Document:

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                                                                    EXHIBIT 4.10

                          HANOVER COMPRESSOR COMPANY
                            SUBSCRIPTION AGREEMENT

     THIS SUBSCRIPTION AGREEMENT AND THE ACCOMPANYING MATERIALS DO NOT
CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY A SECURITY IN
ANY JURISDICTION IN WHICH, OR TO ANY PERSON TO WHOM, IT IS UNLAWFUL TO MAKE SUCH
AN OFFER OR SOLICITATION.

     IN MAKING AN INVESTMENT DECISION INVESTORS MUST RELY ON THEIR OWN
EXAMINATION OF HANOVER COMPRESSOR COMPANY (THE "COMPANY"), ITS MANAGEMENT AND
THE TERMS OF THIS OFFERING, INCLUDING THE MERITS AND RISKS THEREOF. THE COMMON
STOCK HAS NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION (THE "COMMISSION") NOR HAS THE COMMISSION PASSED UPON THE FAIRNESS OR
MERITS OF AN INVESTMENT IN THE COMMON STOCK, NOR UPON THE ACCURACY OR ADEQUACY
OF THE INFORMATION CONTAINED IN THIS DOCUMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE, THE INFORMATION CONTAINED HEREIN IS LESS
DETAILED AND COMPLETE THAN AN INVESTOR WOULD RECEIVE IF THE COMMON STOCK WERE
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR IF AN
ALTERNATIVE EXEMPTION FROM SUCH REGISTRATION WERE RELIED UPON.

     THE COMMON STOCK IS SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND RESALE
AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED HEREUNDER AND PURSUANT
TO THAT CERTAIN FORM OF STOCKHOLDERS' AGREEMENT, ATTACKED HERETO AS EXHIBIT A
(THE "STOCKHOLDERS' AGREEMENT"). INVESTORS SHOULD BE AWARE THAT THEY WILL BE
REQUIRED TO BEAR THE FINANCIAL RISK OF HIS OR ITS INVESTMENT FOR AN INDEFINITE
PERIOD OF TIME.

     THIS AGREEMENT is made and entered into as of _________, _______, 1992 by
and among the party set forth on the signature page hereto (the "Investor") and
the Company.

                                  WITNESSETH:

     WHEREAS, the Company is a corporation organized under the laws of the State
of Delaware and is engaged in the business of selling, leasing, maintaining and
refurbishing compressors (the "Compressors") utilized by the natural gas
industry;

     WHEREAS, the Company desires to offer (the "Offering") an aggregate of
22,884 shares of its Common Stock, $.01 par value (the "Common Stock") to
certain qualified subscribers, of which it is anticipated that 1525.6 shares of
such Common Stock will be
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purchased by the Company's management and 6102.4 shares will be purchased by
Hanover Energy Inc. ("HEI"), as hereinafter set forth;

     WHEREAS, the Offering will terminate on April 1, 1992 or such subsequent
date, not later than April 20, 1992, as the Company may determine, in its sole
and absolute discretion, and without notice to or the consent of any Investor
(the "Termination Date"), unless the company shall have accepted subscriptions
for all of the shares of common Stock offered pursuant to the Offering and shall
have renegotiated the terms and conditions of its existing indebtedness extended
by Manufacturers Hanover (the "MH Indebtedness"), on terms not materially less
favorable than the terms (the "Minimum Financing Terms") described under the
heading "Recent Developments" contained in Exhibit B attached hereto, in each
case prior to such date;

     WHEREAS, certain affiliates of the Company reserve the right to purchase
any unsold shares of Common Stock offered hereby for their own account.  Such
Common Stock, if acquired by an affiliate of the Company, will be acquired on
the same terms as the Common Stock offered hereby and will be held in accordance
with applicable law. It is a condition to the closing of the Offering that
various members of the Company's management acquire not less than $1,000,000 of
the Common Stock (the "Management Stock") offered hereby. It is anticipated that
any unsold shares of Common Stock offered hereby will be acquired by either HEI,
which owns 95% of the Company's Common Stock, or by GKH Partners, L.P., a
Delaware limited partnership, or its affiliates (collectively, "GKH") which
own an aggregate of 64. 18% of the outstanding Common stock of Hanover Energy
Holding Corporation, which is the direct parent of HEI;

     WHEREAS, the Investor has previously been given access to and an
opportunity to review the documents, agreements, information and reports
described in Schedule A attached hereto (the "Data");

     NOW, THEREFORE, in consideration of the foregoing, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby acknowledge, agree and understand the
following:

     THE COMMON STOCK HAS NOT BEEN REGISTERED UNDER THE ACT, NOR HAS THE COMMON
STOCK BEEN REGISTERED UNDER THE SECURITIES LAWS OF ANY STATE. THE SALE OF THE
COMMON STOCK IS BEING MADE BY THE COMPANY IN RELIANCE ON APPLICABLE EXCEPTIONS
UNDER THE ACT AND/OR THE RULES PROMULGATED THEREUNDER. AS A CONDITION TO ANY
SALE, THE COMPANY WILL BE RELYING ON CERTAIN REPRESENTATIONS AND WARRANTIES FROM
THE UNDERSIGNED AS SET FORTH IN THIS AGREEMENT TO THE EFFECT, AMONG OTHER
THINGS, THE UNDERSIGNED IS ACQUIRING HIS OR ITS COMMON STOCK SOLELY FOR HIS OR
ITS OWN ACCOUNT AND NOT WITH A VIEW TOWARD DISTRIBUTION OR FRACTIONALIZATION.

     THERE IS NO PUBLIC OR OTHER MARKET FOR THE COMMON STOCK NOR IS SUCH MARKET
LIKELY TO DEVELOP.  TRANSFER OF THE COMMON

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STOCK IS SPECIFICALLY RESTRICTED UNDER THIS SUBSCRIPTION AGREEMENT AND THE
STOCKHOLDERS' AGREEMENT. THE INVESTOR HAS NO RIGHT TO REQUIRE THE COMPANY TO
REGISTER HIS OR ITS COMMON STOCK UNDER THE ACTS FOR THESE REASONS THE
UNDERSIGNED WILL BE REQUIRED TO RETAIN OWNERSHIP OF HIS OR ITS COMMON STOCK AND
BEAR THE ECONOMIC RISK OF HIS OR ITS INVESTMENT FOR AN INDEFINITE PERIOD.

     THE UNDERSIGNED SHOULD NOT CONSTRUE THE CONTENTS OF THIS AGREEMENT OR ANY
COMMUNICATION, WHETHER WRITTEN OR ORAL, FROM THE COMPANY, ITS OFFICERS,
DIRECTORS, COUNSEL OR AGENTS, AS LEGAL, TAX OR BUSINESS ADVICE, AND SHOULD
CONSULT HIS OR ITS OWN LEGAL COUNSEL, ACCOUNTANTS AND OTHER PROFESSIONAL
ADVISORS AS TO LEGAL, TAX, ACCOUNTING AND RELATED MATTERS CONCERNING HIS OR ITS
INVESTMENT.

     INVESTMENT IN THE COMMON STOCK IS SPECULATIVE AND INVOLVES A HIGH DEGREE OF
RISK. THIS INVESTMENT IS SUITABLE ONLY FOR PERSONS WHO CAN AFFORD TO LOSE THEIR
ENTIRE INVESTMENT.

     THE COMPANY RESERVES THE RIGHT TO REJECT ANY SUBSCRIPTION MADE HEREUNDER IN
ITS ABSOLUTE DISCRETION AND FOR WHATEVER REASON.

     1.  Subscription.  The Investor hereby irrevocably subscribes for the
number of shares of Common Stock set forth on the signature page of this
Subscription Agreement under the terms and conditions set forth below. The
Investor agrees to pay to the Company the sum set forth on the signature page as
the purchase price for the Common Stock subscribed for.

     Subject to the terms and conditions hereof, the Investor hereby tenders two
executed copies of this Agreement, two executed copies of the Stockholders'
Agreement, a completed Form W-9 and a certified or cashier's check made payable
to the order of "Hanover Compressor Company" or other immediately available
funds (the "Funds") in an amount equal to $655.48 multiplied by the number of
shares of Common Stock subscribed for.  The Company's acceptance hereof shall be
deemed acknowledgment of its receipt of such Funds and documents.

     The Funds shall be promptly deposited in an interest bearing, segregated
account and such Funds may be invested in treasury bills or other cash
equivalents, as determined in the sole and absolute discretion of the Company.
If acceptable subscriptions for all of the shares of Common Stock offered hereby
are received prior to the Termination Date, if the Management Stock is
subscribed for and if a binding agreement amending the MH Indebtedness on terms
not materially less favorable than the Minimum Financing Terms has been entered
into prior to the Termination Date (together, the "Offering Conditions"), all
subscriptions will be transferred from the segregated bank account to the
Company, together with all income, if any, earned thereon. In the event the
Offering Conditions have not been satisfied in full prior to the Termination
Date, the offering will be terminated and all funds will be returned to
Investors with a pro rata share of

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interest earned thereon, calculated on the basis of the amount of Funds invested
by the Investor and the length of time interest on such Funds was earned.

     2.  Representation and Warranties of the Investor.  The Investor hereby
represents and warrants to the Company as follows:

     (a) The undersigned or his or its designated agents or consultants (the
"Representatives") have carefully reviewed, are familiar with and understand the
Data, the Stockholders' Agreement and Exhibit B attached hereto entitled "Recent
Company Developments," and confirm that the Data provided complies in full with
the description thereof set forth on Schedule A attached hereto.

     (b) All documents, records and books pertaining to an investment in the
Company and requested by him or it have been made available or delivered to him
or it, subject to the terms and conditions of that certain Confidentiality
Agreement, previously executed by the Investor (the "Confidentiality
Agreement"). The undersigned or his or its Representatives have had an
opportunity to ask questions of and receive answers from the Company concerning
the terms and conditions of his or its investment and the financial condition,
operations and prospects of the Company. No statement, printed material or
inducement given or made by the Company or any of its affiliates, agents or
representatives is contrary to the information contained herein or contained in
the Data and the undersigned acknowledges and agrees that the undersigned has
relied solely on the Data in connection with his or its decision to acquire the
Common Stock. In addition, the undersigned acknowledges that in reliance upon
certain state and federal securities law exemptions, the Investor is receiving
less information than the undersigned would have received if an information
memorandum complying with Rule 502 (b) (2) of Regulation D promulgated pursuant
to the Act had been prepared and made available to him or it or if the Common
Stock had been registered pursuant to the Act.

     (c) The undersigned: (i) has adequate means of providing for his or its
current needs and possible personal contingencies and has no need for liquidity
in his or its Common Stock; (ii) can bear the economic risk of losing his or its
entire investment therein; (iii) has, or in the case of a entity Investor, the
person making the decision to invest in the Common Stock has such knowledge and
experience in financial matters that he is capable of evaluating the relative
risks and merits of this investment; (iv) is, or in the case of a entity
Investor, the person making the decision to invest in the Common Stock is
familiar with the nature of, and risks attendant, investment in the Common Stock
and the natural gas compressor industry generally; and (v) has, or in the case
of a entity Investor, the person making the decision to invest in the Common
Stock has determined that the purchase of such Common Stock is consistent with
his or its financial objectives.

     (d) The undersigned is an "accredited investor" as set forth on Schedule B
hereto.

     (e) The address set forth below is the undersigned's true and correct
residence (or, if an entity, its principal business address), and the
undersigned has no present intention of becoming a domiciliary of any other
state or jurisdiction. If the undersigned is an individual, he

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is registered to vote in, and/or is the holder of a current driver's license
issued by, the state of his residence as set forth below.

     (f) The undersigned acknowledges that the Common Stock will be sold (i)
pursuant to the applicable exemptions from registration under the securities
laws of certain states and (ii) that the Common Stock has not been registered
under the Act in reliance upon exemptions from registration provided thereunder
and, in connection therewith, the undersigned hereby covenants and agrees that
the undersigned will not offer, sell or otherwise transfer the Common Stock
except in accordance with this Agreement and with the terms and conditions of
the Stockholders' Agreement. The undersigned further agrees the Common Stock
will not be transferable (except in accordance with the procedures set forth in
the Stockholders' Agreement) without the prior written consent of the Company.
The undersigned understands and agrees that the Company will not consent to a
transfer of the Common Stock unless the transferee meets the financial and other
suitability standards required of an initial subscriber or unless such
conditions are waived by the Company in its sole discretion.  The Company its
sole and absolute discretion, require the Investor to an opinion reasonably may,
in deliver of counsel (from a law firm and in form and substance satisfactory to
the Company) to the effect that any such transfer is exempt from the
registration requirements of the Act. The undersigned further understands that
the Company is under no obligation to register the Common Stock on his or its
behalf, to assist him or it in complying with any exemption from registration or
to consent to the transfer thereof.

     (g) The Common Stock for which the undersigned hereby subscribes is being
acquired solely for his or its own account, for investment purposes only, and is
not being purchased with a view to or for the resale, distribution, subdivision
or fractionalization thereof; the undersigned has no present plans to enter into
any such contract, undertaking, agreement or arrangement. The undersigned has no
reason to anticipate any change in his or its circumstances, financial or
otherwise, which may cause or require any sale or disposition by him or it of
any of the Common Stock subscribed for.  In order to induce the Company to issue
and sell the Common Stock subscribed for hereby to the undersigned Investor, it
is agreed that the Company will have no obligation to recognize the ownership,
beneficial or otherwise, of such Common Stock by anyone but the undersigned
Investor.

     (h) This Agreement has been duly and validly executed and delivered by the
undersigned and constitutes the valid and binding obligation of the Investor
enforceable in accordance with its terms. If the undersigned is a corporation,
partnership, trust or other entity, the undersigned represents and warrants that
it is authorized and otherwise duly qualified to purchase and hold the Common
Stock, and such entity has not been formed for the specific purpose of acquiring
the Common Stock unless (in the case of a partnership or corporation) all of its
equity owners qualify as accredited individual investors under the standards set
forth in Schedule B hereto.

     (i) All information which the undersigned has provided to the Company
concerning himself, his financial position and his knowledge of financial and
business matters, or in the case of a corporation, partnership, trust or other
entity, the information concerning the person making the investment decision on
behalf of such entity, including all information contained herein, is

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true, correct and complete as of the date set forth at the end hereof, and if
there should be any change in such information prior to this subscription being
accepted, the undersigned will immediately provide the Company with such
information.

     (j) The undersigned obtained knowledge of this investment by personal
contact with an officer, director, shareholder, affiliate or agent of the
Company.

     (k) None of the following has ever been represented, guaranteed or
warranted to him or it by the Company:

          (i) that the Company will be profitable or that the undersigned will
     realize tax benefits in connection with an investment in the Company, or
     that the undersigned will realize profits or losses, as a result of his or
     its investment in the Company; or

          (ii) that the past performance or experience on the part of any
     officer, director, shareholder, employee, agent or affiliate thereof, or
     any employee, agent or affiliate of the Company will in any way indicate
     the predictable results of ownership of Common Stock or of the overall
     venture.

     (1) The undersigned acknowledges, is aware of and understands the following
certain specific risks, which risks do not constitute an exhaustive delineation
of all material risks attendant an investment in the Company:

          (i) Natural Gas Compressor Industry Considerations.  The Company's
     profitability is, in part, dependent upon the current market for natural
     gas.  Since 1982, there has been an over-supply of natural gas and,
     consequently, prices have declined significantly and remain at relatively
     low levels. In general, future prices of natural gas are dependent upon
     numerous factors beyond the control of the company, including competition,
     conservation efforts and various economic, political and regulatory
     developments. The current unsettled energy market, highlighted by recent
     political events in the Middle East and elsewhere, make it particularly
     difficult to estimate future prices of natural gas. Although declines in
     natural gas prices tend to decrease efforts to discover and develop new
     natural gas reserves, thus placing greater reliance upon older, developed
     natural gas reserves (which reliance requires additional compression in
     order to deliver the remaining natural gas reserves to market) a
     significant decline in the price of natural gas could result in the
     widespread failure of natural gas producers and would likely have a
     material adverse effect on the Company's financial condition and results of
     operation.

          (ii) Potential Liability and Insurance.  Natural gas operations are
     subject to certain risks, including explosions, uncontrollable flows of gas
     or well fluids, fires, pollution and other environmental risks. These risks
     could expose the Company to substantial liability for injury and loss of
     life, property damage, pollution and other environmental damages, and
     consequential damages, if such damages resulted from a Compressor defect or
     from the Company's negligence in maintaining, servicing or refurbishing its
     Compressors.

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          Although the Company has obtained certain insurance, as described in
     greater detail in the Data, no assurance can be given that such insurance
     is adequate to cover the Company's intended operations, will be generally
     available in the future or, if available, that premiums will be reasonable.
     If the Company were to incur a substantial liability and such damages were
     not covered by insurance or were in excess of policy limits, or if the
     Company were to incur such liability at a time when it is no longer able to
     obtain liability insurance, its financial condition could be materially
     adversely affected.  The Company, consistent with industry trends, may find
     it difficult to obtain adequate insurance coverage against possible
     liabilities that may be incurred in connection with the conduct of its
     business.  There can be no assurance that all possible types of liabilities
     that may be incurred by the Company will be covered by its insurance or
     that the dollar amount of such liabilities will not exceed the Company's
     policy limits.  A partially or completely uninsured claim, if successful
     and of sufficient magnitude, could have a materially adverse effect on the
     Company and its financial condition.

          (iii)  Additional Environmental Liability Risks.  In addition to
     liability which may arise as a result of an alleged Compressor defect or
     Company negligence, if environmental damage is found to have occurred as a
     result of the Company's operating activities, the Company could incur
     substantial liability. In such event, the Company may be liable for all
     costs of remediation, as well as certain other costs.  Under the
     Comprehensive Response, Compensation and Liability Act ("CERCLA"), the
     Company may also be liable for all costs of remediation of any property
     which it is deemed to be the owner or operator. Various Preliminary
     Environmental (Phase I) Site Assessments have been conducted with respect
     to certain properties owned by various subsidiaries of the Company. Such
     Assessments have identified potential sources of ground contamination.
     Although remediation efforts have been undertaken by the Company, investors
     are strongly urged to carefully review such Assessments which are included
     in the Data.

          (iv) Restrictions Imposed by the Terms of the Company's Indebtedness.
     The terms of the Company's existing indebtedness impose a variety of
     restrictions on the Company's operations including, without limitation,
     limiting the Company's ability to incur additional indebtedness, dispose of
     its assets and extend guarantees. Such restrictions may limit the Company's
     ability to fully exploit business opportunities.  In addition, under the
     terms of its existing indebtedness, the Company may not declare or pay any
     dividend or make any payment for the purchase, redemption or acquisition of
     any shares of Common Stock.  While the Company's receipt of minimum
     Financing Terms not materially less favorable than the terms described
     under the heading "Recent Developments" is a condition to the Offering, the
     Company's management and not an independent third party will determine, in
     its sole reasonable discretion, whether the conditions to the release of
     subscription funds shall have been satisfied. Deviations from financing
     terms described under the heading "Recent Developments" which the Company
     does not in its sole discretion dean material, will not provide a basis for
     a return of subscription funds.

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          (v) Control by Principal Stockholders.  As of March 1, 1992,
     approximately 95% of the Company's outstanding Common Stock was owned by
     HEI. Concurrently with the Offering, HEI, GKH, certain affiliates of HEI
     and various members of the Company's management have been given the
     opportunity to subscribe for this Offering.  It is anticipated that any
     shares not acquired as a result of this Offering will be acquired either by
     HEI or GKH.  As a result of such ownership and certain agreements under the
     Agreement, such persons will have the power to appoint not less than a
     majority of the members of the Company's Board of Directors and thereby
     control the operations, management and policies of the Company.

