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): March 1, 2021 (February 25, 2021)

TARGET HOSPITALITY CORP.
(Exact Name of Registrant as Specified in Its Charter)

001-38343
(Commission File Number)

Delaware
98-1378631
(State or Other Jurisdiction of Incorporation)
(I.R.S. Employer Identification No.)

2170 Buckthorne Place, Suite 440
The Woodlands, Texas 77380
(Address of principal executive offices, including zip code)

(800) 832-4242
(Registrant’s telephone number, including area code)

NOT APPLICABLE
(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:

☐
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))
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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 Stock Market LLC
Warrants to purchase common stock

THWWW

The Nasdaq Stock 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 5.02
Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

(e) Compensatory Arrangements of Certain Officers

Amendment to Employment Agreement with Troy Schrenk

On February 25, 2021, Troy Schrenk, Chief Commercial Officer of Target Hospitality Corp. (the “Company”), entered into an amendment to his existing employment agreement with the Company, dated January 29, 2019 (the “Schrenk Agreement”), as previously disclosed by the Company and filed as Exhibit 10.11 to the Company’s Current Report on Form 8-K filed on March 21, 2019. Pursuant to the amendment, effective January 1, 2021, the terms of the Schrenk Agreement are amended to (a) increase Mr. Schrenk’s base salary from $200,000 per calendar year to $350,000 per calendar year, (b) increase Mr. Schrenk’s annual target bonus opportunity from 75% of his base salary to 85% of his base salary, (c) increase the target grant value of Mr. Schrenk’s Annual Award (as defined in the Schrenk Agreement) from $200,000 to $400,000, and (d) remove Mr. Schrenk’s entitlement to quarterly commission payments.

The foregoing description of the amended terms of the Schrenk Agreement is qualified in its entirety by reference to the full text of the amendment to the Schrenk Agreement, a copy of which is attached to this Current Report on Form 8-K as Exhibit 10.1, and incorporated herein by reference.

Form Equity Award Agreements

On February 25, 2021, the Compensation Committee (the “Compensation Committee”) of the Company’s Board of Directors adopted a new form Executive Restricted Stock Unit Agreement (the “RSU Agreement”) and a form Executive Stock Appreciation Rights Award Agreement (the “SAR Agreement” and together with the RSU Agreement, the “Award Agreements”) with respect to the granting of restricted stock units and stock appreciation rights, respectively, under the Target Hospitality Corp. 2019 Incentive Plan (the “Plan”). The new Award Agreements will be used for all awards to executive officers made on or after February 25, 2021.

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 to 10.2 its Current Report on Form 8-K filed on March 6, 2020, except for the following: (x) 50% of the restricted stock units (“RSUs”) will vest on the second grant date anniversary and 50% of the RSUs will vest on the third grant date anniversary and (y) if the participant’s employment or service terminates due to Retirement (as defined in the Plan), and the participant has been continuously employed by the Company for at least twelve months following the grant date, then a pro-rata portion of the participant’s RSUs scheduled to vest on the next following vesting date shall vest on his or her termination date based on completed calendar months since either (a) the grant date or (b) the initial vesting date, as applicable.

The SAR Agreement has material terms that are substantially similar to those in the form Executive Nonqualified Stock Option Award 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 6, 2020, except for the following: (x) the change in the equity instrument to a stock appreciation right (“SAR”), which may be settled in shares or cash, (y) 50% of the SARs will vest on the second grant date anniversary and 50% of the SARs will vest on the third grant date anniversary, and (z) if the participant’s employment or service terminates due to Retirement (as defined in the Plan), then (a) if the participant has been continuously employed by the Company for at least twelve months following the grant date, then a pro-rata portion of the SARs scheduled to become vested on the next vesting date shall be vested on the participant’s termination date based on completed calendar months since either (i) the grant date or (ii) the initial vesting date, as applicable; (b) following the application of clause (a), the unvested portion of the SARs shall expire upon such termination of employment or service and (c) the participant may exercise the vested portion of the SARs, but only within such period of time ending on the earlier of (i) two years following such termination of employment or service, or (ii) the Expiration Date (as defined in the SAR Agreement).

The foregoing descriptions of the Award Agreements are qualified in their entirety by reference to the full text of RSU Agreement and the SAR Agreement, copies of which are attached to this Current Report on Form 8-K as Exhibit 10.2 and 10.3, respectively, and incorporated herein by reference.

Item 9.01 Financial Statements and Exhibits.

