Document:

ex_179959.htm

 

Exhibit 4.6

 

Description of registrant's securities 

 

Common Stock

 

Our authorized capital stock includes 75,000,000 shares of common stock, par value $0.001 per share. As of March 31, 2020, there were 49,893,534 shares of common stock issued and outstanding, and 33,333 shares of common stock held in the treasury. The following description of the rights of the common stock do not apply to the treasury shares.

 

The holders of outstanding common stock are entitled to receive dividends out of assets legally available therefor at such times and in such amounts as the Board of Directors may from time to time determine. Each stockholder is entitled to one vote for each share of common stock held on all matters submitted to a vote of stockholders. Directors are elected by plurality vote. Therefore, the holders of a majority of the common stock voted can elect all of the directors then standing for election. The common stock is not entitled to preemptive rights and is not subject to conversion. If we are liquidated or dissolved or our business is otherwise wound up, the holders of common stock would be entitled to share ratably in the distribution of all of our assets remaining available for distribution after satisfaction of all our liabilities and the payment of the liquidation preference of any outstanding preferred shares.

 

Authorized but Unissued Common Stock

 

The Delaware General Corporation Law does not require stockholder approval for any issuance of authorized shares, except in certain limited circumstances. However, the listing requirements of the NYSE American, which apply for so long as our common stock is listed on the NYSE American, require stockholder approval of certain issuances (other than a public offering) equal to or exceeding 20% of the then outstanding voting power or then outstanding number of shares of common stock, as well as for certain issuances of stock in compensatory transactions. We will not need to obtain stockholder approval for the issuance of the common stock to be sold in this offering. These additional shares may be used for a variety of corporate purposes, including future public offerings, to raise additional capital or to facilitate acquisitions. One of the effects of the existence of unissued and unreserved shares of common stock may be to enable our Board of Directors to sell shares to persons friendly to current management, for such consideration, in form and amount, as is acceptable to the Board, which issuance could render more difficult or discourage an attempt to obtain control of us by means of a merger, tender offer, proxy contest or otherwise, and thereby protect the continuity of our management and possibly deprive stockholders of opportunities to sell their common stock at prices higher than prevailing market prices.

 

Anti-Takeover Provisions

 

Delaware Law

 

We are subject to Section 203 of the DGCL. This provision generally prohibits a Delaware corporation from engaging in any business combination with any interested stockholder for a period of three years following the date the stockholder became an interested stockholder, unless:

 

•     prior to such date, the board of directors approved either the business combination or the transaction that resulted in the stockholder becoming an interested stockholder;

 

•     upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the number of voting shares outstanding those shares owned by persons who are directors and also officers and by employee stock plans in which employee participants do not have the right to determine confidentially whether shares held subject to the plan will be tendered in a tender or exchange offer; or

 

•     on or subsequent to such date, the business combination is approved by the board of directors and authorized at an annual meeting or special meeting of stockholders and not by written consent, by the affirmative vote of at least 66 2/3% of the outstanding voting stock that is not owned by the interested stockholder.

 

Section 203 defines a business combination to include:

 

•     any merger or consolidation involving the corporation and the interested stockholder;

 

•     any sale, transfer, pledge or other disposition of 10% or more of the assets of the corporation involving the interested stockholder;

 

 

 

 

•     subject to certain exceptions, any transaction that results in the issuance or transfer by the corporation of any stock of the corporation to the interested stockholder;

 

•     any transaction involving the corporation that has the effect of increasing the proportionate share of the stock of any class or series of the corporation beneficially owned by the interested stockholder; or

 

•     the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided by or through the corporation.

 

In general, Section 203 defines an “interested stockholder” as any entity or person beneficially owning 15% or more of the outstanding voting stock of a corporation, or an affiliate or associate of the corporation and was the owner of 15% or more of the outstanding voting stock of a corporation at any time within three years prior to the time of determination of interested stockholder status; and any entity or person affiliated with or controlling or controlled by such entity or person.