          (vi) Factors Affecting Projections.  The Company's projected financial
     statements for the years 1992 through 1995 (the "Projections") included in
     the Data were prepared by management of the Company in the ordinary course
     and are based, in part, on assumptions concerning facts and events over
     which the Company will have no control, and which could, if they change,
     produce results significantly different from those set forth in the
     Projections. Furthermore, such assumptions have not been reviewed by an
     independent third party. There can be no assurance that the actual results
     of operations will be comparable to those set forth in the Projections.
     Investors are cautioned against undue reliance on the Projections and are
     strongly urged to carefully scrutinize the assumptions upon which such
     Projections are based.

          (vii)  Guarantee of Funds Used to Acquire Management Stock.  It is a
     condition to the closing of this Offering that an aggregate of $1,000,000
     of the Common Stock will be purchased by certain members of the Company's
     management team. It is anticipated that any such acquisition may be
     financed through certain third party loans, 50% of the principal amount of
     which would be guaranteed by the Company.  Were such officers to default on
     such loans, the Company would be required to repay a portion of such
     amounts pursuant to its guarantee.  The Projections assume that no default
     shall occur with respect to such loans.

          (viii)  Transition of Management.  Prior to October 1991, the
     Company's Chief Executive Officer was William Pollock and its Vice
     President - Financial was Brenda Phillips. Messrs. McGhan and Bedrich, the
     current Chief Executive officer and Chief Financial officer, respectively,
     of the Company, assumed their respective positions in October, 1991 and
     November, 1992.  Although Mr. McGhan served in various capacities for the
     Company since 1990, including as Chief Operating officer thereof, and
     although both Messrs. Bedrich and McGhan have extensive management
     experience generally, Messrs.  McGhan and Bedrich have served only briefly
     in their current respective positions.

     (m) The undersigned acknowledges, and is aware of and understands the
following intended uses for the proceeds of the Offering:

          (i) Approximately $5,000,000 of the proceeds will be used to repay a
     portion of the MH Indebtedness. Such repayment will permit the Company to
     avoid technical

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     defaults of various financial covenants under documents relating to the MH
     Indebtedness and obtain the Minimum Financing Terms.

          (ii) Approximately $1,400,000 of the proceeds will be used to pay
     existing accounts payable of the Company in order to establish the level of
     trade support necessary to maintain the Company's current level of business
     activity as well as projected growth.

          (iii)  Approximately $8,500,000 of the proceeds will be used for
     general corporate purposes, including the purchase of additional natural
     gas compressors, if such purchases are economically justified. While such
     purchases, if any, should allow the Company to capitalize upon economies of
     scale, no assurance can be given that demand for the Company's products and
     services will be sufficient to justify any such acquisitions.

     3.  Irrevocability of this Agreement.  Except as otherwise provided under
applicable law, the Investor agrees that the undersigned shall not cancel,
terminate or revoke this subscription Agreement and that this Subscription
Agreement shall survive the death, incapacity or disability of the Investor.

     4.  Indemnification.  The Investor agrees to indemnify and hold harmless
the Company and anyone acting on his or its behalf from and against all damages,
losses, costs and expenses (including reasonable attorneys' fees) which may be
incurred by reason of the failure of the Investor to fulfill any of the terms
and conditions of this Subscription Agreement, or by reason of any breach of the
representations and warranties made by the Investor herein.

     5.  Miscellaneous.

     (a) Notices to the Company.  All notices or other communications given or
made hereunder shall be in writing and shall be delivered or mailed by
registered or certified mail, return receipt requested, postage prepaid, to the
Investor at his or its address set forth below and to Hanover Compressor
Company, 2911 Turtle Creek Boulevard, Suite 500, Dallas, Texas 75219, Attention:
Curtis Bedrich.

     (b) Effect and Interpretation.  Notwithstanding the place where this
Agreement may be executed by any of the parties hereto, the parties expressly
agree that all terms and provisions hereof shall be construed in accordance with
and governed by the laws of the State of Delaware without regard to the
conflicts of laws provisions thereof.

     (c) Entire Agreement.  This Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof any may be
amended only by a writing executed by all parties. This Agreement, and the
information contained herein expressly supersedes all understandings and
agreements of the parties (other than the Confidentiality Agreement which shall
survive execution hereof to the extent set forth therein), whether written or
oral, between the parties with respect to the subject matter hereof.

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     (d) Successors.  This Subscription Agreement and all the terms and
provisions hereof shall be binding upon and shall inure to the benefit of the
parties hereto, and their respective heirs, legal representatives, successors
and assigns.

     (e) Severability.  In the event any one or more of the provisions contained
herein shall for any reason be held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of this Subscription Agreement, but this Subscription
Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.

     (f) Certain Tax Matters.  Under Sections 1441 and 1442 of the Internal
Revenue Code, as amended, a corporation, partnership, trust or estate must
withhold tax with respect to certain transfers of property if a holder of the
interest in the entity is a foreign person. To inform the Company that no
withholding is required with respect to any distribution upon any shares of
Common Stock, the undersigned hereby certifies as follows: (1) the undersigned
is not a non-resident alien for purposes of U.S. income taxation; (2) his or its
social security number is as set forth on the signature page; and (3) his or its
home address is as set forth an the signature page. The Investor understands
under penalties of perjury that this certification may be disclosed to the
Internal Revenue Service and that any false statement which the Undersigned has
made here could be punished by fine, imprisonment or both.

     The Investor has completed and submitted herewith a Form W-9 relative to
the Investor's taxpayer identification number and other matters and does hereby
represent and warrant that such form is complete, true and correct.

     (g) Counterparts.  This Subscription Agreement may be executed
simultaneously in one or more counterparts each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.

     IN WITNESS WHEREOF, the parties have executed this Subscription Agreement
as of the date first above written.

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                              Residence Address
                          or if an Entity Investor,
                            address of principal          Total
Signature(s)                 executive offices         Subscription
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(If signing in a
representative capacity,
please indicate nature
of such capacity)
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                                                         $
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                                                         $
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                                  Mailing Address          Tax I.D. or Social
Please Print Name(s)              If Different              Security No. (s)
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Date: __________________, 1992.
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Phone:

(1)  Office:______________   Ext. ______
     Home:________________

(2)  Office:______________   Ext. ______
     Home:________________

___  Individual         ____ Joint Tenants with   _____  Corporation
                             Right Survivorship
                             (Both Parties Sign)         Date Formed:

                                                         _____________

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___  Tenants in Common                            _____  Partnership No.
     (Both Parties Sign)                                 of Partners

                                                         _____________
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___  Community Property                           _____  Trust (___ Revocable)
     (Both Parties Sign)                                       (___ Irrevocable)

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                                                  _____  Other (specify)
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                               (Individual Form)

STATE OF        )
                )
COUNTY OF       )

     I, _______________, a Notary Public in and for said County, in the State
aforesaid, do hereby certify that the person whose name is subscribed to above
appeared before me this day in person, and acknowledged and swore that he signed
and delivered the said instrument as his or its respective free and voluntary
act and deed for the uses and purposes therein set forth, and that the
statements contained therein are true.

     Given under my hand and notarial seal as of the ____ day of
________________, 1992.

My commission expires:

__________________________    ________________________________
                              Notary Public

                                 (Entity Form)

STATE OF        )
                )
COUNTY OF       )

     I, ______________________________________, a Notary Public in and for said
County, in the State aforesaid: do hereby certify that the person whose name is
subscribed to above, known to me to be the _____________________ of
____________________________ of (a corporation, partnership, limited
partnership, (other), appeared before me this day in person, and acknowledged
and swore that he signed and delivered the said instruments on behalf of said
entity for the uses and purposes therein set forth, and that the statements
contained therein are true.

     Give under my hand and notarial seal as of the ____________ day of
______________, 1992.

My commission expires:

__________________________    ________________________________
                              Notary Public

                                       12
<PAGE>

                                   ACCEPTANCE

     The undersigned hereby accepts the foregoing subscription this ____ day of
__________, 1992.  This subscription shall not be binding until accepted by
Hanover Compressor Company and shall become effective as of the date of such
acceptance.

                         HANOVER COMPRESSOR COMPANY

                         By: _____________________________________
                         Its: ____________________________________

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<PAGE>

                                    EXHIBIT

                            STOCKHOLDERS' AGREEMENT

     THIS STOCKHOLDERS" AGREEMENT (the "Agreement") is made and entered into as
of _______________________, 1992 by and among HANOVER COMPRESSOR COMPANY, a
Delaware corporation (the "Company"), HANOVER ENERGY INC., a Texas corporation
("HEI"), and the other persons set forth on the signature pages hereof.

     WHEREAS, the Company is authorized to issue 200,000 shares of common stock,
$.01 par value (the "Common Stock") and 100,000 shares of series A preferred
stock, $.01 par value (the "Preferred Stock");

     WHEREAS, the parties hereto are stockholders (the "Stockholders") of the
Company and each owns the number of shares of Common Stock set forth opposite
his name on the signature page;

     WHEREAS, the parties hereto wish to provide for the containment of
ownership of their shares of Common Stock amongst themselves and certain other
persons upon the terms and conditions set forth herein.

     NOW, THEREFORE, in consideration of the mutual covenants herein contained
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto, intending to be legally
bound, hereby agree as follows:

                                  ARTICLE I.

                                  DEFINITIONS

        1.01 Definitions. Except as otherwise herein expressly provided, the
following terms and phrases shall have the meanings set forth below:

                "Affiliate" shall mean any Person who or which, directly or
        indirectly, through one or more intermediaries, controls or is
        controlled by, or is under common control with, any specified Person
        (the term "control" for these purposes meaning the ability, whether by
        ownership of shares or other equity interests, by contract or otherwise,
        to elect a majority of the directors of a corporation, to select the
        managing or general partner of a partnership, or otherwise to select, or
        have the power to remove and then select, a majority of those persons
        exercising governing authority over an entity, and, without limiting the
        generality of the foregoing, shall conclusively be presumed in the case
        of ownership of fifty percent (50%) or more of the equity interests of
        such entity) and their Immediate Family. With respect to any Person
        which is a trust, the term "Affiliate" shall mean the grantor of such
        trust and the Immediate Family of the Person who is the grantor of such
        trust and/or another trust for the benefit of such Person and/or such
        Person's Immediate Family. No Party to this Agreement will be deemed to
        be an Affiliate of another party hereto solely because they are
        Stockholders.

                                       14
<PAGE>

                "Company Notice" shall have the meaning set forth in Section
        3.01 hereof.

                "Company Option" shall have the meaning set forth in Section
        3.02 hereof.

                "Company Option Period" shall have the meaning set forth in
        Section 3.02 hereof.

                "Divorce Transfer" shall mean, as to any Stockholder, the
        execution by such Stockholder of a property settlement agreement, or the
        entry of a final order of a court against such Stockholder from, which
        there is no further right of appeal, in respect of a divorce or
        dissolution of marriage proceeding, the effect of which is to grant
        rights to all or any part of the Shares owned by such Stockholder to any
        Person other than such Stockholder.

                "Fair Market Value" shall mean, with respect to any Shares, that
        price at which parties dealing at arm's length and without any
        compulsion or duress to either purchase or sell such Shares would agree
        to purchase and sell such Shares. In the event that the relevant parties
        are unable to agree as to "Fair Market Value," Fair Market Value shall
        be determined by an appraisal conducted by an appraiser acceptable to
        the relevant parties. Such appraiser shall be experienced in making
        appraisals of businesses or assets similar to those of the Company. Such
        appraisal shall be final and binding upon the parties hereto and the
        cost for such appraisal shall be borne equally by the parties in
        dispute.

                "Immediate Family" shall mean, with respect to any individual,
        the spouse, parents or children of such individual (regardless of
        whether legally adopted or biological).

                "Insolvency" shall mean, with respect to any Person, (a) the
        filing by such Person of any proceeding in bankruptcy or
        reorganization, (b) the making of an assignment for the benefit of
        creditors, (c) the failing to vacate, discharge or dismiss within sixty
        (60) days of its initiation either (i) the filing of a proceeding in
        bankruptcy against such Person or (ii) the appointment of a receiver or
        trustee for all or any part of his or its assets or property or (d) the
        attachment or levy, or attempted attachment or levy, against any Shares.

                "Involuntarily offered shares" shall mean the following:

                        (a) if the offer Event results from the Insolvency or
                death of, or the Unpermitted Transfer or attempted Unpermitted
                Transfer of Shares by, a Stockholder, all of the Shares owned by
                such Stockholder and, to the extent affected by a Permitted
                Transferor's Insolvency, all or such affected portion of such
                Permitted Transfer Shares; and

                        (b) if the Offer Event results from a Divorce Transfer,
                all of the Shares subject to such Divorce Transfer.

                "Legal Representative" shall mean and include any Person
        empowered or entitled to act with respect to the property of any
        Stockholder, including, but not limited to, any executors,
        administrators, trustees or conservators of any insolvent, dissolved,
        deceased or legally incompetent Stockholder.

                                       15
<PAGE>

                "Offer" shall have the meaning set forth in Section 3.01 hereof.

                "Offer Event" shall mean any of the following:

                        (a) the Insolvency of a Stockholder or a Permitted
                Transferor (other than a Significant Stockholder) where, under
                applicable law, such Permitted Transferor's Insolvency affects
                the Permitted Transfer Shares;

                        (b) any Unpermitted Transfer or attempted Unpermitted
                Transfer of Shares by a Stockholder;

                        (c) the death of a natural Stockholder; or

                        (d) a Divorce Transfer relative to Shares.

                "Offer Event Notice" shall have the meaning set forth in Section
        4.01 hereof.

                "Offering Stockholder" shall have the meaning set forth in
        Section 3.01 hereof.

                "Permitted Transfer Shares" shall have the meaning set forth in
        Section 2.02 hereof.

                "Permitted Transferee" shall mean, with respect to any
        Stockholder, (a) an Affiliate of a Stockholder, (b) one or more members
        of such Stockholder's Immediate Family, (c) a trust for the benefit of
        such Stockholder and/or one or more members of such Stockholder's
        Immediate Family and (d) the beneficiary of such Stockholder where such
        Stockholder is a trust or one or more members of such beneficiary's
        Immediate Family.

                "Permitted Transferor" shall mean any Stockholder who transfers
        all or a portion of his or its Shares to a Permitted Transferee pursuant
        to the terms of subsection (a) of Section 2.02 hereof.

                "Person" shall mean any individual, partnership, corporation,
        trust, business association or other entity.

                "Proposed Voluntary Transfer Consideration" shall have the
        meaning set forth in Section 3.01 hereof.

                "Purchase Price" shall have the meaning set forth in Section
        5.01 hereof.

                "Shares" shall mean any or all shares of Common Stock of the
        Company outstanding from time to time and owned by the Stockholders.

                "Significant Stockholder" shall mean any Stockholder which
        directly or through its Affiliates owns greater than fifty percent (50%)
        of the Shares.

                                       16
<PAGE>

                "Stockholder" shall mean each of the parties hereto and any
        Persons to whom such Persons transfer their Shares pursuant to the terms
        hereof or otherwise and who are bound by the provisions hereof.

                "Stockholder Notice" shall have the meaning set forth in Section
        3.02 hereof.

                "Stockholder Option" shall have the meaning set forth in Section
        3.03 hereof.

                "Stockholder Option Period" shall have the meaning set forth in
        Section 3.03 hereof.

                "Third Party Purchaser" shall have the meaning set forth in
        Section 3.06 hereof.

                "Unpermitted Transfer" shall mean any disposition or transfer of
        Shares other than in accordance with the terms and conditions of this
        Agreement.

                "Voluntarily Offered Shares" shall have the meaning set forth in
        Section 3.01 hereof.

                                  ARTICLE II.

                             DISPOSITION OF STOCK

        2.01 Revocation of Earlier Agreements. This Agreement supersedes all
previous agreements made among any of the Stockholders and/or the Company,
whether written or oral, relating to the disposition of, or restrictions on the
disposition of, the Shares; and all such prior agreements are hereby revoked.

        2.02 Restricted Disposition; Exceptions. No Stockholder or his or its
Legal Representative shall, directly or indirectly, voluntarily or
involuntarily, assign, sell, pledge, encumber, give or otherwise transfer,
dispose of or alienate to any Person by whatever means, any Shares now or at any
time hereafter owned by him or it except as follows:

                (a) Each Stockholder shall have the right to transfer all or any
        part of his or its Shares to one or more Permitted Transferees;
        provided, however, that such transferred Shares (the "Permitted Transfer
        Shares") shall remain subject to all of the terms and conditions of this
        Agreement and such Permitted Transferee (s) shall first comply with the
        provisions of Article VIII hereof;

                (b) Each of the Stockholders shall have the right to transfer
        all or a portion of his or its' Shares to any Person subject to the
        restrictions of Article III hereof;

                (c) The Shares of a Stockholder may be transferred subject to
        the restrictions of Article IV hereof; and

                (d) The Shares of a Significant Stockholder, together with the
        Shares of his or its Permitted Transferees, may be transferred without
        restriction hereunder (except for the restriction set forth in Section
        3.05 hereof), but subject to applicable federal and state securities
        laws.

                                       17
<PAGE>

                                 ARTICLE III.

                        OPTION UPON VOLUNTARY TRANSFER

        3.01  Notice of Transfer.  If a Stockholder (other than a Significant
Stockholder, which shall not, except as otherwise expressly set forth herein to
the contrary, be subject to the transfer restrictions set forth in this Article
III, but shall be entitled to participate in any sale or disposition pursuant to
Section 3.05 hereof) receives a bona fide written offer (the "Offer") from a
third party to purchase all or a portion of his or its Shares for cash (the
"Voluntarily offered Shares") and such Stockholder (the "Offering Stockholder")
desires to accept the offer, the Offering Stockholder shall give written notice
to the Company (the "Company Notice") of his or its intention to transfer the
Voluntarily Offered Shares. In addition to stating the intention to transfer the
Voluntarily Offered Shares, the Company Notice shall state (a) the name,
business address and residence address of the proposed transferee, (b) the
amount of the consideration to be paid (the "Proposed Voluntary Transfer
Consideration"), and (c) any material terms of the sale.  The Company Notice
shall not be effective unless accompanied by a copy of the offer.

        3.02 Company Option to Purchase. The Company shall have the option (the
"Company Option"), exercisable within fifteen (15) days of the date that the
Company Notice is deemed given hereunder (the "Company Option Period", to
purchase all or a portion of the Voluntarily Offered Shares upon the terms and
conditions set forth in Article V hereof. In the event that the Company desires
to exercise its Company Option, it shall promptly, but in no event later than
immediately prior to the expiration of the Company option Period, deliver
written notice of the same to the Offering Stockholder stating the number of
Voluntarily Offered Shares that it is willing to purchase pursuant to the
Company Option. In the event that the Company shall not elect to so purchase all
of the Voluntarily offered Shares, the Company shall promptly, but in no event
later than immediately prior to the expiration of the Company Option Period,
deliver written notice (the "Stockholder Notice") to the remaining
Stockholders of the number of Voluntarily Offered Shares that the Company does
not desire to purchase pursuant to the Company Option and a copy of the Company
Notice.

        3.03  Stockholder Option to Purchase.

        (a) In the event that the Company does not elect to purchase all of the
Voluntarily Offered Shares pursuant to the Company Option, each Stockholder
(other than the Offering Stockholder) shall have the option (the "Stockholder
Option"), exercisable within fifteen (15) days of the date that the Stockholder
Notice is deemed given hereunder (the "Stockholder Option Period"), to purchase,
upon the terms and conditions set forth in Article V hereof, that proportion of
the balance of the Voluntarily Offered Shares that equals a fraction, the
numerator of which is equal to the number of shares of stock of the Company
owned by such Stockholder at the time that the Stockholder Notice is deemed
given hereunder and the denominator of which is equal to the total number of
shares then owned by all of the Stockholders other than the Offering
Stockholder. Each Stockholder desiring to exercise his or its Stockholder Option
shall promptly, but in no event later than immediately prior to the expiration
of the Stockholder

                                       18
<PAGE>

Option Period, deliver written notice to the Offering Stockholder stating the
number of Voluntarily Offered Shares that such Stockholder is willing to
purchase pursuant to the Stockholder Option.

