividends or

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CONFIDENTIAL TREATMENT REQUESTED

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EXHIBIT 10.4

distributions on or enjoy or exercise other rights of ownership regarding the
Performance Shares. This Award Agreement shall not obligate the Company to
continue the employment of Grantee for any specified period of time; Grantee is
an “at will” employee of the Company or any of its Subsidiaries.

8.    Non-Transferability. Neither this Award nor any rights under this Award
Agreement may be assigned, transferred, or in any manner encumbered, and any
attempted assignment, transfer, mortgage, pledge or encumbrance except as herein
authorized, will be void and of no effect.

9.    Independent Legal and Tax Advice. Grantee has and will obtain dependent
legal and tax advice regarding the grant and exercise of this Award and the
disposition of the Performance Shares acquired hereby.

10.    Amendment. This Award may not be amended, modified or waived except by a
written instrument signed by the party against whom enforcement of any such
modification, amendment or waiver is sought.

11.    Venue; Choice of Law. Venue for any action arising hereunder shall be
exclusively in the federal and state courts of Harris County, Texas. To the
extent that federal laws do not otherwise control, this Award Agreement and all
determinations made and actions taken hereunder shall be governed by the laws of
the State of Nevada, without giving effect to principles of conflicts of laws,
and construed accordingly.

12.    Supersedure. This Award Agreement shall supersede and replace all prior
oral agreements and understandings, and any written agreements or understandings
not set forth in an Award Agreement in the form of a formal agreement
substantially identical to this Award Agreement between the Company an the
Grantee regarding the grant of any Award under the Plan.

An authorized representative of the Company has signed this Award Agreement, and
Grantee has signed this Award Agreement to evidence Grantee’s acceptance of the
Award on the terms specified in this Award Agreement, all as of the Date of
Grant. By signing this Award Agreement, Grantee acknowledges receipt of a copy
of the Plan and the related Plan Prospectus. The Grantee has reviewed the Plan
and this Award Agreement in their entirety, has had an opportunity to obtain the
advice of counsel prior to executing this Award Agreement, and fully understands
all terms and conditions of this Award Agreement. The Grantee hereby agrees to
accept as binding, conclusive and final all decisions or interpretations of the
Committee or the Board of Directors on any questions arising under the Plan.

DYNACQ HEALTHCARE, INC.

By:_/s/__Philip Chan

Philip Chan, CFO

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CONFIDENTIAL TREATMENT REQUESTED

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EXHIBIT 10.4

GRANTEE:

__/s/ ***********

Print Name: ***********