(d)  Exhibits

Exhibit No.
 
Exhibit Description

      10.1      Amendment No. 1 to Employment Agreement with Troy Schrenk
      10.2      2021 Form of Executive Restricted Stock Unit Agreement
      10.3          2021 Form of Executive Stock Appreciation Rights Award Agreement





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: March 1, 2021
 
Name: Heidi D. Lewis
 
 
Title: Executive Vice President, General Counsel and Secretary
 
 




Exhibit 10.1
Execution Version
AMENDMENT TO EMPLOYMENT AGREEMENT
This Amendment (this “Amendment”) to the Employment Agreement by and between Target Logistics Management, LLC, a Massachusetts limited liability company (the “Company”), and Troy Schrenk (the “Executive”), dated as of January 29, 2019 (the “Employment Agreement”), is entered into as of this 25th day of February, 2021.
WITNESSETH:
WHEREAS, the Company and the Executive previously entered into the Employment Agreement; and
WHEREAS, the Company has determined that it is prudent to amend the Employment Agreement’s terms to reflect changes to the Executive’s compensation arrangements; and
WHEREAS, the Company and the Executive desire to so amend the Employment Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth in this Amendment, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereby agree as follows:
1. AMENDMENT TO THE EMPLOYMENT AGREEMENT.  The following provisions of the Employment Agreement shall be amended effective January 1, 2021:
 Section 5(a) of the Employment Agreement shall be and hereby is amended and to revise the reference to “$200,000” to be and to read “$350,000.”
 Section 5(c) of the Employment Agreement shall be and hereby is amended and to revise the reference to “75%” to be and to read “85%.”
 Section 5(d)(ii) of the Employment Agreement shall be and hereby is amended and to revise the reference to “$200,000” to be and to read “$400,000.” 
 Section 5(i) of the Employment Agreement is hereby deleted in its entirety.
2. AFFIRMATION.  This Amendment is to be read and construed with the Employment Agreement as constituting one and the same agreement. Except as specifically modified by this Amendment, all remaining provisions, terms and conditions of the Employment Agreement shall remain in full force and effect.
3. DEFINED TERMS. All terms not herein defined shall have the meaning ascribed to them in the Employment Agreement.
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4. RATIFICATION AS AMENDED. Except as amended by this Amendment, the terms and conditions of the Employment Agreement are confirmed, approved and ratified, and the Employment Agreement, as amended by this Amendment, shall continue in full force and effect.  Any reference to the Agreement in the Employment Agreement as amended by this Amendment shall mean the Employment Agreement as amended by this Amendment.
5. COUNTERPARTS.  This Amendment may be executed in one or more counterparts, each of which shall be deemed an original but all of which together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the undersigned have duly executed and delivered this Amendment or have caused this Amendment to be duly executed and delivered on their behalf.

TARGET LOGISTICS MANAGEMENT, LLC

By:  /s/ James B. Archer 
Name:  James B. Archer
Title:    President & CEO

TROY SCHRENK
  /s/ Troy Schrenk
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Exhibit 10.2

FORM OF 2021 EXECUTIVE RESTRICTED STOCK UNIT AGREEMENT
This Restricted Stock Unit Agreement (this “Agreement”) is made and entered into as of [DATE] (the “Grant Date”) by and between Target Hospitality Corp., a Delaware corporation (the “Company”), and [NAME] (the “Participant”). This Agreement is being entered into pursuant to the Target Hospitality Corp. 2019 Incentive Award Plan (the “Plan”). Capitalized terms used in this Agreement but not defined herein will have the meaning ascribed to them in the Plan.
1. Grant of Restricted Stock Units. Pursuant to Section 9 of the Plan, the Company hereby issues to the Participant on the Grant Date an Award consisting of [NUMBER] Restricted Stock Units (the “Restricted Stock Units”). Each Restricted Stock Unit represents the right to receive one Common Share, or an amount in cash equal to the value of one Common Share, as determined by the Committee in its sole discretion pursuant to Section 7 below, 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]
________________, 2023
 
