<PAGE>
As filed with the Securities and Exchange Commission on March 10, 2000
Registration No.____-____
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________
FORM S-8
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
_____________
HANOVER COMPRESSOR COMPANY
(Exact name of registrant as specified in its charter)
Delaware _____________ 75-2344249
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12001 North Houston Rosslyn
Houston, Texas 77086
(Address of principal executive offices)
____________
1999 STOCK OPTION PLAN
DECEMBER 9, 1998 STOCK OPTION PLAN
____________
Copy to:
MICHAEL J. McGHAN RICHARD S. MELLER
President and Chief Executive Officer Latham & Watkins
Hanover Compressor Company Sears Tower
12001 North Houston Rosslyn Suite 5800
Houston, Texas 77086 Chicago, Illinois 60606
(281) 447-8787 (312) 876-6521
(Name, address, including zip code, and telephone
number, including area code, of agent for service)
_______________
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
============================================================================================================================
Title of Each Class of Amount to be Proposed Maximum Proposed Maximum Amount of
Securities to be Registered Registered (1) Offering Price Aggregate Registration
Per Share (2) Offering Price Fee
<S> <C> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------------
Common Stock, par value $.001 per 650,000 $47.63 $18,959,287.18 $5,005.25
share
- ----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Of the shares of the Common Stock being registered hereunder, 300,000 are
subject to the 1999 Stock Option Plan and 350,000 are subject to the December 9,
1998 Stock Option Plan
(2) Solely for purposes of computing the registration fee pursuant to Rule
457(h), the Proposed Maximum Offering Price Per Share is based upon (a) the
weighted average exercise price per share ($21.86) of outstanding options and
(b) for the remaining 184,334 shares, $ 47.63, the average of the high and low
price for shares of the Company's common stock, par value $.001 per share (the
"Common Stock") as reported on the New York Stock Exchange composite tape on
March 3, 2000.
<PAGE>
PART I
Item 1. Plan Information
Not required to be filed with this Registration Statement.
Item 2. Registrant Information and Employee Plan Annual Information
Not required to be filed with this Registration Statement.
PART II
Item 3. Incorporation of Documents by Reference
The documents listed below have been filed by Hanover Compressor Company, a
Delaware corporation (the "Company"), with the Securities and Exchange
Commission (the "Commission") and are incorporated in this Registration
Statement by reference:
a. The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1998 (the "1998 10-K");
b. The Company's Amended Annual Report on Form 10-K/A for the fiscal year
ended December 31, 1998;
c. The Definitive Proxy Statement filed May 6, 1999;
d. The Company's Quarterly Report on Form 10-Q for the quarters ended
March 31, 1999; June 30, 1999; September 30, 1999.
e. All other reports filed by the Company pursuant to Section 13(a) and
15(d) of the Securities Exchange Act of 1934 since the end of the Company's
fiscal year ended December 31, 1998; and
f. The description of the Company's Common Stock contained in the
Company's Registration Statement on Form S-1 filed on April 11, 1997 pursuant to
Section 12 of the Securities Exchange Act of 1934.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934 prior to the filing of a post-
effective amendment which indicates that all securities offered have been sold
or which deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference in this Registration Statement and to be part hereof
from the date of filing such documents.
Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Registration Statement to the extent that a statement
contained herein, or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein, modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this Registration
Statement.
<PAGE>
Item 4. Description of Securities
Not required to be filed with this Registration Statement.
Item 5. Interests of Named Experts and Counsel
The validity of the shares of Common Stock offered hereby is being passed
upon for the Company and the Selling Stockholders by Latham & Watkins, Chicago,
Illinois. Richard S. Meller, the Secretary of the Company, is of counsel at
Latham & Watkins.
Item 6. Indemnification of Directors and Officers
Under Delaware law, a corporation may indemnify any person who was or is a
party or is threatened to be made a party to an action (other than an action by
or in the right of the corporation) by reason of his service as a director or
officer of the corporation, or his service, at the corporation's request, as a
director, officer, employee or agent of another corporation or other enterprise,
against expenses (including attorneys' fees) that are actually and reasonably
incurred by him ("Expenses"), and judgments, fines and amounts paid in
settlement that are actually and reasonably incurred by him, in connection with
the defense or settlement of such action; provided that he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the
corporation's best interests and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that his conduct was unlawful.
Although Delaware law permits a corporation to indemnify any person referred to
above against Expenses in connection with the defense or settlement of an action
by or in the right of the corporation, provided that he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the corporation's
best interest, if such person has been judged liable to the corporation,
indemnification is only permitted to the extent that the adjudicating court (or
the court in which the action was brought) determine that, despite the
adjudication of liability, such person is entitled to indemnity for such
Expenses as the court deems proper. The determination as to whether a person
seeking indemnification has met the required standard of conduct is to be made
(1) by a majority vote of a quorum of disinterested members of the board of
directors, or (2) by independent legal counsel in a written opinion, if such a
quorum does not exist or if the disinterested directors so direct, or (3) by the
stockholders. The General Corporation Law of Delaware also provides for
mandatory indemnification of any director, officer, employee or agent against
Expenses to the extent that such person has been successful in any proceeding
covered by the statute. In addition, the General Corporation Law of Delaware
provides for the general authorization of advancement of a director's or
officer's litigation expenses in lieu of requiring the authorization of such
advancement by the board of directors in specific cases, and that
indemnification and advancement of expenses provided by the statute shall not be
deemed exclusive of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under any bylaw, agreement or otherwise.
The Company's Restated Certificate of Incorporation provides that the
Company shall indemnify its directors and officer and advance expenses incurred
by its directors and officer in defending any civil, commercial, administrative
or investigative action, suit or proceeding, in accordance with and to the
fullest extent permitted by Delaware law.
