TH Target Hospitality Corporation

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

CURRENT REPORT

 

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): February 28, 2025 (February 24, 2025)

 

TARGET HOSPITALITY CORP.

(Exact name of registrant as specified in its charter)

 

Delaware		001-38343		98-1378631
(State or other jurisdiction of incorporation)		(Commission File Number)		(I.R.S. Employer Identification No.)

 

9320 Lakeside Blvd., Suite 300

The Woodlands, TX 77381

(Address, including zip code, of principal executive offices)

 

(832) 709-2563

(Registrant’s telephone number, including area code)

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

	¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
	¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
	¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
	¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Common stock, par value $0.0001 per share		TH		The Nasdaq Capital Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

Item 1.01

Entry into a Material Definitive Agreement.

 

On February 24, 2025 and February 27, 2025, Arrow Bidco, LLC (“Arrow Bidco”) and certain other subsidiaries of Target Hospitality Corp. (the “Company”) entered into a fourth amendment (the “Fourth Amendment”) and a fifth amendment (the “Fifth Amendment”), respectively, to the ABL Credit Agreement, dated as of March 15, 2019, (as amended, amended and restated, supplemented or otherwise modified from time to time prior to the date of the Fourth Amendment, the “ABL Credit Agreement”), by and among Arrow Bidco, the borrowers and guarantors party thereto from time to time, the lenders and fronting banks party thereto from time to time and Bank of America, N.A., as administrative agent and collateral agent.

 

The Fourth Amendment amends the ABL Credit Agreement to modify the springing maturity provision that will accelerate the maturity of the facility if any of the 2025 Senior Secured Notes (as defined in the Credit Agreement) remain outstanding on the date that is ninety-one days prior to the stated maturity date thereof (March 15, 2025) to March 18, 2025, which was further modified by the Fifth Amendment to March 31, 2025.

 

The foregoing descriptions of the Fourth Amendment and the Fifth Amendment are qualified in their entirety by reference to the full text of the Fourth Amendment and the Fifth Amendment, copies of which are attached to this Current Report on Form 8-K as Exhibit 10.1 and 10.2, respectively, and incorporated herein by reference.

 

Item 5.02

Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

Form Equity Award Agreements

 

On February 27, 2025, the Compensation Committee (the “Compensation Committee”) of the Board of Directors the (“Board”) of the Company adopted (i) a new form Executive Restricted Stock Unit Agreement (the “RSU Agreement”) and a new form Executive Performance Stock Unit Agreement (the “PSU Agreement”) with respect to the granting of restricted stock units (“RSUs”) and performance-based restricted stock units (“PSUs”), respectively, under the Target Hospitality Corp. 2019 Incentive Plan (the “Plan”) and (ii) an amendment to the Plan (the “Amendment”) that would increase the number of shares of the Company’s common stock, par value $0.0001 per share (the “Common Stock”) authorized for issuance under the Plan, each of which were approved by the Board on February 27, 2025. Settlement upon vesting of the awards in the form of Common Stock is contingent on stockholder approval of the Amendment at the Company’s 2025 annual meeting of stockholders, otherwise such awards will settle in cash upon vesting. The new RSU Agreement and PSU Agreements will be used for all awards to executive officers made on or after February 27, 2025.

 

The RSU Agreement has material terms that are substantially similar to those in the form Executive Restricted Stock Unit Agreement last approved by the Compensation Committee and previously disclosed by the Company and filed as Exhibit 10.1 to its Current Report on Form 8-K filed on March 5, 2024.

 

Each PSU awarded under the PSU Agreement represents the right to receive one share of Common Stock. PSUs vest and become unrestricted on the third anniversary of the grant date. The number of PSUs that vest pursuant to the PSU Agreement is based on the Company’s Total Shareholder Return (the “TSR Based Award”) performance, measured based on the applicable Performance Period specified in the PSU Agreement. The number of PSUs that vest pursuant to the TSR Based Award range from 0% to 200% of the Target Level (as defined in the PSU Agreement) depending upon the achievement of a specified percentile rank during the applicable Performance Period. Vesting of PSUs is contingent upon the executive’s continued employment through the vesting date, unless the executive’s employment is terminated by reason of death, without Cause, for Good Reason, or in the event of a Change in Control (each term as defined in the Plan).

 

 

The foregoing descriptions of the RSU Agreement and the PSU Agreement are qualified in their entirety by reference to the full text of the RSU Agreement and the PSU Agreement, copies of which are attached to this Current Report on Form 8-K as Exhibits 10.3 and 10.4, respectively, and are incorporated herein by reference.

 

Executive Performance Stock Unit Agreements with Mr. Archer and Mr. Vlacich

 

On February 27, 2025, the Compensation Committee, and the Board, in the case of James B. Archer, the Company’s President and Chief Executive Officer, approved agreements granting PSUs aimed at retaining, motivating and incentivizing certain of the Company’s executive officers under and pursuant to the Plan. Settlement upon vesting of the awards in the form of Common Stock is contingent on stockholder approval of the Amendment at the Company’s 2025 annual meeting of stockholders, otherwise such awards will settle in cash upon vesting. These awards include:

 

Name		Title		PSUs
James B. Archer		President and Chief Executive Officer			2,000,000
Jason Vlacich		Chief Accounting Officer			600,000

 

Each PSU represents the right to receive one share of Common Stock. PSUs vest and become unrestricted on June 30, 2028. The number of PSUs that vest is determined based upon the achievement of specified share prices over the period between the grant date and June 30, 2025 (the “Performance Period”). The executives will each earn a corresponding number of PSUs upon the achievement of specified share price thresholds, the first of which is $20.00 per share and the highest of which is $30.00 per share. If all Performance Goals (as defined in the applicable award agreements) are met during the Performance Period, Mr. Archer will be entitled to receive a maximum of 2,000,000 PSUs and Mr. Vlacich will be entitled to receive a maximum of 600,000 PSUs. Vesting is contingent upon the applicable executive’s continued employment through the vesting date, unless the applicable executive’s employment is terminated by reason of death or Disability, without Cause, for Good Reason, or in the event of a Qualifying Termination in connection with a Change in Control (each term as defined in the Plan, or each executive’s employment agreement, as amended, with the Company).

 

The foregoing descriptions of the PSU awards granted to Mr. Archer and Mr. Vlacich are qualified in their entirety by reference to the full text of the form of agreement for the PSU awards, copies of which are attached to this Current Report on Form 8-K as Exhibits 10.5 and 10.6, respectively, and are incorporated herein by reference.

 

Item 9.01

Financial Statements and Exhibits.

 

(d) Exhibits

 

Exhibit No.		Exhibit Description
10.1		Fourth Amendment to the ABL Credit Agreement, dated as of February 24, 2025, by and among Arrow Bidco, LLC, the other Loan Parties party thereto, Bank of America, N.A. as administrative agent for itself and the other Secured Parties and each of the Revolver Lenders party thereto.
10.2		Fifth Amendment to the ABL Credit Agreement, dated as of February 27, 2025, by and among Arrow Bidco, LLC, the other Loan Parties party thereto, Bank of America, N.A. as administrative agent for itself and the other Secured Parties and each of the Revolver Lenders party thereto.

