EXHIBIT 10.74
February 27, 2004
VIA HAND DELIVERY
Xxxx X. Xxxx
Senior Vice President and General Counsel
Hanover Compressor Company
00000 Xxxxx Xxxxxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
Re: Separation Agreement and General Release (the "Agreement")
Dear Xxxx:
This letter sets forth the agreement between you and Hanover Compressor
Company ("Hanover" or the "Company") in connection with your determination to
leave the Company and cease to serve as Senior Vice President, General Counsel,
and Secretary of the Company.
1. Preamble:
a. On behalf of Hanover's Board of Directors, I wish to express our
appreciation for the professionalism, leadership, and focus with which
you performed your responsibilities including your great efforts in
helping bring about the successful resolution of our shareholder
litigation and a successful settlement with the Securities and
Exchange Commission.
b. Hanover acknowledges that as Senior Vice President, General Counsel,
and Secretary, you provided invaluable services to Hanover at a
critical time in the Company's history and that Hanover has benefited
from your services.
c. Hanover acknowledges that because of these services, the Company will
continue to benefit in the future.
d. Hanover acknowledges that you have determined that it is in your best
interest to resign from Hanover and that your resignation from Hanover
is voluntary.
e. Hanover's Board of Directors wishes you the best of luck in your
future endeavors.
Xxxx X. Xxxx
February 27, 2004
Page 2
2. Separation Date: Your employment with the Company will cease on March 31,
2004 (the "Separation Date") or such other date as you and the Company
shall mutually agree.
3. Payments and Compensation:
a. 2003 Bonus Payment: In exchange for your past performance, Hanover
will pay you a Bonus for 2003 in the amount of $260,100 (which is 85%
of your base salary ("Base Salary") of $306,000).
b. In consideration of this Agreement becoming effective, Hanover will:
i. pay to you in a lump sum $351,900 (which is 115% of your Base
Salary);
ii. provide to you health insurance benefits for you and your family
substantially similar to those benefits provided to you at the
Separation Date and at the cost to you incurred at the Separation
Date until the earlier of (1) one year following the Separation
Date, or (2) the date you are given an opportunity to receive
substantially similar health insurance from a new employer;
provided that such benefits can be modified if Hanover modifies
its health plan or plans for similarly covered active employees;
provided further that the Company shall give to you the
opportunity to obtain benefits through COBRA after the expiration
of the benefits provided for in this paragraph.
iii. reimburse appropriate outstanding requests for expense
reimbursements, as well as any reasonable and appropriate
reimbursement requests made after the Separation Date which shall
be paid promptly after receipt; and
iv. correct any errors in past pay checks (including payment of any
funds owing) and to make appropriate corrections to your W-2
form.
c. All Payments set forth in this Paragraph shall be made on or before
the Separation Date except as provided in subparagraph (b)(iii)
hereof.
d. After your Separation Date you shall no longer be eligible to
participate in or accumulate any credit under any provision of any
Hanover retirement plan.
Xxxx X. Xxxx
February 27, 2004
Page 3
4. For a period of six (6) months or such shorter period as you may, in good
faith, elect (if, for example, you become employed elsewhere), you will be
available to provide consulting services to Hanover at such reasonable
times and in such reasonable, incidental amounts as you and Hanover shall
mutually agree at no cost to Hanover beyond the payments set out above in
Paragraph 3, above; provided that should Hanover require more than
incidental amounts of time, as agreed between you and Hanover, you and
Hanover shall mutually agree on further compensation for your services in
addition to the payments described above.
5. Without the prior written consent of Hanover, except to the extent required
by an order of a court having competent jurisdiction or under subpoena from
an appropriate government agency, you shall continue to comply with
Hanover's policies regarding confidential information and, moreover, shall
not disclose any trade secrets, customer lists, marketing plans and related
information, management organization and related information (including
data and other information related to members of the Board and management),
operating policies and manuals, business plans and related information,
financial records and information or other commercial, business or
technical information related to Hanover or its subsidiaries and affiliates
to any third person unless such information has been previously disclosed
to the public by Hanover or has become public knowledge other than by a
breach of this Agreement. In the event you become self-employed or enter
into a joint employment arrangement, you shall not use any such information
for such business.
6. The terms and provisions of your previous employment agreement with Hanover
shall be null and void.