<PAGE>
The Company has also entered into agreements to indemnify its directors and
certain of its officers, in addition to the indemnification provided for in the
Company's Restated Certificate of Incorporation and By-laws. These agreements,
among other things, will indemnify the Company's directors and officers for all
direct and indirect expenses and costs (including, without limitation, all
reasonable attorneys' fees and related disbursements, other out-of-pocket costs
and reasonable compensation for time spent by such persons for which they are
not otherwise compensated by the Company or any third person) and liabilities of
any type whatever (including, but not limited to, judgments, fines and
settlement fees) actually and reasonably incurred by such person in connection
with either the investigation, defense, settlement or appeal of any threatened,
pending or completed action, suit or other proceeding, including any action by
or in the right of the corporation, arising out of such person's services as a
director, officer, employee or other agent of the Company, any subsidiary of the
Company or any other company or enterprise to which the person provides services
at the request of the Company. The Company believes that these provisions and
agreements are necessary to attract and retain talented and experienced
directors and officers.
The Company maintains liability insurance for the benefit of its directors
and officers.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
4.1 1999 Stock Option Plan
4.2 December 9, 1998 Stock Option Plan
5.1 Opinion of Latham & Watkins, counsel to Hanover
23.1 Consent of PricewaterhouseCoopers LLP.
24.1 Power of Attorney (included in the signature page to the Registration
Statement).
Item 9. Undertakings
a. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement;
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the Registration Statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental change
in the information set forth in the Registration Statement.
Notwithstanding the foregoing, any increase or
<PAGE>
decrease in volume of securities offered (if the total dollar
value of securities offered would not exceed that which was
registered) and any deviation from the low or high and of the
estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in volume and price represent no
more than 20 percent change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in
the effective registration statement;
(iii) To include any material information with respect to
the plan of distribution not previously disclosed in the
Registration Statement or any material change to such information
in the Registration Statement;
provided, however, that paragraphs (a)(1)(ii) and (a)(1)(iii) shall
not apply to information contained in periodic reports filed by the
registrant pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934 that are incorporated by reference in this
Registration Statement.
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
b. The undersigned registrant hereby undertakes that, for purposes
of determining any liability under the Securities Act of 1933, each filing
of the registrant's annual report pursuant to section 13(a) or section
15(d) of the Securities Exchange Act of 1934 that is incorporated by
reference in this Registration Statement shall be deemed to be a new
registration statement relating to the securities offered herein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
c. Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the registrant pursuant to the foregoing provisions,
or otherwise, the registrant has been advised that in the opinion of the
Securities and Exchange Commission such indemnification is against public
policy as expressed in the Securities Act of 1933 and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in
the successful defense of any action, suit or proceeding) is asserted by
such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling precedent, submit to
a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of
such issue.
<PAGE>
SIGNATURES
The Registrant. Pursuant to the requirements of the Securities Act of
--------------
1933, as amended, the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form S-8 and has
duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the city of Houston, Texas, on
March 10, 2000.
HANOVER COMPRESSOR COMPANY
By: /s/ MICHAEL J. McGHAN
________________________________,
Michael J. McGhan
President and Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below, hereby constitutes and appoints Michael A. O'Connor, Michael J. McGhan,
Curtis Bedrich, William S. Goldberg, and Richard S. Meller, and each acting
alone, his true and lawful attorneys-in-fact and agents, with full power of
resubstitution and substitution, for him and in his name, place and stead, in
any and all capacities, to sign any or all amendments or supplements to this
Registration Statement and to file the same with all exhibits thereto and other
documents in connection therewith, with the Securities and Exchange commission,
granting unto said attorneys-in-fact and agents full power and authority to do
and perform each and every act and thing necessary or appropriate to be done
with respect to this Registration Statement or any amendments or supplements
hereto in and about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents, each acting alone, or his substitute or
substitutes, may lawfully do or cause to be done by virtue hereof.
<PAGE>
Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed by the following persons in their
respective capacities with Hanover Compressor Company and on the dates
indicated.
Signatures Titles Date
- ---------- ------ ----
/s/ MICHAEL J. MCGHAN
_______________________ President and Chief March 10, 2000
Michael J. McGhan Executive Officer
(Principal Executive
Officer)
/s/ CURTIS BEDRICH
_______________________ Chief Financial Officer March 10, 2000
Curtis Bedrich and Treasurer(Principal
Financial and Accounting
Officer)
/s/ TED COLLINS, JR.
_______________________ Director March 10, 2000
Ted Collins, Jr.
/s/ ROBERT R. FURGASON
_______________________ Director March 10, 2000
Robert R. Furgason
/s/ WILLIAM S. GOLDBERG
_______________________ Director March 10, 2000
William S. Goldberg
/s/ MELVYN N. KLEIN
_______________________ Director March 10, 2000
Melvyn N. Klein
/s/ MICHAEL A. O'CONNOR
_______________________ Director March 10, 2000
Michael A. O'Connor
/s/ ALVIN V. SHOEMAKER
_______________________ Director March 10, 2000
Alvin V. Shoemaker
<PAGE>
HANOVER COMPRESSOR COMPANY
EXHIBIT INDEX
Exhibit Sequentially
Number Description of Exhibit Numbered Page
- ------ ---------------------- -------------
4.1 1999 Stock Option Plan 9
4.2 December 9, 1998 Stock Option Plan 18
5.1 Opinion of Latham & Watkins 27
23.1 Consent of PricewaterhouseCoopers LLP. 29
24.1 Power of Attorney (included in the signature page to the
Registration Statement). 6
<PAGE>
EXHIBIT 4.1
HANOVER COMPRESSOR COMPANY
1999 STOCK OPTION PLAN
1. Preamble.
--------
Hanover Compressor Company, a Delaware corporation (the "Company"), hereby
establishes the Hanover Compressor Company 1999 Stock Option Plan (the "Plan")
as a means whereby the Company may, through awards of non-qualified stock
options:
(a) provide Company Officers, employees, Directors and consultants
with additional incentive to promote the success of the Company's and its
Subsidiaries' businesses;
(b) enable such employees to acquire proprietary interests in the
Company; and
(c) encourage such employees to remain in the employ of the Company
and its Subsidiaries.
(d) provide officers and directors of, and consultants to, the
Company and its Subsidiaries (who are not otherwise employees) with
additional incentive to promote the success of the businesses of the
Company and its Subsidiaries.