 

 

10.3		Form of 2025 Executive Restricted Stock Unit Agreement
10.4		Form of 2025 Executive Performance Stock Unit Agreement
10.5		2025 Executive Performance Stock Unit Agreement with James B. Archer
10.6		2025 Executive Performance Stock Unit Agreement with Jason P. Vlacich
104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

	Target Hospitality Corp.
	By:	/s/ Heidi D. Lewis
Dated: February 28, 2025		Name: Heidi D. Lewis
		Title: Executive Vice President, General Counsel and Secretary

 

 

 

Exhibit 10.1

 

Execution Version

 

FOURTH AMENDMENT TO THE ABL CREDIT AGREEMENT

 

This Fourth Amendment to the ABL Credit Agreement (this “Amendment”) is dated as of February 25, 2025 and is entered into by and among Arrow Bidco, LLC, a Delaware limited liability company (the “Administrative Borrower”), Topaz Holdings LLC, a Delaware limited liability company (“Holdings”), the other Loan Parties party hereto, Bank of America, N.A., as administrative agent and collateral agent for itself and the other Secured Parties (collectively, in such capacities, the “Agent”) and each of the Revolver Lenders party hereto (which shall constitute each of the Revolver Lenders under the Existing ABL Credit Agreement).

 

RECITALS

 

WHEREAS, reference is made to the ABL Credit Agreement, dated as of March 15, 2019 (as amended by the First Amendment to the ABL Credit Agreement, dated as of February 1, 2023, the Second Amendment to the ABL Credit Agreement, dated as of August 10, 2023, the Third Amendment to the ABL Credit Agreement, dated as of October 12, 2023, and as further amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing ABL Credit Agreement”, and as amended by this Amendment, the “Amended ABL Credit Agreement”), among the Administrative Borrower, Holdings, the Borrowers and Guarantors party thereto from time to time, the Lenders and Fronting Banks party thereto from time to time, and Bank of America, N.A., as the Agent and the Swingline Lender;

 

WHEREAS, subject to the satisfaction of the conditions precedent to effectiveness set forth in Section 3 hereof, the Borrowers have requested to make certain amendments to the terms of the Existing ABL Credit Agreement as set forth in Section 2 hereof, and each Revolver Lender party hereto hereby agrees to amend such provisions as described, and on the terms set forth, herein;

 

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.         Defined Terms. Capitalized terms used but not defined herein (including in the introductory paragraph hereof and the recitals hereto) shall have the meanings assigned to such terms in the Amended ABL Credit Agreement.

 

Section 2.         Amended ABL Credit Agreement.

 

(a)            Subject to the occurrence of the Fourth Amendment Effective Date, the Existing ABL Credit Agreement shall hereby be amended by amending and restating clause (ii) set forth in the proviso to the definition of “Revolver Facility Termination Date” to read as follows: “(ii) if any 2025 Senior Secured Notes remain outstanding on March 18, 2025 or, in the case of any Refinancing Indebtedness in respect of the 2025 Senior Secured Notes, remains outstanding on the date that is ninety-one (91) days prior to the stated maturity date thereof (either such date, the “2025 Springing Maturity Date”), the Revolver Facility Termination Date shall be the 2025 Springing Maturity Date.”

 

 

Section 3.         Conditions to Effectiveness of Amendment.

 

The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent (the date of the satisfaction of such conditions precedent being referred to herein as the “Fourth Amendment Effective Date”):

 

(a)            Execution. The Agent executing this Amendment and receiving a duly executed counterpart of this Amendment from the Administrative Borrower, Holdings, the other Loan Parties and each of the Revolver Lenders under the Existing ABL Credit Agreement;

 

(b)            Fees and Expenses. Prior to or substantially concurrently with the Fourth Amendment Effective Date, the Administrative Borrower shall have paid (or shall have caused to be paid) all fees and reasonable out-of-pocket expenses required to be paid on or prior to the Fourth Amendment Effective Date (in the case of expenses, to the extent invoiced at least two Business Days prior to the Fourth Amendment Effective Date (except as otherwise agreed to by the Borrowers));

 

(c)            No Default. No Event of Default has occurred and is continuing on the Fourth Amendment Effective Date;

 

(d)            Representations and Warranties. The representations and warranties of each Loan Party in the Loan Documents shall be true and correct in all material respects as of the Fourth Amendment Effective Date and are hereby made (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date, and any representation or warranty qualified by materiality, material adverse effect or similar language shall be true and correct in all respects, but as so qualified); and

 

(e)            Closing Certificate. The Agent shall have received a certificate of a Senior Officer or “Authorized Officer” of the Administrative Borrower dated as of the Fourth Amendment Effective Date confirming satisfaction of the conditions set forth in clauses (c) and (d) of this Section 3.

 

Section 4.         Reaffirmation. Each Loan Party hereby (i) ratifies and affirms all the provisions of the Existing ABL Credit Agreement and the other Loan Documents as amended hereby, (ii) agrees that the terms and conditions of the Existing ABL Credit Agreement, the Security Documents and the other Loan Documents, including the guarantee and security provisions set forth therein, shall continue in full force and effect as amended hereby, and shall not be impaired or limited by the execution or effectiveness of this Amendment and (iii) acknowledges and agrees that the Collateral continues to secure, to the fullest extent possible in accordance with the Existing ABL Credit Agreement as amended hereby, the payment and performance of the applicable Secured Obligations in accordance with the Existing ABL Credit Agreement as amended hereby. The terms and conditions of the Guarantee and the Security Documents are hereby reaffirmed by the Loan Parties.

 

 

Section 5.         Representations and Warranties. To induce the other parties hereto to enter into this Amendment, each Loan Party hereby represents and warrants to the Agent and the Revolver Lenders that the following statements are true and correct:

 

(a)            each Loan Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of this Amendment and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Amendment;

 

(b)            each Loan Party has duly executed and delivered this Amendment and this Amendment constitutes the legal, valid and binding obligation of such Loan Party enforceable in accordance with its terms, in each case subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, arrangement or similar laws relating to or affecting creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law); and

 

(c)            neither the execution, delivery or performance by any Loan Party of this Amendment nor compliance with the terms and provisions of this Amendment nor the consummation of the transactions contemplated hereby will (a) contravene any material provision of any Applicable Law applicable to such Loan Party, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Loan Party (other than Liens created under the Loan Documents and Permitted Liens) pursuant to, the terms of any material indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other material instrument to which such Loan Party is a party or by which it or any of its property or assets is bound, (c) violate any provision of the Organic Documents of such Loan Party, or (d) violate any provision of the 2025 Senior Secured Notes (or any permitted refinancing thereof).

 

Section 6.         Effect on the Loan Documents.

 

(a)            As of the Fourth Amendment Effective Date, each reference in the Existing ABL Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the “Credit Agreement” (including, without limitation, by means of words like “thereunder”, “thereof” and words of like import), shall mean and be a reference to the Amended ABL Credit Agreement.

 

(b)            Except as specifically amended herein, all Loan Documents shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

 

(c)            The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Revolver Lender, the Swingline Lender, any Fronting Bank or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of the Loan Documents, except as expressly contemplated hereby. Nothing herein contained shall be construed as a substitution or novation of the obligations outstanding under the Existing ABL Credit Agreement or any other Loan Document or instruments securing the same, which shall remain in full force and effect as modified hereby.

 

 

(d)            The parties hereto acknowledge and agree that, on and after the Fourth Amendment Effective Date, this Amendment shall constitute a Loan Document for all purposes of the Amended ABL Credit Agreement.

 

Section 7.         GOVERNING LAW. THIS AMENDMENT AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AMENDMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Section 8.         Miscellaneous.

 

(a)            This Amendment is binding and enforceable as of the Fourth Amendment Effective Date against each party hereto and their respective successors and permitted assigns.

