Document:

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                                                                    EXHIBIT 10.3

                             OFFSET RIGHTS AGREEMENT

         This OFFSET RIGHTS Agreement (this "Agreement") is made as of May 14,
2003 by and between Schlumberger Technology Corporation, a Texas corporation
("STC"), and Hanover Compressor Company, a Delaware corporation (the "Company").

         WHEREAS, STC and the Company, among others, are parties to that certain
PIGAP Settlement Agreement dated the date hereof (the "Settlement Agreement").

         WHEREAS, in order to induce STC and the Company to enter into the
Settlement Agreement, the Company and STC have executed and delivered this
Agreement.

         Now, therefore, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

                                    ARTICLE I
                                   DEFINITIONS

         Capitalized terms used but not otherwise defined herein shall have the
meanings assigned to such terms in the Indenture.

         1.1      "Alliance Agreement" shall mean that certain Most Favored
Supplier and Alliance Agreement dated as of August 31, 2001 by and between
Schlumberger Oilfield Holdings Limited, STC and Hanover Compression Limited
Partnership, as amended, restated, supplemented, waived, replaced, restructured
or otherwise modified from time to time; provided that, in case of any
replacement agreement, the parties to the Alliance Agreement shall have agreed
in writing that such replacement agreement replaces all or a portion of the
Alliance Agreement.

         1.2      "Holder" shall mean STC and its Permitted Transferees.

         1.3      "Indenture" shall mean the Indenture between the Company and
Wachovia Bank, National Association, as Trustee, dated May 14, 2003, as amended
or supplemented from time to time in accordance with the terms thereof.

         1.4      "Material Adverse Effect" shall mean a material adverse effect
on (a) the business, operations, affairs, financial condition, assets or
properties of the Company and its Subsidiaries taken as a whole, or (b) the
ability of the Company to perform its obligations under the Indenture or the
Securities or (c) the validity or enforceability of the Indenture or the
Securities.

         1.5      "Permitted Transferee" shall mean any direct or indirect
Subsidiary of Schlumberger or any entity that merges or consolidates with or
owns or acquires all of the equity securities or all or substantially all of the
assets of STC, or any Subsidiary of such entity.

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         1.6      "Responsible Officer" shall mean any Senior Financial Officer
and any other officer of the Company with responsibility for the administration
of the relevant portion of the Indenture.

         1.7      "Senior Financial Officer" shall mean the chief financial
officer, principal accounting officer, treasurer or comptroller of the Company.

                                   ARTICLE II
                         REPRESENTATIONS AND WARRANTIES

         The Company represents and warrants to the Holder that:

         2.1      Organization; Power and Authority. The Company is a
corporation duly organized validly existing and in good standing under the laws
of its jurisdiction of incorporation, and is duly qualified as a foreign
corporation and is in good standing in each jurisdiction in which such
qualification is required by law, other than those jurisdictions as to which the
failure to be so qualified or in good standing could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. The Company
has the corporate power and authority to own or hold under lease the properties
it owns or holds under lease, to transact the business it transacts, to execute
and deliver the Securities and to perform the provisions of the Indenture.

         2.2      Authorization. The Indenture has been duly authorized by all
necessary corporate action on the part of the Company, and, assuming it has been
duly authorized, executed and delivered by the Trustee, will be a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). The Securities have been duly authorized by
all necessary corporate action on the part of the Company, and, when executed by
the Company and authenticated by the Trustee, will have been validly issued and
delivered and will constitute a legal, valid and binding obligation of the
Company entitled to the benefits of the Indenture and enforceable in accordance
with their terms, except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).

         2.3      Compliance with Laws, Other Instruments. The execution,
delivery and performance by the Company of the Indenture and the Securities will
not (a) contravene, result in any breach of, or constitute a default under, or
result in the creation of any Lien in respect of any property of the Company
under (1) its corporate charter or by-laws or (2) any material indenture,
mortgage, deed of trust, loan, purchase or credit agreement, lease or any other
material agreement or instrument to which the Company is bound or by which the
Company or any of its properties may be bound or affected, (b) conflict with or
result in a breach of any of the terms, conditions or provisions of any order,
judgment, decree, or ruling of any court, arbitrator or

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Governmental Authority applicable to the Company or (c) violate any provision of
any statute or other rule or regulation of any Governmental Authority applicable
to the Company.

         2.4      Governmental Authorizations. No material consent, approval or
authorization of, or registration, filing or declaration with, any Governmental
Authority is required in connection with the execution, delivery or performance
by the Company of the Indenture or the Securities other than (i) those that have
been previously obtained and, on the date of hereof, remain in full force and
effect and (ii) those that may be necessary as contemplated in the Registration
Rights Agreement dated the date hereof between the Company and STC.