 

These statutory provisions could delay or frustrate the removal of incumbent directors or a change in control of us. They could also discourage, impede, or prevent a merger, tender offer, or proxy contest, even if such event would be favorable to the interests of stockholders.

 

Certificate of Incorporation and Bylaw Provisions

 

Our certificate of incorporation and bylaws contain provisions that could have the effect of discouraging potential acquisition proposals or making a tender offer or delaying or preventing a change in control, including changes a stockholder might consider favorable. In particular, the certificate of incorporation and bylaws, as applicable, among other things:

 

•     provide our board of directors with the ability to alter its bylaws without stockholder approval; and

 

•     provide that vacancies on our board of directors may be filled by a majority of directors in office, although less than a quorum.

 

Such provisions may have the effect of discouraging a third-party from acquiring us, even if doing so would be beneficial to our stockholders. These provisions are intended to enhance the likelihood of continuity and stability in the composition of our board of directors and in the policies formulated by them, and to discourage some types of transactions that may involve an actual or threatened change in control of us. These provisions are designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage some tactics that may be used in proxy fights. We believe that the benefits of increased protection of our potential ability to negotiate with the proponent of an unfriendly or unsolicited proposal to acquire or restructure our Company outweigh the disadvantages of discouraging such proposals because, among other things, negotiation of such proposals could result in an improvement of their terms. However, these provisions could have the effect of discouraging others from making tender offers for our shares that could result from actual or rumored takeover attempts. These provisions also may have the effect of preventing changes in our management.

 

Our certificate of incorporation provides that no director is personally liable to us or our stockholders for monetary damages for any breach of fiduciary duty by such director as a director. Nonetheless, a director is liable to the extent provided by applicable law, (i) for breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the DGCL (relating to unlawful payment of dividend or unlawful stock purchase or redemption) or (iv) for any transaction from which the director derived an improper personal benefit. If the DGCL is amended to authorize the further elimination or limitation of the liability of directors, then the liability of one of our directors, in addition to the limitation on personal liability provided in our certificate of incorporation, will be limited to the fullest extent permitted by the amended DGCL. No amendment to or repeal of the relevant article of our certificate of incorporation will apply to or have any effect on the liability or alleged liability of any of our directors for or with respect to any acts or omissions of such director occurring prior to such amendment.

 

Our certificate of incorporation furthermore states that we shall indemnify, to the fullest extent permitted by Section 145 of the DGCL, as amended from time to time, each person that such section grants us the power to indemnify. Insofar as indemnification for liability under the Securities Act may be permitted for our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

 

 

 

Dividends

 

We have not declared or paid any cash dividends on our common stock, and we do not anticipate declaring or paying cash dividends for the foreseeable future. We are not subject to any legal restrictions respecting the payment of dividends, except that we may not pay dividends if the payment would render us insolvent. Any future determination as to the payment of cash dividends on our common stock will be at our board of directors’ discretion and will depend on our financial condition, operating results, capital requirements and other factors that our board of directors considers to be relevant. Currently, the board of directors does not intend to pay any cash dividends, but retain all funds for working capital.

 

Transfer Agent and Registrar

 

The transfer agent and registrar for our common stock and warrants is Continental Stock Transfer & Trust Company.Exhibit 10.1 

 

FORM OF RESTRICTED STOCK UNIT AGREEMENT

 

This Restricted Stock
Unit Agreement (this “Agreement”) is made and entered into as of April 1, 2020 (the “Grant Date”)
by and between Target Hospitality Corp., a Delaware corporation (the “Company”), and [EMPLOYEE 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. By signing this Agreement,
the Participant hereby consents to the reduction in Participant’s base salary for the period between April 1, 2020 and December
31, 2020 and hereby agrees that such reduction does not constitute “Good Reason” within the meaning of the Employment
Agreement by and between the Participant and Target Logistics Management, LLC, dated [DATE].