        (b) Within five (5) days after the Offering Stockholder has determined
which of the other Stockholders have elected to exercise the Stockholder Option,
the Offering Stockholder shall deliver a notice to each of the other
Stockholders indicating which other Stockholders have elected to purchase their
pro rata share of the Voluntarily Offered Shares and whether any of the other
Stockholders have declined their option to purchase their respective pro rata
share thereof and in the event that one or more other Stockholders have declined
to exercise such Stockholder Option, then the Offering Stockholder shall
pursuant to such notice grant to each Stockholder who or which has so elected to
purchase all of his or its pro rata share of the Voluntarily offered Shares the
additional right and option, but not the obligation, to purchase such amounts of
the remaining Voluntarily Offered Shares as may be mutually agreed upon by or
among such Stockholders, as the case may be, and in the event the Stockholders
are unable to agree as to such amount, each such Stockholder may purchase its
respective pro rata share (determined on a fully diluted basis) with respect to
the number of Shares of the Company held by each other Stockholder who or which
has exercised the Stockholder Option. Any Voluntarily Offered shares remaining
unpurchased under this Section 3.03(b) due to any such Stockholder electing to
purchase less than his or its respective pro rata share of such Voluntarily
Offered Shares may be purchased by the other exercising Stockholder(s) in such
amounts as may be mutually agreed. Each recipient of such additional Stockholder
Option may exercise the same by delivering to the Offering Stockholder written
notice to such effect within five (5) days of the Offering Stockholder's
delivery of notice granting such additional Stockholder Option. A Stockholder's
response to such additional Stockholder Option shall be final, binding and
conclusive as to such Stockholder.

        3.04 Forfeiture of Options. If, at the expiration of the last applicable
option period, the eligible Persons have not elected to purchase all of the
Voluntarily Offered Shares, then and in such event all of the options shall be
deemed to have been unexercised, and the Offering Stockholder shall, subject to
Section 3.05 hereof, have the right to sell all of the Voluntarily offered
Shares to the party named in the Offer so long as (a) such sale is consummated
within sixty (60) days after the expiration of the last applicable option
period; (b) such sale is made strictly upon the terms set forth in the Offer and
none other; and (c) the proposed transferee agrees, in writing, prior to such
transfer, to be bound by the terms of this Agreement.

        3.05 Rights of Inclusion. Notwithstanding anything to the contrary
contained herein, in the event one or more Stockholders propose to sell or
otherwise dispose of more than fifty percent (50%) of the outstanding Shares of
Common Stock pursuant to an Offer and in the event at the expiration of the last
applicable option period eligible Persons have not elected to purchase all of
the Voluntarily Offered Shares (if applicable), then in such event each
Stockholder shall have the right to sell, pursuant to the Offer, the number of
Shares of Common Stock equal to the product of (x) the total number of Shares to
be acquired pursuant to the offer, multiplied by (y) a

                                       19
<PAGE>

fraction, the numerator of which shall be the total number of Shares of Common
Stock owned by such Stockholder, and the denominator of which shall be the total
number of Shares of Common Stock then outstanding; provided that the rights of
inclusion set forth in this Section 3.05 shall be applicable to those Shares of
Common Stock issued pursuant to the exercise of options granted under that
certain Hanover Compressor Company Stock Compensation Plan, including with
respect to those options which become exercisable pursuant to Section 4.1
thereof, on the same terms as are set forth in this Section 3.65. Such sale
shall occur on the terms and conditions set forth in the Offer. Simultaneously
with the consummation of such sale or other disposition of the Shares, the
Offering Stockholder shall remit to each Stockholder electing to sell pursuant
to this Section 3.05, the total sales price of the Shares of Common Stock sold
by such Stockholder and shall furnish such other evidence of completion of such
sale or other disposition and the terms thereof, as may be reasonably requested
by such Stockholder. Absent intentional misconduct or gross negligence on the
part of the offering Stockholder, the offering Stockholder shall have no
liability to any Stockholder with respect to the good faith allocation of
purchase price among Stockholders pursuant to the terms hereof. The right of a
Stockholder to participate in any sale or disposition of Common Stock pursuant
to this Section 3.05 shall be exercisable for a period of ten (10) days
following written notice thereof given by the Offering Stockholder and may be
exercised only by written notice to such effect. In the event any Stockholder
has not given the Offering Stockholder written notice of his or its desire to
participate in such sale within such ten (10) day period, such Stockholder will
be deemed to have waived any and all of his or its rights with respect to such
sale and the Offering Stockholder shall be entitled to sell all of the
Voluntarily Offered Shares to the party named in the offer on the terms set
forth in Section 3.04 hereof.

     The provisions of this Section 3.05 shall not be applicable to any transfer
of Common Stock: (1) to any Permitted Transferee; (2) pursuant to an effective
registration statement under the Securities Act of 1933, as amended, or (3)
pursuant to Rule 144 or Rule 144A or any similar provisions then in effect.

        3.06 Right to Compel Sale. In the event one or more Stockholders owning
more than fifty percent (50%) of the Shares propose to sell or otherwise dispose
of (including by means of a merger or stock-for-stock exchange) all of its or
their respective Shares of Common Stock pursuant to an Offer, then in addition
to the right of the remaining Stockholders to, under certain circumstances,
participate in such sale pursuant to the provisions of Section 3.05 hereof, the
Offering Stockholder may, at its option, require the remaining Stockholders to
sell or otherwise dispose of (and to vote their Shares of Common Stock in favor
of such transaction, to the extent required) all Shares of Common Stock hold by
him or it to the party named in the Offer for the same consideration per Share
and otherwise on the same terms and conditions set forth in the Offer. In the
event the Offering Stockholder elects to compel the sale of Common Stock
pursuant to this Section 3.06, the offering Stockholder shall send written
notice to each of the remaining Stockholders, setting forth the consideration
per Share to be paid and the other terms and conditions of Offer. Within thirty
(30) days following the date such notice is given, each of the remaining
Stockholders shall deliver to the Offering Stockholder certificates evidencing
all Shares of Common Stock held by such Stockholder, duly endorsed in blank,
together with all other documents reasonably required by the offering
Stockholder, in order to consummate such

                                       20
<PAGE>

transaction. In the event that a Stockholder shall fail to deliver such
certificates as required hereunder, the Company is hereby authorized and
directed, and the Company agrees, to immediately thereafter reflect the transfer
on its books of such Shares to the party compelling sale thereof (which party
shall be deemed for all purposes to legally own such Shares as nominee for such
Stockholder with full irrevocable power and authority to vote and dispose of
such Shares) and to remit to such Stockholder his or its respective share of the
total sales price of the Shares sold pursuant to this Section 3.06 as
hereinafter set forth. Thereafter, the Shares held by such Stockholder shall
conclusively be presumed lost and of no value.

     If within 120 days after the Offering Stockholder gives notice of their
intent to compel the disposition of Shares, they have not completed the sale of
all Shares of Common Stock in accordance with the term set forth in such notice,
the Offering Stockholder shall return to each Stockholder, all certificates
evidencing such Shares of Common Stock previously delivered for sale pursuant
hereto, and all of the restrictions contained herein shall continue in effect as
if no such notice had been given.

     Promptly, but in no event later than two (2) business days following the
consummation of any transaction pursuant to this Section 3.06, the Offering
Stockholder shall remit to each of the remaining Stockholders the total sales
price of the Shares of Common Stock sold pursuant to this Section 3.06, and
shall furnish such other evidence of completion as may reasonably be requested
by such Stockholders. Absent intentional misconduct or gross negligence on the
part of the offering Stockholder, such Offering Stockholder shall have no
liability to any other Stockholder with respect to the good faith allocation of
purchase price pursuant to the terms hereof.

                                  ARTICLE IV.

                   OPTION UPON INVOLUNTARY OR OTHER TRANSFER

        4.01 Notice of Offer Event. Promptly, but in no event later than ten
(10) days, after the occurrence of an Offer Event, the Stockholder owning the
Involuntarily offered shares, or his or its Legal Representative, shall give the
Company written notice (the "Offer Event Notice") of the occurrence of the Offer
Event.

        4.02 Options to Purchase in Case of Occurrence of Offer Event. In the
event of an of an Offer Event, the Company and the Stockholders (other than the
affected Stockholder) shall have the same options to purchase the Involuntarily
Offered Shares for the same time periods (commencing on the date that the Offer
Event Notice is deemed given hereunder), in the same relative amounts and,
except as set forth in Article V hereof, upon the same terms as are set forth in
Article III hereof.

        4.03 Forfeiture of Option; Transfer. In the event that the eligible
Persons do not elect to purchase all of the Involuntarily Offered Shares within
the last applicable option period, then all acceptances shall be void and the
following shall occur:

                                       21
<PAGE>

                (a) if the Offer Event results from the Insolvency of a
        Stockholder or the Permitted Transferor thereof, the Involuntarily
        Offered Shares shall be transferred free of the terms of this Agreement;

                (b) if the Offer Event results from an Unpermitted Transfer or
       attempted Unpermitted Transfer, no transfer of the Involuntarily Offered
       Shares shall occur, and the Unpermitted Transfer or attempted Unpermitted
       Transfer of the Involuntarily Offered Shares shall be void for all
       purposes;

                (c) if the offer Event is triggered by the death of a
        Stockholder, the Involuntarily Offered Shares shall be transferred
        pursuant to the terms and conditions of the will, trust instrument or
        laws of intestate succession, as appropriate, but in any event shall
        remain subject to all of the provisions and restrictions of this
        Agreement; and

                (d) if the Offer Event results from a Divorce Transfer, the
        Involuntarily Offered Shares shall be transferred to the transferee
        subject to the provisions and restrictions of this Agreement.

                                  ARTICLE V.

                               TERMS OF PURCHASE

        The terms of a purchase pursuant to Articles III and IV shall be as
follows:

        5.01 Purchase Price. The purchase price (the "Purchase Price") shall be
as follows:

                (a) in the case of any purchase pursuant to Article III hereof,
        the Proposed Voluntary Transfer Consideration;

                (b) in the case of any purchase pursuant to Article IV hereof
        (other than in the case of an Unpermitted Transfer or attempted
        Unpermitted Transfer), the Fair Market Value of the Involuntarily
        Offered Shares; and

                (c) in the case of any purchase following an Unpermitted
        Transfer or attempted Unpermitted Transfer, fifty percent (50%) of the
        Fair Market Value of the Involuntarily offered Shares.

        5.02 Payment. Each purchaser shall pay his proportionate share of the
Purchase Price, payable, in the event of a purchase pursuant to Article III
hereof, on the terms set forth in the Offer. Each purchaser's proportionate
share of the Purchase Price shall equal the proportion which the number of
Shares purchased by him or it bears to the total number of Shares purchased by
all of such purchasers. Each purchaser shall be liable only for his or its
respective proportionate share of the Purchase Price.

        5.03 Time and Place of Closing. The closing shall occur at the principal
office of the Company on the date which is thirty (30) days following the
expiration of the last applicable

                                       22
<PAGE>

option period; provided, however, that in the event that an appraisal is
required pursuant to the terms hereof, the closing shall take place within
fifteen (15) days after the results of such appraisal have been delivered to the
Company or the date set forth above, whichever is later.

                                  ARTICLE VI.

                           DELIVERY OF CERTIFICATES

        If the Shares of any Stockholder are purchased hereunder, the selling
Stockholder (or his or its Legal Representative) shall at closing endorse in
blank and deliver to the purchaser or purchasers all instruments evidencing such
purchased Shares, together with all other documents that may be required in the
sole opinion of the Company's attorneys to effect a complete transfer and
assignment of the Shares so purchased, free and clear of any lien, pledge,
community property rights or encumbrance whatsoever, except as created by the
pledge of the Shares pursuant to the terms of the Pledge Agreement.  If the
selling Stockholder, or his Legal Representative, fails to endorse and deliver
all instruments representing the purchased Shares at closing, the instruments
representing the purchased Shares shall conclusively be presumed lost and of no
value.  The officers of the Company are hereby authorized and directed, and the
Company agrees, to immediately thereafter reflect such transfer in the records
of the Company as of such date and issue new certificates to the purchaser of
such purchased Shares.

                                 ARTICLE VII.

                        ENDORSEMENT ON STOCK CERTIFICATE

        Upon the execution of this Agreement, the certificates evidencing the
Shares shall be surrendered to the Company and endorsed as follows:

        "The shares represented by this certificate have not been registered
        under the Securities Act of 1933, as amended (the "Act"), or any state
        securities laws and may not be sold, transferred or otherwise disposed
        of except in accordance with the Act or laws or an applicable exemption
        therefrom. The sale, transfer, pledge or other disposition of the shares
        evidenced by this certificate is restricted by the terms of that certain
        Stockholders' Agreement dated as of April ____, 1992 by and among
        Hanover Compressor Company (the "Company") and each of the Stockholders
        specified therein, which Stockholders, Agreement may be examined at the
        principal offices of the Company, and any such shares may be sold,
        transferred, pledged or otherwise disposed of only after compliance with
        said Stockholders' Agreement."

        Except for certificates issued as the result of the Insolvency of a
Stockholder or Permitted Transferor (which certificates shall contain only the
first sentence of the foregoing endorsement), and certificates issued after the
termination of this Agreement pursuant to Article X, all

                                       23
<PAGE>

certificates evidencing Shares which are subsequently issued by the Company
shall bear the foregoing endorsement.

                                 ARTICLE VIII.

                             RIGHTS OF TRANSFEREES

        The disposition or transfer of Shares to any transferee pursuant to the
terms hereof (other than Shares transferred pursuant to an Offer Event resulting
from the Insolvency of a Stockholder or the Permitted Transferor thereof) shall
not be deemed to have been fully consummated until such time as the transferee
executes and delivers to the Company and each of the remaining Stockholders a
signed counterpart of this Agreement. Until this Agreement is executed and
delivered as herein provided, the transferee shall not be deemed to be a
Stockholder of the Company for any purpose.

                                  ARTICLE IX.

                    SPECIFIC PERFORMANCE; INJUNCTIVE RELIEF

     Any Person against whom enforcement of this Agreement is sought hereby
declares that it is difficult to measure in money the damages which will occur
to a party hereto or a Legal Representative by reason of a failure to perform
any of the obligations under this Agreement, including, but not limited to, the
failure to transfer Shares to a purchasing Stockholder and the attempted
transfer of Shares to a Person in contravention of the terms of this Agreement.
Therefore, notwithstanding' any other provision of this Agreement, the parties
hereto hereby waive any claim or defense to an action to enforce the provisions
hereof or to enjoin the breach hereof of the nature that the party instituting
such action or proceeding has adequate remedy at law. Any Person against whom
such relief is sought also hereby agrees to waive any requirement that the party
instituting such action furnish a bond of any type.

                                  ARTICLE X.

                                     TERM

        10.01 TERM. This Agreement shall commence on the date hereof and shall
continue until terminated upon the occurrence of any of the following events:

                (a)  dissolution of the Company;

                (b) the voluntary agreement, in writing, of all of the
        Stockholders;

                (c) the consummation of a publicly registered offering of any
        equity or convertible debt securities of the Company; and

                                       24
<PAGE>

                (d) whenever there is only one surviving Stockholder and all
        obligations of such Stockholder and the estates of deceased
        Stockholders, one to the other, have been satisfied.

        10.02 Termination. Upon termination of this Agreement, the Company
shall, upon surrender to it by the Stockholders of the certificates representing
the outstanding Shares then held by the Stockholders, issue to the Stockholders
new certificates for an equal number of Shares but without the endorsement set
forth in Article VII hereof.

                                  ARTICLE XI.

                     VOTING OF SHARES; NO PREEMPTIVE RIGHTS

        11.01 Voting of Shares. Each Stockholder shall vote his or its Shares of
Common Stock at any regular or special meeting of Stockholders or in connection
with any written consent executed in lieu of such meeting and shall take all
action necessary to ensure that the Certificate of Incorporation and By-Laws of
the Company do not at any time, conflict with the provisions of this Agreement.

        11.02 No Preemptive Rights. No Stockholder shall by reason of his or its
holding of the Shares have any preemptive or preferential rights to purchase or
subscribe to any shares of any class of the Company's stock, whether now or
hereafter authorized, or any notes, debentures, bonds or other securities
convertible into or carrying options or warrants to purchase shares of any class
of the Company's stock now or hereafter authorized, whether or not the issuance
of any such shares, notes, debentures, bonds or other securities, would
adversely affect the dividend or voting rights of the Stockholders.

                                 ARTICLE XII.

                                 MISCELLANEOUS

        12.01 Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application
thereof to any party or circumstance shall be prohibited by or invalid under
applicable law, such provision shall be ineffective to the minimal extent of
such prohibition or invalidity without invalidating the remainder of such
provision or the remaining provisions of this Agreement or the application
circumstances.

        12.02 Governing Law. This Agreement shall be construed under the laws of
the State of Delaware (without regard to Delaware conflicts of law principles).

        12.03 Counterparts. This Agreement may be executed in several
counterparts, each of which when so executed may be deemed to be an original.

                                       25
<PAGE>

        12.04 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Stockholders and their respective heirs, executors,
Legal Representatives and permitted assigns.

        12.05 Notices. All notices required to be given under the terms of this
Agreement or which any of the parties may desire to give hereunder shall be in
writing and shall be deemed given upon personal delivery or three (3) days after
deposit in the United States mail, registered or certified, postage prepaid,
addressed to the party to be notified at the following address or at such other
address as the party to be notified may, from time to time in writing, furnish
to the other parties in the manner provided in this Section:

     If to a Stockholder or      At the last known address of the
     his or its Legal            Stockholder shown on the records
     Representative:             of the Company

     If to HEI or the Company:  2911 Turtle Creek Boulevard
                                Suite 500
                                Dallas, Texas  75219
                                Attn:  Curtis Bedrich

     with a copy to:            Neal Gerber & Eisenberg
                                Two North LasSalle Street
                                Suite 2200
                                Chicago, Illinois  60602
                                Attn:  Richard S. Meller, Esq.

        12.06 Pronouns, Singular and Plural. Where the context so requires, the
singular shall include the plural and the plural the singular; and all pronouns
shall include the masculine, feminine and neuter.

        12.07 Headings. The headings, titles and subtitles herein are inserted
for convenience of reference only and are to be ignored in any construction of
the provisions hereof.

        12.08 Amendments. Subject to Section 12.12 hereof, no amendments or
additions to this Agreement shall be binding unless in writing and signed by all
the parties hereto.

        12.09 Third Party Beneficiaries. Nothing contained herein shall confer
any right or claim upon, or otherwise inure to the benefit of, any third party.

        12.10 Entire Agreement. This Agreement constitutes the entire agreement
of the parties in respect of the within subject matter and supersedes all other
prior agreements, oral or written, with respect to the same.

        12.11 Capacity and Authority. Each party hereby represents and warrants
that he or it has full power, capacity and authority to enter into this
Agreement and that his or its doing so is

                                       26
<PAGE>

not in violation of any contract or agreement, whether written or oral, to which
he or it is a party or by which he or it is bound and will not violate or
interfere with the rights of any other Person.

        12.12 Additional Stockholders. Additional Persons may become parties to
this Agreement at any time and from time to time without the consent of the
other Stockholders at such time, provided that the Company approves the same by
executing the signature page in respect of such new party.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first above written.

