8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): July 21, 2006

HANOVER COMPRESSOR COMPANY
HANOVER COMPRESSION LIMITED PARTNERSHIP

(Exact Name of Registrant as Specified in Its Charter)

Delaware
Delaware
(State or Other Jurisdiction of
Incorporation or Organization) 001-13071
001-31934
(Commission File Number) 
76-0625124
75-2344249
(I.R.S. Employer
Identification No.)

12001 North Houston Rosslyn
Houston, Texas
(Address of Principal Executive Offices) 77086
(Zip Code)

Registrant’s Telephone Number, including Area Code: (281) 447-8787

Not Applicable.
(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o  Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o  Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o  Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry Into A Material Definitive Agreement.

Executive Compensation

On July 21, 2006, the Board of Directors (the “Board”) of Hanover Compressor Company (the “Company”) approved increases to the base salary of the following named executive officers, each of such increases to be effective as of July 1, 2006. Additionally, the Board approved long term incentive awards to key employees, including Executive Officers. The 2006 Long Term Incentive Awards Program is described below.

		Amount of
Officer	Title	Increase	New Salary
John E. Jackson	CEO	$25,000	$565,000
Brian A. Matusek	Sr. VP US Operations & Global Services	$35,000	$310,000
Norman A. Mckay	Sr. VP Eastern Hemisphere	$35,000	$310,000
Gary M. Wilson	Sr. VP & General Counsel	$15,000	$310,000
Lee E. Beckelman	Sr. VP & CFO	$50,000	$300,000

2006 Long Term Incentive Awards Program

     The 2006 Long Term Incentive Awards Program (the “2006 Awards Program”) was developed primarily to provide long term incentives to management-level employees and align management’s interests with those of the Company’s shareholders. The long term incentive awards (“Awards”) that participants will be entitled to receive pursuant to the 2006 Awards Program consist of the following:

     (i) Time vested restricted stock or stock-settled restricted stock units (“Time Vested Stock Awards”), and

     (ii) either

• performance vested restricted stock or stock-settled restricted stock units cliff vesting after a three year performance period (“Performance Awards”), or

• cash awards paid out over a period of 3 years (“Cash Awards”).

     All Executive Officers received a combination of Time Vested Stock Awards and Performance Awards. Cash Awards were granted to non-executive personnel only. All Awards will be issued under the Company’s 2006 Stock Incentive Plan approved by the stockholders in May 2006 (the “Incentive Plan”) or the Company’s 2006 Long Term Cash Incentive Plan (the “Cash Plan”).

     The Cash Plan was adopted by the Management Development and Compensation Committee of the Board (the “Compensation Committee”) on July 20, 2006 and allows for the payment of Cash Awards only. The form of the Company’s Cash Plan is filed herewith as Exhibit 10.1.

     The Time Vested Stock Awards that were granted pursuant to the 2006 Program will vest in one-third increments on each anniversary of their grant, so that 100% of these awards will have vested within three years of July 21, 2006, the original grant date. The Cash Awards that were granted pursuant to the 2006 Awards Program will be paid out in one-third increments on each anniversary of their grant so that 100% of the awards will be paid out within three years of July 21, 2006.

     Recipients of the Performance Awards are eligible to receive shares of Hanover common stock at the end of three years from the original award grant date if the Company meets certain three-year average return on capital employed (“ROCE”) goals as determined by the Compensation Committee of the Board. ROCE is equal to (1) EBIT, 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 three-year average threshold ROCE goal has been set by the Compensation Committee of the Board at 6%. The intent of the Compensation Committee is to provide incentives for participants to achieve significant improvements in the Company’s operational performance. Upon the occurrence of material non-operational events during the performance period, the Compensation Committee may adjust the incentive formula to exclude such event. If the Company does not meet the threshold ROCE goals, then recipients of these Performance Awards will not be entitled to receive any shares under the Performance Awards. If the Company meets or exceeds the threshold ROCE, participants will be entitled to receive shares equal to a percentage of the target amount of shares payable to each participant based upon the final three-year average ROCE as follows:

	Performance Payout
Three-Year Average Return	Based Upon
on Capital Employed (ROCE)	Percentage of Target
6.0%	50%
7.5%	100%
9.5% or more	200%

     If the three-year average ROCE falls within the range set forth in the table above, the percentage of the target Performance Award shares issued to each participant will be pro-rated accordingly.