         2.5      No Default under Section 8.1(d) of the Credit Agreement. On
the date hereof, the Company is not in default and no waiver of default is
currently in effect under Section 8.1(d) of the Credit Agreement.

                                   ARTICLE III
                          INFORMATION AS TO THE COMPANY

         3.1      Quarterly Financial Statements. Within 60 days after the end
of each quarterly fiscal period in each fiscal year of the Company (other than
the last quarterly fiscal period of each such fiscal year), the Company shall
deliver to the Holder duplicate copies of:

                  (a)      an unaudited consolidated balance sheet of the
         Company and its Subsidiaries as at the end of such quarter, and

                  (b)      unaudited consolidated statements of income and cash
         flows of the Company and its Subsidiaries for such quarter and (in the
         case of the second and third quarters) for the portion of the fiscal
         year ending with such quarter,

setting forth in each case in comparative form the figures for the corresponding
periods in the previous fiscal year, all in reasonable detail, prepared in
accordance with GAAP applicable to quarterly financial statements generally, and
certified by a Senior Financial Officer as fairly presenting, in all material
respects, the financial position of the companies being reported on and their
results of operations and cash flows, subject to changes resulting from year-end
adjustments. Notwithstanding the foregoing, the electronic filing with the
Securities and Exchange Commission on EDGAR of the Company's Quarterly Report on
Form 10-Q for such quarterly period prepared in compliance with the requirements
therefor shall be deemed to satisfy the requirements of this Section 3.1.

         3.2      Annual Financial Statements. Within 90 days after the end of
each fiscal year of the Company, the Company shall deliver to the Holder
duplicate copies of:

                  (a)      an audited consolidated balance sheet of the Company
         and its Subsidiaries, as at the end of such year, and

                  (b)      audited consolidated statements of income, changes in
         shareholders' equity and cash flows of the Company and its
         Subsidiaries, for such year,

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setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail, prepared in accordance with GAAP, and
accompanied by an opinion thereon of independent certified public accountants of
recognized national standing, which opinion shall state that such financial
statements present fairly, in all material respects, the financial position of
the companies being reported upon and their results of operations and cash flows
and have been prepared in conformity with GAAP, and that the examination of such
accountants in connection with such financial statements has been made in
accordance with generally accepted auditing standards, and that such audit
provides a reasonable basis for such opinion in the circumstances.
Notwithstanding the foregoing, the electronic filing with the Securities and
Exchange Commission on EDGAR of the Company's Annual Report on Form 10-K for
such fiscal year prepared in accordance with the requirements therefor shall be
deemed to satisfy the requirements of this Section 3.2.

         3.3      SEC and Other Reports. Promptly upon their becoming available,
the Company shall deliver to the Holder one copy of (1) each financial
statement, report, notice or proxy statement sent by the Company or any
Subsidiary to public securities holders generally and (2) each regular or
periodic report, each registration statement (without exhibits except as
expressly requested by such holder), and each prospectus and all amendments
thereto filed by the Company or any Subsidiary with the Securities and Exchange
Commission. Notwithstanding the foregoing, the electronic filing with the
Securities and Exchange Commission on EDGAR of any such financial statement,
report, notice, proxy statement, annual or periodic report, registration
statement or prospectus shall be deemed to satisfy the requirements of this
Section 3.3.

         3.4      Requested Information. With reasonable promptness, the Company
shall deliver to the Holder such other data and information relating to the
business, operations, affairs, financial condition, assets or properties of the
Company or any of its Subsidiaries or relating to the ability of the Company to
perform its obligations under the Securities as from time to time may be
reasonably requested by the Holder.

                                   ARTICLE IV
                                OFFSET AGREEMENT

         4.1      Offset Prepayment.

                  (a)      The Holder may provide a written notice (an "Offset
         Notice") to the Trustee (at such address and in such manner as provided
         in the Indenture) and the Company of its election to have an amount of
         sums identified by the Holder in the Offset Notice as being due and
         payable by the Holder or any of its Affiliates to the Company or any of
         its Affiliates in respect of the products or services provided to the
         Holder or any of its Affiliates in accordance with the Company's "Most
         Favored Supplier Status" established pursuant to Section 3.4 of the
         Alliance Agreement offset against the Available Offset Amount (as
         defined below). So long as, within five (5) Business Days after the
         identification of such sums in the Offset Notice, the Company has not
         in good faith claimed in a writing delivered to the Holder and the
         Trustee, that such sums were not incurred in accordance with the
         Company's "Most Favored Supplier Status," such sums may be offset (an
         "Offset Prepayment") against an equal portion of any Additional
         Interest, interest, if any, and the Original Issue Discount accrued
         through the date of the Offset Notice plus $23,378,423 (collectively,
         the "Available Offset Amount").

