EXHIBIT 10.1
HANOVER COMPRESSOR COMPANY
RETENTION BONUS PLAN
ARTICLE 1
ESTABLISHMENT AND PURPOSE
     Hanover Compressor Company (the “Company”) has established this retention
bonus plan for select employees, known as the Hanover Compressor Company
Retention Bonus Plan (the “Plan”). The primary purpose of the Plan is to provide
a significant incentive for employees to remain employed with the Company in
light of a potential merger with Universal Compression Holdings, Inc., a
Delaware Corporation.
ARTICLE 2
DEFINITIONS
     Whenever used in this Plan, the following terms shall have the meanings set
forth below and, when the meaning is intended, the initial letter of the word is
capitalized:

  (a)   “Administrator” means the person or persons appointed by the
Compensation Committee of the Board of Directors of the Company to administer
the Plan.     (b)   “Affiliate” means any corporation, partnership, limited
liability company or partnership, association, trust or other organization
which, directly or indirectly, controls, is controlled by, or is under common
control with, the Company. For purposes of the preceding sentence, “control”
(including, with correlative meanings, the terms “controlled by” and “under
common control with”), as used with respect to any entity or organization, shall
mean the possession, directly or indirectly, of the power (i) to vote more than
50% of the securities having ordinary voting power for the election of directors
of the controlled entity or organization, or (ii) to direct or cause the
direction of management and policies of the controlled entity or organization,
whether through the ownership of voting securities or by contract or otherwise.
    (c)   “Company” means Hanover Compressor Company, a Delaware corporation.  
  (d)   “Cause” means (i) the commission by a Participant of an act of fraud,
embezzlement or willful breach of a fiduciary duty to the Company or an
Affiliate (including the unauthorized disclosure of confidential or proprietary
material information of the Company or an Affiliate), (ii) a conviction of a
Participant (or a plea of nolo contendere in lieu thereof) for a felony or a
crime involving fraud, dishonesty or moral turpitude, (iii) willful failure of a
Participant to follow the written directions of the chief executive officer of
the Company, Company management, or the Board of Directors, in the case of
executive officers of the Company, when such directions are consistent with the
Participant’s customary duties and

 

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      responsibilities and where such refusal has continued for more than
10 days following written notice; (iv) willful misconduct as an employee of the
Company or an Affiliate which includes the Participant’s failure to adhere to
P.R.I.D.E., the Company’s Guide to Ethical Business Conduct; (v) willful failure
of a Participant to render services to the Company or an Affiliate in accordance
with his employment arrangement, which failure amounts to a material neglect of
his duties to the Company or an Affiliate or (vi) substantial dependence, as
determined by the Administrator, on any drug, immediate precursor or other
substance listed on Schedule IV of the Federal Comprehensive Drug Abuse
Prevention and Control Act of 1970, as amended, as determined in the sole
discretion of the Administrator. With respect to any Participant residing
outside of the United States, the Administrator may revise the definition of
“Cause” as appropriate to conform to the laws of the applicable non-U.S.
jurisdiction.     (e)   “Disability” means any physical or mental condition for
which the Participant would be eligible to receive long-term disability benefits
under the Company’s long-term disability plan. With respect to any Participant
residing outside of the United States, the Administrator may revise the
definition of “Disability” as appropriate to conform to the laws of the
applicable non-U.S. jurisdiction.     (f)   “Internal Revenue Code” means the
Internal Revenue Code of 1986, as amended.     (g)   “Key Date” means the date
through which a Participant must remain in continuous employment with the
Company in order to be entitled to a Retention Bonus under the Plan as
determined under Section 5.2 and set forth on the Participant’s Retention Bonus
Award Letter.     (h)   “Participant” means an employee of the Company selected
by the Administrator who has been provided a Retention Bonus Award Letter that
specifies the details of the employee’s participation in the Plan.     (i)  
“Retention Bonus” means the amount described in Section 5.1 and specifically set
forth on the Participant’s Retention Bonus Award Letter.     (j)   “Retention
Bonus Award Letter” means the letter provided by the Administrator to each
Participant that sets forth the Retention Bonus and Key Date applicable to the
Retention Bonus, as described in Section 5.1.     (k)   “Successor” shall mean
any person, firm, corporation, or business entity which at any time, whether by
merger, purchase, or otherwise, acquires all or substantially all of the assets,
stock or business of the Company.