     Vesting or actual payment of all Awards is contingent upon the participants’ continued employment with the Company, with the exception of the earlier acceleration events described below. In order to be eligible to receive payment upon vesting of the Performance Award, employees must be employed by the Company on July 21, 2009.

     Upon a change of control of the Company or in the event a participant’s employment is terminated due to his or her death or disability:

• the Incentive Plan provides that all unvested Time Vested Stock Awards shall fully vest and no longer be subject to any restrictions, and all performance awards shall immediately vest in full and all performance criteria applicable to such performance awards shall be deemed met at 100% of target as of the date of such change of control of the Company or death or disability, as the case may be; and

• the Cash Plan provides that all unvested Cash Awards shall immediately become payable in a lump sum cash payment (subject to applicable tax withholding).

     The form of Award Notice for the Time Vested Awards, the Performance Awards and the Cash Awards are filed herewith as Exhibits 10.2, 10.3, 10.4, 10.5 and 10.6 are incorporated herein by reference.

Director Compensation

On July 21, 2006, the Company’s Board of Directors approved certain increases in Non-Employee Director compensation. The increases were effective immediately.

The attached exhibit 10.8 sets forth the compensation for Non-Employee Directors.

Item 9.01 Financial Statements and Exhibits

(c) Exhibits

Exhibit No.	Description
10.1*	2006 Long Term Cash Incentive Plan
10.2*	Form of Award Notice Time Vested Restricted Stock
10.3*	Form of Award Notice Time Vested Restricted Stock Units (stock settled)
10.4*	Form of Award Notice Performance Vested Restricted Stock
10.5*	Form of Award Notice Performance Vested Restricted Stock Units (stock settled)
10.6*	Form of Award Notice Cash Incentive Plan
10.7	2006 Stock Incentive Plan incorporated by reference to the Company’s Definitive Proxy Statement filed March 24, 2006
10.8*	Schedule of Compensation for Non-Employee Directors

* Filed herewith

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	HANOVER COMPRESSOR COMPANY HANOVER COMPRESSION LIMITED PARTNERSHIP
Date: July 27, 2006	By:	/s/ Gary M. Wilson
		Name:	Gary M. Wilson
		Title:	Senior Vice President, General Counsel and Corporate Secretary

EXHIBIT INDEX

Exhibit No.	Description
10.1*	2006 Long Term Cash Incentive Plan
10.2*	Form of Award Notice Time Vested Restricted Stock
10.3*	Form of Award Notice Time Vested Restricted Stock Units (stock settled)
10.4*	Form of Award Notice Performance Vested Restricted Stock
10.5*	Form of Award Notice Performance Vested Restricted Stock Units (stock settled)
10.6*	Form of Award Notice Cash Incentive Plan
10.7	2006 Stock Incentive Plan incorporated by reference to the Company’s Definitive Proxy Statement filed March 24, 2006
10.8*	Schedule of Compensation for Non-Employee Directors

*Filed herewith

EX-10.1

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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EX-10.2

Exhibit 10.2

HANOVER COMPRESSOR COMPANY


AWARD NOTICE
TIME-VESTED RESTRICTED STOCK

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”).

     2. Grant Date. The date of this Restricted Stock Award is July 21, 2006 (the “Grant Date”).

     3. Vesting. Your Award is subject to a vesting schedule. A portion of your Award (rounded to the nearest whole number) will automatically vest on each of the dates (a “Vesting Date”) indicated in the table below. However, you must be employed by the Company or one of its subsidiaries at all times from the Grant Date up to and including the applicable Vesting Date for the Award to vest. Contact Wachovia at (866) 311-5694 or (713) 853-2400 with any questions concerning the vesting of your Award.

Vesting Date	Number of Shares Vested
July 21, 2007	[SHARES VESTING]
July 21, 2008	[SHARES VESTING]
July 21, 2009	[SHARES VESTING]

     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), the unvested portion of 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, the unvested portion of your Award will immediately vest in full and all restrictions applicable to your Award will cease as of that date. In the event your employment terminates due to Retirement, it will be within the discretion of the Compensation Committee to vest or not vest any unvested portion of your Award.