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                  (b)      Any Offset Prepayment shall be applied first against
         interest, if any, second against any accrued Additional Interest, third
         against the Original Issue Discount, and fourth against the Issue
         Price; provided, however, such Offset Prepayment shall not exceed the
         Available Offset Amount. For purposes of determining the Available
         Offset Amount at any time, the initial $23,378,423 portion of the
         Available Offset Amount shall be reduced by the amount of any Offset
         Prepayment previously applied against the Issue Price.

                  (c)      Notwithstanding the foregoing, in no event shall any
         amounts be deducted from the Available Offset Amount and no obligations
         of the Holder or any of its Affiliates be deemed satisfied in full
         until the Holder has delivered all Securities to the Trustee for
         cancellation and re-issuance to reflect the new Principal Amount,
         accrued Additional Interest, interest, if any, Issue Price and/or the
         amount of Original Issue Discount accrued as of such re-issuance, as
         the case may be, as necessary to reflect the result of the application
         of the Offset Prepayment. In connection with the delivery of all
         Securities for cancellation and re-issuance pursuant to the preceding
         sentence, the Holder shall deliver a written consent to amend the
         Principal Amount pursuant to Section 9.02(1) of the Indenture to
         reflect the Principal Amount set forth on the re-issued Securities.

                                    ARTICLE V
                                  MISCELLANEOUS

         5.1      Term and Termination. This Agreement shall terminate and be of
no further force and effect upon the earlier to occur of (i) the Holder no
longer owns all the issued and outstanding Securities or (ii) the discharge of
all liabilities on the Securities pursuant to Section 8.01 of the Indenture. STC
agrees to notify the Trustee and the Company in writing that the Holder no
longer owns all the issued and outstanding Securities within five (5) Business
Days following the first date that the Holder no longer owns all the issued and
outstanding Securities.

         5.2      Survival. All representations and warranties contained herein
shall survive the execution and delivery of this Agreement until the termination
of this Agreement in accordance with the provisions of Section 5.1.

         5.3      Amendments and Waivers. Except as otherwise expressly provided
herein, the provisions of this Agreement may be amended or waived at any time
only by the prior written agreement of the Company and STC. Any waiver, permit,
consent or approval of any kind or character on the part of any of the parties
hereto of any provision or condition of this Agreement must be made in writing
and shall be effective only to the extent specifically set forth in writing.

         5.4      Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together will
constitute one and the same instrument. Facsimile signatures will be deemed to
be original signatures for all applicable purposes.

         5.5      Assignment. This Agreement may not be assigned (and any
purported assignment shall be null and void) without the prior written consent
of the non-assigning party; provided, however, STC may assign this agreement to
its Permitted Transferees.

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         5.6      Successors and Assigns. Except as otherwise expressly provided
herein, all agreements contained in this Agreement by or on behalf of any of the
parties hereto will bind and inure to the benefit of the respective successors
and assigns of the parties hereto.

         5.7      Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience of reference only and do not constitute a
part of and shall not be utilized in interpreting this Agreement.

         5.8      Notices. Any notices required or permitted to be sent
hereunder shall be delivered personally or mailed, certified mail, return
receipt requested, or delivered by overnight courier service to the following
addresses, or such other address as STC designates by written notice to Hanover,
and shall be deemed to have been given upon delivery, if delivered personally,
two (2) business days after mailing, if mailed, or one (1) business day after
delivery to the courier, if delivered by overnight courier service:

         If to Hanover, to:

         Hanover Compressor Company
         12001 North Houston Rosslyn Road
         Houston, Texas 77086
         Attn: General Counsel
         Fax: (281) 405-6203

         If to STC, to:

         Schlumberger Technology Corporation
         300 Schlumberger Drive MD:23
         Sugar Land, Texas 77478
         Attn: General Counsel
         Fax: (281) 285-6952

         with a copy to (which shall not constitute notice):

         Schiff Hardin & Waite
         6600 Sears Tower
         Chicago, Illinois 60606
         Attention: Mark A. Sternberg, Esq.
         Fax: (312) 258-5700

         5.9      Governing Law. This Agreement and the transactions
contemplated hereby shall be governed by and construed in accordance with the
laws of the State of New York without giving effect to the conflicts of laws
principles thereof, except that if it is necessary in any other jurisdiction to
have the law of such other jurisdiction govern this Agreement in order for this
Agreement to be effective in any respect, then the laws of such other
jurisdiction shall govern this Agreement to such extent.