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ARTICLE 3
ADMINISTRATION
     3.1 Administration of the Plan. The Plan shall be administered by the
Administrator.
     3.2 Authority of the Administrator. Subject to the provisions herein, the
Administrator shall have full power and authority to select and approve
Participants; to determine the amount of the Retention Bonus opportunity (which
need not be the same for each Participant); to determine the terms and
conditions of each individual’s participation in a manner consistent with the
provisions of the Plan; to establish Key Dates and strategic, financial, and/or
operational goals as described in Section 5.2; to determine whether any
strategic, financial, and/or operational goals have been met; to interpret, in
its sole discretion, the Plan and any agreement or instrument entered into under
the Plan; to establish, amend, rescind, or waive rules and regulations for the
Plan’s administration; and in general to have the full power to make all other
determinations which may be necessary or advisable for the administration of the
Plan, to the extent consistent with the provisions of the Plan.
     3.3 Decision of Administrator Final. Subject to applicable law, any
interpretation of the provisions of the Plan and any decision on any matter
within the discretion of the Administrator made by the Administrator in good
faith shall be final and conclusive and binding on all persons.
     3.4 Interested Administrator. If an Administrator is also a Participant in
the Plan, he may not decide or determine any matter or question concerning his
benefits unless such decision or determination could be made by him under the
Plan if he were not the Administrator.
ARTICLE 4
PARTICIPATION
     The Administrator shall identify which employees of the Company shall
participate in the Plan. As soon is practicable following selection by the
Administrator, each selected employee shall be provided with a Retention Bonus
Award Letter which shall describe the terms and conditions of each individual’s
participation in the Plan. A selected employee shall become a Participant in the
Plan as of such time as the selected employee is provided with his or her
Retention Bonus Award Letter.
ARTICLE 5
RETENTION BONUS OPPORTUNITY
     5.1 Establishment of Retention Bonus Amount. The Administrator shall
establish a Retention Bonus amount for each Participant, which need not be the
same for each Participant. Each Retention Bonus amount may be stated as a dollar
amount or as a percentage of the Participant’s annual rate of base salary then
in effect, and shall represent the amount of cash that can be earned by the
Participant under the Plan. Each Participant’s Retention Bonus amount shall be
communicated to such Participant in the form of a Retention Bonus Award Letter
provided to such Participant by the Administrator.

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     5.2 Establishment of Key Date. Subject to Section 6.1, each Participant
must remain in continuous employment with the Company (and any Successor)
through and including such Participant’s Key Date in order to be entitled to
receive a Retention Bonus under this Plan. The Administrator in its sole
discretion shall establish the Key Date for each Participant, which need not be
the same for each Participant. The Key Date may be based on (i) a fixed date,
(ii) a number of days occurring after a strategic, financial, and/or operational
goal as determined in the sole discretion of the Administrator, or (iii) such
other criteria as determined in the sole discretion of the Administrator.
     5.3 Payment of Retention Bonus. Subject to Section 6.1, any Retention Bonus
payable under this Plan shall be paid to the Participant (or the Participant’s
beneficiary, as the case may be) as a single lump sum within ten (10) days after
such Participant’s Key Date.
     5.4 Withholding for Taxes. Notwithstanding any other provisions of the
Plan, the Company may withhold from any payment to be made under the Plan such
amount or amounts as may be required for purposes of complying with the tax
withholding provisions of the Internal Revenue Code or any applicable federal,
state, local or foreign laws, and in the case of expatriate employees, the
withholding required under the Company’s expatriate program, or such other
amount or amounts as are agreed to by the Participant.
ARTICLE 6
TERMINATION OF EMPLOYMENT
     6.1 Termination Due to Death, Disability, or Termination Without Cause.
Notwithstanding anything in this Plan to the contrary, in the event a
Participant’s employment with the Company is terminated prior to a Participant’s
Key Date by reason of death, Disability, or termination by the Company without
Cause, such Participant (or the Participant’s beneficiary in the case of death)
shall receive a distribution of the Retention Bonus within ten (10) days of such
event.
     6.2 Termination For Other Reasons. In the event a Participant’s employment
with the Company is terminated for any reason not described in Section 6.1 prior
to such Participant’s Key Date, all rights of such Participant to any Retention
Bonus under the Plan shall be forfeited.
     6.3 Employment with Successors. For purposes of this Plan, employment with
any Successor will be considered employment with the Company.
     6.4 Compliance with Section 409A. The Company shall take all steps as it
deems necessary or advisable to make sure the Plan and any distributions
thereunder comply at all times with Section 409A of the Internal Revenue Code.
ARTICLE 7
BENEFICIARY
     Any amounts that may be payable under the Plan upon a Participant’s death
shall be payable to the Participant’s surviving spouse, if any, and if not, the
estate of the Participant.