 

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 Units Vested	 	Number of Vested Units
	April 15, 2020	 	11.12%	 	 
	May 1, 2020	 	11.11%	 	 
	June 1, 2020	 	11.11%	 	 
	July 1, 2020	 	11.11%	 	 
	August 1, 2020	 	11.11%	 	 
	September 1, 2020	 	11.11%	 	 
	October 1, 2020	 	11.11%	 	 
	November 1, 2020	 	11.11%	 	 
	December 1, 2020	 	11.11%	 	 

  

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4.                 
Termination of
Service/Employment. The vesting schedule above notwithstanding, if the Participant’s employment or 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 employment or service and neither the Company nor any Affiliate
shall have any further obligations to the Participant under this Agreement. Notwithstanding any provision of this Agreement or
the Plan to the contrary, if any of the following occur, the Restricted Period in effect on such date shall lapse: (i) the closing
of a Change in Control, (ii) the liquidation of the Company, (iii) the Participant’s termination by the Company not for Cause,
or (iv) December 31, 2020.

 

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. Common Shares issued upon settlement of the Restricted
Stock Units shall not be subject to the Company’s minimum ownership guidelines; however, the provisions of the Company’s
Securities Trading Policy would continue to apply to such shares.

 

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 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.

 

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7.                 
Settlement
of Restricted Stock Units. Promptly upon each vesting date listed in Section 3 above, and in any event no later than
March 15th of the calendar year following the calendar year in which the Restricted Period ends, the Company shall (a) 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 (b) 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 (i) pay
cash or part cash and part Common Share in lieu of delivering only Common Shares in respect of the Restricted Stock Units or (ii)
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.

 

8.                 
No Rights to Continued Service/Employment. Neither the Plan nor this
Agreement shall confer upon the Participant any right to be retained in any position, as an employee, consultant or director of
the Company or any Affiliate. 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 employment or service with the Company or an Affiliate at any time,
with or without Cause.

 

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 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 to the Company, and the Company shall have the right to deduct from any compensation
paid to the Participant pursuant to the Plan, 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 Participant may 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) if the Committee
has adopted a formal procedure allowing any participant to authorize 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), issuing
such authorization, 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.

 

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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 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 Texas 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 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.

 

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

 

21.             
Section
409A.

 

21.1         
This Agreement is intended to comply with Section 409A of the Code and the regulations issued thereunder (“Section
409A”) 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.

 

21.2         
If and to the extent any portion of any payment provided to the Participant under this Agreement in connection with the
Participant’s separation from service (as defined in Section 409A) is determined to constitute “nonqualified deferred
compensation” within the meaning of Section 409A and the Participant is a “specified employee” as defined in
Section 409A(a)(2)(B)(i), as determined by the Company in accordance with the procedures separately adopted by the Company for
this purpose, by which determination the Participant, as a condition to accepting benefits under this Agreement and the Plan,
agrees that he or she is bound, such portion of the shares of the Company’s common stock to be delivered on a vesting date
shall not be delivered before the earlier of (i) the day that is six months plus one day after the date of separation from service
(as determined under Section 409A) or (ii) the tenth 10th day after the date of the Participant’s death (as applicable,
the “New Payment Date”). The shares that otherwise would have been delivered to the Participant during the
period between the date of separation from service and the New Payment Date shall be delivered to the Participant on such New
Payment Date, and any remaining shares will be delivered on their original schedule. Neither the Company nor the Participant shall
have the right to accelerate or defer the delivery of any such shares except to the extent specifically permitted or required
by Section 409A. This Agreement is intended to comply with the provisions of Section 409A and this Agreement and the Plan shall,
to the extent practicable, be construed in accordance therewith. Terms defined in this Agreement and the Plan shall have the meanings
given such terms under Section 409A if and to the extent required to comply with Section 409A.

 

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21.3         
Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement
comply with Section 409A 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.

 

22.             
No Impact on Other Benefits. The value of the Participant’s Restricted
Stock Units is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare,
insurance or similar employee benefit.

 

23.             
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.

 

24.             
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:	Heidi D. Lewis
	 	Title:	Executive Vice President, General Counsel and Secretary
	 	 
	 	[PARTICIPANT NAME]
	 	 
	 	
        By:
	 

 

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