 

(b)            Section headings used in this Amendment are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

(c)            Each of the parties hereto hereby agrees that Sections 14.6, 14.8, 14.14 and 14.16 of the Existing ABL Credit Agreement are incorporated by reference herein, mutatis mutandis, and shall have the same force and effect with respect to this Amendment as if originally set forth herein.

 

[SIGNATURE PAGES FOLLOW]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers or representatives as of the day and year first above written.

 

	ARROW BIDCO, LLC,
	as the Administrative Borrower and a Guarantor
	By:	/s/ Jason Vlacich
		Name: Jason Vlacich
		Title: Chief Financial Officer
	TOPAZ HOLDINGS LLC,
	as Holdings and a Guarantor
	By:	/s/ Jason Vlacich
		Name: Jason Vlacich
		Title: Chief Financial Officer
	TARGET LOGISTICS MANAGEMENT, LLC,
	as a Borrower and a Guarantor,
	By:	/s/ Jason Vlacich
		Name: Jason Vlacich
		Title: Chief Financial Officer
	TLM EQUIPMENT, LLC,
	as a Borrower and a Guarantor
	By:	/s/ Jason Vlacich
		Name: Jason Vlacich
		Title: Chief Financial Officer

 

[Signature Page to Fourth Amendment to the ABL Credit Agreement]

 

 

	US IRON BIDCO, LLC,
	as a Borrower and a Guarantor
	By:	/s/ Jason Vlacich
		Name: Jason Vlacich
		Title: Chief Financial Officer
	RL SIGNOR HOLDINGS, LLC,
	as a Borrower and a Guarantor,
	By:	/s/ Jason Vlacich
		Name: Jason Vlacich
		Title: Chief Financial Officer

 

[Signature Page to Fourth Amendment to the ABL Credit Agreement]

 

 

	BANK OF AMERICA, N.A.,
	as the Agent and a Revolver Lender
	By:	/s/ Jacob Garcia
		Name: Jacob Garcia
		Title: Senior Vice President

[Signature Page to Fourth Amendment to the ABL Credit Agreement]

 

 

	TEXAS CAPITAL BANK,
	as a Revolver Lender
	By:	/s/ Stefanie Unruh
		Name: Stefanie Unruh
		Title: Director, ACO

 

[Signature Page to Fourth Amendment to the ABL Credit Agreement]

 

 

	DEUTSCHE BANK AG NEW YORK BRANCH,
	as a Revolver Lender
	By:	/s/ Lauren Danbury
		Name: Lauren Danbury
		Title: Vice President
	By:	/s/ Suzan Onal
		Name: Suzan Onal
		Title: Director

[Signature Page to Fourth Amendment to the ABL Credit Agreement]

 

 

	GOLDMAN SACHS BANK USA,
	as a Revolver Lender
	By:	/s/ Priyankush Goswami
		Name: Priyankush Goswami
		Title: Authorized Signatory

 

[Signature Page to Fourth Amendment to the ABL Credit Agreement]

 

  

 

Exhibit 10.2

 

Execution Version

 

FIFTH AMENDMENT TO THE ABL CREDIT AGREEMENT

 

This Fifth Amendment to the ABL Credit Agreement (this “Amendment”) is dated as of February 27, 2025 and is entered into by and among Arrow Bidco, LLC, a Delaware limited liability company (the “Administrative Borrower”), Topaz Holdings LLC, a Delaware limited liability company (“Holdings”), the other Loan Parties party hereto, Bank of America, N.A., as administrative agent and collateral agent for itself and the other Secured Parties (collectively, in such capacities, the “Agent”) and each of the Revolver Lenders party hereto (which shall constitute each of the Revolver Lenders under the Existing ABL Credit Agreement).

 

RECITALS

 

WHEREAS, reference is made to the ABL Credit Agreement, dated as of March 15, 2019 (as amended by the First Amendment to the ABL Credit Agreement, dated as of February 1, 2023, the Second Amendment to the ABL Credit Agreement, dated as of August 10, 2023, the Third Amendment to the ABL Credit Agreement, dated as of October 12, 2023, the Fourth Amendment to the ABL Credit Agreement, dated as of February 24, 2025 and as further amended, amended and restated, supplemented or otherwise modified from time to time prior to the date hereof, the “Existing ABL Credit Agreement”, and as amended by this Amendment, the “Amended ABL Credit Agreement”), among the Administrative Borrower, Holdings, the Borrowers and Guarantors party thereto from time to time, the Lenders and Fronting Banks party thereto from time to time, and Bank of America, N.A., as the Agent and the Swingline Lender;

 

WHEREAS, subject to the satisfaction of the conditions precedent to effectiveness set forth in Section 3 hereof, the Borrowers have requested to make certain amendments to the terms of the Existing ABL Credit Agreement as set forth in Section 2 hereof, and each Revolver Lender party hereto hereby agrees to amend such provisions as described, and on the terms set forth, herein;

 

NOW, THEREFORE, in consideration of the covenants and agreements contained herein, as well as other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

 

Section 1.      Defined Terms. Capitalized terms used but not defined herein (including in the introductory paragraph hereof and the recitals hereto) shall have the meanings assigned to such terms in the Amended ABL Credit Agreement.

 

Section 2.      Amended ABL Credit Agreement.

 

(a)            Subject to the occurrence of the Fifth Amendment Effective Date, the Existing ABL Credit Agreement shall hereby be amended by amending and restating clause (ii) set forth in the proviso to the definition of “Revolver Facility Termination Date” to read as follows: “(ii) if any 2025 Senior Secured Notes remain outstanding on March 31, 2025 or, in the case of any Refinancing Indebtedness in respect of the 2025 Senior Secured Notes, remains outstanding on the date that is ninety-one (91) days prior to the stated maturity date thereof (either such date, the “2025 Springing Maturity Date”), the Revolver Facility Termination Date shall be the 2025 Springing Maturity Date.”

 

 

Section 3.      Conditions to Effectiveness of Amendment.

 

The effectiveness of this Amendment is subject to the satisfaction of the following conditions precedent (the date of the satisfaction of such conditions precedent being referred to herein as the “Fifth Amendment Effective Date”):

 

(a)            Execution. The Agent executing this Amendment and receiving a duly executed counterpart of this Amendment from the Administrative Borrower, Holdings, the other Loan Parties and each of the Revolver Lenders under the Existing ABL Credit Agreement;

 

(b)            Fees and Expenses. Prior to or substantially concurrently with the Fifth Amendment Effective Date, the Administrative Borrower shall have paid (or shall have caused to be paid) all fees and reasonable out-of-pocket expenses required to be paid on or prior to the Fifth Amendment Effective Date (in the case of expenses, to the extent invoiced at least two Business Days prior to the Fifth Amendment Effective Date (except as otherwise agreed to by the Borrowers));

 

(c)            No Default. No Event of Default has occurred and is continuing on the Fifth Amendment Effective Date;

 

(d)            Representations and Warranties. The representations and warranties of each Loan Party in the Loan Documents shall be true and correct in all material respects as of the Fifth Amendment Effective Date and are hereby made (it being understood and agreed that any representation or warranty which by its terms is made as of a specified date shall be required to be true and correct in all material respects only as of such specified date, and any representation or warranty qualified by materiality, material adverse effect or similar language shall be true and correct in all respects, but as so qualified); and

 

(e)            Closing Certificate. The Agent shall have received a certificate of a Senior Officer or “Authorized Officer” of the Administrative Borrower dated as of the Fifth Amendment Effective Date confirming satisfaction of the conditions set forth in clauses (c) and (d) of this Section 3.