50%
   
________________,2024
 
50%
   
4. Termination of Service/Employment. Except as otherwise provided in the employment agreement entered into between the Participant and Target Logistics Management, LLC, dated [DATE] (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 a pro-rata portion of the Participant’s Restricted Stock Units scheduled to become vested on the next following vesting date shall be vested on his or her termination date based on completed calendar months since either (a) the Grant Date, or (b) the initial vesting date, as applicable; 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.
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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, upon and following the settlement of the Restricted Stock Units, the Participant shall be the record owner of the Common Shares underlying the Restricted Stock Units unless and until such shares are sold or otherwise disposed of, and as record owner shall be entitled to all rights of a shareholder of the Company (including voting rights).
6.2 In the event that the Company pays any cash dividends on its Common Shares between the Grant Date and the date when the Restricted Stock Units are settled in accordance with Section 7 hereof or are forfeited, the Participant’s Account shall be credited on the date such dividend is paid to shareholders with an amount equal to all cash dividends that would have been paid to the Participant if one Common Share had been issued on the Grant Date for each Restricted Stock Unit granted to the Participant (“Dividend Equivalents”). Dividend Equivalents shall be credited to the Participant’s Account and interest may be credited on the amount of cash Dividend Equivalents credited to the Participant’s Account at a rate and subject to such terms as determined by the Committee. Dividend Equivalents credited to the Participant’s Account shall be subject to the same vesting and other restrictions as the Restricted Stock Units to which they are attributable and shall be paid on the same date that the Restricted Stock Units to which they are attributable are settled in accordance with Section 7 hereof. Dividend Equivalents credited to the Participant’s Account shall be distributed in cash or, at the discretion of the Committee, in Common Shares having a Fair Market Value equal to the amount of the Dividend Equivalents and interest, if any. Any accumulated and unpaid Dividend Equivalents attributable to Restricted Stock Units that are cancelled will not be paid and will be immediately forfeited upon cancellation of the Restricted Stock Units.
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7. Settlement of Restricted Stock Units. Promptly upon 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.
8. No Rights to Continued Service/Employment. Neither the Plan nor this Agreement shall confer upon the Participant any right to be retained in any position, as an employee, consultant or director of the Company or any Affiliate. Further, nothing in the Plan or this Agreement shall be construed to limit the discretion of the Company or an Affiliate to terminate the Participant’s employment or service with the Company or an Affiliate at any time, with or without Cause.
9. Adjustments. In the event of any change to the outstanding Common Shares or the capital structure of the Company (including, without limitation, a Change in Control), if required, the Restricted Stock Units shall be adjusted or terminated in any manner as contemplated by Section 12 of the Plan.
10. Beneficiary Designation. The Participant may file with the Committee a written designation of one or more persons as the beneficiary(ies) who shall be entitled to his or her rights under this Agreement and the Plan, if any, in case of his or her death, in accordance with Section 16(f) of the Plan.
11. Tax Liability and Withholding.
11.1 The Participant shall be required to pay to the Company, and the Company shall have the right to deduct from any compensation paid to the Participant pursuant to the Plan, the amount of any required withholding taxes in respect of the Restricted Stock Units and to take all such other action as the Committee deems necessary to satisfy all obligations for the payment of such withholding taxes in accordance with Section 16(c) of the Plan. The Participant may satisfy any federal, state or local tax withholding obligation by any of the following means, or by a combination of such means of the Plan, (a) tendering a cash payment, (b) if the Committee has adopted a formal procedure allowing any participant to authorize the Company to withhold Common Shares from the Common Shares otherwise issuable or deliverable to the Participant as a result of the vesting of the Restricted Stock Units (provided, however, that no Common Shares shall be withheld with a value exceeding the maximum amount of tax required to be withheld by law), issuing such authorization, or (c) delivering to the Company previously owned and unencumbered Common Shares. Notwithstanding the foregoing, in the event the Participant fails to provide timely payment of all sums required to satisfy any applicable federal, state and local withholding obligations in respect of the Restricted Stock Units, the Company shall treat such failure as an election by the Participant to satisfy all or any portion of the Participant’s required payment obligation pursuant to Section 11.1(b) above.
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11.2 Notwithstanding any action the Company takes with respect to any or all income tax, social insurance, payroll tax, or other tax-related withholding (“Tax-Related Items”), the ultimate liability for all Tax-Related Items is and remains the Participant’s responsibility and the Company (a) makes no representation or undertakings regarding the treatment of any Tax-Related Items in connection with the grant, vesting or settlement of the Restricted Stock Units or the subsequent sale of any shares; and (b) does not commit to structure the Restricted Stock Units to reduce or eliminate the Participant’s liability for Tax-Related Items.
12. Compliance with Law. The issuance and transfer of Common Shares shall be subject to compliance by the Company and the Participant with all applicable requirements of federal and state securities laws and with all applicable requirements of any stock exchange on which the Common Shares may be listed. No Common Shares shall be issued pursuant to Restricted Stock Units unless and until any then applicable requirements of state or federal laws and regulatory agencies have been fully complied with to the satisfaction of the Company and its counsel. The Participant understands that the Company is under no obligation to register the Common Shares with the Securities and Exchange Commission, any state securities commission or any stock exchange to effect such compliance.