Except as specifically provided herein, the provisions of this Plan do not
apply to or affect any option, stock appreciation rights, or stock heretofore or
hereafter granted under any other stock plan of the Company or any subsidiary,
and all such options, stock appreciation right or stock continue to be governed
by and subject to the applicable provisions of the plan or agreement under which
they were granted.
2. Definitions.
------------
2.01 "Board" or "Board of Directors" means the board of directors of the
----- ------------------
Company.
2.02 "Cause" means (i) the commission by such Participant of an act of
-----
fraud, embezzlement or willful breach of a fiduciary duty to the Company
(including the unauthorized disclosure of confidential or proprietary material
information of the Company), (ii) a conviction of such 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, (v) the willful failure of such Participant to
render services to the Company in accordance with his employment or consulting
arrangement, which failure amounts to a material neglect of his duties to the
Company or (vi) substantial dependence, as determined by the Board, on alcohol
or any drug, immediate precursor or other substance listed in Schedule I-V of
the Federal Comprehensive
<PAGE>
Drug Abuse Prevention and Control Act of 1970, as amended, as determined in the
sole discretion of the Committee.
2.03 "Change in Control" means the occurrence of any one of the following
-----------------
events:
(a) any (A) consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or which
contemplates that all or substantially all of the business and/ or assets
of the Company shall be controlled by another corporation or (B) a
recapitalization (including an exchange of Company equity securities by the
holders thereof), in either case, in which any "Person" (as such term is
used in Sections 13(d) and (14(d)(2) of the Exchange Act), other than the
Controlling Shareholders, becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of securities of the
Company representing more than 50% of the combined voting power of the
Company's then outstanding securities ordinarily having the right to vote
in the election of directors;
(b) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company and its Subsidiaries or Affiliates;
(c) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval; or
(d) any "Person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act), other than the Controlling Shareholders, shall become
the beneficial owner of securities of the Company representing more than
50% of the combined voting power of the Company's then outstanding
securities ordinarily having the right to vote in the election of
directors.
2.04 "Code" means the Internal Revenue Code of 1986, as it exists now and
----
as it may be amended from time to time.
2.05 "Committee" means the Compensation Committee of the Board or any other
---------
committee comprised of two or more outside Directors appointed by the Board to
administer the Plan, as the case may be. Each member of the Committee shall (a)
be a member of the Board of Directors who has not at any time within one year
prior thereto, or at any time during such member's term of service on the
Committee, received any stock options, stock appreciation rights or allocations
of any equity securities under the Plan or any other plan maintained by the
Company or any of its affiliates, except as permitted pursuant to the provisions
of Rule 16b-3(c)(2)(i) of the Exchange Act or any successor rule thereof; and
(b) be an outside Director as determined under Treasury Regulation 26 CFR
(S)1.162-27(e)(3) or any successor regulation thereto. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors.
2.06 "Common Stock" means the common stock of the Company, $.001 par value.
------------
2
<PAGE>
2.07 "Company" means Hanover Compressor Company, a Delaware corporation,
and any successor thereto.
2.08 "Controlling Shareholders" means GKH Investments, L.P., GKH Partners,
------------------------
L.P., and the partners therein.
2.09 "Director" means a member of the Board.
--------
2.10 "Disability" means being entitled to disability benefits under the
----------
terms of the Company's long term disability plan.
2.11 "Exchange Act" means the Securities Exchange Act of 1934, as it
------------
exists now or from time to time may hereafter be amended.
2.12 "Fair Market Value" means for the relevant day:
-----------------
(a) If shares of Common Stock are listed or admitted to unlisted
trading privileges on any national or regional securities exchange, the
last reported sale price, regular way, on the composite tape of that
exchange on the day Fair Market Value is to be determined;
(b) If the Common Stock is not listed or admitted to unlisted trading
privileges as provided in paragraph (a), and if sales prices for shares of
Common Stock are reported by the National Association of Securities
Dealers, Inc. Automated Quotations, Inc. National Market System ("NASDAQ
System"), then the last sale price for Common Stock reported as of the
close of business on the day Fair Market Value is to be determined, or if
no such sale takes place on that day, the average of the high bid and low
asked prices so reported; if Common Stock is not traded on that day, the
next preceding day on which such stock was traded; or
(c) If trading of the Common Stock is not reported by the NASDAQ
System or on a stock exchange, Fair Market Value will be determined by the
Committee in its discretion based upon the best available data.
2.13 "Officer" means a corporate or equivalent officer of the Company or
-------
any Subsidiary or Affiliate of the Company.
2.14 "Option" means the right of a Participant to purchase a specified
------
number of shares of Common Stock, subject to the terms and conditions of the
Plan.
2.15 "Option Date" means the date upon which an Option is awarded to a
-----------
Participant under the Plan.
2.16 "Option Price" means the price per share at which an Option may be
------------
exercised.
2.17 "Participant" means an individual to whom an Option has been granted
-----------
under the Plan.
3
<PAGE>
2.18 "Plan" means the Hanover Compressor Company 1999 Stock Option Plan, as
----
set forth herein and as from time to time amended.
2.19 "Securities Act" means the Securities Act of 1933, as it exists now or
--------------
from time to time may hereinafter be amended.
2.20 "Subsidiary" means any corporation or other entity of which the
----------
majority voting power or equity interest is owned directly or indirectly by the
Company.
2.21 "Termination of Employment" means,
-------------------------
(a) with respect to an employee when the employee's employment
relationship with the Company and all of its Subsidiaries is terminated,
regardless of any severance arrangements. A transfer from the Company to a
Subsidiary or affiliate, or vice versa is not a termination of employment
for purposes of this Plan;
(b) with respect to a consultant when the consultant's consulting
relationship with the Company is terminated either due to the termination
of any consulting agreement, or otherwise, regardless of the fact that no
employment relationship exists;
(c) with respect to an Officer or Director when such individual is no
longer serving as an Officer or Director of the Company, as a consultant to
or employee of the Company and any of its Subsidiaries.