 

Section 4.      Reaffirmation. Each Loan Party hereby (i) ratifies and affirms all the provisions of the Existing ABL Credit Agreement and the other Loan Documents as amended hereby, (ii) agrees that the terms and conditions of the Existing ABL Credit Agreement, the Security Documents and the other Loan Documents, including the guarantee and security provisions set forth therein, shall continue in full force and effect as amended hereby, and shall not be impaired or limited by the execution or effectiveness of this Amendment and (iii) acknowledges and agrees that the Collateral continues to secure, to the fullest extent possible in accordance with the Existing ABL Credit Agreement as amended hereby, the payment and performance of the applicable Secured Obligations in accordance with the Existing ABL Credit Agreement as amended hereby. The terms and conditions of the Guarantee and the Security Documents are hereby reaffirmed by the Loan Parties.

 

 

Section 5.      Representations and Warranties. To induce the other parties hereto to enter into this Amendment, each Loan Party hereby represents and warrants to the Agent and the Revolver Lenders that the following statements are true and correct:

 

(a)            each Loan Party has the corporate or other organizational power and authority to execute, deliver and carry out the terms and provisions of this Amendment and has taken all necessary corporate or other organizational action to authorize the execution, delivery and performance of this Amendment;

 

(b)            each Loan Party has duly executed and delivered this Amendment and this Amendment constitutes the legal, valid and binding obligation of such Loan Party enforceable in accordance with its terms, in each case subject to (i) bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium, arrangement or similar laws relating to or affecting creditors’ rights generally and (ii) general equitable principles (whether considered in a proceeding in equity or at law); and

 

(c)            neither the execution, delivery or performance by any Loan Party of this Amendment nor compliance with the terms and provisions of this Amendment nor the consummation of the transactions contemplated hereby will (a) contravene any material provision of any Applicable Law applicable to such Loan Party, (b) result in any breach of any of the terms, covenants, conditions or provisions of, or constitute a default under, or result in the creation or imposition of (or the obligation to create or impose) any Lien upon any of the property or assets of such Loan Party (other than Liens created under the Loan Documents and Permitted Liens) pursuant to, the terms of any material indenture, loan agreement, lease agreement, mortgage, deed of trust, agreement or other material instrument to which such Loan Party is a party or by which it or any of its property or assets is bound, (c) violate any provision of the Organic Documents of such Loan Party, or (d) violate any provision of the 2025 Senior Secured Notes (or any permitted refinancing thereof).

 

Section 6.      Effect on the Loan Documents.

 

(a)            As of the Fifth Amendment Effective Date, each reference in the Existing ABL Credit Agreement to “this Agreement,” “hereunder,” “hereof,” “herein,” or words of like import, and each reference in the other Loan Documents to the “Credit Agreement” (including, without limitation, by means of words like “thereunder”, “thereof” and words of like import), shall mean and be a reference to the Amended ABL Credit Agreement.

 

(b)            Except as specifically amended herein, all Loan Documents shall continue to be in full force and effect and are hereby in all respects ratified and confirmed.

 

(c)            The execution, delivery and effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of any Revolver Lender, the Swingline Lender, any Fronting Bank or the Agent under any of the Loan Documents, nor constitute a waiver of any provision of the Loan Documents, except as expressly contemplated hereby. Nothing herein contained shall be construed as a substitution or novation of the obligations outstanding under the Existing ABL Credit Agreement or any other Loan Document or instruments securing the same, which shall remain in full force and effect as modified hereby.

 

 

(d)            The parties hereto acknowledge and agree that, on and after the Fifth Amendment Effective Date, this Amendment shall constitute a Loan Document for all purposes of the Amended ABL Credit Agreement.

 

Section 7.      GOVERNING LAW. THIS AMENDMENT AND ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR RELATING TO THIS AMENDMENT (WHETHER ARISING IN CONTRACT, TORT OR OTHERWISE) SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

 

Section 8.      Miscellaneous.

 

(a)            This Amendment is binding and enforceable as of the Fifth Amendment Effective Date against each party hereto and their respective successors and permitted assigns.

 

(b)            Section headings used in this Amendment are for convenience of reference only and are not to affect the construction hereof or be taken into consideration in the interpretation hereof.

 

(c)            Each of the parties hereto hereby agrees that Sections 14.6, 14.8, 14.14 and 14.16 of the Existing ABL Credit Agreement are incorporated by reference herein, mutatis mutandis, and shall have the same force and effect with respect to this Amendment as if originally set forth herein.

 

[SIGNATURE PAGES FOLLOW]

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed and delivered by their respective proper and duly authorized officers or representatives as of the day and year first above written.

 

	ARROW BIDCO, LLC,
	as the Administrative Borrower and a Guarantor
	By:	/s/ Jason Vlacich
		Name:	Jason Vlacich
		Title:	Chief Financial Officer and Chief Accounting Officer
	TOPAZ HOLDINGS LLC,
	as Holdings and a Guarantor
	By:	/s/ Jason Vlacich
		Name:	Jason Vlacich
		Title:	Chief Financial Officer and Chief Accounting Officer
	TARGET LOGISTICS MANAGEMENT, LLC,
	as a Borrower and a Guarantor,
	By:	/s/ Jason Vlacich
		Name:	Jason Vlacich
		Title:	Chief Financial Officer and Chief Accounting Officer
	TLM EQUIPMENT, LLC,
	as a Borrower and a Guarantor
	By:	/s/ Jason Vlacich
		Name:	Jason Vlacich
		Title:	Chief Financial Officer and Chief Accounting Officer

 

[Signature Page to Fifth Amendment to the ABL Credit Agreement]

 

 

	US IRON BIDCO, LLC,
	as a Borrower and a Guarantor
	By:	/s/ Jason Vlacich
		Name:	Jason Vlacich
		Title:	Chief Financial Officer and Chief Accounting Officer
	RL SIGNOR HOLDINGS, LLC,
	as a Borrower and a Guarantor,
	By:	/s/ Jason Vlacich
		Name:	Jason Vlacich
		Title:	Chief Financial Officer and Chief Accounting Officer

 

[Signature Page to Fifth Amendment to the ABL Credit Agreement]

 

 

	BANK OF AMERICA, N.A.,
	as the Agent and a Revolver Lender
	By:	/s/ Jacob Garcia
		Name:	Jacob Garcia
		Title:	Senior Vice President

 

[Signature Page to Fifth Amendment to the ABL Credit Agreement]

 

 

	TEXAS CAPITAL BANK,
	as a Revolver Lender
	By:	/s/ Stefanie Unruh
		Name:	Stefanie Unruh
		Title:	Director, ACO

 

[Signature Page to Fifth Amendment to the ABL Credit Agreement]

 

 

	DEUTSCHE BANK AG NEW YORK BRANCH,
	as a Revolver Lender
	By:	/s/ Philip Tancorra
		Name:	Philip Tancorra
		Title:	Vice President
	By:	/s/ Suzan Onal
		Name:	Suzan Onal
		Title:	Director

 

[Signature Page to Fifth Amendment to the ABL Credit Agreement]

 

 

 

	GOLDMAN SACHS BANK USA,
	as a Revolver Lender
	By:	/s/ Priyankush Goswami
		Name:	Priyankush Goswami
		Title:	Authorized Signatory

 

[Signature Page to Fifth Amendment to the ABL Credit Agreement]

 

 

 

Exhibit 10.3

 

Execution Version

 

2025 EXECUTIVE RESTRICTED STOCK UNIT AGREEMENT

 