13. Notices. Any notice required to be delivered to the Company under this Agreement shall be in writing and addressed to the General Counsel & Secretary of the Company at the Company’s principal corporate offices. Any notice required to be delivered to the Participant under this Agreement shall be in writing and addressed to the Participant at the Participant’s address as shown in the records of the Company. Either party may designate another address in writing (or by such other method approved by the Company) from time to time.
14. Governing Law. This Agreement will be construed and interpreted in accordance with the laws of the State of Texas without regard to conflict of law principles.
15. Interpretation. Any dispute regarding the interpretation of this Agreement shall be submitted by the Participant or the Company to the Committee for review. The resolution of such dispute by the Committee shall be final and binding on the Participant and the Company.
16. Participant Bound by Plan. This Agreement is subject to all terms and conditions of the Plan as approved by the Company’s shareholders. The terms and provisions of the Plan as it may be amended from time to time are hereby incorporated herein by reference. In the event of a conflict between any term or provision contained herein and a term or provision of the Plan, the applicable terms and provisions of the Plan will govern and prevail.
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.
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18. Severability. The invalidity or unenforceability of any provision of the Plan or this Agreement shall not affect the validity or enforceability of any other provision of the Plan or this Agreement, and each provision of the Plan and this Agreement shall be severable and enforceable to the extent permitted by law. If any provision of the Plan or any Award or Award agreement is or becomes or is deemed to be invalid, illegal, or unenforceable in any jurisdiction or as to any person or entity or Award, or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to the applicable laws, or if it cannot be construed or deemed amended without, in the determination of the Committee, materially altering the intent of the Plan or the Award, such provision shall be construed or deemed stricken as to such jurisdiction, person or entity or Award and the remainder of the Plan and any such Award shall remain in full force and effect.
19. Discretionary Nature of Plan. The Plan is discretionary and may be amended, cancelled or terminated by the Company at any time, in its discretion. The grant of the Restricted Stock Units in this Agreement does not create any contractual right or other right to receive any Restricted Stock Units or other Awards in the future. Future Awards, if any, will be at the sole discretion of the Company. Any amendment, modification, or termination of the Plan shall not constitute a change or impairment of the terms and conditions of the Participant’s employment with the Company.
20. Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel Restricted Stock Units, prospectively or retroactively; provided that no such amendment shall adversely affect the Participant’s material rights under this Agreement without the Participant’s consent.
21. Section 409A.
21.1 This Agreement is intended to comply with Section 409A of the Code and the regulations issued thereunder (“Section 409A”) or an exemption thereunder and shall be construed and interpreted in a manner consistent with the requirements for avoiding additional taxes or penalties under Section 409A.
21.2 If and to the extent any portion of any payment provided to the Participant under this Agreement in connection with the Participant’s separation from service (as defined in Section 409A) is determined to constitute “nonqualified deferred compensation” within the meaning of Section 409A and the Participant is a “specified employee” as defined in Section 409A(a)(2)(B)(i), as determined by the Company in accordance with the procedures separately adopted by the Company for this purpose, by which determination the Participant, as a condition to accepting benefits under this Agreement and the Plan, agrees that he or she is bound, such portion of the shares of the Company’s common stock to be delivered on a vesting date shall not be delivered before the earlier of (i) the day that is six months plus one day after the date of separation from service (as determined under Section 409A) or (ii) the tenth 10th day after the date of the Participant’s death (as applicable, the “New Payment Date”).  The shares that otherwise would have been delivered to the Participant during the period between the date of separation from service and the New Payment Date shall be delivered to the Participant on such New Payment Date, and any remaining shares will be delivered on their original schedule.  Neither the Company nor the Participant shall have the right to accelerate or defer the delivery of any such shares except to the extent specifically permitted or required by Section 409A.  This Agreement is intended to comply with the provisions of Section 409A and this Agreement and the Plan shall, to the extent practicable, be construed in accordance therewith.  Terms defined in this Agreement and the Plan shall have the meanings given such terms under Section 409A if and to the extent required to comply with Section 409A.
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21.3 Notwithstanding the foregoing, the Company makes no representations that the payments and benefits provided under this Agreement comply with Section 409A and in no event shall the Company be liable for all or any portion of any taxes, penalties, interest or other expenses that may be incurred by the Participant on account of non-compliance with Section 409A.
22. No Impact on Other Benefits. The value of the Participant’s Restricted Stock Units is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
23. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original but all of which together will constitute one and the same instrument. Counterpart signature pages to this Agreement transmitted by facsimile transmission, by electronic mail in portable document format (.pdf), or by any other electronic means intended to preserve the original graphic and pictorial appearance of a document, will have the same effect as physical delivery of the paper document bearing an original signature.
24. Acceptance. The Participant hereby acknowledges receipt of a copy of the Plan and this Agreement. The Participant has read and understands the terms and provisions thereof, and accepts Restricted Stock Units subject to all of the terms and conditions of the Plan and this Agreement. The Participant acknowledges that there may be adverse tax consequences upon the vesting or settlement of the Restricted Stock Units or disposition of the underlying shares and that the Participant should consult a tax advisor prior to such vesting, settlement or disposition.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
 