COMPANY:                        STOCKHOLDERS:
-------                         ------------

HANOVER COMPRESSOR COMPANY,     HEI
                                ---
 a Delaware corporation
                                HANOVER ENERGY INC.,
                                a Texas corporation

By: _______________________     By: _____________________________
     Its: _________________         Its: ________________________

                                Number of Shares:________

                                Additional Stockholders:

                                _________________________________

                                Number of Shares:________________

                                _________________________________

                                Number of Shares:________________

                                       27<PAGE>

                                                                    EXHIBIT 4.11

================================================================================

Dated:  March 21, 1996

                       CONFIDENTIAL OFFERING MEMORANDUM

                          HANOVER COMPRESSOR COMPANY

              Up to 1,111 shares of Common Stock, $.001 par value

                           $1,800 Minimum Investment

================================================================================

          All of the 1,111 shares (the "Shares") of common stock, $.001 par
value (the "Common Stock"), offered hereby are being sold by Hanover Compressor
Company, a Delaware corporation (the "Company").  The Shares are being offered
only to certain employees of the Company and its subsidiaries and are offered
together with options to purchase shares of Common Stock which will be granted
to investors.  See "The Offering."

          There has been no public market for the Common Stock, and no such
public market is anticipated to exist in the foreseeable future.  See
"Determination of Offering Price" for a discussion of the factors considered in
determining the offering price.

          See "Risk Factors" for a discussion of certain factors that should be
considered in evaluating an investment in the Common Stock.

        THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
                SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
               SECURITIES COMMISSION, NOR HAS THE SECURITIES AND
                  EXCHANGE COMMISSION OR ANY STATE SECURITIES
                    COMMISSION PASSED UPON THE ACCURACY OR
                     ADEQUACY OF THIS OFFERING MEMORANDUM.
                           ANY REPRESENTATION TO THE
                        CONTRARY IS A CRIMINAL OFFENSE.

================================================================================
                                                Fees and       Proceeds to the
                         Offering Price (1)  Commissions (2)     Company (2)
--------------------------------------------------------------------------------
Per Share.................   $    1,800          $0.00            $    1,800
--------------------------------------------------------------------------------
Maximum Total.............   $1,999,800          $0.00            $1,999,800
================================================================================

(1)  Payable in cash upon subscription (except for shares to be purchased with
     proceeds of loans made by the Company).  The minimum purchase per investor
     is one Share (for a total of $1,800), not including Shares purchased with
     the proceeds of four year loans to be made by the Company, and the maximum
     aggregate purchase by all investors is 1,111 Shares (for a total of
     $1,999,800), including Shares purchased with the proceeds of four year
     loans to be made by the Company.  See "The Offering."

(2)  The Shares are being offered directly by the Company which will pay no
     commissions but will utilize a portion of the proceeds to pay legal,
     accounting and other expenses of the offering estimated to be $25,000.

THIS OFFERING MEMORANDUM CONSTITUTES AN OFFER ONLY IF A NAME APPEARS IN THE
SPACE BELOW MARKED "NAME OF OFFEREE" AND CONSTITUTES AN OFFER ONLY TO SUCH NAMED
OFFEREE.

Name of Offeree:                                      Memorandum Number:

             THESE SECURITIES INVOLVE A SIGNIFICANT DEGREE OF RISK
<PAGE>

                        ______________________________

          THIS MEMORANDUM IS SUBMITTED IN CONNECTION WITH THE OFFERING OF THESE
SECURITIES PURSUANT TO SECTION 4(2) OF THE SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), REGULATION D AND/OR SECTION 701 PROMULGATED UNDER THE
SECURITIES ACT AND PURSUANT TO AVAILABLE EXEMPTIONS UNDER STATE SECURITIES LAWS,
AND MAY NOT BE REPRODUCED OR USED FOR ANY OTHER PURPOSE.  ANY ACTION CONTRARY TO
THESE RESTRICTIONS MAY INVOLVE A VIOLATION OF CERTAIN FEDERAL OR STATE
SECURITIES LAWS.

                        ______________________________

          THE COMPANY HAS AGREED TO MAKE AVAILABLE, PRIOR TO THE CONSUMMATION OF
THE TRANSACTIONS CONTEMPLATED HEREIN, TO EACH OFFEREE OF COMMON STOCK OR HIS
REPRESENTATIVE(S) OR BOTH, THE OPPORTUNITY TO ASK QUESTIONS OF, AND RECEIVE
ANSWERS FROM IT OR ANY PERSON ACTING ON ITS BEHALF CONCERNING THE TERMS AND
CONDITIONS OF THIS OFFERING, AND TO OBTAIN ANY ADDITIONAL INFORMATION, TO THE
EXTENT IT POSSESSES SUCH INFORMATION OR CAN ACQUIRE IT WITHOUT UNREASONABLE
EFFORT OR EXPENSE, NECESSARY TO VERIFY THE ACCURACY OF THE INFORMATION SET FORTH
HEREIN.

                        ______________________________

          PROSPECTIVE INVESTORS ARE NOT TO CONSTRUE THE CONTENTS OF THIS
MEMORANDUM OR ANY PRIOR OR SUBSEQUENT COMMUNICATION FROM THE COMPANY, ITS
AFFILIATES, DIRECTORS, OFFICERS AND EMPLOYEES OR ANY PROFESSIONAL ASSOCIATED
WITH THIS OFFERING AS LEGAL OR TAX ADVICE.  EACH INVESTOR SHOULD CONSULT HIS OWN
PERSONAL COUNSEL, ACCOUNTANT AND OTHER ADVISERS AS TO LEGAL, TAX, ECONOMIC AND
RELATED MATTERS CONCERNING THE INVESTMENT DESCRIBED HEREIN AND ITS SUITABILITY
FOR HIM.

                        ______________________________

          NO DISTRIBUTION OF THIS MEMORANDUM IN WHOLE OR IN PART, OR THE
DISCLOSURE OF ANY OF ITS CONTENTS, IS PERMITTED UNLESS AUTHORIZED.  EXCEPT FOR
INFORMATION CONTAINED HEREIN OR AUTHORIZED BY THE COMPANY, NO OFFERING
LITERATURE OR ADVERTISING IN WHATEVER FORM SHALL BE EMPLOYED IN THE OFFERING OF
THE SHARES.  NO PERSON HAS BEEN AUTHORIZED TO MAKE REPRESENTATIONS, OR GIVE ANY
INFORMATION,

                                     -ii-
<PAGE>

WITH RESPECT TO THE SHARES, EXCEPT THE INFORMATION CONTAINED HEREIN AND IN THE
SUMMARY OF THE OFFERING PREPARED BY THE COMPANY.

                        ______________________________

          INVESTMENT IN THE COMMON STOCK IS SUITABLE ONLY FOR INVESTORS WHO MEET
THE SUITABILITY STANDARDS DESCRIBED UNDER "THE OFFERING -- SUITABILITY."

                        ______________________________

          THE COMMON STOCK OFFERED HEREBY MAY NOT BE TRANSFERRED IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT OR AN EXEMPTION FROM REGISTRATION.

                        ______________________________

          THIS MEMORANDUM DOES NOT CONSTITUTE AN OFFER OR SOLICITATION TO ANYONE
IN ANY STATE OR IN ANY OTHER JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION
IS NOT AUTHORIZED.

                        ______________________________

          THE COMPANY WILL NOT BE REQUIRED TO DELIVER AN ANNUAL REPORT TO
STOCKHOLDERS PURSUANT TO THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED.
HOWEVER, THE COMPANY INTENDS TO FURNISH ITS STOCKHOLDERS ANNUALLY WITH A COPY OF
THE COMPANY'S AUDITED FINANCIAL STATEMENTS.

                        ______________________________

FOR LOUISIANA RESIDENTS ONLY:

          THE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OR THE
LOUISIANA SECURITIES LAWS.  THE SHARES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY
NOT BE SOLD OR TRANSFERRED FOR VALUE IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
OF THEM UNDER THE SECURITIES ACT AND/OR THE LOUISIANA SECURITIES LAWS OR AN
OPINION OF COUNSEL TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED UNDER
SUCH ACT OR LAWS.

                        ______________________________

FOR TEXAS RESIDENTS ONLY:

                                     -iii-
<PAGE>

          THE SHARES HAVE NOT BEEN REGISTERED UNDER THE TEXAS SECURITIES ACT, AS
AMENDED (THE "TEXAS ACT"), AND ARE OFFERED AND SOLD PURSUANT TO AN EXEMPTION
THEREFROM.  THE SHARES CANNOT BE SOLD OR TRANSFERRED EXCEPT IN A TRANSACTION
WHICH IS EXEMPT UNDER THE TEXAS ACT, OR PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE TEXAS ACT OR IN A TRANSACTION WHICH IS OTHERWISE IN
COMPLIANCE WITH THE TEXAS ACT.

                        ______________________________

          THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON TRANSFERABILITY AND
RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT AS PERMITTED UNDER THE
SECURITIES ACT AND THE APPLICABLE STATE SECURITIES LAWS, PURSUANT TO
REGISTRATION OR EXEMPTION THEREFROM.  INVESTORS SHOULD BE AWARE THAT THEY MAY BE
REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD
OF TIME.

                                     -iv-
<PAGE>

                       CONFIDENTIAL OFFERING MEMORANDUM
                          HANOVER COMPRESSOR COMPANY

                               TABLE OF CONTENTS
                               -----------------

<TABLE>
<CAPTION>
                                                                PAGE
                                                                ----
<S>                                                             <C>
SUMMARY OF THE OFFERING.........................................   1

THE COMPANY.....................................................   1

THE OFFERING....................................................   1

FEDERAL INCOME TAX CONSEQUENCES.................................  10

RISK FACTORS....................................................  13

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS...........................................  13

DETERMINATION OF OFFERING PRICE.................................  21

PLAN OF OFFERING................................................  21

USE OF PROCEEDS.................................................  23

DILUTION........................................................  23

CAPITALIZATION..................................................  25

DIVIDEND POLICY.................................................  26

SELECTED FINANCIAL INFORMATION..................................  26

BUSINESS........................................................  31

MANAGEMENT......................................................  42

PRINCIPAL STOCKHOLDERS..........................................  52

DESCRIPTION OF CERTAIN INDEBTEDNESS.............................  58

DESCRIPTION OF CAPITAL STOCK....................................  59

ADDITIONAL INFORMATION..........................................  63
</TABLE>

                                     -v-
<PAGE>

                   [THIS PAGE WAS INTENTIONALLY LEFT BLANK]

                                     -vi-
<PAGE>

EXHIBITS:
---------
Exhibit A   -   Subscription Agreement
Exhibit B   -   Stockholders' Agreement
Exhibit C   -   Form of Loan Agreement
Exhibit D   -   Form of Four Year Note
Exhibit E   -   Form of Pledge Agreement
Exhibit F   -   Form of 1996 Employee Stock Option Plan
Exhibit G   -   Form of Option Agreement under 1996 Employee Stock Option Plan
Exhibit H   -   Letter Agreement Relating to the Stockholders' Agreement

                                     -vii-
<PAGE>

                            SUMMARY OF THE OFFERING

          The following summary is qualified in its entirety by the more
detailed information appearing elsewhere in this Offering Memorandum and the
Exhibits attached hereto.  Prospective investors of the Shares should carefully
consider the factors set forth under "Risk Factors."

                                  The Company

          The Company was organized in October 1990 for the purpose of
acquiring, manufacturing, selling, leasing, maintaining and refurbishing
compressors utilized by the natural gas industry.  For a more detailed
description of the Company's business, see "Business."

                                 The Offering

Shares of Common Stock offered:     1,111 including Shares to be acquired for
                                    cash out of the subscribing offeree's own
                                    funds or by delivery of a four year note,
                                    but not including shares which may be
                                    acquired pursuant to options granted under
                                    the Employee Option Plan. See "The
                                    Offering."

Shares of Common Stock outstanding  129,525.53 not including (i) shares
 after the offering:                issuable upon exercise of options and (ii)
                                    198.40 shares of Common Stock which are held
                                    by the Company as treasury shares.

Use of Proceeds:                    All of the net proceeds of this offering
                                    will be used for general corporate purposes,
                                    including working capital.

          The Company reserves the right to withdraw this offering and return
all subscriptions or modify this offering at any time during the term of this
offering.  Subscriptions for Shares may be accepted or rejected by the Company
in its sole discretion.  All cash received by the Company in respect of
subscriptions for the Shares (the "Funds") shall be promptly deposited in an
interest bearing, segregated account and such Funds may be invested in treasury
bills or other cash equivalents, as determined in the sole and absolute
discretion of the Company.  If acceptable subscriptions for a minimum aggregate
of one Share is received by the Company on or before March 28, 1996 or such
later date as the Company in its sole discretion may determine without consent
of or notice to the offerees, but in no event later than May 31, 1996 (the
"Termination Date"), all subscriptions will be transferred from the segregated
bank account to the Company, together with all interest, if any, earned thereon.
The minimum subscription per subscribing offeree is one Share (not including any
Shares to be acquired pursuant to a four year loan made by the Company) for an
aggregate of $1,800; however, the Company, in its sole discretion, may accept
subscriptions for a lesser number of Shares, subject to applicable

                                      -1-
<PAGE>

securities laws. In the event all conditions have not been satisfied in full
prior to the Termination Date or the Company withdraws this offering, this
offering will be terminated and all Funds will be returned to subscribing
offerees with a pro rata share of interest earned thereon, if any, calculated on
the basis of the amount of Funds invested by each subscribing offeree and the
length of time interest on such Funds was earned. See "Plan of Offering."

                         Summary Financial Information

          See "Selected Financial Information" for a summary of certain relevant
financial information.

                                 Risk Factors

          For a discussion of certain factors that should be considered in
evaluating an investment in the Shares, including, among others, (i) the
Company's limited operating history, (ii) the short terms of compressor leases
and the possible inability of the Company to re-lease its compressors, (iii)
competition, (iv) factors regarding the natural gas compressor leasing industry,
(v) potential liability and insurance, (vi) environmental liability risks, (vii)
governmental regulation, (viii) restrictions imposed by the terms of the
Company's indebtedness and the effect of a default thereunder, (ix) dependence
upon internally generated funds (x) limited preemptive rights, (xi) no public
market for the Common Stock and restrictions on transferability, (xii)
dividends, (xiii) control by principal stockholders, (xiv) capital demands due
to recent expansion activity, (xv) dilution and (xvi) Federal income task risks,
see "Risk Factors."

                                      -2-
<PAGE>

                                  THE COMPANY

          Hanover Compressor Company is a corporation organized under the laws
of the State of Delaware.  The principal executive office of the Company is
located at 12001 North Houston Rosslyn, Houston, Texas 77086, and the Company's
telephone number is (713) 447-8787.

                                 THE OFFERING

          This offering is made only to certain employees of the Company and its
subsidiaries for the purpose of providing such persons with the opportunity to
obtain an equity interest in the Company.  The Company reserves the right to
withdraw this offering and return all subscriptions or make non-material
modifications to the offering at any time during the term of the offering.  All
Funds shall be promptly deposited in an interest bearing, segregated account and
such Funds may be invested in treasury bills or other cash equivalents, as
determined in the sole and absolute discretion of the Company.  Funds deposited
in the segregated account may not be withdrawn by subscribers unless the
offering terminates as described herein.  The deposit of Funds in such account
does not constitute acceptance of all or any portion of any offeree's
subscription by the Company.

General

          Subject to adjustment for over-subscription, each offeree may
subscribe to purchase for cash as many of the Shares as such offeree may desire.
Upon such subscription, the Company will, at the request and option of each
subscribing offeree, loan (the "Four Year Loan") such subscribing offeree
sufficient funds, on a full recourse and secured basis, to purchase two
additional Shares (all such Shares hereinafter the "Loan Shares") for each Share
subscribed for hereunder for cash (the "Cash Shares").  See "The Four Year
Loan."  For each Share acquired by a subscribing offeree hereunder, the Company
will grant such subscribing offeree an option to purchase one-third of one share
of Common Stock pursuant to the terms of the 1996 Employee Stock Option Plan,
substantially in the form attached hereto as Exhibit F (the "Employee Option
Plan").  The exercise price for such options will be $1,800 per share (subject
to adjustment for stock splits, stock dividends and other similar events as
described in the Employee Option Plan).  See "Options -- Employee Option Plan."

          Offerees who desire to subscribe for Shares will be required to (i)
become parties to the Amended and Restated Stockholders' Agreement of Hanover
Compressor Company attached hereto as Exhibit B (the "Stockholders' Agreement")
and (ii) execute a letter agreement regarding the application of Section 3.5(d)
of the Stockholders' Agreement (the "Letter Agreement").  The Stockholders'
Agreement restricts the sale of Common Stock held by the parties thereto and
provides for, among other things, (i) the right of Investors (as hereinafter
defined) to participate in a sale by GKH Partners, L.P., a Delaware limited
partnership

                                      -3-
<PAGE>

("Partners"), and GKH Investments, L.P., a Delaware limited partnership
(together with Partners, "GKH"), of at least 50% of the Common Stock owned by
GKH, (ii) the right of GKH to require all Investors to sell their stock in
certain transactions for the same consideration to be received by GKH and (iii)
the right of the Company or its affiliates to purchase all of an Investor's
Common Stock upon the termination of such Investor's employment with the Company
and its subsidiaries and affiliates. The purchase price for such stock varies
depending on the circumstances and, in cases where an Investor is terminated for
cause or voluntarily terminates his employment without good reason (each as more
fully defined in the Stockholders' Agreement), such purchase price may be
substantially below the fair market value of such Common Stock. See
"Stockholders' Agreement."

          The maximum aggregate number of shares which may be subscribed for
pursuant to this offering is 1,111, which number does not include any shares of
Common Stock to be issued upon exercise of options granted under the Employee
Option Plan. If the offerees subscribe for more than such number of shares of
Common Stock, each offeree's subscription will be reduced proportionately based
on the relationship between the number of shares subscribed for by such offeree
and the aggregate number of shares subscribed for by all offerees.

          For information regarding the method of subscribing for Shares, see
"Plan of Offering" and the Subscription Agreement attached hereto as Exhibit A
(the "Subscription Agreement").

Suitability

          Investment in the Shares offered hereby involves a significant degree
of risk.  See "Risk Factors."  This offering is a private offering made only by
delivery of a copy of this Offering Memorandum to the employee of the Company or
its subsidiaries whose name appears hereon.  The Shares have not been registered
under the Securities Act, or any applicable state securities laws.  The Shares
are being offered pursuant to one or more exemptions from the registration
requirements of the Securities Act, including the exemption afforded by Section
4(2) thereof, Regulation D and/or Section 701 promulgated thereunder, and
pursuant to available exemptions under state securities laws, only to certain
employees for investment only.  Each person who subscribes for Shares and whose
subscription is accepted by the Company (each an "Investor," collectively, the
"Investors") will be required to represent that he is acquiring the Shares for
his own account, for investment, and without any intention of making a
distribution or resale thereof, either in whole or in part.  The Shares may not
be resold or transferred except in accordance with the provisions of the
Securities Act, the rules and regulations thereunder, any applicable state
securities laws and the terms and conditions of the Stockholders' Agreement.  As
a result of the foregoing, investment in the Shares is suitable only for persons
of adequate financial means apart from their investment in the Shares, and who
have no need for liquidity with respect to such investment.