     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 & 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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EX-10.3

Exhibit 10.3

HANOVER COMPRESSOR COMPANY

AWARD NOTICE
TIME-VESTED RESTRICTED STOCK UNIT (Stock-Settled)

Hanover Compressor Company (the “Company”), has granted to you, [NAME] (“the Participant”), restricted stock units 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] restricted stock units (the “Award” or “RSUs”).

     2. Grant Date. The date of this RSU Award is July 21, 2006 (the “Grant Date”).

     3. Vesting. Your Award is subject to a vesting schedule. A portion of your Award (rounded to the nearest whole number) will automatically vest on each of the dates (a “Vesting Date”) indicated in the table below. However, you must be employed by the Company or one of its subsidiaries at all times from the Grant Date up to and including the applicable Vesting Date for the Award to vest. As soon as administratively practicable following each Vesting Date, the Company will issue to you one share of Common Stock for each of your vested RSUs. Contact Wachovia at (866) 311-5694 or (713) 853-2400 with any questions concerning the vesting of your Award.

Vesting Date	Number of RSUs Vested
July 21, 2007	[UNITS VESTED]
July 21, 2008	[UNITS VESTED]
July 21, 2009	[UNITS VESTED]

     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), the unvested portion of 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, the unvested portion of your Award will immediately vest in full and all restrictions applicable to your Award will cease as of that date. In the event your employment terminates due to Retirement, it will be within the discretion of the Compensation Committee to vest or not vest any unvested portion of your Award.

     5. No Stockholder Rights. Until vested and paid as Common Stock, you will not have any right to vote your RSUs or receive dividends, if any, with respect to your RSUs.

     6. Non-Transferability. You cannot sell, transfer, pledge, exchange or otherwise dispose of your RSUs (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.

     8. No Right to Future Benefits. The Plan is provided by the Company on an entirely discretionary basis, and the Plan creates no vested rights in you as a Participant. You understand and

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agree that this Award is not part of your salary and that receipt of this Award does not entitle you to any future awards under the Plan or any other plan or program of the Company. This Award is not part of your normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.

     9. Data Privacy. You consent to the collection, use, processing and transfer of your personal data as described in this paragraph. You understand that the Company and its subsidiaries hold certain personal information about you (including your name, address and telephone number, date of birth, social security number, social insurance number, etc.) for the purpose of administering the Plan (“Data”). You also understand that the Company and/or its subsidiaries will transfer this Data amongst themselves as necessary for the purpose of implementing, administering and managing your participation in the Plan, and that the Company and/or any of its subsidiaries may also transfer this Data to any third parties assisting the Company in the implementation, administration and management of the Plan. You authorize them to receive, possess, use, retain and transfer the information, in electronic or other form, for these purposes. You also understand that you may, at any time, review the Data, require any necessary changes to the Data or withdraw your consent in writing by contacting the Company. You further understand that withdrawing your consent may affect your ability to participate in the Plan.

     10. 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.

     11. 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 & 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.

     12. 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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EX-10.4

Exhibit 10.4

HANOVER COMPRESSOR COMPANY


AWARD NOTICE
PERFORMANCE-VESTED RESTRICTED STOCK

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

HANOVER COMPRESSOR COMPANY


AWARD NOTICE – EXHIBIT A
2006 PERFORMANCE-BASED OBJECTIVES AND CONDITIONS

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.

EX-10.5

Exhibit 10.5

HANOVER COMPRESSOR COMPANY


AWARD NOTICE
PERFORMANCE-VESTED RESTRICTED STOCK UNIT (Stock-Settled)

Hanover Compressor Company (the “Company”), has granted to you, [NAME] (“the Participant”), restricted stock units 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] restricted stock units (the “Award” or “RSUs”). This Award is stated at maximum payout and the actual Award earned and paid may be less.

     2. Grant Date. The date of this RSU 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 RSUs 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. Based upon the performance achieved at the conclusion of the Performance Period, the portion of your Award that vests will no longer be subject to the restrictions on transfer described in Section 6 below, and any portion of your Award that does not vest will be forfeited.

     As soon as administratively practicable following the Vesting Date, and in no event later than September 30, 2009, the Company will issue to you one share of Common Stock for each of your vested RSUs. 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. No Stockholder Rights. You will not have any right to vote your RSUs or receive dividends with respect to your RSUs.