         5.10     Consent to Jurisdiction. Each of the parties hereto (i)
consents to submit itself to the personal jurisdiction of any federal court
located in the Borough of Manhattan in the City of

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New York, New York or any New York state court in the event any dispute arises
out of this Agreement or any of the transactions contemplated hereby, (ii)
agrees that it will not attempt to deny or defeat such personal jurisdiction by
motion or other request for leave from any such court, and (iii) agrees that it
will not bring any action relating to this Agreement in any court other than a
federal court sitting in the Borough of Manhattan in the City of New York, New
York or a New York state court.

         5.11     WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY WAIVES
ITS RESPECTIVE RIGHT TO A JURY TRIAL OF ANY PERMITTED CLAIM OR CAUSE OF ACTION
ARISING OUT OF THIS AGREEMENT, ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, OR
ANY DEALINGS BETWEEN ANY OF THE PARTIES HERETO RELATING TO THE SUBJECT MATTER OF
THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY. THE SCOPE OF THIS
WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE
FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT OR
ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY, INCLUDING, WITHOUT LIMITATION,
CONTRACT CLAIMS, TORT CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR
IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
SUPPLEMENTS OR OTHER MODIFICATIONS TO THIS AGREEMENT, ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR TO ANY OTHER DOCUMENT OR AGREEMENT RELATING TO THE
TRANSACTIONS CONTEMPLATED HEREBY.

         5.12     Service of Process. Each of the parties hereto irrevocably
consents to the service of any process, pleading, notices or other papers by the
mailing of copies thereof by registered, certified or first class mail, postage
prepaid, to such party at such party's address set forth herein, or by any other
method provided or permitted under New York law; provided that if either party
hereto effects such service of process by any method other than transmittal
thereof via overnight courier, charges prepaid, such party shall simultaneously
transmit a copy thereof via overnight courier, charges prepaid.

         5.13     Reproduction of Documents. This Agreement and all documents
relating hereto, including, but not limited to, (a) consents, waivers,
amendments and modifications which may hereafter be executed and (b)
certificates and other information previously or hereafter furnished, may be
reproduced by any photographic, photostatic, microfilm, optical disk,
micro-card, miniature photographic or other similar process. The parties agree
that any such reproduction shall be admissible in evidence as the original
itself in any judicial or administrative proceeding, whether or not the original
is in existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

         5.14     Remedies. Each of the parties to this Agreement will be
entitled to enforce its rights under this Agreement specifically, to recover
damages by reason of any breach of any provision of this Agreement and to
exercise all other rights existing in its favor. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party shall be entitled to
immediate

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injunctive relief or specific performance without bond or the necessity of
showing actual monetary damages in order to enforce or prevent any violations of
the provisions of this Agreement.

         5.15     Complete Agreement. This Agreement, together with the
Settlement Agreement and the agreements named therein, constitute the entire
agreement of the parties hereto with respect to the subject matter hereof and
supercedes all prior and contemporaneous negotiations and agreements, oral or
written. All prior or contemporaneous negotiations or agreements are deemed
incorporated and merged into this Agreement and are deemed to have been
abandoned if not so incorporated. Each of the parties hereto represents that no
promises or inducements not herein expressed have been made to any party or have
caused any party to sign this Agreement. No representations, oral or written,
are being relied upon by any party in executing this Agreement other than the
express representations of this Agreement. All parties to this Agreement have
negotiated and participated in its drafting and the Agreement and terms hereof
shall not be construed in favor of or against any party as the drafter of the
Agreement.

         5.16     Severability. If any provision or term of this Agreement is
held to be illegal, invalid, or unenforceable, such provision or term shall be
fully severable; this Agreement shall be construed and enforced as if such
illegal, invalid, or unenforceable provision had never comprised part of this
Agreement; and the remaining provisions of this Agreement shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance from this Agreement. Furthermore, in
lieu of each such illegal, invalid, or unenforceable provision or term there
shall be added automatically as a part of this Agreement another provision or
term as similar to the illegal, invalid, or unenforceable provision as may be
possible and that is legal, valid, and enforceable.

         5.17     Investigation. Each of the parties hereto, through and by
signature of an authorized officer below, represents that it has read this
Agreement and fully understands all of its and their terms; that it has
conferred with its attorney prior to signing the same, or that it knowingly and
voluntarily has chosen not to confer with its attorney; and that it understands
any rights that it may have and signs this Agreement with full knowledge of any
such rights.