                                      -4-
<PAGE>

          Offerees who desire to subscribe for Shares should read and discuss
with their advisors this Offering Memorandum, the Subscription Agreement, the
Stockholders' Agreement, the Letter Agreement, the Loan Agreement (as defined
below), the Four Year Note (as defined below), the Pledge Agreement (as defined
below), the Employee Option Plan and the other documents relative to the
foregoing regarding the appropriateness of an investment in the Shares.  The
desirability of an investment in the Common Stock depends upon a number of
factors including, among others, (i) the factors set forth under the caption
"Risk Factors," (ii) the nature of the Company's business, (iii) the possibility
of a decline in value of the Common Stock, (iv) the various restrictions on
transferability of the Common Stock, including those contained in the
Stockholders' Agreement, and the present essential illiquidity of the
investment, (v) the desirability to the offeree of a long-term investment, (vi)
the likelihood that the Company will not pay dividends on the Common Stock in
the foreseeable future and the likelihood of restrictions imposed on the
Company's ability to pay dividends under the terms of the agreements governing
the Company's senior secured indebtedness and the Series A and Series B
Preferred Stock (as defined below), (vii) the control of the Company by its
principal stockholders, (viii) the relationship between such offeree's
investment (including the investment pursuant to the Four Year Loan) and such
offeree's net worth, (ix) the employment goals of the offeree and the right of
the Company to purchase such offeree's Common Stock upon the termination of his
employment with the Company, in some instances at a purchase price equal to or
less than the offeree's cost thereof, even if such cost is less than the fair
market value of the Common Stock, and (x) other relevant personal circumstances
of each offeree.

The Four Year Loan

          Each Investor may, but is not required to, request from the Company a
Four Year Loan to purchase the Loan Shares.  Inasmuch as the Four Year Loan will
be made on a full recourse and secured basis, each Investor should consider
carefully the additional risk that he or she will undertake by obtaining the
Four Year Loan to purchase Shares.

          The Four Year Loan will bear interest at the prime rate as announced
from time to time by Chemical Bank ("Prime Rate"), will be made pursuant to a
loan agreement substantially in the form of Exhibit C hereto (the "Loan
Agreement"), evidenced by a secured promissory note substantially in the form of
Exhibit D hereto (the "Four Year Note").  Any amount of principal and/or accrued
interest on the Four Year Note which is not paid when due will bear interest at
the Prime Rate plus 2%, except that upon the failure to make the required
payments following (i) the sale of Common Stock or receipt by the Investor of
dividends on Common Stock, (ii) termination for Cause (as defined below) and
(iii) voluntary termination without Good Reason (as defined below), the
outstanding principal and accrued and unpaid interest will bear interest at 15%
per annum, compounded monthly, or the highest rate of interest allowable under
applicable law, whichever is less.  Interest on the Four Year Note will be
payable in cash annually on December 31 (each an "Interest Payment Date") to the
extent of 66.7% of the accrued interest to such date (the "Minimum Interest
Payment"), and all accrued interest which is not paid as of an Interest

                                      -5-
<PAGE>

Payment Date will be automatically added to the principal amount of the Four
Year Note. Each Minimum Interest Payment must be paid to the extent of bonus
payments, if any, less an allowance equal to 33.3% of such bonus payment for
federal and state income tax (the "Net Bonus"), paid to the Investor by the
Company on or before each Interest Payment Date (including amounts paid in such
calendar year which relate to a previous calendar year and were not taken into
consideration in such prior calendar year), provided that nothing herein or in
the Loan Agreement or the Four Year Note shall create any obligation on the part
of the Company to pay any bonus. In the event the Net Bonus is insufficient to
pay the Minimum Interest Payment, the Investor shall be required to pay the
difference between such Net Bonus and the Minimum Interest Payment. The Company
will have the right to withhold from the Investor all or any portion of a Net
Bonus payable by the Investor in respect of interest under the Four Year Loan,
which amounts will be deemed to have been paid to the Investor and subsequently
repaid by the Investor to the Company. All principal and accrued and unpaid
interest will be due upon maturity, which will be 48 months from the date of the
Loan Agreement, provided that such date may be accelerated upon the occurrence
of an Event of Default (as defined below) or under other circumstances more
fully described in the Loan Agreement and the Four Year Note.

          The Four Year Note will be secured by a pledge of (i) all of the
shares and rights to acquire shares of Common Stock owned by the Investor as of
the date of the Four Year Loan, or which are acquired by the Investor subsequent
to the date of the Four Year Loan and (ii) all proceeds received by an Investor
thereon, including dividends and additional shares received in stock
distributions, all as more fully set forth in the pledge agreement attached
hereto as Exhibit E (the "Pledge Agreement").  The Four Year Note will provide
for mandatory prepayment upon and to the extent of dividends or other
distributions paid to the Investor on the Common Stock and proceeds from the
sale of the Common Stock, and upon termination of the Investor's employment by
the Investor without Good Reason (as defined below) or by the Company for Cause
(as defined below).

          The Four Year Note, the Loan Agreement, the Pledge Agreement and any
other documents that are executed in connection therewith (collectively, the
"Loan Documents") will be assignable by the Company to any of its affiliates,
including GKH, or to any third party financial institution or commercial lender
to which the Company is or becomes indebted.  The Loan Documents cannot be
assigned by an Investor without the Company's prior written consent.

          "Cause," when capitalized and with reference to the termination of the
Investor's employment with the Company, means (i) the commission 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 (or a plea of nolo contendere in
lieu thereof) for a felony or a crime involving fraud, dishonesty or moral
turpitude, (iii) willful misconduct as an employee of the Company, (iv) the
willful failure to render services to the Company in accordance with such
Investor's employment, which failure

                                      -6-
<PAGE>

amounts to a material neglect of his duties to the Company or (v) substantial
dependence, as determined by the Board of Directors of the Company (the
"Board"), on alcohol or any controlled substance.

          "Good Reason," when capitalized, means, with reference to the
voluntary termination of the Investor's employment with the Company by the
Investor, where such termination (i) promptly follows a material reduction of
such Investor's duties and responsibilities or a permanent change in such
Investor's duties and responsibilities which are materially inconsistent with
the type of duties and responsibilities of such Investor then in effect, (ii)
promptly follows a material reduction in annual base salary (without regard to
bonus compensation, if any), (iii) promptly follows a material reduction in such
Investor's employee benefits (without regard to bonus compensation, if any) if
such reduction results in such Investor receiving benefits which are, in the
aggregate, materially less than the benefits received by other comparable
employees of the Company generally or (iv) the Board otherwise determines that a
voluntary termination by such Investor is for "Good Reason" under the
circumstances then prevailing.

          An "Event of Default", when capitalized and with reference to the Four
Year Loan includes, without limitation, (i) the failure to pay principal or
interest when due, which failure has continued for 10 days after written notice
from the Company, (ii) any representation or warranty contained in the Loan
Documents or the Subscription Agreement being incorrect in any material respect
on or as of the date made or deemed made, (iii) the default with respect to any
covenant contained in the Loan Documents, which default is not curable by the
Investor or, if curable, has continued uncured for 10 days after written notice
from the Company, (iv) the failure of the Investor to make any payment when due
under, or other default of the Investor which permits acceleration of, any other
material indebtedness of the Investor and (v) the occurrence of certain
bankruptcy-related events with respect to the Investor which continue for 60
days or are otherwise consented to by the Investor.

Options

Employee Option Plan

          For each share of Common Stock acquired by an Investor hereunder, the
Company will grant such Investor an option to purchase one-third of one share of
Common Stock (subject to adjustment for stock splits, stock dividends and other
similar events as described in the Employee Option Plan) at a purchase price of
$1,800 per share.  Such options will vest ratably over a five year period
beginning on the first anniversary of the Employee Option Plan (subject to (i)
acceleration upon termination of employment due to death or permanent disability
and upon the occurrence of a Capital Event (as defined in the Employee Option
Plan) and (ii) forfeiture upon termination for Cause) and be governed by the
terms of the Employee Option Plan and individual option agreements (the
"Employee Option Agreements")

                                      -7-
<PAGE>

between the Company and each Investor, forms of which are attached hereto as
Exhibits F and G, respectively. The term of the options will be 10 years,
subject to a limited exercise period for vested options in the event of the
termination of employment of the Investor (other than for Cause). An option may
not be exercised during any period in which the Investor is in default under the
terms of any loan or other obligation that the Investor may have to the Company.
The shares of Common Stock acquired upon exercise of the options will be subject
to the terms of the Stockholders' Agreement, as amended by the Letter Agreement.
Options may not be transferred other than by will or the laws of descent and
distribution, and during the lifetime of an Investor, such options may be
exercised only by the Investor. The options granted under the Employee Option
Plan are nonstatutory options and are not intended to qualify as "incentive
stock options" under Section 422 of the Internal Revenue Code of 1986, as
amended (the "Code"), and each Investor should consult his tax advisors for
information regarding the tax treatment of such options.

          Pursuant to the Employee Option Agreements, each Investor will agree
that he will not during the term of such agreement and for a period of one year
thereafter, (i) compete with any business of the Company or its subsidiaries or
affiliates and (ii) without the Company's express written consent, disclose to
persons outside the Company confidential information concerning the Company or
any of its subsidiaries or affiliates.

Stockholders' Agreement and Letter Agreement

          As a condition to the acceptance by the Company of a subscribing
offeree's subscription for Shares, such subscribing offeree is required to
become a party to the Stockholders' Agreement and to execute the Letter
Agreement.  The Letter Agreement provides that certain obligations of the
Company which arise upon an Investor's voluntary termination of employment from
the Company without Good Reason are determined by reference to the date of the
Subscription Agreement rather than August 7, 1995, the date of the Stockholders'
Agreement.  The summary of the Stockholders' Agreement set forth below is not
intended to be a complete recitation of the provisions thereof, and each offeree
should read and understand all the provisions of the Stockholders' Agreement and
the Letter Agreement before making a determination whether to invest in the
Shares.

Restrictions on Transfer

          The Stockholders' Agreement contains substantial restrictions on the
disposition of an Investor's Common Stock.  In general, an Investor will be
permitted to transfer some or all shares of his Common Stock to affiliates,
including certain relatives and controlled entities, provided each affiliate
agrees to be bound by the terms of the Stockholders' Agreement.  An Investor
will also be permitted to transfer all (but not less than all) of his shares of
Common Stock to a bona fide third party purchaser if such purchaser agrees to be
bound by the terms of the Stockholders' Agreement, but only after such Common
Stock is offered first to the Company

                                      -8-
<PAGE>

and then to GKH on the same terms as offered to the bona fide third party
purchaser. The Investor will be required to comply with certain mechanical
provisions regarding such transfer, including (i) timely notice to the Company
and GKH of any proposed transfer and (ii) consummation of any transfer within a
specified period.

Rights to Compel Disposition

          GKH will have the right to compel each Investor to dispose of all of
his shares of Common Stock and make certain representations with respect to his
ownership of such Common Stock in the event GKH seeks to sell all, but not less
than all, of its Common Stock.  If GKH exercises its right to compel the
disposition of the Investors' Common Stock, the consideration for such Common
Stock will be the same per share consideration on the same terms to be received
by GKH for its shares of Common Stock.

Rights of Inclusion

          Each Investor will have the right to sell his Common Stock on the same
terms as GKH in a transaction pursuant to which GKH sells at least 50% of the
Common Stock of the Company then owned by GKH.  Investors who desire to
participate in such sale will be required to deliver notice on a timely basis
and comply with other mechanical provisions in connection with such transfer.

Preemptive Rights

          Although Delaware law does not generally provide for preemptive
rights, in the event the Company offers an existing stockholder who is party to
the Stockholders' Agreement the opportunity to purchase additional shares of
Common Stock, the other parties to the Stockholders' Agreement will have the
right to acquire their respective pro rata share of such Common Stock on the
same terms and conditions offered to such stockholder, except that such right
shall not apply to (i) shares issuable in connection with a merger, acquisition
or similar transaction, (ii) shares issuable upon the exercise of any options,
warrants or other convertible securities, (iii) shares offered by the Company to
employees and directors of the Company or (iv) shares issuable in connection
with preemptive rights granted to other stockholders of the Company in
connection with a merger, acquisition or similar transaction, or in connection
with the issuance by the Company of its Series B Preferred Stock.

Transfers upon Termination

          The Company will have the right to purchase all of the Common Stock of
an Investor in the event such Investor ceases to be an employee of the Company
or any of its subsidiaries or affiliates.  The purchase price for such Common
Stock will be (i) in the event such Investor's employment is terminated for
Cause, the lower of the Investor's cost for his Common Stock on a share by share
basis and 80% of fair market value thereof, (ii) in the event

                                      -9-
<PAGE>

such employment is voluntarily terminated without Good Reason, the lower of cost
and fair market value and (iii) in the event such Investor's employment is
terminated by death, retirement, permanent disability, without Cause or
voluntarily with Good Reason, the fair market value of such Common Stock. The
purchase price for such Common Stock will be payable (a) in cash (and/or by the
delivery of a term note with the shortest term permissible if required by any
agreement to which the Company is then subject) if such Investor's employment is
terminated with Good Reason or upon death, retirement, permanent disability or
without Cause, or voluntarily without Good Reason more than three years after
the date of the Subscription Agreement, and (b) by delivery of a seven year term
note if such employment is terminated for Cause, or voluntarily without Good
Reason on or prior to the third anniversary of the Subscription Agreement. Any
note delivered in connection with the foregoing will bear interest, payable
annually, at the Prime Rate.

          Cost, fair market value, retirement, permanent disability and
voluntary termination are each defined in the Stockholders' Agreement.

                        FEDERAL INCOME TAX CONSEQUENCES

          THE DISCUSSION SET FORTH BELOW PROVIDES GENERAL INFORMATION AS TO
CERTAIN ANTICIPATED FEDERAL INCOME TAX CONSEQUENCES ASSOCIATED WITH SUBSCRIPTION
FOR THE SHARES AND OPTIONS HEREUNDER.  EACH INVESTOR SHOULD CONSULT HIS TAX
ADVISOR AS TO THE SPECIFIC TAX CONSEQUENCES OF HIS SUBSCRIPTION, INCLUDING THE
APPLICATION OF POSSIBLE STATE AND  LOCAL TAX LAWS.

Restricted Stock

          Code Section 83 governs transfers of property to persons (whether
employees or independent contractors) in exchange for services.  Under that
section, a person receiving property as compensation for services must report
(as compensation income) the excess of the fair market value of the property
received over the amount paid in exchange therefor (such excess referred to
herein as "In-Kind Compensation").

          In determining when a recipient of In-Kind Compensation must report
income attributable thereto, Code Section 83(a) provides that the value of such
In-Kind Compensation (without regard to any restriction other than a restriction
which by its terms will never lapse) is includible in the recipient's income at
the first time that the recipient's rights in the property are substantially
vested.  For such purposes, property is considered to be substantially vested
when it is either (a) transferable or (b) not subject to a substantial risk of
forfeiture.  A substantial risk of forfeiture is generally considered to exist
when the recipient's rights to the property are predicated upon the future
performance of services or upon the occurrence of a condition related

                                     -10-
<PAGE>

to the transfer. Further, an interest in restricted property is transferable
only if the subsequent transferee's rights in the property are not subject to a
substantial risk of forfeiture.

          Alternatively, Code Section 83(b) provides each recipient of In-Kind
Compensation the ability to include such amounts in income in the year in which
he receives them, rather than the year in which the In-Kind Compensation becomes
substantially vested.  Under that section, a taxpayer may elect, within 30 days
of the transfer of property, to include in income the value of any In-Kind
Compensation (as determined without regard to the restrictions thereon).
Taxpayers who include In-Kind Compensation in income under Code Section 83(b)
but later forfeit the property received are denied a deduction for any portion
of the In-Kind Compensation reported by the taxpayer.

          Once includible in the income of the recipient, In-Kind Compensation
is considered payment of wages subject to withholding of income tax and deposits
pursuant to the Federal Insurance Contributions Act (FICA).  Upon the subsequent
sale of the transferred stock or other property, the taxpayer will recognize
income to the extent that the amounts realized on sale exceed the sum of (a) the
amount includible in his income under Code Section 83 and (b) the amount paid
for the property.

          Offerees who desire to subscribe for Shares will be required to become
parties to the Stockholders' Agreement.  Pursuant to the Stockholders'
Agreement, each Investor may be required, in the event his employment terminates
for Cause or without Good Reason, to sell his Shares back to the Company for an
amount equal to the lower of (a) cost or (b) a percentage (either 100% or 80%)
of fair market value.  Any transferee of an Investor may be required to sell the
transferred Shares to the Company upon similar terms in the event that the
Investor's employment is terminated for Cause or without Good Reason.  Such
restrictions lapse with respect to any Investor on the earliest to occur of (a)
the Investor's death, retirement, permanent disability, or involuntary
termination of employment without Cause, (b) the Investor's voluntary
termination of employment with Good Reason, or (c) the failure of the Company to
exercise its rights to purchase the Investor's Shares in a timely fashion
following the termination of his employment for Cause or without Good Reason
(each such event referred to as a "Lapse Event").  See "The
Offering -- Stockholders' Agreement."

          The Company believes that, in light of various provisions of the
Stockholders' Agreement, each Investor subscribing for Shares hereunder will
acquire such Shares subject to a substantial risk of forfeiture.  Further, the
Company believes that the Shares subscribed for hereunder are not transferable
within the meaning of Code Section 83.  As such, to the extent that the fair
market value of any Share exceeds the amount paid therefor, no Investor should
be required to include in income the In-Kind Compensation attributable thereto
until the restrictions lapse at the occurrence of a Lapse Event.  Nevertheless,
any Investor may elect, under Code Section 83(b), to include the value of the
In-Kind Compensation in the year in which he purchases Shares pursuant to this
Offering.

                                     -11-
<PAGE>

Stock Options

          Taxpayers receiving compensatory, nonstatutory stock options (i.e.,
options other than "qualified options" taxable under Code Section 421) generally
do not recognize income as a result of the grant of such options.  Unless the
granted options have a readily ascertainable fair market value within the
meaning of Code Section 83 as of the date of grant, the taxpayer realizes income
only on the date he exercises or disposes of such options.  At that time, he
realizes compensation income equal to the difference between the market value of
the stock and the price paid to acquire and exercise the option.  However, where
the optionee's rights in the property transferred pursuant to the exercise of
such option are not substantially vested (within the meaning of Code Section
83), the optionee does not realize income until the first time that his rights
in that property become substantially vested.  See "-- Restricted Stock."

          When an option is not regularly traded on an established market, it
does not have a readily ascertainable market value unless its value can be
determined with "reasonable accuracy."  For such purposes, the value of an
option cannot be determined with reasonable accuracy unless all of the following
conditions exist:

          (i)    The option is transferable;

          (ii)   The option is exercisable immediately in full;

          (iii)  The option is not subject to any restriction or condition which
                 has a significant effect upon its value; and

          (iv)   The value of the option privilege is readily ascertainable.

          For each Share acquired by an Investor hereunder, the Company will
grant such Investor an option to purchase one-third of one share of Common Stock
(subject to certain adjustments) at a purchase price of $1,800 per share.  Such
options will vest ratably over a five-year period commencing on the first
anniversary of the Employee Option Plan, will be nontransferable (except by will
or the laws of descent and distribution) and, during the life of the Investor,
may be exercised solely by the Investor.  See "The Offering -- Options --
Employee Option Plan."  Once exercised, the shares of Common Stock acquired
pursuant to such exercise will become subject to the Stockholders' Agreement, as
amended by the Letter Agreement, including its restrictions and repurchase
rights vested in the Company.  The options will not be actively traded on an
established market as of the date the Company grants them.

          The Company believes that, since the options are neither exercisable
immediately in full nor transferable (except at death), the value of options may
not be determined with reasonable accuracy.  As the options should not have a
readily ascertainable market value within the meaning of Code Section 83, the
Company believes that they should not be compensation income to the optionee on
the date of grant (notwithstanding that their value may later become

                                     -12-
<PAGE>

readily ascertainable). Further, since the property acquired pursuant to the
exercise of such options (i.e., shares of Common Stock) will be subject to the
Stockholders' Agreement, the Company believes that an Investor exercising an
option granted hereunder will acquire property in which his rights are not
substantially vested within the meaning of Code Section 83. Accordingly, the
Company believes that an Investor should not have compensation income until the
date that the restrictions on the Common Stock acquired pursuant to such
exercise lapse (i.e., at the occurrence of a Lapse Event under the Stockholders'
Agreement). At that time, the Investor should recognize compensation income in
an amount equal to the excess of the market value of the stock as of such date
over the price paid to exercise and acquire the applicable option. Any Investor
may, however, choose to accelerate the recognition of income to the date he
exercises an option provided he makes the election under Code Section 83(b).