This Restricted Stock Unit Agreement (this “Agreement”) is made and entered into as of [DATE], 2025 (the “Grant Date”) by and between Target Hospitality Corp., a Delaware corporation (the “Company”), and [EXECUTIVE NAME] (the “Participant”). This Agreement is being entered into pursuant to the Target Hospitality Corp. 2019 Incentive Award Plan‎, as amended ‎(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 or an amount in cash equal to the value of one Common Share, pursuant to Section 7 below, and 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
February 26, 2026		25%
February 26, 2027		25%
February 26, 2028		25%
February 26, 2029		25%

 

4.             Termination of Service/Employment. Except as otherwise provided in the employment agreement, as amended and restated, entered into between the Participant and Target Logistics Management, LLC, dated [__________________] (the “Employment Agreement”), 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. In accordance with the Employment Agreement, if the Participant’s employment is terminated without Cause or by the Executive for Good Reason at any time prior to the first anniversary of the Grant Date, a minimum of 12.5% of the Restricted Stock Units shall become Vested Units as of the date of such termination of employment. Notwithstanding any provision of this Agreement or the Plan to the contrary, ‎(i) if the Participant’s employment or service terminates due to Retirement, and the Participant ‎‎has been continuously employed by the Company for at least twelve (12) months following the ‎‎Grant Date, then any portion of the Participant’s Restricted Stock Units ‎‎scheduled to ‎become vested within twelve (12) months after the Participant’s termination date ‎shall be vested on his or her termination date; and (ii) ‎if the Participant experiences a Qualifying Termination, any ‎Restricted Period in effect on the date of such Qualifying Termination shall expire as of such ‎date.‎

 

 

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.

 

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. Subject to Section 7 below, 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.

 

 

7.             Settlement of Restricted Stock Units.

 

7.1           Promptly upon the expiration of the Restricted Period, 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.‎

 

7.2           Notwithstanding the preceding, the form of payment for this Award will be determined based on approval by the Company’s shareholders of the proposed increase ‎in the number of shares available for issuance under the Plan at the May 22, 2025 ‎annual meeting of Company’s shareholders‎. If such approval is not received, then all payments under this Award will be made in cash.

 

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 of 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.

 

 

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 any 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.

 

 

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 or the cash equivalent shall not be delivered or paid 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 cash equivalent of 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 or the shares themselves shall be paid or delivered to the Participant on such New Payment Date, and any remaining shares or the cash equivalent 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 or cash payment 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.

 

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.           Clawback. Notwithstanding any provisions in the Agreement to the contrary, any ‎compensation, ‎payments, or benefits provided hereunder (or profits realized from the sale of the ‎Common Shares delivered ‎hereunder), whether in the form of cash or otherwise, shall be subject ‎to a clawback to the extent provided by any policy or procedure adopted by the Company or ‎any ‎individual agreement between the Participant and the Company.‎

 

24.           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.

 

25.           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]

 

 

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:	EVP, General Counsel & Secretary
	[PARTICIPANT NAME]
	By:

 

 

 

Exhibit 10.4

 

Execution Version

 

2025 EXECUTIVE PERFORMANCE STOCK UNIT AGREEMENT

 

This Performance Stock Unit Agreement (this “Agreement”) is made and entered into as of February 27, 2025 (the “Grant Date”) by and between Target Hospitality Corp., a Delaware corporation (the “Company”), and [EXECUTIVE NAME] (the “Participant”). This Agreement is being entered into pursuant to the Target Hospitality Corp. 2019 Incentive Award Plan‎, as amended ‎(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 Performance Units. Pursuant to Section 9 of the Plan, the Company hereby issues to the Participant on the Grant Date an Award consisting of [NUMBER] Performance Stock Units (the “Performance Units”)‎, subject to adjustment as specified on Exhibit A to this Agreement. Each Performance Unit represents the right to receive one Common Share, subject to the terms and conditions set forth in this ‎Agreement and the Plan.‎ The Performance 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 Performance 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, the Performance Units shall become vested based on (i) continued service with ‎the Company until the third (3rd) anniversary of the Grant Date (the “Restricted Period”), and (ii) the ‎attainment of the Performance Criteria specified on Exhibit A to this Agreement. Any portion of ‎the Performance Units that does not become vested in accordance with the preceding ‎provisions of this Section 3 and Exhibit A shall be forfeited to the Company for no ‎consideration as of the date of the termination of the Employee’s employment with the ‎Company. ‎ Once vested, the Performance Units shall become “Vested Units.”

 

4.           Termination of Service/Employment.

 

4.1         Except as otherwise provided in the employment agreement, as amended and restated, entered into between the Participant and Target Logistics Management, LLC, dated [____________________] (the “Employment Agreement”), the vesting schedule above notwithstanding, if the Participant’s employment or service terminates for any reason at any time before all of the Performance Units have vested, the Participant’s unvested Performance 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. In accordance with the Employment Agreement, if the Participant’s employment is terminated without Cause or by the Participant for Good Reason at any time prior to the first anniversary of the Grant Date, the time vesting requirement described in Section 3(i) of the Agreement a minimum of 12.5% of the Performance Units shall be satisfied as of the date of such termination of employment (and the remaining portion shall be forfeited) and such Performance Units shall be held by the Participant until the end of the Restricted Period and settled based on the attainment level for the Performance Criteria as provided in Section 3(ii) above. Notwithstanding any provision of this Agreement or the Plan to the contrary, ‎(i) if the ‎Participant’s employment or service terminates due to (A) Retirement, provided the Participant ‎‎has been ‎continuously employed by the Company for at least twelve (12) months following the ‎‎Grant ‎Date, (B) termination without Cause, or (C) resignation by the Participant for Good Reason, then the time vesting requirement described in Section 3(i) of the Agreement shall be satisfied with respect to a pro-rata portion of the Participant’s Performance Units ‎‎based on ‎‎completed calendar months since the Grant Date, including the period during which the Participant is receiving severance payments under the Participant’s Employment Agreement (and the remaining portion shall be forfeited);; provided, however, that in either case such Performance Units shall be held by the Participant until the end of the Restricted Period and settled based on the attainment level for the Performance Criteria as provided in Section 3(ii) above.

 

 

4.2         Notwithstanding any provision of this Agreement or the Plan to the contrary, upon the ‎occurrence of a Change in Control, the attainment level for the Performance Criteria ‎shall be the greater of Target Level or the level of actual performance as of the date of such ‎Change in Control.‎ If the Participant subsequently experiences a Qualifying Termination, the Participant’s Performance Units shall be time vested and settled at the performance level described in the preceding sentence.

 

5.           Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period and until such time as the Performance Units are settled, the Performance 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 Performance Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Performance 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.

 

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 Performance Units unless and until the Performance Units vest and are settled by the issuance of such Common Shares. Subject to Section 7 below,‎ the Participant shall be the record owner of the Common Shares underlying the Performance 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 Performance 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 Performance 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 Performance Units to which they are attributable and shall be paid on the same date that the Performance 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 Performance Units that are cancelled will not be paid and will be immediately forfeited upon cancellation of the Performance Units.

 

 

7.           Settlement of Performance Units.

 

7.1         Promptly upon the expiration of the Restricted Period, 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 Performance 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 Performance Units, less an ‎amount equal to any required tax withholdings.‎

 

7.2         Notwithstanding the preceding, the form of payment for this Award will be determined based on approval by the Company’s shareholders of the proposed increase ‎in the number of shares available for issuance under the Plan at the May 22, 2025 ‎annual meeting of Company’s shareholders‎. If such approval is not received, then all payments under this Award will be made in cash.

 

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 of 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 Performance 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 Performance 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 Performance 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 Performance 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 Performance Units or any subsequent sale of any shares; and (b) does not commit to structure the Performance 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 Performance 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.

