Exhibit 10.4

     
HANOVER COMPRESSOR COMPANY

AWARD NOTICE
PERFORMANCE-VESTED RESTRICTED STOCK
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Hanover Compressor Company (the “Company”), has granted to you, [NAME] (“the
Participant”), shares of restricted stock under the Hanover Compressor Company
2006 Stock Incentive Plan (the “Plan”). All capitalized terms in this Notice
have the same meaning ascribed to them in the Plan.
The main terms of your Award are as follows:
     1. Award. You have been granted [NUMBER] shares of Company restricted stock
(the “Award” or “Restricted Stock”). This Award is stated at maximum payout and
the actual Award earned and paid may be less.
     2. Grant Date. The date of this Restricted Stock Award is July 21, 2006
(the “Grant Date”).
     3. Vesting. The Award will vest on July 21, 2009 (the “Vesting Date”) and
will be paid at 0% to 200% of the Target Award, subject to the achievement of a
pre-determined performance objective (the “Performance Measure”) over a
three-year period (the “Performance Period”). The “Target Award” is the number
of shares that would be earned and paid if the Performance Measure is met at the
target level.
     Exhibit A provides (i) the Performance Period over which performance will
be measured, (ii) an explanation of the Performance Measure, and (iii) the
percentage of the Award that will vest based on the achievement of the
Performance Measure at threshold, target and maximum levels.
     As soon as administratively practicable following the Vesting Date, and in
no event later than September 30, 2009, the Company will notify you, based upon
the performance achieved at the conclusion of the Performance Period, of the
portion of your Award that will vest and will no longer be subject to the
restrictions on transfer described in Section 6 below. Any portion of your Award
that does not vest will be forfeited. Contact Wachovia at (866) 311-5694 or
(713) 853-2400 with any questions concerning the vesting of your Award.
     4. Termination of Employment. If your employment with the Company or a
subsidiary terminates for any reason (other than as a result of death,
Disability or a Corporate Change) during the Performance Period and up to the
Vesting Date, your Award will be automatically forfeited on the date of such
event unless the Compensation Committee directs otherwise. If your employment
with the Company terminates as a result of your death, Disability or a Corporate
Change, your Award will immediately vest at 100% of the Target Award and all
restrictions applicable to your Award will cease as of that date.
     5. Stockholder Rights. You will have the right to vote your shares of
Restricted Stock and receive dividends, if any, with respect to your Restricted
Stock, regardless of vesting; however, the Company will withhold delivery of
your Restricted Stock shares until they are vested.
     6. Non-Transferability. Before you are vested in your Award, you cannot
sell, transfer, pledge exchange or otherwise dispose of your shares of
Restricted Stock (except by will or the laws of descent and distribution).
     7. No Right to Continued Employment. Nothing in this Notice guarantees your
continued employment with the Company or its subsidiaries or interferes in any
way with the right of the Company or its subsidiaries to terminate your
employment at any time.

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     8. Withholding. Your Award is subject to applicable income tax, social
insurance, or social security withholding obligations. If necessary, the Company
reserves the right to withhold from your regular earnings an amount sufficient
to meet the withholding obligations.
     9. Plan Governs. This Notice is subject to the terms of the Plan, a copy of
which is available on the Company’s website or which will be provided to you
upon written request addressed to Hanover Compressor Company, Compensation and
Benefits Department, 12001 N. Houston Rosslyn, Houston, Texas 77086. In the
event of a discrepancy between this Notice and the Plan, the Plan shall govern.
     10. Participant Acceptance. If you do not accept the Award or the terms of
the Award, you must notify the Company in writing at the address provided above
within thirty (30) days of delivery of this Notice. Otherwise, the Company will
deem the Award and the terms of the Award accepted by you.

            ON BEHALF OF HANOVER COMPRESSOR
COMPANY AND ITS SUBSIDIARIES
    By:   /s/ John E. Jackson         John E. Jackson        President and Chief
Executive Officer   

 

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HANOVER COMPRESSOR COMPANY

AWARD NOTICE – EXHIBIT A
2006 PERFORMANCE-BASED OBJECTIVES AND CONDITIONS
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Performance Period
  July 1, 2006 through June 30, 2009
 
   
Performance Measure
  Average Return on Capital Employed (“ROCE”) over the Performance Period
 
   
 
  ROCE is calculated as follows: (1) earnings before interest and taxes, divided
by (2) short-term debt plus, current maturities of long-term debt plus,
long-term debt plus, minority interest plus, stockholders’ equity less, cash.
 
   
 
  The intent of the Performance Measure is to provide an incentive for managers
to effect significant improvements in the Company’s operational performance.
Upon the occurrence of material non-operational events during the Performance
Period, the Compensation Committee may, in its discretion, adjust the incentive
formula to exclude such event.

                              Threshold   Target   Maximum ROCE Performance
Objectives   6.0%   7.5%   9.5%
Payout (expressed as a percentage of the Award at target performance)
    50 %     100 %     200 %          The actual Award payout will range from 0%
to 200% of the Award that would have been earned at target performance.