                                    * * * * *

                            [Signature Page Follows]

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<PAGE>

         The parties hereto have executed this Agreement as of the date first
set forth above.

                                    HANOVER COMPRESSOR COMPANY

                                    By: /s/ John E. Jackson
                                       -----------------------------------------

                                    Name: John E. Jackson
                                         ---------------------------------------

                                    Title: Senior Vice President and
                                           Chief Financial Officer
                                          --------------------------------------

                                    SCHLUMBERGER TECHNOLOGY
                                    CORPORATION

                                    By: /s/ Dean Ferris
                                       -----------------------------------------

                                    Name: Dean Ferris
                                         ---------------------------------------

                                    Title: Assistant Secretary
                                          --------------------------------------

                                 SIGNATURE PAGE
                             OFFSET RIGHTS AGREEMENT<PAGE>

                                                                    EXHIBIT 10.6

                                HANOVER GUARANTEE

         HANOVER GUARANTEE, dated as of December 15, 2003, made by HANOVER
COMPRESSOR COMPANY (the "Guarantor"), in favor of JPMORGAN CHASE BANK, as (in
such capacity, the " ") for the lenders (the "Lenders") parties to the Credit
Agreement, dated as of December 15, 2003 (as may be amended, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among the
Guarantor, Hanover Compression Limited Partnership, a Delaware limited
partnership ("HCLP"), the Lenders, Bank One, NA, as syndication agent and the
Administrative Agent.

                              W I T N E S S E T H:

         WHEREAS, pursuant to the Credit Agreement, the Lenders have severally
agreed to make Loans to HCLP upon the terms and subject to the conditions set
forth therein, to be evidenced by the Notes issued by HCLP under the Credit
Agreement;

         WHEREAS, it is a condition precedent to the obligation of the Lenders
to continue to make their respective Loans to HCLP under the Credit Agreement
that the Guarantor shall have executed and delivered this Guarantee to the
Administrative Agent for the ratable benefit of the Lenders.

         NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to enter into the Credit Agreement and to
induce the Lenders to make their respective loans to HCLP under the Credit
Agreement, the Guarantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:

         1.       Defined Terms.    (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given to
them in the Credit Agreement.

         (b)      As used herein, "Obligations" means the collective reference
to the unpaid principal of and interest on the Notes and all other obligations
and liabilities of HCLP to the Administrative Agent or the Lenders (including,
without limitation, interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans and interest accruing at
the then applicable rate provided in the Credit Agreement after the filing of
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to HCLP, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding), whether
direct or indirect, absolute or contingent, due or to become due, now existing
or hereafter incurred, which may arise under, out of, or in connection with, the
Credit Agreement, the Notes, the Letters of Credit, the other Loan Documents or
any other document made, delivered or given in connection therewith, whether on
account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to the Administrative Agent or to the

<PAGE>

                                                                               2

Lenders that are required to be paid by HCLP or the Guarantor pursuant to the
terms of the Credit Agreement or this Agreement or any other Loan Document).

         (c)      The words "hereof," "herein" and "hereunder" and words of
similar import when used in this Guarantee shall refer to this Guarantee as a
whole and not to any particular provision of this Guarantee, and section and
paragraph references are to this Guarantee unless otherwise specified.

         (d)      The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

         2.       Guarantee. (a) Subject to the provisions of paragraph
  2(b), the Guarantor hereby, unconditionally and irrevocably, guarantees to the
Administrative Agent, for the ratable benefit of the Lenders and their
respective successors, indorsees, transferees and assigns, the prompt and
complete payment and performance by HCLP when due (whether at the stated
maturity, by acceleration or otherwise) of the Obligations.

         (b)      Anything herein or in any other Loan Document to the contrary
notwithstanding, the maximum liability of the Guarantor hereunder and under the
other Loan Documents shall in no event exceed the amount which can be guaranteed
by the Guarantor under applicable federal and state laws relating to the
insolvency of debtors.

         (c)      The Guarantor further agrees to pay any and all expenses
(including, without limitation, all fees and disbursements of counsel) which may
be paid or incurred by the Administrative Agent or any Lender in enforcing, or
obtaining advice of counsel in respect of, any rights with respect to, or
collecting, any or all of the Obligations and/or enforcing any rights with
respect to, or collecting against, the Guarantor under this Guarantee. This
Guarantee shall remain in full force and effect until the Obligations are paid
in full and the Commitments are terminated, notwithstanding that from time to
time prior thereto HCLP may be free from any Obligations.