 

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 Performance 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 Performance Units in this Agreement does not create any contractual right or other right to receive any Performance 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 Performance 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 or the cash equivalent shall not be delivered or paid 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 cash equivalent of 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 or the shares themselves shall be paid or delivered to the Participant on such New Payment Date, and any remaining shares or the cash equivalent 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 or cash payment 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.

 

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 Performance 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.         Clawback. Notwithstanding any provisions in the Agreement to the contrary, any ‎compensation, ‎payments, or benefits provided hereunder (or profits realized from the sale of the ‎Common Shares delivered ‎hereunder), whether in the form of cash or otherwise, shall be subject ‎to a clawback to the extent (i) necessary to ‎comply with the requirements of any applicable law, ‎including but not limited to, the Dodd-Frank Wall Street ‎Reform and Consumer Protection Act ‎of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations ‎promulgated ‎thereunder; (ii) necessary to comply with the Target Hospitality Corp. Compensation Recovery Policy; or (iii) provided by any policy or procedure adopted by the Company or ‎any ‎individual agreement between the Participant and the Company.‎

 

24.         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.

 

 

25.         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 Performance 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 Performance 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]

 

 

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 & Secretary
	[PARTICIPANT NAME]
	By:

 

 

Exhibit A

 

2025 Performance Criteria

 

The Participant’s Performance Units shall become vested based on the satisfaction of both the (i) the time vesting requirement described in Section 3(i) of the Agreement, and (ii) the applicable Performance Criteria described in this Exhibit A. The initial number of Performance Units specified in Section 1 of the Agreement shall be the number of Common Shares delivered upon settlement of the Performance Units subject to the Agreement if payment is made at the “Target Level.” This initial number of Performance Units shall be adjusted based on the attainment of the Performance Criteria described in Section 3 below.

 

1.           Performance Period: The performance period for the Award shall be the period between February 27, 2025 and December 31, 2027.

 

2.           Award Level: The Performance Units subject to this Agreement will be earned based on the Company’s performance for the Performance Period. Following the end of the Performance Period, the Committee shall determine the number of Performance Units earned for such Performance Period.

 

3.           Performance Criteria: Payment of the Award is determined ‎based on performance using relative Total Shareholder Return (“TSR”) (the “TSR Based ‎Award”) measured based on the Performance Period. ‎No portion of the Award will be earned if the ‎Company’s performance during the Performance Period is below the threshold level of the ‎Performance Criteria for the Award as described below.

 

Award Level:

 

The Award shall be earned based on the Company’s relative TSR performance for the applicable Performance Period as measured against the TSR of the Comparator Group during the applicable Performance Period. For this purpose, constituent companies in the Russell 2000 Index on the Grant Date will be the “Comparator Group”. The Award Level shall be determined based on the following table:

 

Level	Percentile Rank vs. Comparator Group	Payout Percentage
Maximum	‎85th Percentile and above‎	200% of Target Level
Target	‎50th Percentile	100% of Target Level
Threshold	‎25th Percentile‎	50% of Target Level
‎<Threshold‎	Below 25th Percentile	0%

 

Any payment will be based on linear interpolation between Threshold, Target, and Maximum Award Levels. Notwithstanding the preceding, if Company’s absolute TSR over the Performance ‎Period is negative, the Payout Percentage shall be limited to 100% of Target Level regardless of relative TSR results.

 

 

TSR shall be calculated as:

 

 

where n represents the number of years over which TSR is measured.

 

The “Ending Average Stock Price” shall be calculated as the volume weighted average Stock Price for the last 20 trading days of the applicable Performance Period.

 

The “Beginning Average Stock Price” shall be calculated as the volume weighted average Stock Price for the last 10 trading days prior to the first day of the applicable Performance Period.

 

The “Stock Price” of a share of Stock shall be the closing quotation on the National Association of Securities Dealers Automated Quotations (“NASDAQ”) for the applicable date (or an applicable substitute exchange or quotation system if the NASDAQ is no longer applicable).

 

The “Reinvested Dividend Amount” shall be calculated as the sum of the total dividends paid¹ on one share of Stock during the Performance Period, assuming reinvestment of such dividends in such Stock (based on the Closing Stock Price of such Stock on the ex-dividend date). For the avoidance of doubt, it is intended that the foregoing calculation of Reinvested Dividend Amount shall take into account not only the reinvestment of dividends in a share of Stock but also capital appreciation or depreciation in the shares of Stock deemed acquired by such reinvestment.

 

Companies that are not publicly listed during the entire applicable Performance Period shall not be included ‎in the Comparator Group. Comparator companies that file for bankruptcy or delist at any ‎time during such Performance Period will remain in the Comparator Group with a TSR that ‎places such companies at the bottom of the percentile rankings.

 

In addition to any other authority or powers granted to the Committee herein or in the Plan, the Committee shall have the authority to interpret and determine the application and calculation of any matter relating to the determination of TSR, including any terms in the Agreement or this Exhibit related thereto. The Committee shall also have the power to make any and all adjustments it deems appropriate to reflect any changes in the Company’s outstanding Stock, including by reason of subdivision or consolidation of Stock or other capital readjustment, the payment of a stock dividend on the Stock, other increase or reduction in the number of shares of Stock outstanding, recapitalizations, reorganizations, mergers, consolidations, combinations, split-ups, split-offs, spin-offs, exchanges or other relevant changes in capitalization or distributions to holders of Stock. The determination of the Committee with respect to any such matter shall be conclusive.

 

1

The relevant date for determining whether a dividend is included in the calculation of “Reinvested Dividend Amount” is the ex-dividend date (and not the payment date). In the event that the stock of the measured company goes ex-dividend during the Performance Period (including the 20-day trading period during which the Ending Average Stock Price is to be calculated), such dividend shall be included in the determination of “Reinvested Dividend Amount,” notwithstanding the fact that the payment date of such dividend may actually occur after the conclusion of the Performance Period. In the event that the stock of the measured company goes ex-dividend prior to the commencement of the Performance Period (for example, during the 10-day trading period during which the Beginning Average Stock Price is to be calculated), such dividend shall not be included in the termination of “Reinvested Dividend Amount,” notwithstanding the fact that the payment date of such dividend may actually occur during the Performance Period.

 

 

 

Exhibit 10.5

 

Execution Version

 

2025 EXECUTIVE PERFORMANCE STOCK UNIT AGREEMENT

 

This Performance Stock Unit Agreement (this “Agreement”) is made and entered into as of February 27, 2025 (the “Grant Date”) by and between Target Hospitality Corp., a Delaware corporation (the “Company”), and James B. Archer (the “Participant”). This Agreement is being entered into pursuant to the Target Hospitality Corp. 2019 Incentive Award Plan, as amended (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 Performance Units. Pursuant to Section 9 of the Plan, the Company hereby issues to the Participant on the Grant Date an Award consisting of 2,000,000 Restricted Stock Units (the “Performance Units”)‎, subject to adjustment as specified on Exhibit A to this Agreement. Each Performance Unit represents the right to receive one Common Share, subject to the terms and conditions set forth in this ‎Agreement and the Plan.‎ The Performance 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 Performance 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, the Performance Units shall become vested based on (i) continued service with ‎the Company until the June 30, 2028 (the “Restricted Period”), and (ii) the ‎attainment of the Performance Criteria specified on Exhibit A to this Agreement. Any portion of ‎the Performance Units that does not become vested in accordance with the preceding ‎provisions of this Section 3 and Exhibit A shall be forfeited to the Company for no ‎consideration as of the date of the termination of the Employee’s employment with the ‎Company. ‎ Once vested, the Performance Units shall become “Vested Units.”