7. Except as otherwise provided herein, no equipment or materials or property
owned by Hanover or you shall be transferred between you and Hanover. You
agree that, on or prior to the Separation Date, you will return or
relinquish all Hanover credit cards, computers (including all files saved
thereon), office space, furniture, equipment, files (except publicly
available information or documents that formed the basis of such
information), books, and other company equipment, materials or property in
your possession. You are entitled to all of your personal property that is
currently on Hanover premises, including office furniture and furnishings,
and Hanover agrees to return and relinquish the same.
8. In partial exchange for the consideration provided for in this Agreement,
you for yourself, and your heirs, executors, administrators and assigns
(collectively, the "Releasors") forever waive, release and discharge
Hanover and its parent, subsidiaries, affiliates, successors and assigns,
past and present officers, directors, employees and agents, and any
fiduciaries of any employee benefit plan or policy
Xxxx X. Xxxx
February 27, 2004
Page 4
of Hanover (collectively, the "Releasees"), from any and all claims,
demands, causes of actions, fees and liabilities and expenses (inclusive of
attorneys' fees) of any kind whatsoever, whether known or unknown, which
you ever had or now have against the Releasees by reason of any actual or
alleged act, omission, transaction, practice, conduct, occurrence, or other
matter up to and including the date of your execution of this Agreement,
including, but not limited to (a) any claims under Title VII of the Civil
Rights Act of 1964, as amended, 42 U.S.C. Sections 1981, 1985 & 1986, the
Age Discrimination in Employment Act (ADEA), as amended, the Americans with
Disabilities Act, the Family and Medical Leave Act, the Employee Retirement
Income Security Act of 1974, the Civil Rights Act of 1991, as amended,
and/or any other Federal, state or local law (statutory or decisional),
regulation, or ordinance, and (b) any tort and/or contract claims,
including any claims of wrongful discharge, defamation, emotional distress,
nonphysical injury, personal injury or sickness or other harm. This release
does not apply to obligations undertaken by this Agreement or under the
terms and conditions of any employee benefit plan (including any plan under
which you have been afforded stock options and/or restricted stock) program
or arrangement (other than any such plan, program or arrangement providing
severance benefits) in which you are a participant or are eligible to
participant in on the separation date.
9. Hanover forever waives, releases and discharges you and your heirs,
executors, administrators and assigns from any and all claims, demands,
causes of actions, fees and liabilities and expenses (inclusive of
attorneys' fees) of any kind whatsoever, whether known or unknown, which
Hanover ever had or now has against you by reason of any actual or alleged
act, omission, transaction, practice, conduct, occurrence, or other matter
up to and including the date of execution of this Agreement, including, but
not limited to (a) any Federal, state or local law (statutory or
decisional), regulation, or ordinance, and (b) any tort and/or contract
claims. This release does not apply to obligations undertaken by this
Agreement.
10. The above release in Paragraph 8 notwithstanding, it is expressly agreed
that (i) you are entitled to receive and are not releasing and do not
release or waive any right to indemnification to the fullest extent
permitted by Delaware law with respect to all activities undertaken by you
for Hanover and its subsidiaries and affiliates (including, but not limited
to, your service as an officer and/or director of Hanover or its
subsidiaries or affiliates and your service on the management committee of
Hanover Measurement Services Company, L.P.) and (ii) to the extent that
Hanover (or any successor to Hanover) maintains coverage for directors and
officers, you shall be covered for acts undertaken by you on behalf of
Hanover and its affiliates and subsidiaries prior to your Separation Date.
Xxxx X. Xxxx
February 27, 2004
Page 5
11. You agree, that until December 31, 2004, you will not provide services as
an employee consultant, advisor, partner or member of any entity whose
primary business is directly competitive with that of the Hanover's or any
subsidiary of Hanover ("Competitor") with regard to the natural gas
services business ("Competitive Services"); provided, however, that this
covenant will not (a) restrict you from providing services to any
Competitor if such services are provided to a line of business of the
Competitor that is not Competitive Services; (b) not prohibit you from
entering into the private practice of law or providing legal services to a
Competitor so long as in connection with the provision of such services you
do not disclose or otherwise use any confidential or proprietary
information of Hanover (as defined in paragraph 5, above); or (c) restrict
your ability to arrange or provide financing or investments through
third-parties (other than in connection with direct competitors of the
Company) that relate to or involve Competitive Services. Hanover will have
all rights and remedies available to it at law and in equity to assure your
compliance with this covenant and to remedy any breach thereof.