         (d)      The Guarantor agrees that the Obligations may at any time and
from time to time exceed the amount of the liability of the Guarantor hereunder
without impairing this Guarantee or affecting the rights and remedies of the
Administrative Agent or any Lender hereunder.

         (e)      No payment or payments made by HCLP, the Guarantor, any other
guarantor or any other Person or received or collected by the Administrative
Agent or any Lender from HCLP, the Guarantors, any other guarantor or any other
Person by virtue of any action or proceeding or any set-off or appropriation or
application at any time or from time to time in reduction of or in payment of
the Obligations shall be deemed to modify, reduce, release or otherwise affect
the liability of the Guarantor hereunder which shall, notwithstanding any such
payment or payments other than payments made by the Guarantor in respect of the
Obligations or payments received or collected from the Guarantor in respect of
the Obligations, remain liable for the Obligations up to the maximum liability
of the Guarantor hereunder until the Obligations are paid in full and the
Commitments are terminated.

         3.       Right of Set-off. Upon the occurrence and during the
continuance of any Event of Default, the Guarantor hereby irrevocably authorizes
each Lender at any time and from time to

<PAGE>
                                                                               3

time without notice to such Guarantor, any such notice being expressly waived by
the Guarantor, to set-off and appropriate and apply any and all deposits
(general or special, time or demand, provisional or final), in any currency, and
any other credits, indebtedness or claims, in any currency, in each case whether
direct or indirect, absolute or contingent, matured or unmatured, at any time
held or owing by such Lender to or for the credit or the account of such
Guarantor, or any part thereof in such amounts as such Lender may elect, against
and on account of the obligations and liabilities of such Guarantor to such
Lender hereunder and claims of every nature and description of such Lender
against such Guarantor, in any currency, whether arising hereunder, under the
Credit Agreement, any Note, any Letter of Credit or any Loan Document, as such
Lender may elect, whether or not the Administrative Agent or any Lender has made
any demand for payment and although such obligations, liabilities and claims may
be contingent or unmatured. The Administrative Agent and each Lender shall
notify such Guarantor promptly of any such set-off and the application made by
the Administrative Agent or such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and application. The rights
of the Administrative Agent and each Lender under this Section are in addition
to other rights and remedies (including, without limitation, other rights of
set-off) which the Administrative Agent or such Lender may have.

         4.       No Subrogation. Notwithstanding any payment or payments made
by the Guarantor hereunder or any set-off or application of funds of the
Guarantor by any Lender, the Guarantor shall not be entitled to be subrogated to
any of the rights of the Administrative Agent or any Lender against HCLP or any
collateral security or guarantee or right of offset held by any Lender for the
payment of the Obligations, nor shall the Guarantor seek or be entitled to seek
any contribution or reimbursement from HCLP or any other guarantor in respect of
payments made by such Guarantor hereunder, until all amounts owing to the
Administrative Agent and the Lenders by HCLP on account of the Obligations are
paid in full and the Commitments are terminated. If any amount shall be paid to
the Guarantor on account of such subrogation rights at any time when all of the
Obligations shall not have been paid in full, such amount shall be held by such
Guarantor in trust for the Administrative Agent and the Lenders, segregated from
other funds of such Guarantor, and shall, forthwith upon receipt by such
Guarantor, be turned over to the Administrative Agent in the exact form received
by such Guarantor (duly indorsed by such Guarantor to the Administrative Agent,
if required), to be applied against the Obligations, whether matured or
unmatured, in such order as the Administrative Agent may determine.

         5.       Amendments, etc. with respect to the Obligations; Waiver of
Rights. The Guarantor shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantor and without notice to or
further assent by the Guarantor, any demand for payment of any of the
Obligations made by the Administrative Agent or any Lender may be rescinded by
such party and any of the Obligations continued, and the Obligations, or the
liability of any other party upon or for any part thereof, or any collateral
security or guarantee therefor or right of offset with respect thereto, may,
from time to time, in whole or in part, be renewed, extended, amended, modified,
accelerated, compromised, waived, surrendered or released by the Administrative
Agent or any Lender, and the Credit Agreement, the Notes and the other Loan
Documents and any other documents executed and delivered in connection therewith
may be amended, modified, supplemented or terminated, in whole or in part, as
the Administrative Agent (or the Required Lenders, as the case may be) may deem
advisable from time to time, and any collateral security, guarantee or right of
offset at any time held by the Administrative Agent

<PAGE>
                                                                               4

or any Lender for the payment of the Obligations may be sold, exchanged, waived,
surrendered or released. Neither the Administrative Agent nor any Lender shall
have any obligation to protect, secure, perfect or insure any Lien at any time
held by it as security for the Obligations or for this Guarantee or any property
subject thereto. When making any demand hereunder against the Guarantor, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on HCLP or the Guarantor or guarantor, and any failure by
the Administrative Agent or any Lender to make any such demand or to collect any
payments from HCLP or any such other guarantor or any release of HCLP or such
other guarantor shall not relieve the Guarantor in respect of which a demand or
collection is not made or the Guarantor not so released of its several
obligations or liabilities hereunder, and shall not impair or affect the rights
and remedies, express or implied, or as a matter of law, of the Administrative
Agent or any Lender against the Guarantor. For the purposes hereof "demand"
shall include the commencement and continuance of any legal proceedings.