2.22 Rules of Construction.
---------------------
(a) Governing Law. The construction and operation of this Plan are
-------------
governed by the laws of the State of Delaware.
(b) Undefined Terms. Unless the context requires another meaning, any
---------------
term not specifically defined in this Plan has the meaning given to it by
the Code.
(c) Headings. All headings in this Plan are for reference only and
are not to be utilized in construing the Plan.
(d) Gender. Unless clearly appropriate, all nouns of whatever gender
------
refer indifferently to persons of any gender.
(e) Singular and Plural. Unless clearly inappropriate, singular terms
-------------------
refer also to the plural and vice versa.
(f) Severability. If any provision of this Plan is determined to be
------------
illegal or invalid for any reason, the remaining provisions shall continue
in full force and effect and shall be construed and enforced as if the
illegal or invalid provision did not exist, unless the continuance of the
Plan in such circumstances is not consistent with its purposes.
4
<PAGE>
3. Stock Subject to the Plan.
-------------------------
Except as otherwise provided in Section 10, the aggregate number of shares
of Common Stock that may be issued under Options under this Plan may not exceed
300,000 shares of Common Stock. Reserved shares may be either authorized but
unissued shares or treasury shares, in the Board's discretion. If any grants
hereunder shall terminate or expire such shares shall be eligible to be granted
as new Options under this Plan.
4. Administration.
--------------
The Plan shall be administered by the Committee. In addition to any other
powers set forth in this Plan, the Committee has the exclusive authority:
(a) to construe and interpret the Plan, and to remedy any ambiguities
or inconsistencies therein;
(b) to establish, amend and rescind appropriate rules and regulations
relating to the Plan;
(c) subject to the express provisions of the Plan, to determine the
individuals who will receive grants of Options, the times when they will
receive them, the number of shares to be subject to each award and the
Option Price, payment terms, payment method, and expiration date applicable
to each award;
(d) to contest on behalf of the Company or Participants, at the
expense of the Company, any ruling or decision on any matter relating to
the Plan or to any grants of Options;
(e) generally, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and the grants of
Options as it may deem necessary or advisable;
(f) to determine the form in which tax withholding under Section 13
of this Plan will be made; and
(g) to amend the Plan or any Option granted hereunder as may be
necessary in order for any business combination involving the Company to
qualify for pooling-of-interest treatment under APB No. 16.
5. Eligible Participants
---------------------
All employees, Officers, and Directors of the Company and its Subsidiaries,
and those consultants (who are not otherwise employees of the Company or any of
its Subsidiaries) are eligible to participate in the Plan. Subject to the
provisions of the Plan, the Committee shall determine from time to time those
individuals who shall be designated as Participants and the number, if any, of
Options to be granted to each such Participant;
5
<PAGE>
6. Terms and Conditions of Options.
-------------------------------
All Options granted under this Plan shall be nonstatutory options, which
are not intended to be classified as "incentive stock options" under Section 422
of the Code. The Committee may, in its discretion, grant Options to any
Participant under the Plan. Each Option shall be evidenced by an agreement
between the Company and the Participant. Each Option agreement, in such form as
is approved by the Committee, shall be subject to the following express terms
and conditions and to such other terms and conditions, not inconsistent with the
Plan as the Committee may deem appropriate:
(a) Option Period. Each Option will expire as of the earliest of:
-------------
(i) ten years from the Grant Date;
(ii) the date on which it is forfeited under the provisions of
Section 8;
(iii) the date three months after the Participant's Termination
of Employment for any reason other than death or Disability; or
(iv) the date twelve months after the Participant's death or
Disability.
(b) Option Price. At the time when the Option is granted, the
------------
Committee will fix the Option Price. The Option Price may be greater than,
less than, or equal to Fair Market Value on the Option Date, as determined
in the sole discretion of the Committee.
(c) Other Option Provisions. The form of Option authorized by the
-----------------------
Plan may contain such other provisions as the Committee may from time to
time determine.
7. Manner of Exercise of Options.
-----------------------------
To exercise an Option in whole or in part, a Participant (or, after his
death, his executor or administrator) must give written notice to the Committee,
stating the number of shares to which he intends to exercise the Option. The
Company will issue the shares with respect to which the Option is exercised upon
payment in full of the Option Price. The Option Price may be paid (i) in cash,
(ii) in shares of Common Stock having an aggregate Fair Market Value, as
determined on the date of delivery, equal to the Option Price, (iii) if
permitted by the Committee, by cash or certified or cashier's check for the par
value of the Plan Shares plus a promissory note for the balance of the purchase
price, which note shall provide for full personal liability of the maker and
shall contain such other terms and provisions as the Committee may determine,
including without limitation the right to repay the note partially or wholly
with Common Stock, or (iv) by delivery of irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale or loan proceeds necessary
to pay for all Common Stock acquired through such exercise and any tax
withholding obligations resulting from such exercise. The Option Price may be
paid in shares of Common Stock which were received by the Participant upon the
exercise of one or more Options.
6
<PAGE>
8. Vesting.
-------
A Participant may not exercise an Option until it has become vested. The
portion of an Option award that is vested depends upon the period that has
elapsed since the Option Date. Unless the Committee establishes a different
vesting schedule at the time when an Option is granted, all Options granted
under this Plan shall vest according to the following schedule:
Period Elapsed Vested Percentage
-------------- -----------------
First Anniversary of Option Date 10%
Second Anniversary of Option Date 30%
Third Anniversary of Option Date 60%
Fourth Anniversary of Option Date 100%
Except as provided below, upon a Termination of Employment, a Participant
forfeits any Options that are not yet vested. Unless the Committee in its sole
discretion specifically waives the application of this sentence, then
notwithstanding the vesting schedule contained herein or in the Participant's
agreement, if the Participant's Termination of Employment is terminated for
Cause all Options granted to the Participant will be immediately cancelled and
forfeited by the Participant upon delivery to him of notice of such termination
for Cause.