TARGET HOSPITALITY CORP.
 
By: _____________________
Name:
Title:
 
[PARTICIPANT NAME]
 
By: _____________________
Name:

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Exhibit 10.3

FORM OF 2021 EXECUTIVE STOCK APPRECIATION RIGHTS AWARD AGREEMENT
This Stock Appreciation Rights Award Agreement (this “Agreement”) is made and entered into as of [DATE] (the “Grant Date”) by and between Target Hospitality Corp., a Delaware corporation (the “Company”), and [NAME] (the “Participant”). This Agreement is being entered into pursuant to the Target Hospitality Corp. 2019 Incentive Award Plan (the “Plan”). Capitalized terms used in this Agreement but not defined herein will have the meaning ascribed to them in the Plan.
1. Grant. The Company hereby grants to the Participant an Award (the “Award”), subject to the terms and conditions of the Plan and this Agreement, for _________ Stock Appreciation Rights (the “SAR”).  The Award represents, for each vested SAR, the right to receive a payment in cash or Common Shares, as determined by the Committee in its sole discretion pursuant to Section 4.2 below, in an amount equal to the difference between (a) the Fair Market Value of a Common Share on the date of exercise, over (b) the Grant Date Price.  The “Grant Date Price” shall be $________________, the Fair Market Value of a Common Share on the Grant Date.
2. Vesting.
2.1 Vesting Schedule.  On each vesting date set forth below, the portion of the Participant’s Award that corresponds to such vesting date, as specified in the chart below, shall become vested and may be exercised, provided that the Participant remains in continuous service through the relevant vesting date, and except as otherwise determined by the Committee in its sole discretion or as otherwise provided in this Agreement or the Plan.
Vesting Date
 