 

4.              Termination of Service/Employment. Notwithstanding any provision to the contrary in the employment agreement, as amended and restated, entered into between the Participant and Target Logistics Management, LLC, dated February 29, 2024 (the “Employment Agreement”), and except as otherwise provided on Exhibit A, if the Participant’s employment or service terminates for any reason at any time during the Restricted Period, the Participant’s unvested Performance 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.

 

5.              Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period and until such time as the Performance Units are settled, the Performance 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 Performance Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Performance 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.

 

 

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 Performance Units unless and until the Performance Units vest and are settled by the issuance of such Common Shares. Subject to Section 7 below,‎ the Participant shall be the record owner of the Common Shares underlying the Performance 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 Performance 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 Performance 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 Performance Units to which they are attributable and shall be paid on the same date that the Performance 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 Performance Units that are cancelled will not be paid and will be immediately forfeited upon cancellation of the Performance Units.

 

7.              Settlement of Performance Units.

 

7.1            Promptly upon the expiration of the Restricted Period, 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 Performance 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 Performance Units, less an ‎amount equal to any required tax withholdings.‎

 

7.2            Notwithstanding the preceding, the form of payment for this Award will be determined based on approval by the Company’s shareholders of the proposed increase ‎in the number of shares available for issuance under the Plan at the May 22, 2025 ‎annual meeting of Company’s shareholders‎. If such approval is not received, then all payments under this Award will be made in cash.

 

 

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 of 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 Performance 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 Performance 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 Performance 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 Performance 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 Performance Units or any subsequent sale of any shares; and (b) does not commit to structure the Performance 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 Performance 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.

 

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 Performance 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 Performance Units in this Agreement does not create any contractual right or other right to receive any Performance 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 Performance 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 or the cash equivalent shall not be delivered or paid 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 cash equivalent of 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 or the shares themselves shall be paid or delivered to the Participant on such New Payment Date, and any remaining shares or the cash equivalent 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 or cash payment 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.

 

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 Performance 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.            Clawback. Notwithstanding any provisions in the Agreement to the contrary, any ‎compensation, ‎payments, or benefits provided hereunder (or profits realized from the sale of the ‎Common Shares delivered ‎hereunder), whether in the form of cash or otherwise, shall be subject ‎to a clawback to the extent (i) necessary to ‎comply with the requirements of any applicable law, ‎including but not limited to, the Dodd-Frank Wall Street ‎Reform and Consumer Protection Act ‎of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations ‎promulgated ‎thereunder; (ii) necessary to comply with the Target Hospitality Corp. Compensation Recovery Policy; or (iii) provided by any policy or procedure adopted by the Company or ‎any ‎individual agreement between the Participant and the Company.‎

 

24.            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.

 

25.            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 Performance 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 Performance 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]

 

 

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

 

	TARGET HOSPITALITY CORP.
	By:	/s/ Heidi D. Lewis
	Name:	Heidi D. Lewis
	Title:	EVP, General Counsel
	PARTICIPANT
	/s/ James B. Archer
	James B. Archer

 

 

Exhibit A

 

Retention PSU Performance Criteria

 

The forfeiture restrictions on the Performance Units granted under the Agreement will ‎lapse on the date the Participant has satisfied both the Performance Goal and the Service Goal with respect to a Performance Unit, each as described below.

 

A.              Performance Goal

 

The “Performance Goal” will be satisfied with respect to the number of Performance Units on the date on which the Company’s stock price satisfies the relevant criteria as set out below (each a “Milestone”):

 

Achievement of Share Price**	Number of Potential PSUs Earned**
$20.00	250,000
$25.00	500,000
$27.50	500,000
$30.00	750,000

 

**For this purpose, “Share Price” means the volume weighted average price of a share of the Company’s common stock on the Nasdaq Capital Market (“NASDAQ”) during any sixty (60) consecutive calendar day period (a “Measurement Period”). For this purpose, a Measurement Period shall commence on a date when NASDAQ is open for business. If two or more Milestones are attained during a single Measurement Period, or as a result of two or more overlapping Measurement Periods, more than one Milestone may be attained for such Measurement Period or overlapping Measurement Periods. To the extent a Milestone is not satisfied on or before June 30, 2028, the portion of the Performance Units subject to that Milestone shall be forfeited on June 30, 2028.

 

The Milestones shall be appropriately adjusted by the Committee to reflect any stock split, stock dividend, or other extraordinary event affecting the capitalization of the Company.

 

B.              Service Vesting Criteria

 

The “Service Goal” will be satisfied if Participant remains continuously employed by the Company until June 30, 2028.

 

If the Participant’s employment with the Company terminates due to the Participant’s resignation of his employment or termination by the Company for any reason, prior to the date the Service Goal is achieved, then all of the Performance Units shall be automatically forfeited on such date and neither the Company nor any Affiliate shall have any further obligations to the Participant under this Agreement.

 

 

Notwithstanding the preceding, (A) if the Company terminates the Participant’s employment due to (i) death, (ii) Disability (as defined in the Employment Agreement), or (iii) without Cause, or (B) the Participant resigns his employment for Good Reason, then:

 

·

Any Performance Unit for which the Milestone has been achieved on or before such date shall be vested on the Participant’s employment termination date; and

 

·

Any Performance Units for which the Milestone has not been achieved on or before such date shall be forfeited on the Participant’s employment termination date.

 

C.              Change in Control.

 

If a Change in Control for the Company occurs prior to June 30, 2028, and the Participant has remained continuously employed with the Company through the closing date for such transaction, then the following shall apply:

 

·

If the $20.00 Share Price Milestone has been attained on or before the closing date for such transaction, then all of the Performance Goals shall be deemed to have been satisfied on the closing date for the Change in Control, subject to satisfaction of the Service Goal.

 

·

In the event the Participant experiences a Qualifying Termination as a result of such Change in Control, the Service Goal shall also be satisfied in its entirety on the Participant’s employment termination date.‎

 

For clarity, the parties agree that a public resale of securities of Target Hospitality Corp. by Arrow Holdings S.a.r.l. and/or Modulaire Global S.a.r.l. shall not, of its own accord, result in a Change in Control.

 

 

 

Exhibit 10.6

 

Execution Version

 

2025 EXECUTIVE PERFORMANCE STOCK UNIT AGREEMENT

 

This Performance Stock Unit Agreement (this “Agreement”) is made and entered into as of February 27, 2025 (the “Grant Date”) by and between Target Hospitality Corp., a Delaware corporation (the “Company”), and Jason Vlacich (the “Participant”). This Agreement is being entered into pursuant to the Target Hospitality Corp. 2019 Incentive Award Plan, as amended (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 Performance Units. Pursuant to Section 9 of the Plan, the Company hereby issues to the Participant on the Grant Date an Award consisting of 2,000,000 Restricted Stock Units (the “Performance Units”)‎, subject to adjustment as specified on Exhibit A to this Agreement. Each Performance Unit represents the right to receive one Common Share, subject to the terms and conditions set forth in this ‎Agreement and the Plan.‎ The Performance 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 Performance 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, the Performance Units shall become vested based on (i) continued service with ‎the Company until the June 30, 2028 (the “Restricted Period”), and (ii) the ‎attainment of the Performance Criteria specified on Exhibit A to this Agreement. Any portion of ‎the Performance Units that does not become vested in accordance with the preceding ‎provisions of this Section 3 and Exhibit A shall be forfeited to the Company for no ‎consideration as of the date of the termination of the Employee’s employment with the ‎Company. ‎ Once vested, the Performance Units shall become “Vested Units.”

