exv10w1



 




Exhibit
10.1





HANOVER COMPRESSOR COMPANY




2006 LONG-TERM CASH INCENTIVE PLAN





 









 








TABLE OF CONTENTS




	 	 	 	 	 	 	 
	 
	 	 	 	PAGE
	 
	 	 	 	 	 	 
	I.

	 	PURPOSE
	 	 	1	 
	 
	 	 	 	 	 	 
	II.

	 	DEFINITIONS
	 	 	1	 
	 
	 	 	 	 	 	 
	III.

	 	ADMINISTRATION OF PLAN
	 	 	3	 
	 
	 	 	 	 	 	 
	IV.

	 	ELIGIBILITY
	 	 	3	 
	 
	 	 	 	 	 	 
	V.

	 	AWARD NOTICE
	 	 	4	 
	 
	 	 	 	 	 	 
	VI.

	 	PAYMENT OF AWARD
	 	 	4	 
	 
	 	 	 	 	 	 
	VII.

	 	TERMINATION OF EMPLOYMENT
	 	 	4	 
	 
	 	 	 	 	 	 
	VIII.

	 	CORPORATE CHANGE
	 	 	4	 
	 
	 	 	 	 	 	 
	IX.

	 	MISCELLANEOUS PROVISIONS
	 	 	4	 






-i-






 









 








HANOVER COMPRESSOR COMPANY




2006 LONG-TERM CASH INCENTIVE PLAN




I. PURPOSE



Effective as of July 1, 2006, the Company has established the HANOVER COMPRESSOR COMPANY 2006
LONG-TERM CASH INCENTIVE PLAN. The purpose of the Plan is to award cash bonuses to employees as an
incentive to remain with the Company or its Affiliates over the long term.




II. DEFINITIONS



The following definitions shall be applicable throughout the Plan unless specifically modified by
any paragraph:




     (a) "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 the management and policies of the controlled entity or organization, whether
through the ownership of voting securities or by contract or otherwise.



     (b) "Award” means any cash bonus granted under the terms of the Plan.



     (c) "Award Notice” means a written notice setting forth the terms of an Award granted under
the Plan.



     (d) "Board” means the Board of Directors of the Company.



     (e) "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 or the Board, in the
case of executive officers of the Company; (iv) willful misconduct as an Employee of the Company or
an Affiliate; (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 Committee, 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 Committee. With respect to any Participant residing outside of the
United States, the Committee may revise the definition of “Cause” as appropriate to conform to the
laws of the applicable non-U.S. jurisdiction.



     (f) "Committee” means the Committee defined in Paragraph III of the Plan.



     (g) "Company” means Hanover Compressor Company, a Delaware corporation.



     (h) "Corporate Change” means:




     (i) The acquisition by any individual, entity or group (within the meaning of Section
13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”)) (a



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“Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of 40% or more of either (A) the then outstanding shares of common stock
of the Company (the “Outstanding Company Common Stock”) or (B) the combined voting power of
the then outstanding voting securities of the Company entitled to vote generally in the
election of directors (the “Outstanding Company Voting Securities”); provided, however, that
for purposes of this subsection (i), any acquisition by any Person pursuant to a transaction
which complies with clause (A) of subsection (iii) of this definition shall not constitute a
Corporate Change; or




     (ii) Individuals, who, as of the date hereof, constitute the Board (the “Incumbent
Board”) cease for any reason to constitute at least a majority of the Board; provided,
however, that any individual becoming a director subsequent to the date hereof whose
election, or nomination for election by the Company’s stockholders, was approved by a vote
of at least a majority of the directors then comprising the Incumbent Board shall be
considered for purposes of this definition as though such individual was a member of the
Incumbent Board, but excluding, for these purposes, any such individual whose initial
assumption of office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened solicitation
of proxies or consents by or on behalf of a Person other than the Board; or




     (iii) The consummation of a reorganization, merger or consolidation of the Company or
sale, lease or other disposition of all or substantially all of the assets of the Company
and its subsidiaries, taken as a whole (other than to an entity wholly owned, directly or
indirectly, by the Company) (a “Corporate Transaction”), in each case, unless, following
such Corporate Transaction, (A) all or substantially all of the individuals and entities who
were the beneficial owners, respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such Corporate Transaction
beneficially own, directly or indirectly, more than 60% of, respectively, the then
outstanding shares of common stock and the combined voting power of the then outstanding
voting securities entitled to vote generally in the election of directors, as the case may
be, of the corporation resulting from such Corporate Transaction (including a corporation
which as a result of such transaction owns the Company or all or substantially all of the
Company’s assets either directly or through one or more subsidiaries) in substantially the
same proportions as their ownership, immediately prior to such Corporate Transaction, of the
Outstanding Company Common Stock and the Outstanding Company Voting Securities, as the case
may be, and (B) at least a majority of the members of the board of directors of the
corporation resulting from such Corporate Transaction were members of the Incumbent Board at
the time of the execution of the initial agreement, or of the action of the Board, providing
for such Corporate Transaction.



