exv10w1



 






Exhibit 10.1




January 31, 2005




Mr. Lee E. Beckelman

12001 N. Houston Rosslyn

Houston, TX 77086



Dear Lee:



This letter summarizes Hanover Compressor Company’s offer to you to serve as the Company’s Vice
President and Chief Financial Officer (“CFO”) in Hanover’s corporate office in Houston, Texas,
effective January 26, 2005. In this role, you will report to the President and CEO.



As a current employee, certain of the benefits offered and conditions of employment are already
familiar to you but are repeated herein for completeness and clarity. As Hanover’s CFO, your
compensation and the other terms and conditions of employment are set by the Company’s board of
directors. Initial compensation for this position is as follows.




	 	 	 
	Base Salary:

	 	$250,000.00 annual base salary for the remainder of 2005, on
a pro-rata basis ($9,615.38 per pay period for 26 pay periods
per full year).
	 
	 	 
	Bonus
	 	 
	Opportunity:

	 	0 – 50% of annual base salary to be paid annually based upon
personal performance as well as Company performance, and as
determined by the Company’s board of directors.
	 
	 	 
	Stock Option
	 	 
	Program:

	 	Subject to Board approval in March 2005, the Company will
grant to you 10,000 restricted shares of Company common
stock, which will vest at the rate of 25% per year over a
four-year period and will otherwise be subject to the
provisions of the 2003 Stock Incentive Plan. In addition,
provided that you remain continually employed by the Company
in a role substantially similar to that described herein, you
will be given the full opportunity to






 









 





January 31, 2005

Page 2



	 	 	 
	

	 	participate in the stock, incentive, retirement and other plans offered to
the most senior officers of the Company.
	 
	 	 
	Severance:

	 	The Company will make an immediate lump sum severance payment to you equal to one times
the sum of your annual base salary and target bonus which was in effect immediately before the
“Change of Control”, if within the first twelve months following a “Change of Control” of the
Company (i) you terminate your employment with the Company for “Good Reason” or (ii) the
Company terminates your employment without “Cause”. In such event, the Company shall also
reimburse you for your COBRA premiums, paid to continue your current health benefits, for a
period of up to eighteen months.
	 
	 	 
	

	 	Please note that this agreement will not obligate the Company to make any
severance payment to you in the event that (i) you resign or voluntarily
terminate your employment with the Company for any reason, other than
“Good Reason” within the first twelve months following a “Change of
Control”, (ii) your employment ends due to your death or inability to
perform the essential requirements of the job, with or without reasonable
accommodation, due to disability, or (iii) you are terminated for “Cause”.
	 
	 	 
	

	 	These commitments regarding your severance are contingent upon, and are in
consideration for your continued compliance with your post-termination
obligations, including the Cooperation and Confidential Information provisions, which are addressed
below.
	 
	 	 
	

	 	For purposes of this letter agreement, the terms “Change of Control” and
“Cause” will have the same definition as used in the Company’s 2003 Stock
Incentive Plan under the terms “Corporate Change” and “Cause,”
respectively, and are incorporated herein by reference. Moreover,
voluntary termination of employment for “Good Reason” shall be defined as
any situation within the first twelve months following a “Change in
Control” of the Company in which your termination of employment with the
Company (i) promptly follows a material reduction of your duties and
responsibilities or a permanent change in your duties and responsibilities
which are materially inconsistent with the type of duties and
responsibilities then in effect or your title, (ii) promptly follows a
reduction in your annual base salary (without regard to bonus
compensation, if any) or a reduction in your annual bonus opportunity as
set forth in this letter (it is acknowledged that a reduction in the
actual amount of your bonus from year to year as a result of the criteria
addressed above will not be considered a






 









 





January 31, 2005

Page 3



	 	 	 
	

	 	reduction in bonus opportunity), (iii) promptly follows a material
reduction in your employee benefits (without regard to bonus compensation,
if any) if such reduction results in you receiving benefits which are, in
the aggregate, materially less than the benefits received by other
comparable employees of the Company generally, (iv) promptly follows a
material failure by the Company to comply with the terms of this letter or
to pay any compensation when due, but only after you provide notice to the
Company of such failure and the Company has reasonable opportunity to
cure, or (v) the Board otherwise determines that a voluntary termination
by you is for “Good Reason” under the circumstances then prevailing.
	 
	 	 
	Benefits &
	 	 
	Vacation:

	 	As a full time employee, you are also eligible to participate
in the various benefit programs offered by the Company. You
will be entitled to up to four weeks of vacation per year.
	 
