exv10w1



 





EXHIBIT 10.1




October 5, 2004




Mr. John E. Jackson

62 North Knights Gate Circle

Cypress, Texas 77382



Dear John:




This letter summarizes Hanover Compressor Company’s offer to you to serve as
the Company’s President and Chief Executive Officer (“President and CEO”) in
Hanover’s corporate office in Houston, Texas. In this role, you will report to
the Company’s board of directors.




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 President and CEO, 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:

	 	$540,000.00 annual base salary for the remainder of
2004, on a pro-rata basis, and for 2005 ($20,769.23
per pay period for 26 pay
periods per full year).
	 
	 	 
	Bonus

Opportunity:

	 	0 – 100% 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:

	 	As of the date hereof, the Company is granting to you
100,000 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 participate in the stock,







 









 






	 	 	 
	October 5, 2004

Page 2
	 	 
	 
	 	 
	

	 	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 three 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”. Otherwise, the Company will make a
severance payment to you equal to one times your
annual base salary, payable in 24 equal monthly
installments, if the Company terminates your
employment without “Cause” at any time other than the
first twelve month period immediately following a
“Change of Control”. In either of these
circumstances, 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, however, 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”.
Additionally, in the event that the Company subsequently
implements employment contracts for its executive managers
that contain Change of Control-related severance provisions
more favorable to managers than that described above, you
will be offered similar protections.
	 
	 	 
	

	 	These commitments regarding your severance are contingent
upon, and are in consideration for your continued
compliance with your post-termination obligations,
including the Cooperation, Confidential Information and
Non-competition and Non-solicitation 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)







 









 






	 	 	 
	October 5, 2004

Page 3
	 	 
	 
	 	 
	

	 	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 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,







 









 






	 	 	 
	October 5, 2004

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	 	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 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.
	 
	 	 
	Non-competition
and Non-solicitation:

	 	We also request that you agree that in exchange for
your compensation and other consideration, as well
as the Company’s providing you access to its
Confidential Information, for a two (2) year period
following your termination from employment with the
Company for any reason, you will not directly or
indirectly on behalf of yourself or any other
person(s), company, partnership, corporation, or
business of whatever nature compete with the Company
or its affiliated entities, which includes your
promise not to: (i) engage in, carry on, or have a
financial interest in (in any capacity whatsoever,
including, without limitation, as an officer,
director, shareholder, owner, partner, joint
venturer, manager, advisor, employee, independent
contractor or consultant) any entity that competes
with the business of Hanover Compressor Company or
its affiliated entities; (ii) induce or attempt to
influence any employee, agent, consultant or
independent contractor of Hanover Compressor Company
or its affiliated entities to terminate work or
employment with the Company, or otherwise adversely
interfere with or affect the business relationship
between them; or (iii) divert, take, solicit and/or
accept







 









 






	 	 	 
	October 5, 2004

Page 5
	 	 
	 
	 	 
	

	 	the business of any entity that is or has been a customer
of Hanover Compressor Company or its affiliated entities,
or any potential customer of Hanover Compressor Company or
affiliated entities. This agreement shall apply regardless
of whether your employment terminates under circumstances
which entitle you to receive the severance payments
described above. If you breach the foregoing covenants,
the Company shall be no longer obligated to provide you
severance payments or continued reimbursement for health
care benefits; however, this shall not prohibit the Company
in any way from pursuing or obtaining other or additional
remedies at law or at equity. These non-competition and
non-solicitation provisions will control over any other
non-competition or related agreements in the Company’s
plans and policies, including the stock option agreement
and/or plan.
	 
	 	 
	Injunctive Relief:

	 	Please also agree that the covenants set forth herein pertaining to Cooperation, Confidential Information
and Non-competition and Non-solicitation 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
October 25, 2004.
	 
	 	 
	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, Confidential Information, and
Non-competition and Non-solicitation 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.







 









 






	 	 	 
	October 5, 2004

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	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/ Victor E. Grijalva

	 	 
	

	 	Name: Victor E. Grijalva	 	 
	

	 	Title: Chairman of the Board	 	 
	 
	 	 	 	 
	Accepted:

	 	/s/ John E. Jackson

	 	Date: October 5, 2004
	

	 	John E. Jackson