                                 RISK FACTORS

          Investors should consider the specific factors set forth below as well
as the other information set forth in this Offering Memorandum.  The following
is not necessarily a comprehensive list of all of the possible risk factors
associated with an investment in the Common Stock.

Limited Operating History

          The Company's products are well-established in the marketplace, and
the Company has experienced net profits in four of its five full fiscal years of
operation.  However, there can be no assurance that the Company will remain
profitable in the future.  See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

Short Lease Terms; Possible Inability to Re-lease Compressors

          The Company has historically leased its compressors under leases with
an average fixed term of approximately six months and which continue thereafter
on a month to month basis.  Historically, lessees have renewed their leases on a
month to month basis for an average period of approximately 24 months.  Based on
the average cost of new compressors and the average lease price, the Company
generally does not recoup its investment in the compressors until after its
receipt of at least 48 months of lease payments.  Accordingly, the Company
assumes substantial risk of not recovering its entire investment in the
equipment it purchases.  Although the Company has historically been successful
in re-leasing units in its inventory, there can be no assurance that the Company
will continue to be able to do so or that a substantial portion of its lessees
will not terminate their leases at approximately the same time, thereby causing
an adverse accumulation of unleased compressors in the Company's inventory.  The
inability of the Company to lease a substantial portion of its compressors for
any reason would have a material adverse effect upon the Company's financial
condition and its results of operations.  See "Business."

                                     -13-
<PAGE>

Competition

          The natural gas compression industry and the oil and gas production
equipment business are highly competitive.  The Company competes with several
large national and international companies which, like the Company, offer a wide
range of compressors and oil and gas production equipment for purchase or lease.
There can be no assurance that such competitors will not substantially increase
the resources devoted to the development and marketing of products competitive
with those of the Company or that new competitors will not enter the industry.
See "Business -- Competition."

Natural Gas Compressor Industry Considerations

          The Company's profitability is, in part, dependent upon the current
demand for natural gas.  Natural gas demand, aided by competitive pricing and
interstate pipeline deregulation, has increased at a rate of approximately 2-3%
per year from 1986 through 1994.  The Company's management estimates that demand
for gas compression has increased approximately 6-10% per year during this time
frame.  This increase is a result of increased production from lower reservoir-
pressured areas and the increased amount of coal-seam and tight-gas drilling in
certain geographic areas.

          Depressed natural gas prices tend to decrease efforts to discover and
develop new natural gas reserves domestically.  This places greater reliance
upon older, developed reserves which requires additional compression to deliver
the remaining natural gas to market.  A significant decline in the price of
natural gas could result in the widespread failure of independent producers and
increased pricing pressure and credit risk for compressor rental companies.
This would have a material adverse effect on the Company's financial condition
and results of operations.  See "Business."

Potential Liability and Insurance

          Natural gas operations are subject to certain risks, including
explosions, uncontrollable flows of gas or well fluids, fires, pollution and
other environmental risks.  These risks could expose the Company to substantial
liability for injury and loss of life, property damage, pollution and other
environmental damages, and consequential damages, if such damages resulted from
an alleged compressor defect or from the Company's negligence in maintaining,
servicing or refurbishing its compressors.

          Although the Company has obtained certain insurance, no assurance can
be given that such insurance is adequate to cover the Company's operations, will
be generally available in the future or, if available, that premiums will be
commercially justifiable.  If the Company were to incur a substantial liability
and such damages were not covered by insurance or were in excess of policy
limits, or if the Company were to incur such liability at a time when it is no
longer able

                                     -14-
<PAGE>

to obtain liability insurance, its financial condition could be materially
adversely affected. The Company, consistent with industry trends, may find it
difficult to obtain adequate insurance coverage against possible liabilities
that may be incurred in connection with the conduct of its business. There can
be no assurance that all possible types of liabilities that may be incurred by
the Company will be covered by its insurance or that the dollar amount of such
liabilities will not exceed the Company's policy limits. A partially or
completely uninsured claim, if successful and of sufficient magnitude, could
have a material adverse effect on the Company and its financial condition.

Environmental Liability Risks

          In addition to liability which may arise as a result of an alleged
compressor defect or alleged Company negligence, if environmental damage is
found to have occurred as a result of the Company's operating activities, the
Company could incur substantial liability. In such event, the Company could be
liable for all costs of remediation, as well as certain other costs. Under the
Comprehensive Response, Compensation and Liability Act ("CERCLA"), the Company
may also be liable for all costs of remediation of any property of which it is
deemed to be the owner or operator. Various Preliminary Environmental (Phase I)
Site Assessments were conducted in 1990 and 1991 with respect to certain
properties owned or operated by the Company and its subsidiaries. Such
assessments identified potential sources of ground contamination. Although
remediation efforts have been undertaken by the previous owners, no assurances
can be given that such remediation efforts will be successful or that the
Company will not incur costs in remediating such contamination or discover
additional sources of enumerated contamination. In addition, pursuant to the HPC
Merger (as defined below), the Company acquired certain potential environmental
liabilities estimated at December 31, 1995 to be between $139,000 and $200,000.
See "Business -- Company History" for a description of the HPC Merger.

          As a result of the Company's acquisition of Astra Resources
Compression, Inc. ("Astra"), the Company, through a wholly owned subsidiary,
indirectly owns a 17 acre parcel of land which includes a lagoon at Astra's East
Bernard, Texas facility, formerly the site of a solid waste landfill.  The
Company has been indemnified by Astra's former parent for any environmental
liability associated with the landfill in excess of $250,000 and has the right
to "put" the property to Astra's former parent for $150,000 under certain
circumstances.

          In June 1993, a Phase I and Phase II Environmental Assessment was
conducted on the Company's 20 acre headquarters/fabrication facility in Houston,
which Assessment indicated that such site has minimal apparent risk with respect
to environmental liability. In addition, the company maintains a professionally
designed Spill Prevention Control and Countermeasure Plan (the "SPCC Plan") with
respect to its Fort Smith, Arkansas maintenance facility, which is designed to
prevent oil spills and waste releases and to describe protocols for immediate
coordination of necessary activities to minimize any harmful effects should a
spill or other release occur. Although the Fort Smith facility does not
routinely generate hazardous waste, the

                                     -15-
<PAGE>

SPCC Plan includes waste release measures given that during an oil spill event,
certain characteristic hazardous waste from spill residue may be generated.
Moreover, the Company is currently implementing a Site Remediation and Clean Up
Proposal regarding real property located in Columbus, Texas with respect to
which the Company acquired a lease and purchase option pursuant to the February
1995 acquisition by the Company of substantially all of the assets of Smith
Industries, Incorporated. See "Business -- Company History."

Governmental Regulation

          The Company is subject to various federal, state and local laws and
regulatory standards in the areas of safety, health and the environment,
including regulations regarding emission controls.  The Company believes that it
is in substantial compliance with such laws and regulations and that the phasing
in of emission controls and other known standards at the rate currently
contemplated by such laws and regulations will not have a material adverse
effect on the Company's financial condition or results of operations.  However,
various state and federal agencies from time to time consider adopting new laws
and regulations or amending existing laws and regulations regarding
environmental protection.  While the Company may be able to pass on the
additional costs of complying with such laws, there can be no assurances that
attempts to do so would be successful.  Accordingly, new laws or regulations or
amendments to existing laws or regulations could require the Company to
undertake significant capital expenditures and could otherwise have a material
adverse effect on the Company's financial condition and results of operations.

Restrictions Imposed by the Terms of the Company's Indebtedness; Effect of
Default

          The terms of the Company's existing credit agreement dated December
19, 1995 (the "Bank Credit Agreement") among the Company, Chemical Bank, as
agent, and the other banks party thereto and the loan agreement dated as of
December 19, 1995 (the "JEDI Loan Agreement") among the Company, Joint Energy
Development Investments Limited Partnership ("JEDI") as agent and the financial
institutions named therein impose a variety of restrictions on the Company's
operations, including, without limitation, limiting the Company's ability to
incur additional indebtedness, grant or suffer liens or other encumbrances on
its property, make investments, loans or advances except under certain
enumerated circumstances, make capital expenditures above specified levels,
enter into sale/leaseback arrangements as a seller/lessee, dispose of its assets
or extend guarantees.  Such restrictions may limit the Company's ability to
exploit fully certain business opportunities.  In addition, under the terms of
the Bank Credit Agreement and the JEDI Loan Agreement, the Company may not
declare or pay any dividend on or make any payment for the purchase, redemption
or acquisition of any shares of Common Stock other than repurchases of Common
Stock from employees of the Company which do not exceed an aggregate of
$2,500,000.  In addition, the failure of the Company to maintain certain
financial ratios may cause the Company to be in default under the agreements
governing its

                                     -16-
<PAGE>

indebtedness and such default, if uncured, may ultimately entitle its creditors
to foreclose on all of the assets of the Company. See "Description of Certain
Indebtedness."

Dependence on Internally Generated Funds; Capital Needs

          The compressor leasing business and the oil and gas production
equipment business in which the Company is involved are capital intensive
businesses, and the inability of the Company to continue to have access to
sufficient capital could have a material adverse effect on the Company's ability
to finance compressor purchases and production equipment materials purchases
and, thus, maintain its future leasing revenues and profitability.  Company
growth has historically been financed through (i) sales of Common Stock,
including the sale of approximately $15,000,000 of Common Stock to certain
executive officers and then existing stockholders of the Company in 1992 (the
"1992 Offering"), the sale of approximately $2,500,000 of Common Stock to
certain members of the Company's management in 1993 (the "1993 Offering"), the
sale of approximately $16,000,000 of Common Stock to GKH in 1993, the sale of
$275,000 of Common Stock to certain employees of the Company at $1,100 per share
in 1995 (the "1995 Management Offering"), the sale of $2,590,500 of Common Stock
to certain employees of the Company at $1,500 per share in 1995 (the "1995
Employee Offering"), the sale of $20,000,000 of Common Stock and $10,000,000 of
Series B Preferred Stock to JEDI in 1995 and the sale of $21,602,000 of Series A
Prepared Stock to GKH, other existing investors in the Company and certain
others in 1995, (ii) internally generated funds, (iii) borrowings under the Bank
Credit Agreement, which provides for a revolving credit facility with a
commitment of $90,000,000 and borrowings under the JEDI Loan Agreement, which
provides for a revolving credit facility with a commitment of $100,000,000 and
(iv) a merger involving the acquisition of all of the outstanding shares of
Astra in exchange for cash consideration and 30,556 shares of Common Stock
issued to Astra's parent (the "Astra Merger").

          In addition, although the Company believes that it will have
sufficient capital resources based on internally generated funds, the amounts
available under the Bank Credit Agreement and the JEDI Loan Agreement and other
potential placements of equity to fund its anticipated capital needs for at
least the next several years, there can be no assurance that the Company will
meet its projected earnings and that sufficient cash flow will be generated.
Failure to generate sufficient cash flow together with the absence of
alternative sources of capital could have a material adverse effect on the
financial condition, operations and expected growth of the Company.  See
"Management's Discussion of and Analysis of Financial Condition and Results of
Operations."

Limited Preemptive Rights

          Although Delaware law does not generally provide for preemptive
rights, in the event the Company offers any party to the Stockholders' Agreement
the opportunity to purchase additional shares of Common Stock, all other parties
to the Stockholders' Agreement will have

                                     -17-
<PAGE>

the right to acquire their respective pro rata share of such Common Stock on the
same terms and conditions offered to such other stockholder, except that such
right shall not apply to (i) shares issuable in connection with a merger,
acquisition or similar transaction, (ii) shares issuable upon the exercise of
any options, warrants or other convertible securities or (iii) shares offered by
the Company to employees of the Company. See "The Offering -- Stockholders'
Agreement -- Preemptive Rights" and "Description of Capital Stock." JEDI has the
right with respect to certain equity offerings of the Company to existing
Company stockholders (each a "Rights Offering") to (a) subscribe for the first
fifteen percent of such Rights Offering on an exclusive basis, and (b) subscribe
for its pro rata share of the remaining equity under the Rights Offering in the
event the Company offers additional shares in exchange for capital required to
satisfy certain covenants under the JEDI Credit Agreement. Astra Resources also
has a preemptive right to subscribe for shares of Common Stock sufficient for it
to maintain ownership of at least 20% of the outstanding Common Stock subject to
a specified threshold. In addition, in the event the Company sells or otherwise
issues any shares of Common Stock to GKH, the non-GKH parties to the Gale Force
Stockholders' Agreement (as defined below) will have the right to acquire their
respective pro rata amount of Common Stock on the same terms and conditions as
such Common Stock is sold or otherwise issued to GKH. See "Principal
Stockholders -- Stockholders' Agreements -- Gale Force Stockholders' Agreement,"
"-JEDI Stockholders' Agreement" and -"Astra Stockholders' Agreement".

No Public Market for Common Stock; Restriction on Transferability

          Each subscribing offeree will be required to represent that he is
purchasing the Shares for investment purposes for his own account and not with a
view towards resale or distribution.  There is no public market for the Shares
and an Investor's ability to transfer his Common Stock will be significantly
restricted by the terms of the Stockholders' Agreement.  In addition, the
Stockholders' Agreement (i) gives GKH the right to cause all Investors to sell
their Common Stock in certain transactions and (ii) gives the Company or certain
of its affiliates the right, but not the obligation, to purchase all of the
Common Stock of an Investor upon the termination of such Investor's employment
with the Company. The purchase price for such stock varies depending on the
circumstances and, in cases where an Investor is terminated for Cause or
voluntarily terminates his employment without Good Reason, such purchase price
may be substantially below the fair market value of such Common Stock.  See "The
Offering -- Stockholders' Agreement."  Any potential Investor must be able and
willing to bear the risk of his investment for an indefinite period.

Dividends

          The Company has never paid cash dividends on its Common Stock and does
not anticipate paying any cash dividends in the foreseeable future.  In
addition, the ability of the Company to pay dividends will be limited by the
terms of the Bank Credit Agreement, the JEDI

                                     -18-
<PAGE>

Loan Agreement, the Series A Preferred Stock and the Series B Preferred Stock.
See "Description of Certain Indebtedness," and "Certain Contemplated
Transactions."

Control by Principal Stockholders

          As of December 31, 1995, approximately 51.7% of the Company's
outstanding Common Stock (not including shares issuable pursuant to existing
option programs) was owned by GKH.  Subsequent to this offering, GKH will
continue to own a majority of the Common Stock of the Company and by virtue of a
voting trust with certain members of management, will control a majority, on a
fully diluted basis, of the Common Stock.  By maintaining such majority control,
GKH will continue to have the power to determine the policies of the Company and
its subsidiaries, the persons constituting the directors and officers thereof
(subject to the terms of (i) the Gale Force Stockholders' Agreement, (ii) the
Hanna Stockholders' Agreement, (iii) the HEHC Stockholders' Agreement, (iv) the
Astra Stockholders' Agreement and (v) the Stockholders' Agreement) and the
outcome of various corporate actions requiring stockholder approval (subject to
the terms of the HEHC Stockholders' Agreement).  See "Principal Stockholders --
Stockholders' Agreements" for a description of these agreements.

Recent Expansion Activity

          The Company recently acquired Astra thereby increasing its compressor
fleet by 12% and its work force by 10%.  (See "Business -- Company History").
Through its acquisition of the production equipment business of Smith
Industries, Incorporated (the "Smith Business;" See "Business -- Company
History"), the Company substantially expanded its oil and gas production
equipment fabrication operations.  The Company is now in the process of
integrating both of these acquisitions into its current operations.  Given the
size of the acquisitions, there can be no assurance that the integration will be
successful or that additional capital will not be required to operate the
Company's oil and gas production equipment business or the compressor business.

          As of September 8, 1995, HCC (through its wholly owned subsidiary
H.C.C. Compressor de Venezuela, C.A.) acquired 100% of the issued and
outstanding stock of Proyecto Gas Natural P.G.N., C.A., a Venezuelan corporation
("PGN"), from Walter Rode and Luis Zubillaga in exchange for cash, assumption of
certain liabilities of PGN and 104.6667 shares of Common Stock (to Mr. Rode
only).  PGN is an owner and lessor of natural gas compression equipment in
Venezuela and provides natural gas compression services under contract to
Corpoven, S.A. and Bitumenes Orinoco, S.A. BITOR, both of which are
instrumentalities of the Venezuelan government.  Mr. Rode continues to be
employed by HCC (or its affiliates) in connection with the operations of PGN.

          In addition, the Company has also made certain other acquisitions,
which management believes will enhance the Company's competitive position in the
natural gas

                                     -19-
<PAGE>

compression industry, which is generally experiencing a considerable amount of
consolidation. See "Business -- Company History." However, there can be no
assurance that such acquisitions will effect the desired results.

Dilution

          Assuming all of the Shares are issued, the value of the Shares
purchased pursuant to this offering will be subject to immediate dilution in the
net tangible book value of $546.79 per Share from the adjusted net tangible book
value as of December 31, 1995.

Federal Income Tax Risks

          The following discussion summarizes certain federal income tax risks
associated with an investment in the Shares and the exercise of options acquired
therewith, and should be read in conjunction with "Federal Income Tax
Consequences."  As the following does not purport to be a complete discussion of
all relevant tax issues, prospective investors should consult their own tax
advisors for advice regarding the impact of a subscription for Shares and
options upon their individual tax positions, including the application of state
and local income tax law, if any.

Treatment of Compensation Income; Receipt of Shares

          No assurance can be given that the Internal Revenue Service ("IRS")
will consider the provisions of the Stockholders' Agreement to be sufficient to
render Shares subscribed for hereunder to be nontransferable and each Investor's
rights therein to be subject to a substantial risk of forfeiture within the
meaning of Code Section 83.  Further, no assurance can be given that a court of
competent jurisdiction would agree with the conclusions of the Company.  In the
event that the IRS considers the provisions of the Stockholders' Agreement to be
insufficient for such purpose, it may consider each Investor to have
compensation income (as of the date he acquires Shares) in an amount equal to
the difference between the fair market value of such Shares and the Investor's
purchase price.  Each Investor may thus be required to pay federal income and
FICA tax on such income, plus interest and penalties as applicable.  Further,
the Company may be required to pay federal unemployment and other taxes on the
compensation deemed to be transferred to each Investor, plus interest and
penalties as applicable, which tax may indirectly effect the value of each
Investor's Shares.

Treatment of Compensation Income; Receipt of Options

          No assurance can be given that the IRS (or any court) will agree that
an Investor acquiring Common Stock pursuant to the exercise of any option is
subject to a substantial risk of forfeiture with respect to such Stock and such
Stock is nontransferable under Section 83 of the Code.  As such, an Investor
exercising options granted hereunder may realize compensation income at the date
he exercises an option in an amount equal to the difference between the fair

                                     -20-
<PAGE>

market value of the Common Stock on that date over the price paid to exercise
and acquire the applicable option.  An Investor may thus be required to pay
federal income and FICA tax (and interest and penalties, as applicable) with
respect to such compensation income.  Similarly, the Company may be required to
pay federal unemployment and other taxes (including penalties and interest)
which payment may indirectly effect the value of each Investor's Common Stock.

Election under Code Section 83(b)

          Any Investor may make an election to include amounts in income on the
date he acquires shares of Common Stock (whether at subscription for Shares or
upon the exercise of any option granted hereunder).  Electing Investors will
thus not recognize additional compensation income upon the occurrence of a Lapse
Event under the Stockholders' Agreement.  However, since each electing Investor
accelerates the recognition of income from the time at which the Company
believes it would otherwise be first recognizable (i.e., the date of any Lapse
Event), each electing Investor must bear certain market risks associated with
the value of his Shares.  If the value of an electing Investor's Shares does not
exceed the value of such Shares on the date that the Investor acquired them,
such electing Investor will have included amounts in income which would not have
otherwise have been includible had he not made the election under Code Section
83(b).  Such electing Investor will not be entitled to deduct any amounts
attributable to that income acceleration.