9. Change of Control.
-----------------
Notwithstanding the provisions of Section 8 or anything contained in a
Participant's agreement to the contrary, upon a Change in Control all Options
shall be subject to the following:
(a) The Company shall have the right to acquire from Participants
their vested Options by payment of the difference between the price per
share of Common Stock established in the Change of Control and the Option
Price; and
(b) All unvested Options shall either (i) convert into options to
purchase securities of the acquirer in the Change of Control on the same
terms and conditions as apply to the Options under the Plan, (ii) convert
into such consideration as the Participant would have received had the
Options been fully vested, or (iii) be treated as otherwise determined by
the Committee.
10. Adjustments to Reflect Changes in Capital Structure.
---------------------------------------------------
If there is any change in the corporate structure or shares of the Company,
the Committee may, in its discretion, make any adjustments necessary to prevent
accretion, or to protect against dilution, in the number and kind of shares
authorized by the Plan and, with respect to outstanding Options, in the number
and kind of shares covered thereby and in the applicable Option Price. For the
purpose of this Section 10, a change in the corporate structure or shares of the
Company includes, without limitation, any change resulting from a
recapitalization, stock split, stock dividend, consolidation, rights offering,
spin-off, reorganization, or liquidation and any
7
<PAGE>
transaction in which shares of Common Stock are changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company
or another entity.
11. Non-Transferability of Options.
------------------------------
The Options granted under the Plan are not transferable, voluntarily or
involuntarily, other than by will or the laws of descent and distribution, or to
the extent permissible under Section 422 of the Code pursuant to a qualified
domestic relations order as defined in Section 414(p) of the Code. During a
Participant's lifetime his Options may be exercised only by him.
12. Rights as Stockholder.
---------------------
No Common Stock may be delivered upon the exercise of any Option until full
payment has been made and all income tax withholding requirements thereon have
been satisfied. A Participant has no rights whatsoever as a stockholder with
respect to any shares covered by an Option until the date of the issuance of a
stock certificate for the shares.
13. Withholding Tax.
---------------
The Company shall have the right to withhold in cash or shares of Common
Stock with respect to any payments made to Participants under the Plan any taxes
required by law to be withheld because of such payments.
14. Non-Competition and Confidential Information.
--------------------------------------------
Each Participant receiving Options shall be subject to the restriction
that, during the term of his Option Agreement and for a period of two years
thereafter, he or she (i) will not compete with any business of the Company or
its Subsidiaries and (ii) will not disclose to persons outside the Company
confidential information concerning the Company or its Subsidiaries without the
Company's express written consent.
15. No Right To Employment.
----------------------
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company or any Subsidiary, or any right or claim
to any benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
16. Amendment of the Plan.
---------------------
The Committee may from time to time amend or revise the terms of this Plan
in whole or in part and may, without limitation, adopt any amendment deemed
necessary; provided, however, that, except as provided in Section 4(g), no
change in any Options previously granted to a Participant may be made that would
impair the rights of the Participant without the Participant's consent.
8
<PAGE>
17. Conditions Upon Issuance of Shares.
----------------------------------
An Option shall not be exercisable and a share of Common Stock shall not be
issued pursuant to the exercise of an Option until such time as the Plan has
been approved by the Board of Directors and unless the exercise of such Option
and the issuance and delivery of such share pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares of Common Stock may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Common Stock is being
purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
18. Effective Date and Termination of Plan.
--------------------------------------
18.01 Effective Date. This Plan is effective as of the date of its
--------------
adoption by the Board of Directors. Prior to the Board of Director's approval,
the Committee may, in its discretion, grant options under the Plan as if the
Plan were effective, provided the exercise of the options so granted shall be
expressly subject to the approval of the Plan by the Board of Directors.
18.02 Termination of the Plan. The Board may terminate the Plan at any
-----------------------
time with respect to any shares that are not then subject to Options.
Termination of the Plan will not affect the rights and obligations of any
Participant with respect to Options granted before termination.
9
<PAGE>
EXHIBIT 4.2
HANOVER COMPRESSOR COMPANY
DECEMBER 9, 1998 STOCK OPTION PLAN
1. Preamble.
Hanover Compressor Company, a Delaware corporation (the "Company"), hereby
establishes the Hanover Compressor Company December 9, 1998 Stock Option Plan
(the "Plan") as a means whereby the Company may, through awards of nonqualified
stock options:
(a) provide Company Officers, employees, Directors and consultants
with additional incentive to promote the success of the Company's and its
Subsidiaries' businesses;
(b) enable such employees to acquire proprietary interests in the
Company;
(c) encourage such employees to remain in the employ of the Company
and its Subsidiaries; and
(d) provide officers and directors of, and consultants to, the
Company and its Subsidiaries (who are not otherwise employees) with
additional incentive to promote the success of the businesses of the
Company and its Subsidiaries.
The awards under this Plan shall be granted by the Company to appropriately
reward employees who participated in the Company's 1997 Stock Purchase Plan as
of the date hereof and have agreed to accept options under this Plan in exchange
for waiving their rights to a contingent payment on July 1, 2001 under the terms
of a Performance Award granted under the 1997 Stock Purchase Plan. Except as
specifically provided in the prior sentence or otherwise herein, the provisions
of this Plan do not apply to or affect any option, stock appreciation rights, or
stock heretofore or hereafter granted under any other stock plan of the Company
or any subsidiary, and all such options, stock appreciation rights or stock
continue to be governed by and subject to the applicable provisions of the plan
or agreement under which they were granted.
2. Definitions.
2.01 "Board" or "Board of Directors" means the board of directors the
Company.
2.02 "Cause" means (i) the commission by such Participant of an act of
fraud, embezzlement or willful breach of a fiduciary duty to the Company
(including the unauthorized disclosure of confidential or proprietary material
information of the Company), (ii) a conviction of such 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, (v) the willful failure of such Participant to
render services to the Company in accordance with his employment
<PAGE>
or consulting arrangement, which failure amounts to a material neglect of his
duties to the Company or (vi) substantial dependence, as determined by the
Board, on alcohol or any drug, immediate precursor or other substance listed in
Schedule I-V of the Federal Comprehensive Drug Abuse Prevention and Control Act
of 1970, as amended, as determined in the sole discretion of the Committee.