         6.       Guarantee Absolute and Unconditional. The Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Obligations and notice of or proof of reliance by the Administrative Agent or
any Lender upon this Guarantee or acceptance of this Guarantee, the Obligations,
and any of them, shall conclusively be deemed to have been created, contracted
or incurred, or renewed, extended, amended or waived, in reliance upon this
Guarantee; and all dealings between HCLP and the Guarantor, on the one hand, and
the Administrative Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee. The Guarantor waives diligence, presentment, protest, demand for
payment and notice of default or nonpayment to or upon HCLP or the Guarantor
with respect to the Obligations. The Guarantor understands and agrees that this
Guarantee shall be construed as a continuing, absolute and unconditional
guarantee of payment without regard to (a) the validity, regularity or
enforceability of the Credit Agreement, any Note or any other Loan Document, any
of the Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender (b) any defense, set-off or counterclaim
(other than a defense of payment or performance) which may at any time be
available to or be asserted by HCLP against the Administrative Agent or any
Lender, or (c) any other circumstance whatsoever (with or without notice to or
knowledge of HCLP or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of HCLP for the Obligations, or of
such Guarantor under this Guarantee, in bankruptcy or in any other instance.
When pursuing its rights and remedies hereunder against the Guarantor, the
Administrative Agent and any Lender may, but shall be under no obligation to,
pursue such rights and remedies as it may have against HCLP or any other Person
or against any collateral security or guarantee for the Obligations or any right
of offset with respect thereto, and any failure by the Administrative Agent or
any Lender to pursue such other rights or remedies or to collect any payments
from HCLP or any such other Person or to realize upon any such collateral
security or guarantee or to exercise any such right of offset, or any release of
HCLP or any such other Person or any such collateral security, guarantee or
right of offset, shall not relieve such Guarantor of any liability hereunder,
and shall not impair or affect the rights and remedies, whether express, implied
or available as a matter of law, of the Administrative Agent and the Lenders
against such Guarantor. This Guarantee shall remain in full force and effect and
be binding in accordance with and to the extent of its terms upon the Guarantor
and its successors and assigns, and shall inure to the benefit of the
Administrative Agent and the Lenders, and their

<PAGE>
                                                                               5

respective successors, indorsees, transferees and assigns, until all the
Obligations and the obligations of the Guarantor under this Guarantee shall have
been satisfied by payment in full and the Commitments shall be terminated,
notwithstanding that from time to time during the term of the Credit Agreement
HCLP may be free from any Obligations.

         7.       Reinstatement. This Guarantee shall continue to be effective,
or be reinstated, as the case may be, if at any time payment, or any part
thereof, of any of the Obligations is rescinded or must otherwise be restored or
returned by the Administrative Agent or any Lender upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of HCLP or the Guarantor,
or upon or as a result of the appointment of a receiver, intervenor or
conservator of, or trustee or similar officer for, HCLP or the Guarantor or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

         8.       Payments. The Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in U.S. Dollars at the office of the Administrative Agent located
at 270 Park Avenue, New York, New York 10017.

         9.       Representations and Warranties. The Guarantor hereby
represents and warrants that:

         (a)      it is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the corporate
power and authority and the legal right to own and operate its property, to
lease the property it operates and to conduct the business in which it is
currently engaged;

         (b)      it has the corporate power and authority and the legal right
to execute and deliver, and to perform its obligations under, this Guarantee,
and has taken all necessary corporate action to authorize its execution,
delivery and performance of this Guarantee;

         (c)      this Guarantee constitutes a legal, valid and binding
obligation of such Guarantor enforceable in accordance with its terms, except as
affected by bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting the enforcement of
creditors' rights generally, general equitable principles and an implied
covenant of good faith and fair dealing;

         (d)      the execution, delivery and performance of this Guarantee will
not violate any provision of any Requirement of Law or Contractual Obligation of
such Guarantor and will not result in or require the creation or imposition of
any Lien on any of the properties or revenues of such Guarantor pursuant to any
Requirement of Law or Contractual Obligation of the Guarantor;