     6. Non-Transferability. You cannot sell, transfer, pledge exchange or otherwise dispose of your RSUs (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. No Right to Future Benefits. The Plan is provided by the Company on an entirely discretionary basis, and the Plan creates no vested rights in you as a Participant. You understand and agree that this Award is not part of your salary and that receipt of this Award does not entitle you to any future awards under the Plan or any other plan or program of the Company. This Award is not part of your normal or expected compensation for purposes of calculating any severance, resignation, redundancy, end of service payments, bonuses, long-service awards, pension, or retirement benefits or similar payments.

     9. Data Privacy. You consent to the collection, use, processing and transfer of your personal data as described in this paragraph. You understand that the Company and its subsidiaries hold certain personal information about you (including your name, address and telephone number, date of birth, social security number, social insurance number, etc.) for the purpose of administering the Plan (“Data”). You also understand that the Company and/or its subsidiaries will transfer this Data amongst themselves as necessary for the purpose of implementing, administering and managing your participation in the Plan, and that the Company and/or any of its subsidiaries may also transfer this Data to any third parties assisting the Company in the implementation, administration and management of the Plan. You authorize them to receive, possess, use, retain and transfer the information, in electronic or other form, for these purposes. You also understand that you may, at any time, review the Data, require any necessary changes to the Data or withdraw your consent in writing by contacting the Company. You further understand that withdrawing your consent may affect your ability to participate in the Plan.

     10. 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.

     11. 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.

     12. 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

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.

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EX-10.6

Exhibit 10.6

HANOVER COMPRESSOR COMPANY


AWARD NOTICE
CASH INCENTIVE AWARD

Hanover Compressor Company (the “Company”), has awarded you, [NAME] (“the Participant”), a cash incentive award under the Hanover Compressor Company 2006 Long-Term Cash 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 awarded a cash incentive in the amount of [DOLLAR AMOUNT] (the “Award”).

     2. Award Date. The date of this Award is July 21, 2006 (the “Award Date”).

     3. Award Payout. Your Award is subject to payout over a three year period. A portion of your Award will become payable on each of the dates (the “Payment Date”) indicated in the table below, provided you have been continuously employed by the Company or an Affiliate at all times from the Award Date up to and including the applicable Payment Date.

Payment Date	Portion of Award Payable
July 21, 2007	1/3
July 21, 2008	1/3
July 21, 2009	1/3

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

     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), the unpaid portion of 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 death, Disability or a Corporate Change, all remaining unpaid portions of your Award will immediately become payable in a lump sum cash payment (subject to applicable tax withholding).

     5. Non-Transferability. Before you are eligible to receive in your Award, you cannot transfer, pledge exchange or otherwise dispose of your Award (except by will or the laws of descent and distribution).

     6. No Right to Continued Employment. Nothing in this Notice guarantees your continued employment with the Company or its Affiliates or interferes in any way with the right of the Company or its Affiliates to terminate your employment at any time.

     7. 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 the Award or your regular earnings an amount sufficient to meet the withholding obligations.

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     8. Plan Governs. This Notice is subject to the terms of the Plan, a copy of which is available on the Company’s intranet website or which will be provided to you upon written request addressed to Hanover Compressor Company, Compensation & 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.

     9. 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 AFFILIATES
By:	/s/ John E. Jackson
	John E. Jackson
	President and Chief Executive Officer

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EX-10.8

EXHIBIT 10.8

HANOVER COMPRESSOR COMPANY

Schedule of Compensation for Non-Employee Directors
(Effective July 21, 2006)

Annual Retainer	$30,000
Committee Chairman Annual Retainer
Audit Committee	$15,000
Compensation Committee	$15,000
Finance Committee	$10,000
Governance Committee	$10,000
Board Chairman Annual Retainer	$120,000
Attendance Fee	$1,500 paid for all in-person and telephonic board and committee meetings.
Restricted Stock	Time-vested restricted stock valued at approximately $105,000 on the date of grant and subject to the terms of 2006 Stock Incentive Plan. The shares vest one-third per year over a three-year period, subject however, to immediate vesting in the event of a change in control.
	Directors are required to hold the shares until they cease to serve as a director (except to the extent necessary to meet the associated tax obligation).
Reimbursement of Travel Expenses	100% of travel and other expenses while on company business.