     (i) "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.



     (j) "Employee” means any person who is an employee of the Company or any Affiliate. If an
entity ceases to be an Affiliate of the Company, a Participant employed by such entity shall be
deemed to have terminated his employment with the Company and its Affiliates and shall cease to be
an Employee under the Plan. For any and all purposes under the Plan, the term “Employee” shall
exclude an individual hired as an independent contractor, leased employee, consultant, or a person
otherwise designated by the Committee, the Company or an Affiliate at the time of hire as not
eligible to participate in or receive benefits under the Plan, even if such ineligible individual
is subsequently determined to be an employee by any governmental or judicial authority.
Notwithstanding the foregoing, for purposes of any Award granted to a person residing outside of
the United States, the Committee may revise the definition of “Employee” as appropriate to conform
to the laws of the applicable non-U.S. jurisdiction.



     (k) "Participant” means an Employee selected by the Committee to participate in the Plan.



     (l) "Plan” means the Hanover Compressor Company 2006 Long-Term Cash Incentive Plan, as amended
from time to time.



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     (m) "Retirement” means a termination of service, other than due to Cause or death, on or after
the Participant attains (i) age 65 or (ii) age 55 and with the written consent of the Committee.
Notwithstanding the foregoing, with respect to a Participant residing outside of the United States,
the Committee may revise the definition of “Retirement” as appropriate to conform to the laws of
the applicable non-U.S. jurisdiction.



III. ADMINISTRATION OF PLAN




     (a) Composition of Committee. The Plan shall be administered by the Management Development
and Compensation Committee of the Board (the “Committee”) or such other committee, if any, that may
be designated by the Board to administer the Plan.



     (b) Powers. Subject to Paragraph III(d) and the express provisions of the Plan, the Committee
shall have authority, in its discretion, to determine which Employees shall receive an Award, the
time or times when such Award shall be made, the terms and conditions of an Award, and the value of
an Award. In making such determinations, the Committee may take into account the nature of the
services rendered by the respective Employees, their present and potential contribution to the
Company’s success and such other factors as the Committee in its sole discretion shall deem
relevant.



     (c) Additional Powers. The Committee shall have such additional powers as are delegated to it
by the other provisions of the Plan. Subject to the express provisions of the Plan, this shall
include the power to construe the Plan and the respective notices provided hereunder, to prescribe
rules and regulations relating to the Plan, and to determine the terms, restrictions and provisions
of the notice relating to each Award, and to make all other determinations necessary or advisable
for administering the Plan. The Committee may correct any defect or supply any omission or
reconcile any inconsistency in the Plan or in any notice relating to an Award in the manner and to
the extent it shall deem expedient to carry it into effect. The Committee may amend or terminate
the Plan at any time in its sole discretion. Any determination or decision made by the Committee
or its delegate (pursuant to Paragraph III(d)) under the terms of the Plan shall be made in the
sole discretion of the Committee or such delegate and shall be final and binding on all persons,
including the Company and Participants, but subject to ratification by the Board if the Board so
provides.



     (d) Delegation of Powers. The Committee may delegate to one or more officers of the Company
the authority to make Awards to Employees under the Plan. Any delegation described in this
paragraph shall contain such limitations and restrictions as the Committee may provide and shall
comply in all respects with the requirements of applicable law, including the Delaware General
Corporation Law.



     (e) Awards Outside of the United States. Notwithstanding anything in the Plan to the
contrary, with respect to any Participant or eligible Employee who is resident outside of the
United States, the Committee may, in its sole discretion, amend or vary the terms of the Plan in
order to conform such terms with the requirements of local law, to meet the goals and objectives of
the Plan, or to take advantage of preferential tax treatment that may be available under local law,
and may, in its sole discretion, establish administrative rules and procedures to facilitate the
operation of the Plan in such non-U.S. jurisdictions. The Committee may, where it deems
appropriate in its sole discretion, establish one or more sub-plans of the Plan for these purposes.



IV. ELIGIBILITY



Subject to the delegation of power in Paragraph III(d), the Committee, in its sole discretion, may
select any individual, who at the time of grant is an Employee of the Company, to receive an Award
under the Plan. Only individuals who are actively employed by the Company or an Affiliate on the
date Awards under the Plan are granted shall be eligible to become Participants in the Plan. The
Committee shall consider such additional factors as it deems pertinent in selecting Participants
and in determining the amount of their respective Awards. The Plan is discretionary in nature and
the grant of Awards by the Committee is voluntary.