2.03 "Change in Control" means the occurrence of any one of the following
events:
(a) any (A) consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or which
contemplates that all or substantially all of the business and/ or assets
of the Company shall be controlled by another corporation or (B) a
recapitalization (including an exchange of Company equity securities by the
holders thereof), in either case, in which any "Person" (as such term is
used in Sections 13(d) and (14(d)(2) of the Exchange Act), other than the
Controlling Shareholders, becomes the beneficial owner (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of securities of the
Company representing more than 50% of the combined voting power of the
Company's then outstanding securities ordinarily having the right to vote
in the election of directors;
(b) any sale, lease, exchange or transfer (in one transaction or
series of related transactions) of all or substantially all of the assets
of the Company and its Subsidiaries;
(c) approval by the shareholders of the Company of any plan or
proposal for the liquidation or dissolution of the Company, unless such
plan or proposal is abandoned within 60 days following such approval; or
(d) any "Person" (as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act), other than the Controlling Shareholders, shall become
the beneficial owner of securities of the Company representing more than
50% of the combined voting power of the Company's then outstanding
securities ordinarily having the right to vote in the election of
directors.
2.04 "Code" means the Internal Revenue Code of 1986, as it exists now and
as it may be amended from time to time.
2.05 "Committee" means the Compensation Committee of the Board or any other
committee comprised of two or more outside Directors appointed by the Board to
administer the Plan, as the case may be. Each member of the Committee shall (a)
be a member of the Board of Directors who has not at any time within one year
prior thereto, or at any time during such member's term of service on the
Committee, received any stock options, stock appreciation rights or allocations
of any equity securities under the Plan or any other plan maintained by the
Company or any of its affiliates, except as permitted pursuant to the provisions
of Rule l6b-3(c)(2)(i) of the Exchange Act or any successor rule thereof; and
(b) be an outside Director as determined under Treasury Regulation 26 CFR
Section 1.162-27(e)(3) or any successor regulation thereto. Once appointed, the
Committee shall continue to serve until otherwise directed by the Board of
Directors.
2
<PAGE>
2.06 "Common Stock" means the common stock of the Company, $.001 par value.
2.07 "Company" means Hanover Compressor Company, a Delaware corporation,
and any successor thereto.
2.08 "Controlling Shareholders" means GKH Investments, L.P., GKH Partners,
L.P., and the partners therein.
2.09 "Director" means a member of the Board.
2.10 "Disability" means being entitled to disability benefits under the
terms of the Company's long term disability plan.
2.11 "Exchange Act" means the Securities Exchange Act of 1934, as it exists
now or from time to time may hereafter be amended.
2.12 "Fair Market Value" means for the relevant day:
(a) If shares of Common Stock are listed or admitted to unlisted
trading privileges on any national or regional securities exchange, the
last reported sale price, regular way, on the composite tape of that
exchange on the day Fair Market Value is to be determined;
(b) If the Common Stock is not listed or admitted to unlisted trading
privileges as provided in paragraph (a), and if sales prices for shares of
Common Stock are reported by the National Association of Securities
Dealers, Inc. Automated Quotations, Inc. National Market System (*NASDAQ
System"), then the last sale price for Common Stock reported as of the
close of business on the day Fair Market Value is to be determined, or if
no such sale takes place on that day, the average of the high bid and low
asked prices so reported; if Common Stock is not traded on that day, the
next preceding day on which such stock was traded; or
(c) If trading of the Common Stock is not reported by the NASDAQ
system or on a stock exchange, Fair Market Value will be determined by the
Committee in its discretion based upon the best available data.
2.13 "Officer" means a corporate or equivalent officer of the Company any
Subsidiary of the Company.
2.14 "Option" means the right of a Participant to purchase a specified
number of shares of Common Stock, subject to the terms and conditions of the
Plan.
2.15 "Option Date" means the date upon which an option is awarded to a
Participant under the Plan.
2.16 "Option Price" means the price per share at which an Option may be
exercised.
3
<PAGE>
2.17 "Participant" means an individual to whom an Option has been granted
under the Plan.
2.18 "Plan" means the Hanover Compressor Company December 9, 1998 Stock
Option Plan, as set forth herein and as from time to time amended.
2.19 "Securities Act" means the Securities Act of 1933, as it exists now or
from time to time may hereinafter be amended.
2.20 "Subsidiary' means any corporation or other entity of which the
majority voting power or equity interest is owned directly or indirectly by the
Company.
2.21 "Termination of Employment" means,
(a) with respect to an employee when the employee's employment
relationship with the company and all of its Subsidiaries is terminated,
regardless of any severance arrangements. A transfer from the Company to a
Subsidiary, or vice versa is not a termination of employment for purposes
of this Plan;
(b) with respect to a consultant when the consultant's consulting
relationship with the Company is terminated either due to the termination
of any consulting agreement, or otherwise, regardless of the fact that no
employment relationship exists;
(c) with respect to an officer or Director when such individual is no
longer serving as an Officer or Director of the Company, as a consultant to
or employee of the Company and any of its Subsidiaries.
2.22 Rules of Construction.
(a) Governing Law. The construction and operation of this Plan are
governed by the laws of the State of Delaware.
(b) Undefined Terms. Unless the context requires another meaning, any
term not specifically defined in this Plan has the meaning given to it by
the Code.
(c) Headings. All headings in this Plan are for reference only and
are not to be utilized in construing the Plan.
(d) Gender. Unless clearly appropriate, all nouns of whatever gender
refer indifferently to persons of any gender.
(e) Singular and Plural. Unless clearly inappropriate, singular terms
refer also to the plural and vice versa.
(f) Severability. If any provision of this Plan is determined to be
illegal or invalid for any reason, the remaining provisions shall continue
in full force and effect and
4
<PAGE>
shall be construed and enforced as if the illegal or invalid provision did
not exist, unless the continuance of the Plan in such circumstances is not
consistent with its purposes.