 

4.             Termination of Service/Employment. Notwithstanding any provision to the contrary in the employment agreement, as amended and restated, entered into between the Participant and Target Logistics Management, LLC, dated February 29, 2024 (the “Employment Agreement”), and except as otherwise provided on Exhibit A, if the Participant’s employment or service terminates for any reason at any time during the Restricted Period, the Participant’s unvested Performance 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.

 

5.             Restrictions. Subject to any exceptions set forth in this Agreement or the Plan, during the Restricted Period and until such time as the Performance Units are settled, the Performance 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 Performance Units or the rights relating thereto shall be wholly ineffective and, if any such attempt is made, the Performance 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.

 

 

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 Performance Units unless and until the Performance Units vest and are settled by the issuance of such Common Shares. Subject to Section 7 below,‎ the Participant shall be the record owner of the Common Shares underlying the Performance 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 Performance 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 Performance 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 Performance Units to which they are attributable and shall be paid on the same date that the Performance 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 Performance Units that are cancelled will not be paid and will be immediately forfeited upon cancellation of the Performance Units.

 

7.             Settlement of Performance Units.

 

7.1           Promptly upon the expiration of the Restricted Period, 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 Performance 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 Performance Units, less an ‎amount equal to any required tax withholdings.‎

 

7.2           Notwithstanding the preceding, the form of payment for this Award will be determined based on approval by the Company’s shareholders of the proposed increase ‎in the number of shares available for issuance under the Plan at the May 22, 2025 ‎annual meeting of Company’s shareholders‎. If such approval is not received, then all payments under this Award will be made in cash.

 

 

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 of 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 Performance 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 Performance 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 Performance 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 Performance 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 Performance Units or any subsequent sale of any shares; and (b) does not commit to structure the Performance 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 Performance 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.

 

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 Performance 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 Performance Units in this Agreement does not create any contractual right or other right to receive any Performance 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 Performance 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 or the cash equivalent shall not be delivered or paid 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 cash equivalent of 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 or the shares themselves shall be paid or delivered to the Participant on such New Payment Date, and any remaining shares or the cash equivalent 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 or cash payment 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.

 

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 Performance 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.           Clawback. Notwithstanding any provisions in the Agreement to the contrary, any ‎compensation, ‎payments, or benefits provided hereunder (or profits realized from the sale of the ‎Common Shares delivered ‎hereunder), whether in the form of cash or otherwise, shall be subject ‎to a clawback to the extent (i) necessary to ‎comply with the requirements of any applicable law, ‎including but not limited to, the Dodd-Frank Wall Street ‎Reform and Consumer Protection Act ‎of 2010, section 304 of the Sarbanes Oxley Act of 2002 or any regulations ‎promulgated ‎thereunder; (ii) necessary to comply with the Target Hospitality Corp. Compensation Recovery Policy; or (iii) provided by any policy or procedure adopted by the Company or ‎any ‎individual agreement between the Participant and the Company.‎

 

24.           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.

 

25.           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 Performance 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 Performance 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]

 

 

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

 

	TARGET HOSPITALITY CORP.
	By:	/s/ Heidi D. Lewis
	Name:	Heidi D. Lewis
	Title:	EVP, General Counsel
	PARTICIPANT
	/s/ Jason Vlacich
	Jason Vlacich

 

 

Exhibit A

 

Retention PSU Performance Criteria

 

The forfeiture restrictions on the Performance Units granted under the Agreement will ‎lapse on the date the Participant has satisfied both the Performance Goal and the Service Goal with respect to a Performance Unit, each as described below.

 

A.             Performance Goal

 

The “Performance Goal” will be satisfied with respect to the number of Performance Units on the date on which the Company’s stock price satisfies the relevant criteria as set out below (each a “Milestone”):

 

Achievement of Share Price**	Number of Potential PSUs Earned**
$20.00	75,000
$25.00	150,000
$27.50	150,000
$30.00	225,000

 

**For this purpose, “Share Price” means the volume weighted average price of a share of the Company’s common stock on the Nasdaq Capital Market (“NASDAQ”) during any sixty (60) consecutive calendar day period (a “Measurement Period”). For this purpose, a Measurement Period shall commence on a date when NASDAQ is open for business. If two or more Milestones are attained during a single Measurement Period, or as a result of two or more overlapping Measurement Periods, more than one Milestone may be attained for such Measurement Period or overlapping Measurement Periods. To the extent a Milestone is not satisfied on or before June 30, 2028, the portion of the Performance Units subject to that Milestone shall be forfeited on June 30, 2028.

 

The Milestones shall be appropriately adjusted by the Committee to reflect any stock split, stock dividend, or other extraordinary event affecting the capitalization of the Company.

 

B.             Service Vesting Criteria

 

The “Service Goal” will be satisfied if Participant remains continuously employed by the Company until June 30, 2028.

 

If the Participant’s employment with the Company terminates due to the Participant’s resignation of his employment or termination by the Company for any reason, prior to the date the Service Goal is achieved, then all of the Performance Units shall be automatically forfeited on such date and neither the Company nor any Affiliate shall have any further obligations to the Participant under this Agreement.

 

 

Notwithstanding the preceding, (A) if the Company terminates the Participant’s employment due to (i) death, (ii) Disability (as defined in the Employment Agreement), or (iii) without Cause, or (B) the Participant resigns his employment for Good Reason, then:

 

·

Any Performance Unit for which the Milestone has been achieved on or before such date shall be vested on the Participant’s employment termination date; and

 

·

Any Performance Units for which the Milestone has not been achieved on or before such date shall be forfeited on the Participant’s employment termination date.

 

C.             Change in Control.

 

If a Change in Control for the Company occurs prior to June 30, 2028, and the Participant has remained continuously employed with the Company through the closing date for such transaction, then the following shall apply:

 

·

If the $20.00 Share Price Milestone has been attained on or before the closing date for such transaction, then all of the Performance Goals shall be deemed to have been satisfied on the closing date for the Change in Control, subject to satisfaction of the Service Goal.

 

·

In the event the Participant experiences a Qualifying Termination as a result of such Change in Control, the Service Goal shall also be satisfied in its entirety on the Participant’s employment termination date.‎

 

For clarity, the parties agree that a public resale of securities of Target Hospitality Corp. by Arrow Holdings S.a.r.l. and/or Modulaire Global S.a.r.l. shall not, of its own accord, result in a Change in Control.

 

 

v3.25.0.1

Cover	Feb. 24, 2025
Cover [Abstract]
Document Type	8-K
Amendment Flag	false
Document Period End Date	Feb. 24, 2025
Entity File Number	001-38343
Entity Registrant Name	TARGET HOSPITALITY CORP.
Entity Central Index Key	0001712189
Entity Tax Identification Number	98-1378631
Entity Incorporation, State or Country Code	DE
Entity Address, Address Line One	9320 Lakeside Blvd.
Entity Address, Address Line Two	Suite 300
Entity Address, City or Town	The Woodlands
Entity Address, State or Province	TX
Entity Address, Postal Zip Code	77381
City Area Code	832
Local Phone Number	709-2563
Written Communications	false
Soliciting Material	false
Pre-commencement Tender Offer	false
Pre-commencement Issuer Tender Offer	false
Title of 12(b) Security	Common stock, par value $0.0001 per share
Trading Symbol	TH
Security Exchange Name	NASDAQ
Entity Emerging Growth Company	false

---