          Further, in the event that an electing Investor is required to sell
Shares of Common Stock back to the Company (e.g., pursuant to the exercise of
the Company's rights to repurchase such Shares in the Stockholders' Agreement),
that Investor will not be allowed any deduction for any portion of the basis in
such Shares that he acquired as a result of a Section 83(b) election.

                        DETERMINATION OF OFFERING PRICE

          The offering price of $1,800 per Share was determined solely by the
Board based on a number of factors, including the date of the Company's hiring
of the offerees and a comparison of the Company's 1994 and 1995 financial
performance to the financial performance and corresponding per share market
multiples of a select group of public companies involved in the natural gas
compressor leasing and fabrication and energy services industries.  By virtue of
the nature of this offering, the offering price was not determined pursuant to
arm's length negotiations with a third party, and there can be no assurance that
such price is indicative of the fair market value of the Shares.  However, the
Company's recent issuances of shares of Common Stock to each of JEDI on August
7, 1995 and Astra Resources on October 3, 1995 were effected at $1,800 per
share.  See "Business -- Company History."

                               PLAN OF OFFERING

                                     -21-
<PAGE>

          The minimum purchase per subscribing offeree is one Share (excluding
Shares to be acquired by delivery of a Four Year Note) for a minimum aggregate
purchase price of $1,800.  The minimum aggregate purchase for all Investors is
one Share (excluding Shares to be purchased by delivery of a Four Year Note) for
a minimum aggregate purchase price of $1,800.  The Company reserves the right
(i) to reject any subscription for any reason and (ii) to make non-material
modifications to or terminate this offering at any time for any reason.

          Each offeree who desires to subscribe for Shares must (i) on or before
Thursday, March 28, 1996, call Curtis Bedrich (at 713-447-8787) to communicate
the number of Cash Shares and Loan Shares for which such offeree desires to
subscribe and (ii) on or prior to Thursday, April 11, 1996, execute and return
to the Company, c/o Curtis Bedrich, (a) one copy and one extra signature page of
the Subscription Agreement included herewith (including Schedule A attached
thereto), (b) one copy and one extra signature page of the Stockholders'
Agreement included herewith (including the spousal consent, if applicable) and
(c) one copy and one extra signature page of the Letter Agreement included
herewith.

          Upon oral confirmation of the number and type of Shares subscribed for
by a subscribing offeree, the Company will prepare and distribute for execution
to such subscribing offeree (i) one execution copy of each of the Loan Agreement
and Four Year Note, if applicable, (ii) two copies of the Pledge Agreement, if
applicable, (iii) two copies of the Employee Option Agreement, (iv) an
assignment separate from certificate, if the subscribing offeree has requested a
Four Year Loan and (v) an IRS Form W-9.  In addition to the Subscription
Agreement, the Stockholders' Agreement and the Letter Agreement previously
delivered, each subscribing offeree must then, prior to Thursday, April 25,
1996, return to the Company, c/o Curtis Bedrich, to the extent applicable, (i)
the executed Loan Agreement and Four Year Note, (ii) two executed counterparts
of the Pledge Agreement, (iii) two executed counterparts of the Employee Option
Agreement, (iv) the assignment separate from certificate, executed in blank, (v)
the fully completed and executed Form W-9 and (vi) if applicable, a check in an
amount equal to the product of (a) the number of Cash Shares subscribed for and
(b) $1,800.

          The foregoing deadlines are summarized as follows:

<TABLE>
<CAPTION>
=====================================================================================================
Event                                                                      Deadline
=====================================================================================================
<S>                                                                        <C>
Orally contact Curtis Bedrich (at 713-447-8787) to indicate                Thursday, March 28, 1996
the number and type (Cash and/or Loan Shares) of shares you
wish to subscribe for
=====================================================================================================
</TABLE>

                                     -22-
<PAGE>

<TABLE>
<CAPTION>
=====================================================================================================
Event                                                                              Deadline
-----------------------------------------------------------------------------------------------------
<S>                                                             <C>
Deliver one executed copy and one extra executed counterpart    Thursday, April 11, 1996
of (i) the Subscription Agreement (including Schedule A
attached thereto and, if applicable, the spousal consent),
(ii) the Stockholders' Agreement (including the spousal
consent, if applicable) and (iii) the Letter Agreement
-----------------------------------------------------------------------------------------------------
Deliver, as applicable, (i) one copy of each of the Loan        Thursday, April 25, 1996
Agreement and Four Year Note, (ii) one executed copy and one
extra executed counterpart of the Pledge Agreement, (iii)       NOTE: These documents will be
one executed copy and one extra executed counterpart of the     delivered to you on or prior to
Employee Option Agreement, (iv) an assignment separate from     Thursday, April 11, if you orally
certificate executed in blank, (v) an IRS Form W-9 and (vi)     contact Curtis Bedrich with your
a check in the proper amount                                    subscription by Thursday, March 28.
=====================================================================================================
</TABLE>

          All Funds shall be promptly deposited in an interest bearing,
segregated account and such Funds may be invested in treasury bills or other
cash equivalents, as determined in the sole and absolute discretion of the
Company.  If acceptable subscriptions for a minimum aggregate of one Share is
received by the Company on or before April 11, 1996, or such later time as
determined in the sole and absolute discretion of the Company without notice to
or consent of the offerees, but in no event later than the Termination Date, all
Funds will be transferred from the segregated bank account to the Company,
together with all interest, if any, earned thereon.  In the event such condition
has not been satisfied on or before the Termination Date or this offering is
withdrawn by the Company, this offering will be terminated and all Funds will be
returned to the subscribing offerees with a pro rata share of interest earned
thereon, calculated on the basis of the amount of Funds invested by each
subscribing offeree and the length of time interest on such Funds was earned.

                                USE OF PROCEEDS

          Assuming all of the Shares are issued, the net proceeds of the
offering, estimated to be $1,974,800, will be used for general corporate
purposes, including working capital.

                                   DILUTION

          As of December 31, 1995, the Company had adjusted net tangible book
value (defined as total stockholders' equity less goodwill) of $160,376,945, or
$1,248.48 per share of Common Stock .  Adjusted net tangible book value per
share of Common Stock is determined by

                                     -23-
<PAGE>

dividing the actual net tangible book value by the number of shares of its
Common Stock and treating all such Common Stock as having been issued for cash
which would have been outstanding as of December 31, 1995. After giving effect
to the sale of the Shares and the application by the Company of the estimated
net proceeds therefrom as described in "Use of Proceeds", the pro forma net
tangible book value of the Company as of December 31, 1995 would have been
$162,376,745, or $1,253.21 per share of Common Stock. This value represents an
immediate increase in the adjusted net tangible book value of $4.73 per share of
Common Stock to the current shareholders and an immediate dilution in net
tangible book value of $546.79 per Share to purchasers of the Shares. Dilution
per share is determined by subtracting the pro forma adjusted net tangible book
value per share of Common Stock after the completion of this offering from the
per share price paid by purchasers of the Shares. The following table (1)
illustrates this per share dilution:

<TABLE>
<S>                                                                              <C>
     Price per share pursuant to this offering.................................  $1,800.00

     Adjusted net tangible book value per share as of December 31, 1995........  $1,248.48
     Increase in adjusted net tangible book value per share
     attributable to the offering(2)...........................................  $    4.73

     Pro forma adjusted net tangible book value per share after this offering..  $1,253.21

     Dilution per share to purchasers of the Shares............................  $  546.79
</TABLE>

(1)  Assumes that all of the Shares are subscribed for and excludes shares of
     Common Stock reserved for issuance pursuant to options which have
     previously been granted to certain members of management.  To the extent
     such options are exercised, the value of Shares purchased by Investors may
     be subject to further dilution.  See "Capitalization," "The Offering --
     Stock Options" and "Description of Capital Stock -- Options."

(2)  Does not reduce stockholders' equity for the aggregate amount of all Four
     Year Loans.

          The following table sets forth as of December 31, 1995 (calculated on
the same basis as the preceding paragraph and rounded for purposes of this
presentation) the number of shares of Common Stock purchased from the Company,
the value of the total consideration received, the average price per share paid
by the existing shareholders of the Company and the price per share to be paid
by Investors:

<TABLE>
<CAPTION>
==============================================================================================================
                                                                                                Avg. Price Per
                                                                                                    Share
                                       Shares Purchased           Total Consideration               -----
--------------------------------------------------------------------------------------------------------------
                                            Number          %           Amount            %
                                            ------                      ------
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>      <C>                  <C>      <C>
Existing stockholders                      128,458        99.14        $137,450,090     98.57      $1,070.00
</TABLE>

                                     -24-
<PAGE>

<TABLE>
<CAPTION>
==============================================================================================================
                                                                                                Avg. Price Per
                                                                                                    Share
                                       Shares Purchased           Total Consideration               -----
--------------------------------------------------------------------------------------------------------------
<S>                                    <C>               <C>      <C>                  <C>      <C>
Investors                                  1,111          0.86         $  1,999,800      1.43        1800,00
--------------------------------------------------------------------------------------------------------------
Total                                    129,569        100.00         $139,449,890    100.00      $1,076.26
==============================================================================================================
</TABLE>

                                 CAPITALIZATION

          The following table sets forth the total capitalization of the Company
as of December 31, 1995 and as adjusted to reflect the consummation of this
offering (assuming all 1,111 Shares are subscribed for) after the anticipated
application of the estimated net proceeds therefrom.

<TABLE>
<CAPTION>
===================================================================================================================================
                                                                                                               As Adjusted for the
                                                                                               Actual                Offering
===================================================================================================================================
<S>                                                                                      <C>                <C>
-----------------------------------------------------------------------------------------------------------------------------------
Current installments of long-term debt........................................              $        -0-         $        -0-
-----------------------------------------------------------------------------------------------------------------------------------
Long-term debt, less current portions.........................................                51,022,966           51,022,966
-----------------------------------------------------------------------------------------------------------------------------------
Stockholders' Equity:
-----------------------------------------------------------------------------------------------------------------------------------
     Undesignated Preferred Stock, $.01 par value, 135,000 shares authorized,
     0 shares issued and outstanding..........................................                        --                   --

     Series A Preferred Stock $.01 par value, 50,000 shares authorized,                              216                  216
     21,602 issued and outstanding............................................                       100                  100

     Series B Preferred Stock, $.01 par value, 15,000 shares authorized,
     10,000 issued and outstanding............................................
-----------------------------------------------------------------------------------------------------------------------------------
Common Stock, $.001 par value, 200,000 shares authorized, 128,458.03 issued                          129                  130
and outstanding, 129,569.03 issued and outstanding after the offering(1).....
-----------------------------------------------------------------------------------------------------------------------------------
Additional paid-in capital....................................................               161,146,137          163,145,936
-----------------------------------------------------------------------------------------------------------------------------------
Retained earnings.............................................................                 9,935,893            9,935,893
-----------------------------------------------------------------------------------------------------------------------------------
Less:
-----------------------------------------------------------------------------------------------------------------------------------
Notes receivable from officers and employees for purchase of Common Stock.....                 4,668,702            6,000,702
-----------------------------------------------------------------------------------------------------------------------------------
198.40 Treasury shares, at cost...............................................                   218,240              218,240
-----------------------------------------------------------------------------------------------------------------------------------
Net stockholders' equity......................................................               166,195,533          166,863,333
     Total capitalization.....................................................               217,218,499          217,886,299
===================================================================================================================================
</TABLE>

(1)  Includes 198.40 treasury shares and 3.22 shares to be issued to William E.
     Simon, Jr., as trustee for the benefit of William E. Simon Family S
     Corporation Trust, f/b/o William E.

                                     -25-
<PAGE>

     Simon, Jr. u/a/d August 9, 1989, but excludes (i) an aggregate of 14,524.34
     shares of Common Stock subject to options previously granted to executive
     officers and other members of management of the Company pursuant to the
     1992 Stock Plan, the 1993 Option Plan, the Senior Executive Plan, the 1995
     Management Option Plan, the 1995 Employee Option Plan and the Incentive
     Option Plan (see "Management --Options"), and all options to be granted to
     Investors pursuant to the 1996 Employee Stock Option Plan, (ii) 15 shares
     of Common Stock and options to purchase 75 shares of Common Stock issued to
     each of Glen Wind and Kurt Wind as of January 24, 1996 and (iii) an
     aggregate of 124.9 shares of Common Stock issued to John C. Oxley and New
     Prospect Drilling Company, an Arkansas Corporation.

                                DIVIDEND POLICY

          The Company has not paid dividends since its inception. The Company
currently intends to retain all earnings, if any, to fund the expansion of its
business and therefore does not anticipate paying any dividends on the Common
Stock in the foreseeable future. In addition, the ability of the Company to pay
dividends is limited by the terms of the Bank Credit Agreement and the JEDI Loan
Agreement, the Series A Preferred Stock and the Series B Preferred Stock.

                        SELECTED FINANCIAL INFORMATION

          The selected financial data presented below for the years ended
December 31, 1994 and 1993 is derived from the audited financial statements of
the Company. The selected financial data set forth below as of December 31, 1995
was derived from the Company's unaudited financial statements. The data set
forth herein should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Company's
financial statements and notes thereto.

<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------------
                                                      Year Ended
                                                  December 31, 1995      Year Ended            Year Ended
Statement of Income Data                             (unaudited)      December 31, 1994     December 31, 1993
------------------------                             -----------      -----------------     -----------------
================================================================================================================
<S>                                               <C>                 <C>                   <C>
Revenues:
----------------------------------------------------------------------------------------------------------------
  Leasing and Maintenance....................      $   48,120,115        $32,024,912            $25,722,662
----------------------------------------------------------------------------------------------------------------
  Compressor Packaging.......................          29,593,205         16,201,887             14,034,275
----------------------------------------------------------------------------------------------------------------
  Production Equipment.......................          16,007,855          7,271,641              3,178,386
----------------------------------------------------------------------------------------------------------------
  Other......................................             776,161            581,526                411,298
----------------------------------------------------------------------------------------------------------------
    Total revenues...........................          94,497,336         56,079,966             43,346,621
----------------------------------------------------------------------------------------------------------------
Costs and expenses:
----------------------------------------------------------------------------------------------------------------
Leasing and Maintenance......................          16,851,706         11,007,891              9,739,248
----------------------------------------------------------------------------------------------------------------
Compressor packaging.........................          25,265,016         13,732,736             12,130,915
----------------------------------------------------------------------------------------------------------------
</TABLE>

                                     -26-
<PAGE>

<TABLE>
<S>                                                       <C>                <C>                <C>
 Production Equipment...............................       12,882,556          5,798,521          2,671,178
----------------------------------------------------------------------------------------------------------------
 Selling, general and administrative expenses.......       12,331,603          8,427,020          7,413,158
----------------------------------------------------------------------------------------------------------------
 Depreciation and amortization......................       13,493,813          8,108,596          5,757,381
----------------------------------------------------------------------------------------------------------------
 Interest expense...................................        4,560,133          2,027,414          1,366,297
----------------------------------------------------------------------------------------------------------------
   Total costs and expenses                                85,384,827         49,102,178         39,078,177
----------------------------------------------------------------------------------------------------------------
Income before income taxes..........................        9,112,509          6,977,788          4,268,444
----------------------------------------------------------------------------------------------------------------
Income tax expense..................................        3,498,456          2,590,000          1,597,000
----------------------------------------------------------------------------------------------------------------
Net income..........................................      $ 5,614,053        $ 4,387,788        $ 2,671,444
----------------------------------------------------------------------------------------------------------------
</TABLE>

<TABLE>
<CAPTION>
=================================================================================================================
                                                       December 31, 1995
Balance Sheet Data                                        (unaudited)      December 31, 1994   December 31, 1993
------------------                                        -----------      -----------------   -----------------
<S>                                                    <C>                 <C>                 <C>
Total current assets................................      $ 49,959,988         $ 21,484,358        $10,696,270
-----------------------------------------------------------------------------------------------------------------
Net property, plant and equipment...................       193,259,462           88,391,054         61,722,508
-----------------------------------------------------------------------------------------------------------------
Other assets........................................         9,186,862            4,738,740          4,360,547
-----------------------------------------------------------------------------------------------------------------
Total...............................................      $252,406,312         $114,614,152        $76,779,325
-----------------------------------------------------------------------------------------------------------------
Total current liabilities...........................      $ 22,082,426         $ 20,489,078        $ 9,734,146
-----------------------------------------------------------------------------------------------------------------
Long-Term debt and other liabilities................        64,128,353           42,792,233         20,100,126
-----------------------------------------------------------------------------------------------------------------
Stockholders' equity................................       166,195,533           51,332,841         46,945,053
-----------------------------------------------------------------------------------------------------------------
  Total.............................................      $252,406,312         $114,614,152        $76,779,325
=================================================================================================================
</TABLE>

                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

General

          The Company's primary operations consist of three business segments.
The principal segment consists of the leasing and maintenance of the Company's
natural gas compressor units ("Leasing and Maintenance"), and the other segments
consist of the design, engineering and fabrication of natural gas compressor
units ("Compressor Packaging") and the design, engineering, fabrication and
rental of oil and gas production equipment ("Production Equipment"). See
"Business -- Operations."

          The Company commenced operations during the latter part of 1990 with
the acquisition of three regional compression leasing companies. In addition, a
compression leasing and fabricating operation was acquired in July, 1991. A
machine shop operation acquired by the Company in 1990, Precision Welding &
Machine, Inc., a Texas corporation ("PWMI"), was sold

                                     -27-
<PAGE>

by the Company in November 1993. See "Business -- Company History." The
compression rental fleet has been expanded significantly since the Company's
inception, and amounted to 1,215 units aggregating 418,480 horsepower at
December 31, 1995. This growth has been funded by a combination of internally
generated cash flow, bank financing, the acquisition of Astra primarily through
the issuance of Common Stock, additional equity in the form of Common Stock sold
to the Company's management group, certain employees and existing shareholders
in 1992, 1993 and 1995, additional Common Stock sold to JEDI in 1995, and the
sale of Series B Preferred Stock to JEDI and Series A Preferred Stock to certain
existing shareholders and two new investors in 1995, as well as the commencement
of Production Equipment activities in 1993. As discussed elsewhere herein, the
operation of the Production Equipment segment has been significantly enhanced by
the Smith Acquisition. See "Business -- Company History."

Liquidity and Capital Resources

          Earnings before depreciation and amortization and income taxes
amounted to $27.2 million during 1995. Other significant sources of funds during
1995 were amounts available under the Bank Credit Agreement and the JEDI Loan
Agreement and proceeds from sales of Common Stock and Preferred Stock.
Significant uses of funds included the repayment of debt under the Bank Credit
Agreement and net capital expenditures aggregating $69 million during 1995.

          The financing necessary to support the Company's historical operations
has principally been provided from borrowings under the Bank Credit Agreement
and sales of Common Stock.

          For a discussion of the Company's anticipated capital expenditures for
the next two years, see "Business -- Business Strategy."

          Historically, inflation has not had a significant impact on the
operations of the Company.

Results of Operations

Year ended December 31, 1995 compared to year ended December 31, 1994

Revenues

          Revenues from Leasing and Maintenance increased by $16.1 million, or
50%, from $32.0 million in 1994 to $48.1 million in 1995. This increase resulted
primarily from the addition of 456 compression units, aggregating 189,853
horsepower, to the compressor rental fleet. Monthly horsepower utilization of
93% to 96% during 1995 was consistently in excess of the industry average.

                                     -28-
<PAGE>

          Revenues from Compressor Packaging increased by $13.4 million, or 83%,
from $16.2 million in 1994 to $29.6 million in 1995. Compressor Packaging
operations generated operating profit (earnings before depreciation and
amortization expense and interest expense) of $1,969,000 during 1995, as
compared to $1,270,000 during 1994.