3. Stock Subject to the Plan.
Except as otherwise provided in Section 10, the aggregate number of shares
of Common Stock that may be issued under options under this Plan may not exceed
350,000 shares of Common Stock. Reserved shares may be either authorized but
unissued shares or treasury shares, in the Board's discretion. If any grants
hereunder shall terminate or expire such shares shall be eligible to be granted
as new Options under this Plan.
4. Administration.
The Plan shall be administered by the Committee. In addition to any other
powers set forth in this Plan, the Committee has the exclusive authority:
(a) to construe and interpret the Plan, and to remedy any ambiguities
or inconsistencies therein;
(b) to establish, amend and rescind appropriate rules and regulations
relating to the Plan;
(c) subject to the express provisions of the Plan, to determine the
individuals who will receive grants of Options, the times when they will
receive them, the number of shares to be subject to each award and the
Option Price, payment terms, payment method, and expiration date applicable
to each award;
(d) to contest on behalf of the Company or Participants, at the
expense of the Company, any ruling or decision on any matter relating to
the Plan or to any grants of Options;
(e) generally, to administer the Plan, and to take all such steps and
make all such determinations in connection with the Plan and the grants of
Options as it may deem necessary or advisable;
(f) to determine the form in which tax withholding under Section 13
of this Plan will be made; and
(g) to amend the Plan or any Option granted hereunder as may be
necessary in order for any business combination involving the Company to
qualify for pooling-of-interest treatment under APB No. 16.
5. Eligible Participants
All employees, Officers, and Directors of the Company and its Subsidiaries,
and those consultants (who are not otherwise employees of the Company or any of
its Subsidiaries) are eligible to participate in the Plan. Subject to the
provisions of the Plan, the Committee shall
5
<PAGE>
determine from time to time those individuals who shall be designated as
Participants and the number, if any, of options to be granted to each such
Participant;
6. Terms and Conditions of options.
All Options granted under this Plan shall be nonstatutory options, which
are not intended to be classified as "incentive stock options" under Section 422
of the Code. The Committee may, in its discretion, grant Options to any
Participant under the Plan. Each option shall be evidenced by an agreement
between the Company and the Participant.
Each Option agreement, in such form as is approved by the Committee, shall be
subject to the following express terms and conditions and to such other terms
and conditions, not inconsistent with the Plan as the Committee may deem
appropriate:
(a) Option Period. Each option will expire as of the earliest of:
(i) ten years from the Grant Date;
(ii) the date on which it is forfeited under the provisions of
Section 8;
(iii) the date three months after the Participant's Termination
of Employment for any reason other than death or Disability; or
(iv) the date twelve months after the Participant's death or
Disability.
(b) Option Price. At the time when the Option is granted, the
Committee will fix the Option Price. The Option Price may be greater than,
less than, or equal to Fair Market Value on the Option Date, as determined
in the sole discretion of the Committee.
(c) Other Option Provisions. The form of option authorized by the
Plan may contain such other provisions as the Committee may from time to
time determine.
7. Manner of Exercise of Options.
To exercise an Option in whole or in part, a Participant (or, after his
death, his executor or administrator) must give written notice to the Committee,
stating the number of shares to which he intends to exercise the Option. The
Company will issue the shares with respect to which the Option is exercised upon
payment in full of the Option Price. The Option Price may be paid (i) in cash,
(ii) in shares of Common Stock having an aggregate Fair Market Value, as
determined on the date of delivery, equal to the Option Price, (iii) if
permitted by the Committee, by cash or certified or cashier's check for the par
value of the Plan Shares plus a promissory note for the balance of the purchase
price, which note shall provide for full personal liability of the maker and
shall contain such other terms and provisions as the Committee may determine,
including without limitation the right to repay the note partially or wholly
with Common Stock, or (iv) by delivery of irrevocable instructions to a broker
to promptly deliver to the Company the amount of sale or loan proceeds necessary
to pay for all Common Stock acquired through such exercise and any tax
withholding obligations resulting from such exercise. The Option Price may be
paid in
6
<PAGE>
shares of Common Stock which were received by the Participant upon the exercise
of one or more Options.
8. Vesting.
A Participant may not exercise an option until it has become vested. The
portion of an Option award that is vested depends upon the period that has
elapsed since the Option Date. Unless the Committee establishes a different
vesting schedule at the time when an option is granted, all Options granted
under this Plan shall vest according to the following schedule:
--------------------------------------------------------------------
Period Elapsed Vested Percentage
-------------- -----------------
--------------------------------------------------------------------
First Anniversary of Option Date 10%
Second Anniversary of Option Date 30%
Third Anniversary of Option Date 60%
Fourth Anniversary of Option Date 100%
--------------------------------------------------------------------
Except as provided below, upon a Termination of Employment, a Participant
forfeits any Options that are not yet vested. Unless the Committee in its sole
discretion specifically waives the application of this sentence, then
notwithstanding the vesting schedule contained herein or in the Participant's
agreement, if the Participant's Termination of Employment is terminated for
Cause all options granted to the Participant will be immediately cancelled and
forfeited by the Participant upon delivery to him of notice of such termination
for Cause.
9. Change of Control.
Notwithstanding the provisions of Section 8 or anything contained in a
Participant's agreement to the contrary, upon a Change in Control all Options
shall be subject to the following:
(a) The Company shall have the right to acquire from Participants
their vested Options by payment of the difference between the price per
share of Common Stock established in the Change of Control and the Option
Price; and
(b) All unvested options shall either (i) convert into options to
purchase securities of the acquirer in the Change of Control on the same
terms and conditions as apply to the options under the Plan, (ii) convert
into such consideration as the Participant would have received had the
options been fully vested, or (iii) be treated as otherwise determined by
the Committee.