Percentage of SARs Vested
 
Number of SARs Vested
_______________, 2022
 
50%
   
_______________, 2023
 
50%
   
2.2 Expiration. The Award shall vest and become exercisable on the vesting dates set forth above and shall expire as of the tenth anniversary of the Grant Date (the “Expiration Date”).
3. Termination of Employment/Service. Except as otherwise provided in the employment agreement entered in between the Participant and Target Logistics Management, LLC, dated [DATE] (the “Employment Agreement”), upon any termination of the Participant’s employment or service, the Award shall be treated as provided in this Section 3. 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 Award shall become vested and exercisable as of the date of such termination of employment.
3.1 Termination due to Death or Disability. If the Participant’s employment or service is terminated as a result of such Participant’s death or disability (as determined by the Committee), the unvested portion of the Award shall expire upon such termination of employment or service, and the Participant may exercise the vested portion of the Award, but only within such period of time ending on the earlier of (a) two years following such termination of employment or service, or (b) the Expiration Date.
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3.2 Termination due to Retirement. If the Participant’s employment or service is terminated as a result of such Participant’s Retirement, then (a) if the Participant has been continuously employed by the Company for at least twelve (12) months following the Grant Date, then a pro-rata portion of the SARs scheduled to become vested on the next following vesting date shall be vested on his or her termination date based on completed calendar months since either (i) the Grant Date, or (ii) the initial vesting date, as applicable; (b) following the application of clause (a), the unvested portion of the Award shall expire upon such termination of employment or service, and (c) the Participant may exercise the vested portion of the Award, but only within such period of time ending on the earlier of (i) two years following such termination of employment or service, or (ii) the Expiration Date.
3.3 Termination for Reasons Other Than Retirement, Death, Disability or Cause. If the Participant’s employment or service is terminated for any reason other than such Participant’s Retirement, death or disability, and other than such Participant’s termination of employment or service for Cause, the unvested portion of the Award shall expire upon such termination of employment or service, and the Participant may exercise the vested portion of the Award, but only within such period of time ending on the earlier of (a) 90 days following such termination of employment or service, or (b) the Expiration Date.
3.4 Termination for Cause. If the Participant’s employment or service is terminated for Cause, the SARs subject to the Award (whether vested or unvested) shall immediately terminate and cease to be exercisable.
3.5 Extension of Termination Date. If following the Participant’s termination of employment or service for any reason the exercise of the SARs subject to the Award is prohibited because such exercise would violate applicable securities laws, then the expiration of the Award shall be extended to a date that is thirty (30) calendar days following the date such exercise would no longer violate applicable securities laws (so long as such extension shall not violate Section 409A of the Code); provided, that, in no event shall such expiration date be extended beyond the Expiration Date.
3.6 Qualifying Termination. Notwithstanding the foregoing, if a Change in Control occurs and the Participant experiences a Qualifying Termination, 100% of the Award shall become immediately vested and exercisable as of the date of such Qualifying Termination.
4. Manner of Exercise.
4.1 Method of Exercise. To exercise the SARs, the Participant (or in the case of exercise after the Participant’s death or incapacity, the Participant’s executor, administrator, heir or legatee, as the case may be) must deliver to the Company a written or electronic notice of exercise in the manner designated by the Committee for such purpose.
4.2 Payment.  Upon exercise, the Company shall pay to the Participant for each of the vested SAR then exercised the difference between (a) the Fair Market Value of a Common Share on the date of exercise, over (b) the Grant Date Price (the “Payment Amount”).  Such payment may be made in cash; provided, however, that the Committee may, in its sole discretion elect to make some or all of such payment through the delivery of Common Shares with a value, determined as of the trading date immediately prior the payment date, equal to the portion of the Payment Amount which is paid through the delivery of Common Shares.  Payment shall be made as soon as administratively feasible after the exercise date, but in no event later than the March 15th in the calendar year following the calendar year of exercise.
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4.3 Withholding. The Company shall have the right to require the Participant to remit to the Company, or to withhold from other amounts payable to the Participant, as compensation or otherwise, an amount sufficient to satisfy all federal, state, and local withholding tax requirements.
4.4 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 SAR 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.
5. No Rights to Continued Employment/Service; No Rights as Shareholder. 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 an 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 Affiliate at any time, with or without Cause.
6. 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 Award shall be adjusted or terminated in any manner as contemplated by Section 12 of the Plan.
7. Transferability. Unless otherwise provided by the Committee in its discretion, in accordance with Section 16(b) of the Plan, the SAR may not be sold, assigned, alienated, transferred, pledged, attached or otherwise encumbered.
8. 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 exercise 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.
9. Tax Liability and Withholding. 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 exercise of the Award or the subsequent sale of any shares acquired on exercise; and (b) does not commit to structure the Award to reduce or eliminate the Participant’s liability for Tax-Related Items.
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10. Compliance with Law. The exercise of the SAR and any 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 the Award 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.
11. 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.
12. 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.
13. 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.
14. 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.
15. 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 Award may be transferred by will or the laws of descent or distribution.
16. 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.
17. 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 Award in this Agreement does not create any contractual right or other right to receive any SARs 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.
18. Amendment. The Committee has the right to amend, alter, suspend, discontinue or cancel the Award, prospectively or retroactively; provided, that, no such amendment shall adversely affect the Participant’s material rights under this Agreement without the Participant’s consent.
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19. No Impact on Other Benefits. The value of the Participant’s Award is not part of his or her normal or expected compensation for purposes of calculating any severance, retirement, welfare, insurance or similar employee benefit.
20. 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.
21. 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 the Award 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 exercise of the Award or disposition of the underlying shares and that the Participant should consult a tax advisor prior to such exercise or disposition.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first above written.
 
TARGET HOSPITALITY CORP.
 
By: _____________________
Name:
Title:
 
PARTICIPANT
 
By: _____________________
Name:

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