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V. AWARD NOTICE



Subject to the provisions of the Plan, each Award shall be evidenced by an Award Notice in such
form and containing such provisions not inconsistent with the provisions of the Plan and under such
terms as the Committee shall establish. The terms and provisions of the respective Award Notices
need not be identical. Subject to the consent of the Participant, the Committee may, in its sole
discretion, amend an outstanding Award Notice in any manner that is not inconsistent with the
provisions of the Plan.



Unless otherwise provided in the Award Notice provided to a Participant, a portion of the
Participant’s Award will automatically become payable on each of the dates (a “Payment Date”) set
forth in the Award Notice, provided the Participant has been continuously employed by the Company
or an Affiliate at all times from the date of the Award up to and including the applicable Payment
Date.




VI. PAYMENT OF AWARD



Payment of each portion of an Award (subject to applicable tax withholding) shall be made in the
form of a lump sum cash payment within thirty (30) days following the applicable Payment Date.




VII. TERMINATION OF EMPLOYMENT



In the event a Participant’s employment with the Company or an Affiliate terminates for any reason
(other than as a result of death or Disability), the Participant shall automatically forfeit any
unpaid portion of his or her Award on the date of such event unless the Committee directs
otherwise. If a Participant’s employment with the Company terminates as a result of his or her
death or Disability, all remaining unpaid portions of the Participant’s Award shall immediately
become payable in a lump sum cash payment (subject to applicable tax withholding).




VIII. CORPORATE CHANGE



In the event of a Corporate Change, all remaining unpaid portions of the Participant’s Award shall
immediately become payable in a lump sum cash payment (subject to applicable tax withholding).




IX. MISCELLANEOUS PROVISIONS




     (a) No Employment or Benefit Guaranty. The establishment of the Plan, any modification or
amendment thereof, the creation of any fund or account, nor 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 Committee 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, participation in the Plan will
not give any Participant a right to be retained in the employ of the Company.



     (b) Restrictions on Transfer. The rights or interests of Participants under this Plan shall
not be subject in any manner to alienation, sale, transfer, assignment, pledge, encumbrance,
charge, or levy of any kind, either voluntarily or involuntarily, other than by will or by the laws
of descent and distribution.



     (c) Unfunded Plan, Unsecured Interests. No Participant or other person shall have any right,
title or interest in any property of the Company, and nothing herein shall require the Company to
segregate or set aside any funds or other property for the purpose of paying any Award under the
Plan. To the extent that any person acquires a right to receive payments under this Plan, such
right shall be no greater than the right of any unsecured general creditor of the Company.



     (d) No Restriction on Corporate Action. Nothing contained in the Plan shall be construed to
prevent the Company or an Affiliate from taking any action that is deemed by the Company or such
Affiliate to be appropriate or in its best interest, regardless of whether such action would have
an adverse



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effect on the Plan or any Award made under the Plan. No Employee, Participant, representative
of an Employee or Participant, or other person shall have any claim against the Company or any
Affiliate as a result of any such action.



     (e) Headings. The headings used in the Plan are solely for convenience and shall not be
relied upon in construing any provisions hereof. Any reference to a paragraph shall refer to a
paragraph in the Plan unless specified otherwise.



     (f) Gender and Number. Words denoting the masculine gender shall include the feminine and
genders, the singular shall include the plural and the plural shall include the singular wherever
required by the context.



     (g) 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.



     (h) 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 U.S. Internal Revenue Code of
1986, as amended, or any applicable federal, state, local or foreign laws.



     (i) Successors. The Plan is binding on all persons entitled to benefits hereunder and their
respective heirs and legal representatives, on the Committee and its successor and on the Company
and its successor, whether by way of merger, consolidation, purchase or otherwise.



     (j) Effect on Other Employee Benefit Plans. Any benefit paid or payable under this Plan shall
not be included in a Participant’s or Employee’s compensation for purposes of computing benefits
under any employee benefit plan maintained or contributed to by the Company except as may otherwise
be required under the terms of such employee benefit plan or applicable law.



     (k) Limitations Period. Any Participant who believes he or she is being denied any benefit or
right under the Plan may file a written claim with the Committee. Any claim must be delivered to
the Committee within forty-five (45) days of the specific event giving rise to the claim. Untimely
claims will not be processed and shall be deemed denied. The Committee, or its designee, will
notify the Participant of its decision in writing as soon as administratively practicable. Claims
not responded to by the Committee in writing within one hundred and twenty (120) days of the date
the written claim is delivered to the Committee shall be deemed denied. The Committee’s decision
is final and conclusive and binding on all persons. No lawsuit relating to the Plan may be filed
before a written claim is filed with the Committee and is denied or deemed denied and any lawsuit
must be filed within one year of such denial or deemed denial or be forever barred.



     (l) 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.



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