         (e)      no consent or authorization of, filing with, or other act by
or in respect of, any arbitrator or Governmental Authority and no consent of any
other Person (including, without limitation, any stockholder or creditor of such
Guarantor) is required in connection with the execution, delivery, performance,
validity or enforceability of this Guarantee; and

         (f)      no litigation, investigation or proceeding of or before any
arbitrator or Governmental Authority is pending or, to the knowledge of such
Guarantor, threatened by or against such Guarantor or against any of its
properties or revenues with respect to this Guarantee or any of the transactions
contemplated hereby, which would reasonably be expected to have a material

<PAGE>
                                                                               6

adverse effect on the business, operations, property or financial or other
condition of such Guarantor.

         10.      Authority of Administrative Agent. The Guarantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Guarantee with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, right,
request, judgment or other right or remedy provided for herein or resulting or
arising out of this Guarantee shall, as between the Administrative Agent and the
Lenders, be governed by the Credit Agreement and by such other agreements with
respect thereto as may exist from time to time among them, but, as between the
Administrative Agent and such Guarantor, the Administrative Agent shall be
conclusively presumed to be acting as agent for the Lenders with full and valid
authority so to act or refrain from acting, and the Guarantor shall not be under
any obligation, or entitlement, to make any inquiry respecting such authority.

         11.      Notices. All notices, requests and demands to or upon the
Administrative Agent, any Lender or the Guarantor to be effective shall be in
writing (or by telex, fax or similar electronic transfer confirmed in writing)
and shall be deemed to have been duly given or made when delivered by hand or if
by overnight courier service, when received or if given by mail, when deposited
in the mails by certified mail, return receipt requested, or if by telex, fax or
similar electronic transfer, when sent and receipt has been confirmed, addressed
as follows:

         (a)      if to the Administrative Agent or any Lender, at its address
or transmission number for notices provided in subsection 11.2 of the Credit
Agreement; and

         (b)      if to the Guarantor, at its address or transmission number for
notices set forth under its signature below.

         The Administrative Agent, each Lender and the Guarantor may change its
address and transmission numbers for notices by notice in the manner provided in
this Section.

         12.      Counterparts. This Guarantee may be executed by the Guarantor
on any number of separate counterparts, and all of said ------------
counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the counterparts of this Guarantee signed by the Guarantor
shall be lodged with the Administrative Agent.

         13.      Severability. Any provision of this Guarantee which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         14.      Integration. This Guarantee represents the agreement of the
Guarantor with respect to the subject matter hereof and there are no promises or
representations by the Administrative Agent or any Lender relative to the
subject matter hereof not reflected herein.

         15.      Amendments in Writing; No Waiver; Cumulative Remedies. (a)
None of the terms or provisions of this Guarantee may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
the Guarantor and the Administrative Agent,

<PAGE>
                                                                               7

provided that any provision of this Guarantee may be waived by the
Administrative Agent and the Lenders in a letter or agreement executed by the
Administrative Agent or by telex or facsimile transmission from the
Administrative Agent.

         (b)      Neither the Administrative Agent nor any Lender shall by any
act (except by a written instrument pursuant to paragraph 15(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Administrative Agent or any Lender,
any right, power or privilege hereunder shall operate as a waiver thereof. No
single or partial exercise of any right, power or privilege hereunder shall
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. A waiver by the Administrative Agent or any Lender of
any right or remedy hereunder on any one occasion shall not be construed as a
bar to any right or remedy which the Administrative Agent or such Lender would
otherwise have on any future occasion.

         (c)      The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

         16.      Section Headings. The section headings used in this Guarantee
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.

         17.      Successors and Assigns. This Guarantee shall be binding upon
the successors and assigns of the Guarantor and shall inure to the benefit of
the Administrative Agent and the Lenders and their successors and assigns.

         18.      Governing Law. This Guarantee shall be governed by, and
construed and interpreted in accordance with, the law of the State of New York.

<PAGE>
                                                                               8

                 IN WITNESS WHEREOF, the undersigned has caused this Guarantee
to be duly executed and delivered by its duly authorized officer as of the day
and year first above written.

                                         HANOVER COMPRESSOR COMPANY

                                         By: /S/ John E. Jackson
                                            ------------------------------------
                                            Name: John E. Jackson
                                            Title: Senior Vice President and CFO

                                         Address for Notices:
                                         12001 North Houston Rosslyn
                                         Suite 350
                                         Houston, Texas 77086
                                         Attn: Chief Financial Officer
                                         Fax: 281-447-8781

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