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ARTICLE 8
RIGHTS OF PARTICIPANTS
     8.1 No Employment or Benefit Guaranty. None of the establishment of the
Plan, the receipt of a Retention Bonus Award Letter, any modification or
amendment thereof, or the payment of any benefits shall be construed as giving
to any Participant or other person any legal or equitable right against the
Company or the Administrator except as provided herein. Under no circumstances
shall the maintenance of this Plan constitute a contract of employment or shall
the terms of employment of any Participant be modified or in any way affected
hereby. Accordingly, neither participation in the Plan nor the payment of a
Retention Bonus amount shall be held or construed to give any Participant a
right to be retained in the employ of the Company or any Successor or Affiliate.
     8.2 No Assignment of Rights. The rights or interests of a Participant under
this Plan shall not be subject in any manner to anticipation, alienation, sale,
transfer, assignment, pledge, encumbrance, charge, garnishment, executive or
levy of any kind, either voluntarily or involuntarily, and any attempt to
anticipate, alienate, sell, transfer, assign, pledge, encumber, charge, garnish,
execute on, levy or otherwise dispose of any right to an amount payable
hereunder shall be void. No Retention Bonus amount shall be in any manner
subject to the debts, contracts, liabilities, engagements, or torts of any
Participant.
     8.3 No Funding. All payments to be made hereunder shall be paid from the
general assets of the Company, and no special or separate fund shall be
established and no segregation of assets shall be made to assure payment of such
amounts. No Participants shall have any right, title, or interest whatsoever in
or to any amounts under the Plan prior to receipt. Nothing contained in the
Plan, an no action taken pursuant to its provisions, shall create or be
construed to create a trust or fund of any kind, or a fiduciary relationship
between the Company and any other person. The rights of any Participant or
beneficiary to any amounts hereunder shall be no greater than those of an
unsecured general creditor of the Company.
ARTICLE 9
MISCELLANEOUS PROVISIONS
     9.1 Amendment and Termination. The Company reserves the right to amend or
terminate the Plan, in whole or in part, at any time. Except as provided in the
Plan, no amendment or termination of this Plan shall adversely affect the rights
of any Participant to his Retention Bonus.
     9.2 Headings. The headings of the various Articles and Sections in the Plan
are solely for convenience and shall not be relied upon in construing any
provisions hereof. Any reference to a Section shall refer to a Section of the
Plan unless specified otherwise.
     9.3 Evidence. Evidence required of anyone under the Plan shall be signed,
made or presented by the proper party or parties and may be by certificate,
affidavit, document or other information which the person acting thereon
considers pertinent and reliable.

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     9.4 Gender and Number. Words denoting the masculine gender shall include
the feminine and neuter genders, the singular shall include the plural and the
plural shall include the singular wherever required by the context.
     9.5 Applicable Law. The Plan shall be construed in accordance with the laws
of the State of Delaware, without regard to its conflicts of laws doctrine,
except to the extent preempted by Federal law.
     9.6 Severability. Whenever possible, each provision of the Plan shall be
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of the Plan is held to be invalid, illegal or unenforceable
in any respect under any applicable law or rule in any jurisdiction, such
invalidity, illegality or unenforceability shall not affect any other provision
or any other jurisdiction, and the Plan shall be reformed, construed and
enforced in such jurisdiction so as to best give effect to the intent of the
Company under the Plan.
     9.7 Effective Date. This Plan shall be effective as of March 19, 2007.
     9.8 Successors. This Plan may be assigned or transferred to, and shall be
binding upon and shall inure to the benefit of, any Successor and any such
Successor shall be deemed substituted for all purposes for the “Company” under
the terms of this Plan.

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