12. You agree to pay federal and state taxes, if any, that you are required by
law to pay with respect to this Agreement. If you fail to pay any required
taxes with respect to this Agreement, you agree to indemnify and hold
Hanover harmless from any claims, demands, deficiencies, levies,
assessments, penalties or recoveries by any government or entity against
you for any amounts claimed due on account of your failure to pay any
required taxes with respect to the amounts designated in this Agreement.
13. You acknowledge that you have been advised by Hanover to consult an
attorney before signing this Agreement and that you have executed this
Agreement with the waivers and releases set forth above, after having had
the opportunity to consult with an attorney and after having had the
opportunity to consider the terms of this Agreement for twenty-one (21)
days after such terms were proposed to you, provided that nothing contained
herein shall prevent you from signing this Agreement within 21 days of when
these terms were proposed to you. You further acknowledge that: you have
read this Agreement in its entirety; you understand all of its terms; you
knowingly and voluntarily assent to all of the terms and conditions
contained herein including, without limitation, the waivers and releases;
you are executing this Agreement, including the waivers and releases, in
exchange for consideration in addition to anything of value to which you
are already entitled; you are not waiving or releasing rights or claims
that may arise after your execution of this Agreement; and that you
understand that the waivers and releases in this Agreement is being
requested in connection with the cessation of your employment with Hanover
and in exchange for your receipt of consideration to which you otherwise
would not be entitled.
Xxxx X. Xxxx
February 27, 2004
Page 6
14. This Agreement, including the waivers and releases contained herein, shall
become effective the eighth (8th) day following your execution of this
Agreement and you may at any time prior to the effective date revoke this
Agreement by giving written notice of such revocation to Xxxx X. Xxxxxx.
15. Both you and Hanover acknowledge that material to the inducement to enter
into this Agreement are the waivers and releases and the covenants set
forth herein.
16. If any provision of this Agreement is determined by a court of competent
jurisdiction not to be enforceable in the manner set forth in this
Agreement, Hanover and you agree that it is the intention of the parties
that such provision should be enforceable to the maximum extent possible
under applicable law and that such provision shall be reformed to make it
enforceable in accordance with the intent of the parties.
17. This Agreement shall be binding upon and inure to the benefit of the heirs,
trustees, executors, administrators, successors and assigns of the
respective parties. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
shall constitute the same instrument.
18. This Agreement shall be governed by and subject to the laws of the State of
Texas without giving effect to conflict of law rules.
19. You understand that Hanover's obligations to make payments hereunder are
unfunded and that claims for payments by you or any beneficiary shall be
those of a general, unsecured creditor. The payments provided hereunder
shall be subject to withholding in accordance with applicable federal,
state, or local law.
20. Prior to the date of this agreement, Hanover and you have agreed to a press
release which is attached. Hanover will not make any public disclosure
regarding you or your employment with the Company without providing you a
chance to comment on any such disclosure. You will not make any public
disclosure regarding Hanover or your employment with Hanover without
providing the Company a chance to comment on any such disclosure.
21. This Agreement contains a complete statement of all the arrangements
between you and Hanover with respect to your employment and the cessation
of your employment. This Agreement may not be changed orally. No other
promises or agreements shall be binding unless in writing and signed by
Hanover and you. Further, this Agreement supercedes and extinguishes any
prior understandings or written or oral agreements between the parties
including, but not limited to your
Xxxx X. Xxxx
February 27, 2004
Page 7
employment agreement. There have been no promises between the parties
beyond those reflected in this Agreement.
Except as otherwise specifically provided herein, notices and other
communications provided for herein shall be in writing and shall be hand
delivered or mailed.
Xxxx X. Xxxx
February 27, 2004
Page 8
If this letter correctly sets forth our agreement, please execute a
counterpart copy where indicated below.
Sincerely yours,
Hanover Compressor Company
By: /s/ Xxxx X. Xxxxxx
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Xxxx X. Xxxxxx
President and Chief Executive Officer
Dated: February 27, 2004
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ACCEPTED AND AGREED TO
/s/ Xxxx X. Xxxx
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Xxxx X. Xxxx
Dated: February 27, 2004
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