	 	 
	Cooperation:

	 	We ask that you agree to act at all times in a manner
consistent with the interests of Hanover Compressor Company
and it affiliated entities with respect to our shareholders,
customers, employees, agents, and lenders. Neither you nor
the Company will defame or disparage each other. You further
agree that should your employment end, you will provide
reasonable cooperation to the Company in response to
reasonable requests made by the Company for information or
assistance, including but not limited to, participating upon
reasonable notice in conferences and meetings, providing
documents or information, aiding in the analysis of
documents, or complying with any other reasonable requests by
the Company including execution of any agreements that are
reasonably necessary.
	 
	 	 
	Confidential
	 	 
	Information:

	 	During your employment you will be given access to
information relating to the business and affairs of Hanover
Compressor Company and its affiliated entities, including,
without limitation, trade secrets, designs, technology,
processes, data, techniques, inventions (whether patentable
or not), works of authorship, formulas, business and
development plans, customer lists, software programs and
subroutines, source and object code, algorithms, terms of
compensation and personnel assessments of employees,
information regarding the Company’s facilities, processes,
operating procedures, financial data, purchasing practices,
marketing, management procedures, books and records, employee
or personnel data, contractual arrangements or proposals,
properties and business affairs of the Hanover entities, as
well as






 









 





January 31, 2005

Page 4



	 	 	 
	

	 	the Company’s business plans and budgets, information concerning the
Company’s actual or anticipated business, research or development, and may
receive information in confidence by or for any of the Hanover entities
from any other person (collectively “Confidential Information”). We ask
that you agree that you will not, at any time, directly or indirectly, for
any reason whatsoever, with or without cause, except in the appropriate
course of Company business or unless pursuant to a lawful subpoena,
disclose or disseminate any Confidential Information to any person or
entity, nor will you use any Confidential Information in competing with
Hanover Compressor Company or its affiliated entities in any manner. It
is expressly understood that the Confidential Information covered by this
paragraph includes only information that is confidential or proprietary
information of one or more of the Hanover entities and therefore does not
include information which is generally available to the public.
	 
	 	 
	Injunctive Relief:

	 	Please also agree that the
covenants set forth herein pertaining to Cooperation and Confidential
Information impose a reasonable restraint in light of the activities and
business of the Company. Because of the difficulty of measuring economic loss to the Company as a result of
the breach of any of these covenants and because of the immediate and irreparable damage that could be
caused to the Company for which it would have no other adequate remedy, in the event of an alleged breach
any of these covenants, the covenants may be enforced by the Company by injunctions, restraining orders, and
other equitable actions.
	 
	 	 
	Start Date:

	 	Your new position with the Company will become effective on
January 26, 2005.
	 
	 	 
	Dispute
	 	 
	Resolution:

	 	Any controversy or claim arising out of or relating to your employment, separation from, and/or affiliation
with the Company, except for those pertaining to the Cooperation and Confidential Information provisions above, shall be resolved by arbitration in accordance with
the Employment Dispute Resolution Rules of the American Arbitration Association, and judgment upon the award
rendered by the arbitrator may be entered in any court having jurisdiction. In reaching his or her decision,
the arbitrator shall have no authority to change or modify any provision of this Agreement.
	 
	 	 
	Choice of Law:

	 	This Agreement is made and shall be enforced pursuant to the laws of the State of Texas in Houston.






 









 





January 31, 2005

Page 5



	 	 	 
	Entire Agreement:

	 	This letter contains the entire agreement between you and the Company concerning the subject matter hereof
and supersedes any prior or contemporaneous agreements between you and the Company, and cannot be changed,
modified, or amended without a written agreement signed by the Company and you.
	 
	 	 
	Successors and
	 	 
	Assigns:

	 	This agreement shall be binding upon you, your heirs, successors, and assigns and the Company and its
successors and assigns. The Company may assign its rights, duties and obligations under this
agreement. However, your rights, duties and obligations are personal and
therefore shall not be transferred or assigned by you to another.





Your acceptance of this offer can be confirmed by signing the acceptance below and returning a copy
to my attention.



We are very pleased to extend this offer to you.




Sincerely,




Hanover Compressor Company




	 	 	 	 	 
	By:

	 	/s/ John E. Jackson
	 	 
	

	 	 	 	 
	

	 	Name: John E. Jackson	 	 
	

	 	Title: President and CEO	 	 






	 	 	 	 	 	 	 
	Accepted:

	 	/s/ Lee E. Beckelman
	 	 
	 	Date: January 31, 2005
	

	 	 	 	 	 	 
	

	 	Lee E. Beckelman	 	 	 	 
	

	 	Title: Vice President and CFO