10. Adjustments to Reflect Changes in Capital Structure.
If there is any change in the corporate structure or shares of the Company,
the Committee may, in its discretion, make any adjustments necessary to prevent
accretion, or to protect against
7
<PAGE>
dilution, in the number and kind of shares authorized by the Plan and, with
respect to outstanding options, in the number and kind of shares covered thereby
and in the applicable Option Price. For the purpose of this Section 10, a change
in the corporate structure or shares of the Company includes, without
limitation, any change resulting from a recapitalization, stock split, stock
dividend, consolidation, rights offering, spin-off, reorganization, or
liquidation and any transaction in which shares of Common Stock are changed into
or exchanged for a different number or kind of shares of stock or other
securities of the Company or another entity.
11. Non-Transferability of Options.
The options granted under the Plan are not transferable, voluntarily or
involuntarily, other than by will or the laws of descent and distribution, or to
the extent permissible under Section 422 of the Code pursuant to a qualified
domestic relations order as defined in Section 414(p) of the Code. During a
Participant's lifetime his options may be exercised only by him.
12. Rights as Stockholder.
No Common Stock may be delivered upon the exercise of any option until full
payment has been made and all income tax withholding requirements thereon have
been satisfied. A Participant has no rights whatsoever as a stockholder with
respect to any shares covered by an Option until the date of the issuance of a
stock certificate for the shares.
13. Withholding Tax.
The Company shall have the right to withhold in cash or shares of Common
Stock with respect to any payments made to Participants under the Plan any taxes
required by law to be withheld because of such payments.
14. Non-Competition and Confidential Information.
Each Participant receiving options shall be subject to the restriction
that, during the term of his Option Agreement and for a period of two years
thereafter, he or she (i) will not compete with any business of the Company or
its Subsidiaries and (ii) will not disclose to persons outside the Company
confidential information concerning the Company or its Subsidiaries without the
Company's express written consent.
15. No Right To Employment.
Participation in the Plan will not give any Participant a right to be
retained as an employee of the Company or any Subsidiary, or any right or claim
to any benefit under the Plan, unless the right or claim has specifically
accrued under the Plan.
16. Amendment of the Plan.
The Committee may from time to time amend or revise the terms of this Plan
in whole or in part and may, without limitation, adopt any amendment deemed
necessary; provided, however, that, except as provided in Section 4(g), no
change in any Options previously granted to a
8
<PAGE>
Participant may be made that would impair the rights of the Participant without
the Participant's consent.
17. Conditions Upon Issuance of Shares.
An option shall not be exercisable and a share of Common Stock shall not be
issued pursuant to the exercise of an Option until such time as the Plan has
been approved by the Board of Directors and unless the exercise of such option
and the issuance and delivery of such share pursuant thereto shall comply with
all relevant provisions of law, including, without limitation, the Securities
Act, the Exchange Act, the rules and regulations promulgated thereunder, and the
requirements of any stock exchange upon which the shares of Common Stock may
then be listed, and shall be further subject to the approval of counsel for the
Company with respect to such compliance. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Common Stock is being
purchased only for investment and without any present intention to sell or
distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned relevant provisions of
law.
18. Effective Date and Termination of Plan.
18.01 Effective Date. This Plan is effective as of the date of its
adoption by the Board of Directors. Prior to the Board of Director's approval,
the Committee may, in its discretion, grant options under the Plan as if the
Plan were effective, provided the exercise of the options so granted shall be
expressly subject to the approval of the Plan by the Board of Directors.
18.02 Termination of the Plan. The Board may terminate the Plan at any
time with respect to any shares that are not then subject to Options.
Termination of the Plan will not affect the rights and obligations of any
Participant with respect to Options granted before termination.
9
<PAGE>
[LETTERHEAD OF LATHAM & WATKINS]
March 8, 2000
Hanover Compressor Company
12001 North Houston Rosslyn
Houston, Texas 77086
Re: Registration Statement on Form S-8
Ladies and Gentlemen:
In connection with the preparation and filing by Hanover Compressor
Company, a Delaware Corporation (the "Company") with the Securities and Exchange
Commission (the "Commission") under the Securities Act of 1933, as amended (the
"Act"), of a Registration Statement on Form S-8 (the "Registration Statement")
relating to the issuance by the Company of 650,000 shares of the Company's
Common Stock, par value $.001 per share (the "Shares"), pursuant to the
Company's 1999 Stock Option Plan and the December 9, 1998 Stock Option Plan
(collectively, the "Plans"), you have requested our opinion with respect to the
matters set forth below.
In our capacity as your counsel in connection with such registration,
we are familiar with the proceedings taken by the Company and its predecessor
and proposed to be taken by the Company in connection with the authorization,
issuance and sale of the Shares, and for the purposes of this opinion, have
assumed such proceedings will be timely completed in the manner presently
proposed. In addition, we have made such legal and factual examinations and
inquires, including an examination of originals or copies certified or otherwise
identified to our satisfaction of such documents, corporate records and
instruments, as we have deemed necessary or appropriate for purposes of this
opinion.
EXHIBIT 5.1
<PAGE>
LATHAM & WATKINS
Hanover Compressor Company
March 8, 2000
Page 2
In our examination, we have assumed the genuineness of all signatures,
the authenticity of all documents submitted to us as originals and the
conformity to authentic original documents of all documents submitted to us as
copies.
We are opining herein as to the effect of the subject transaction only
of the General Corporation Law of the State of Delaware, and we express no
opinion with respect to the applicability thereto, or the effect thereon, of the
laws of any other jurisdiction or any other Delaware laws, or as to any matters
of municipal law or the laws of any local agency within the state.
Subject to the foregoing, it is our opinion that the Shares have been
duly authorized and that, when issued and sold upon exercise of the options for
such Shares and payment of the exercise price therefor as contemplated by the
Plans, as the case may be, will be validly issued, fully paid and nonassessable.
We consent to your filing this opinion as an exhibit to the
Registration Statement.
Very truly yours,
/s/ LATHAM & WATKINS
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
-----------------------------------------
As independent public accountants, we hereby consent to the
incorporation by reference in this Registration Statement of our report dated
February 25, 1999, which report is included in Hanover Compressor Company's
Quartely Report on form 10-K dated March 31, 1999.
/s/ PricewaterhouseCoopers LLP
