Exhibit 10.4


 


SoundHound AI, Inc.


Non-Employee Director
Compensation Policy


 


This Non-Employee Director
Compensation Policy (the “Director Compensation Policy”) is effective as of June 2, 2022 (the “Effective Date”).


 


Each member of the Board
of Directors (the “Board”) of SoundHound AI, Inc. (the “Company”) who is not also serving as an
employee of the Company or any of its subsidiaries (each such member, an “Outside Director”) will receive the compensation
described in this Director Compensation Policy for Board service on and after the Effective Date or, if such person becomes an Outside
Director after the Effective Date, the date on which such person commences service as an Outside Director.


 


This Director Compensation
Policy may be amended at any time in the sole discretion of the Board. Capitalized terms not explicitly defined in this Director Compensation
Policy but defined in the Plan (as defined below) will have the same definitions as in the Plan.


 


An Outside Director may
decline all or any portion of compensation under this Director Compensation Policy by giving notice to the Company prior to the date cash
is to be paid or equity awards are to be granted, as the case may be.


 


		1.	Annual Cash Retainer



 


		a.	Each Outside Director shall receive an annual cash retainer of $32,000 for his or her service on the Board, and each Outside Director
who serves as chair or member of the following committees of the Board will be paid an additional annual cash retainer as follows (together,
the “Annual Retainer”):



 


		i.	Chair of the Audit Committee: $20,000



 


		ii.	Member of the Audit Committee: $10,000



 


		iii.	Chair of the Compensation Committee: $14,500



 


		iv.	Member of the Compensation Committee: $7,300



 


		v.	Chair of the Nominating and Corporate Governance Committee: $7,500



 


		vi.	Member of the Nominating and Corporate Governance Committee: $3,800



 


For the avoidance
of doubt, an Outside Director who serves as chair of a committee of the Board will not also be paid the additional annual cash retainer
for service as a member of such committee.


 









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		b.	The Annual Retainer is for general availability and participation in meetings and conference calls, inclusive of all Board and committee
service. There is no additional compensation for attending individual Board or committee meetings, or for participation in any other committees
or subcommittees of the Board.



 


		c.	The Annual Retainer will be paid in four (4) equal quarterly payments at the end of each calendar quarter in arrears. The quarterly
payment will be pro-rated if the Outside Director is first appointed during the calendar quarter or ceases to serve on the Board or a
committee during the calendar quarter, with the payment pro-rated based on the number of actual days served by the Outside Director during
such calendar quarter.



 


		2.	Equity Compensation



 


		a.	The equity compensation set forth below will be granted under the Company’s 2022 Incentive Award Plan, as may be amended and
restated from time to time, or any successor equity incentive plan adopted by the Company (the “Plan”) and will be
documented on the applicable form of equity award agreement most recently approved for use by the Board (or a duly authorized committee
thereof) for Outside Directors.



 


		b.	All grants of equity awards to Outside Directors pursuant to this Section 2 will be automatic and nondiscretionary. No person will
have any discretion to select which Outside Directors will be granted any awards under this Section 2 or to determine the number of shares
to be covered by such awards.



 


		c.	Initial Grant



 


		i.	Each Outside Director serving on the Board as of the Effective Date or first elected thereafter shall automatically, and without further
action by the Board, be granted Restricted Stock Units (“RSUs”) having a grant date value of $380,000 (the “Initial
Grant”) upon the Outside Director’s first date of service (or the Effective Date, if later), although no grant shall be
made until a Form S-8 is on file with the Securities and Exchange Commission (“SEC”) to register shares under the Plan.



 


		ii.	The number of RSUs subject to the Initial Grant will be equal to: (A) $380,000, divided by (B) the average quoted closing trading
price of the Company’s Common Stock on the principal trading market on which the Common Stock trades during the twenty (20) trading
days preceding and including the grant date, rounded down to the nearest whole share.



 


		iii.	Prior to the grant date, an Outside Director may elect to receive half of the Initial Grant to paid in the form of Nonqualified Stock
Options, with the number of Options having a grant date value of $190,000 under Financial Accounting Standards Board (FASB) Accounting
Standards Codification (ASC) Topic 718, and the remaining half of the Initial Grant ($190,000) to be paid as RSUs, calculated in the manner
described above.



 


		iv.	The Initial Grant will vest over three years, subject to the Outside Director’s continuous Board service on each applicable
vesting date, with one-third of the Initial Grant to vest on the one-year anniversary of the Outside Director’s first date of service
(or the Effective Date, if later) and one-twelfth of the Initial Grant to vest as of the beginning of each calendar quarter thereafter
(i.e., each January 1, April 1, July 1, and October 1).



 


		v.	To the extent granted as Options:



 


		1.	The exercise price per share will be equal to 100% of the Fair Market Value of the underlying Common Stock on the grant date.



 


		2.	The Options will have a term of ten (10) years from the grant date, subject to earlier expiration in connection with a termination
of Board service.



 






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		3.	Following termination of the Outside Director’s service on the Board, the Initial Grant, to the extent vested, will remain exercisable
for one (1) year if the termination is on account of death or Disability or for ninety (90) days for any other termination, but not later
than the expiration of the 10-year option term. Notwithstanding the foregoing, the vested and unvested portion of any Option shall immediately
terminate if the Outside Director commits an act of Cause or violates the non-competition, non-solicitation, confidentiality or other
similar restrictive covenant provisions of any confidentiality and nondisclosure agreement or other agreement between the Outside Director
and the Company or any of its Subsidiaries.



 


		4.	In the event of an Equity Restructuring as described in Section 8.1 of the Plan, the Administrator shall appropriately and proportionately
adjust the number of shares and exercise price, as applicable, for any Initial Grant made before the date of such event.



 


		d.	Annual RSU Grant



 


		i.	Each Outside Director automatically, and without further action by the Board, will be granted Restricted Stock Units having a grant
date value of $165,000 (the “Annual RSU Grant”) upon the Outside Director’s first date of service (or the Effective
Date, if later) and, in each year thereafter, on the date of each Company annual stockholder meeting, although no grant shall be made
until a Form S-8 is on file with the SEC to register shares under the Plan.



 


		ii.	The number of RSUs subject to each Annual RSU Grant will be equal to: (A) $165,000, divided by (B) the average quoted closing trading
price of the Company’s Common Stock on the principal trading market on which the Common Stock trades during the twenty (20) trading
days preceding and including the grant date, rounded down to the nearest whole share.



 


		iii.	The Annual RSU Grant will vest in four (4) approximately equal quarterly tranches as of the beginning of each calendar quarter following
the grant date (i.e., each January 1, April 1, July 1, and October 1), with the final tranche vesting on the first anniversary
of the grant date, subject to the Outside Director’s continuous Board service on each applicable vesting date.



 


		e.	Treatment on a Change in Control. In the event of a Change in Control, any then-unvested Initial Grant or Annual RSU Grant
will fully vest (and become exercisable, in the case of an Option) as of immediately prior to the effective time of such transaction,
subject to the Outside Director’s continuous Board service through the effective date of such transaction.



 


		3.	Travel Expense Reimbursement



 


The Company will reimburse each Outside
Director for ordinary, necessary, and reasonable out-of-pocket travel expenses to cover in-person attendance at and participation in Board
and committee meetings; provided, that such Outside Director timely submits to the Company appropriate documentation substantiating such
expenses in accordance with the Company’s travel and expense policy, as in effect from time to time.


 


 


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