          Revenues from Production Equipment increased by $8.7 million, or 119%,
from $7.3 million in 1994 to $16.0 million in 1995. Production Equipment
operations resulted in an operating profit (earnings before depreciation and
amortization expense and interest expense) of $641,000 during 1995, as compared
to an operating profit of $364,000 during 1994.

Expenses

          Leasing and Maintenance expenses increased by $5.9 million, or 54%,
from $11.0 million in 1994 to $16.9 million in 1995. This increase resulted from
additions to the compressor rental fleet as reflected by a 50% increase in
Leasing and Maintenance revenue.

          Costs and expenses of Compressor Packaging increased by $11.5 million,
or 84%, from $13.7 million in 1994 to $25.2 million in 1995. This increase is
attributable to the increase in Compressor Packaging operations.

          Costs and expenses of Production Equipment increased by $7.1 million,
or 122%, from $5.8 million in 1994 to $12.9 million in 1995. This increase
resulted from an increase in the volume of production equipment fabrication.

          Selling, general and administrative expenses increased by $3.9
million, or 46% from $8.4 million in 1994 to $12.3 million in 1995. This
increase resulted from the expanded level of activity in each of the Company's
business segments.

          Depreciation and amortization increased $5.4 million, or 67%, from
$8.1 million in 1994 to $13.5 million in 1995. This increase resulted from
expansion of the rental fleet and other capital expenditures.

          Interest expense increased $2.6 million, or 130%, from $2.0 million in
1994 to $4.6 million in 1995 as a result of borrowings under the Bank Credit
Agreement and the JEDI Loan Agreement which was used for general corporate
purposes as well as to finance additions to the compressor rental fleet.

          The Company's effective income tax rate approximates the statutory
income tax rate during 1995 and 1994. Accordingly, the $900,000 increase, or
35%, from $2.6 million in 1994 to $3.5 million in 1995 results from a comparable
31% increase in income before income taxes from 1994 to 1995.

                                     -29-
<PAGE>

Year ended December 31, 1994 compared to year ended December 31, 1993

Revenues

          Revenues from Leasing and Maintenance increased by $6.3 million, or
25%, from $25.7 million in 1993 to $32.0 million in 1994. This increase resulted
primarily from the addition of 168 compression units, aggregating 84,060
horsepower, to the compressor rental fleet. Monthly horsepower utilization of
94% to 96% during 1994 was consistently in excess of the industry average.

          Revenues from Compressor Packaging increased by $2.2 million, or 15%,
from $14.0 million in 1993 to $16.2 million in 1994. This increase resulted from
an increase in the volume of Compressor Packaging during 1994 following the move
in August, 1993, to an expanded fabrication facility. Compressor Packaging
operations generated operating profit (earnings before depreciation and
amortization expense and interest expense) of $1,270,000 during 1994, as
compared to $814,000 during 1993.

          Revenues from Production Equipment increased by $4.1 million, or 129%,
from $3.2 million in 1993 to $7.3 million in 1994. This increase resulted from
an increase in the volume of production equipment fabrication as well as 1994
being the first full year for production equipment packaging, the operations of
which commenced in March, 1993. Production Equipment operations resulted in an
operating profit (earnings before depreciation and amortization expense and
interest expense) of $364,000 during 1994, as compared to an operating loss of
$130,000 during 1993.

Expenses

          Leasing and Maintenance expenses increased by $1.3 million, or 13%,
from $9.7 million in 1993 to $11.0 million in 1994. This increase resulted from
additions to the compressor rental fleet as reflected by a 25% increase in
Leasing and Maintenance revenue.

          Costs and expenses of Compressor Packaging increased by $1.6 million,
or 13%, from $12.1 million in 1993 to $13.7 million in 1994. This increase is
attributable to the increase in Compressor Packaging operations.

          Costs and expenses of Production Equipment increased by $3.1 million,
or 117%, from $2.7 million in 1993 to $5.8 million in 1994. This increase
resulted from an increase in the volume of production equipment fabrication and
the inclusion of a full year of operations in 1994.

          Selling, general and administrative expenses increased by $1.0
million, or 14% from $7.4 million in 1993 to $8.4 million in 1994. This increase
resulted from the expanded level of activity in each of the Company's business
segments.

                                     -30-
<PAGE>

          Depreciation and amortization increased $2.3 million, or 41%, from
$5.8 million in 1993 to $8.1 million in 1994. This increase resulted from
additions to the rental fleet and other capital expenditures which aggregated
$31.8 million during 1994.

          Interest expense increased $700,000, or 56%, from $1.3 million in 1993
to $2.0 million in 1994 as a result of borrowings under the Credit Agreement
which was utilized to finance additions to the compressor rental fleet.

          The Company's effective income tax rate approximates the statutory
income tax rate during 1994 and 1993. Accordingly, the $1.0 million increase, or
62%, from $1.6 million in 1993 to $2.6 million in 1994 results from a comparable
63% increase in income before income taxes from 1993 to 1994.

                                   BUSINESS

Company History

          The Company was incorporated in Delaware in October 1990 as a
majority-owned subsidiary of Hanover Energy Inc., a Texas corporation ("HEI").
In November and December 1990, the Company acquired all of the capital stock of
Guerra Engineering, Inc., a Texas corporation ("GEI"), Energy Recovery Systems,
Inc., a Texas corporation ("ERSI"), and PWMI, and substantially all of the
assets of C&B Compression Sales and Service, Inc., a Louisiana corporation
("C&B"), which acquisitions were accounted for using the purchase method of
accounting.

          In May 1991, HEI was acquired by Hanover Energy Holding Corporation, a
Delaware corporation ("HEHC"), the principal stockholders of which were GKH.

          In July 1991, HEHC acquired all of the common stock of Maintech
Enterprises, Inc., a Texas corporation ("MEI"), through a subsidiary created
solely for that purpose. Such subsidiary was subsequently merged into MEI, and
HEHC contributed the stock of MEI to the Company in April 1992 in connection
with the refinancing of the Company's then current senior credit facility. As a
result of the acquisition of MEI, the Company acquired a 50% interest in a joint
venture, the operations of which consisted of leasing natural gas compressor
units. The remaining interest in the joint venture was acquired by the Company
effective April 1, 1993 and the joint venture was liquidated shortly thereafter.

          Effective December 31, 1992, HEI merged into HEHC, and as a result
thereof, the Company became a direct majority-owned subsidiary of HEHC. Also
effective as of December 31, 1992, GEI and ERSI merged into the Company and, as
a result thereof, the separate existence of GEI and ERSI ceased and all of their
respective assets and liabilities became vested in the Company.

                                     -31-
<PAGE>

          On June 24, 1993, Hanover Pipeline Company, a Delaware corporation and
a wholly-owned subsidiary of HEHC ("HPC"), was merged with and into the Company
(the "HPC Merger").  Pursuant to the HPC Merger, the Company issued to HEHC
2,381.11 shares of Common Stock.  HPC's assets consisted of 16 natural gas
compressors.  HPC had certain potential environmental liabilities estimated at
December 31, 1992 to be between $139,000 and $200,000; however, pursuant to the
merger agreement, HEHC agreed to indemnify the Company for any diminution in
value to the HPC common stock caused by the incurrence by HPC of any
environmental liability.

          On October 7, 1993, the Company acquired all of the issued and
outstanding stock of Hanna Compressor Group, Inc., an Arkansas corporation
("Hanna Compressor"), from Hanna Investment Group, an Arkansas general
partnership ("HIG"), in exchange for 1,875 shares of Common Stock (the "Hanna
Acquisition").  Hanna Compressor's assets consisted of (i) six natural gas
compressor units, (ii) a 4,000 foot combination division office and maintenance
facility situated on five acres of land in Pocola, Oklahoma and (iii) cash.  In
connection with the Hanna Acquisition, the Company, HEHC, GKH and HIG entered
into the Hanna Stockholders' Agreement.  See "Principal Stockholders --
Stockholders' Agreements -- Hanna Stockholders' Agreement."  Effective as of
February 9, 1994, Hanna Compressor was merged into the Company and, as a result
thereof, the separate existence of Hanna Compressor ceased and all of its assets
and liabilities became vested in the Company.

          On November 5, 1993, the Company sold all of the issued and
outstanding capital stock of PWMI to a corporation (the "PWMI Purchaser")
controlled by two former employees of PWMI (the "PWMI Employees") for a purchase
price equal to $500,000.  The purchase price was paid in the form of two secured
promissory notes, one in the principal amount of $475,000 and the other in the
principal amount of $25,000, each of which bear interest at 8% per annum.  The
$475,000 note has a ten year amortization, and is payable to the Company in
equal monthly installments of principal and interest beginning on December 1,
1993, with the entire outstanding balance due and payable December 1, 1996.  The
PWMI Purchaser has missed a number of payments under the promissory notes, and
the Company and the PWMI Purchaser are currently in the process of negotiating a
new payment schedule under the notes.  The obligations of the PWMI Purchaser
under the notes are guaranteed jointly and severally by the PWMI Employees,
which guarantee is secured by a pledge to the Company of the PWMI capital stock,
as well as a security interest in certain assets of PWMI.  As of December 31,
1995, the promissory notes of PWMI Purchaser have been written down on the books
of the Company to $200,000.

          On January 27, 1995, HEHC was merged with and into the Company (the
"HEHC Merger") and, as a result thereof, the separate existence of HEHC ceased
and all of its assets and liabilities became vested in the Company.  Pursuant to
the HEHC Merger, the Company issued to the stockholders of HEHC in the aggregate
59,053.11 shares of Common Stock, which was equal to the number of shares of
Common Stock owned by HEHC immediately prior to the  HEHC Merger.  In connection
therewith, the Company, GKH and the other stockholders of HEHC

                                     -32-
<PAGE>

immediately prior to the Merger entered into the HEHC Stockholders' Agreement.
See "Principal Stockholders -- Stockholders' Agreements -- HEHC Stockholders'
Agreement" for a discussion of the terms of the HEHC Stockholders' Agreement. In
addition, each former stockholder of HEHC agreed to indemnify the Company for
(i) the breach or inaccuracy of any representation or warranty made by HEHC or
such stockholder under the HEHC Merger Agreement and (ii) the breach or default
of any agreement by HEHC or such stockholder under the HEHC Merger Agreement,
payable in shares of Common Stock issued in the HEHC Merger.

          Effective as of January 1, 1995, the Company acquired from CBC
Compression, an Oklahoma general partnership ("CBC"), 40 natural gas compressor
units and certain related equipment for a purchase price of $3,025,000 plus five
percent of rental amounts (exclusive of sales tax, freight and installation
charges) received by the Company under the related Master Gas Compression
Agreement described below.  Pursuant to an agreement (the "Master Gas
Compression Agreement") with AnSon Company, a sister partnership of CBC
("AnSon"), the Company agreed to lease the 40 compressors back to AnSon, along
with at least 25 additional compressors, for an initial term of 24 months.  The
Master Gas Compression Agreement is scheduled to continue for an additional 24-
month period beyond the initial 24-month period; however, the rental price
during such period has not been established.  AnSon, CBC and the Company have
also entered into a 48-month "most favored vendor" relationship whereby AnSon
and CBC have agreed to purchase or lease production equipment from the Company
so long as the Company's price is equal to or less than other bidders.
Similarly, the Company has agreed to retain trucking services from MB Oilfield
Service (an affiliate of CBC and AnSon) during such 48-month period so long as
MB Oilfield Service's price is not higher than other bidders for such services.

          Effective as of February 1, 1995, the Company purchased from Gale
Force Compression Services, Inc. ("Gale Force") 107 natural gas compressors,
certain furniture, fixtures, equipment and other fixed assets, vehicles, the
name "Gale Force", and equipment leases for an aggregate purchase price of
$9,782,800 plus 1,150 shares of Common Stock (the "Gale Force Acquisition").
The compressors are located primarily in Oklahoma and most are currently leased
by the Company pursuant to leases transferred in the sale.  Concurrently with
the Gale Force Acquisition, the Company entered into a four year alliance
agreement with Ward Petroleum, an affiliate of Gale Force, for gas compression
services to be provided by the Company.  In connection with the Gale Force
Acquisition, the Company, GKH and those persons who acquired Common Stock
pursuant to the transaction entered into the Gale Force Stockholders' Agreement.
See "Principal Stockholders -- Stockholders' Agreements -- Gale Force
Stockholders' Agreement" for a discussion of the terms of the Gale Force
Stockholders' Agreement.  Also in connection with this transaction, the Company
entered into an employment agreement with Alan D. Lavenue, a Gale Force
affiliate, for a two year term.

          On February 24, 1995, the Company, through its wholly-owned
subsidiary, Hanover/Smith, Inc. ("Hanover/Smith"), acquired (the "Smith
Acquisition") substantially all of

                                     -33-
<PAGE>

the operating assets of the oil and gas production equipment division of Smith
Industries, Incorporated, a Delaware corporation ("Smith"), which has been in
the fabrication of oil and gas production equipment industry since its inception
in 1927. The assets acquired include real property located in Corpus Christi,
Texas, a lease and purchase option on real property located in Columbus, Texas,
manufacturing equipment used in the fabrication of oil and gas production
equipment, vehicles, inventory, the name "Smith Industries" and Smith's logo.
Smith filed for protection under the United States Bankruptcy Code, 11 U.S.C. --
101 et seq., in May 1994, in the United States Bankruptcy Court for the Southern
District of Texas, Houston Division, in a Case styled In Re: Smith Industries,
Incorporated, No. 94-43705-H3-11. The Bankruptcy Court approved the necessary
orders authorizing the acquisition. The total acquisition price after various
credits and adjustments was $2,595,714. The oil and gas production equipment
operations of Smith acquired by Hanover/Smith have been consolidated with the
existing oil and gas production equipment fabricating operations of the Company
and will operate as Hanover/Smith.

          On August 7, 1995, JEDI purchased $20,000,000 of Common Stock at
$1,800 per share and $10,000,000 of 6.5% Cumulative Redeemable Convertible
Series B Preferred Stock (the "Series B Preferred Stock") at $1,000 per share
(the "Series B Preferred Stock Issuance").  See "Description of Capital Stock --
Preferred Stock."

          On August 7 and September 29, 1995, the Company issued 21,602 shares
of 6.5% Cumulative Redeemable Series A Preferred Stock (the "Series A Preferred
Stock") at $1,000 per share (the "Series A Preferred Stock Issuance").  See
"Description of Capital Stock -- Preferred Stock."

          On September 8, 1995, in connection with the Company's acquisition of
PGN, the Company issued Walter Rode, a former shareholder of PGN, 571.34 shares
of Common Stock.

          On October 13, 1995, in connection with the Astra Merger, the Company
issued 30,556 shares of Common Stock to Astra Resources.

          On October 31, 1995, in connection with the merger of Combustion
Control Corporation, a Delaware corporation ("Combustion"), with and into the
Company, the Company issued 338.43 shares of Common Stock to former shareholders
of Combustion.

          On January 24, 1996, each of Glen Wind and Kurt Wind purchased 15
shares of Common Stock (30 shares total) at $1,100 per share.

Industry

          Natural gas compressors generally do not suffer significant
technological obsolescence, so that the useful life of a compressor is based
primarily on its mechanical integrity.  The useful life of a compressor may also
be extended by refurbishing or overhauling

                                     -34-
<PAGE>

the compressor at regular intervals of approximately five to six years.
Refurbished or overhauled compressors may be leased at prices substantially
similar to new compressors.

          The gas compressor industry services both independent producers and
major integrated natural gas producers, as well as pipeline, gas processing and
gathering and transmission companies, and is substantially dependent on the
natural gas industry.  The Company believes that independent producers currently
account for a substantial portion of the natural gas industry.  The Company also
believes that independent gas producers are now accounting for an increasing
portion of the natural gas produced in the United States relative to that
produced by major integrated energy producers and that independent producers are
more likely to lease compressors from third parties such as the Company as a
result of generally greater constraints on their ability to make the large
capital expenditures necessary to purchase compressors.  In addition, many major
integrated gas producers are directing their capital investments overseas and
allowing their U.S. capital base to decline, thus resulting in further increased
demand for rental compressors.  Moreover, the market for rental compression
services has been expanding as gas producers and pipeline companies strive to
lower operating costs and improve efficiency by outsourcing their gas handling
requirements.

          The Company believes that the market for natural gas compressors is
driven by a variety of factors, including, without limitation, (i) the demand
for natural gas, (ii) the age of particular gas wells, (iii) the relative price
of natural gas to the price of oil or other alternative energy sources and (iv)
the season.  All other things being equal, the gas compression industry is
generally benefited by either an increase in gas prices, which generally results
in the development of new wells, fields and pipeline systems and a corresponding
increase in demand for compression, or, up to a point, by a decrease in natural
gas prices, which results in outsourcing by independent producers and an
increase in the need for leased compression.  Increases in the age of natural
gas wells also has a positive impact on the gas compression industry since older
wells generally experience a decline in their reservoir pressure and require
compressors to increase their productivity.  In contrast, a number of factors
would potentially have an adverse effect on the gas compressor industry.  See
"Risk Factors -- Natural Gas Compressor Industry Considerations."

          Conversely, all other things being equal, a relative decrease in the
price of oil or other energy sources as compared to natural gas generally will
have an adverse effect on the natural gas compression industry since such
circumstances encourage energy users to switch from natural gas to alternative
fuel sources thereby decreasing demand for natural gas.

          The Company believes that the natural gas compressor industry is also
affected by seasonality, with the highest demand for compression in winter
months when natural gas is in greater demand.  As a result of such seasonality,
the Company generally experiences slightly decreased revenues for its Leasing
and Maintenance segment during the months of May through August.

                                     -35-
<PAGE>

          In addition, the Company believes that as environmental considerations
become more important due to the Federal Clean Air Act and related legislative
and social considerations, natural gas, as a cleaner burning fuel than either
oil or coal, will make up a greater share of the domestic energy market.
Additionally, the continuing economic development of lesser developed countries
appears to be having a favorable impact on the demand for natural gas and
related gas handling projects.  However, there can be no assurance that such
increased use of natural gas will occur.

Market Position

Leasing and Maintenance

          The Company believes that the market for the leasing of natural gas
compressors may be distinguished from the market for the sale of natural gas
compressors since the decision to lease a compressor is generally made prior to
a customer's entrance into the marketplace.  Generally, lessees are customers
who anticipate only a short term need for the compressor which is substantially
less than the estimated useful life of the unit or customers who are unable to
or otherwise choose not to internally finance the purchase of such units.

          The Company believes that the natural gas compressor leasing industry
may be divided into categories based on the compressor horsepower and that
market share of the participants in the industry may be determined based on
either (i) the number of units leased by such participants or (ii) the total
horsepower leased by such participants.

          The Company's compressor fleet as of December 31, 1995 was divided by
horsepower as follows:

          ====================================================================
                                        Units            Total Horsepower
           Category (by Horsepower)  (% of Fleet)          (% of fleet)
           ------------------------  ------------          ------------
          ====================================================================
           0 - 44                    109        (9%)       3,482        (1%)
          --------------------------------------------------------------------
           45 - 60                   102        (8%)       5,746        (1%)
          --------------------------------------------------------------------
           61 - 100                  227       (19%)      18,350        (4%)
          --------------------------------------------------------------------
           101 - 200                 272       (22%)      38,265        (9%)
          --------------------------------------------------------------------
           201 - 500                 232       (19%)      72,559       (18%)
          --------------------------------------------------------------------
           501 - 800                  95        (8%)      63,004       (15%)
          --------------------------------------------------------------------
           801 - 1100                 83        (7%)      81,826       (20%)
          --------------------------------------------------------------------
           1100+                      95        (8%)     135,248       (32%)
          --------------------------------------------------------------------

                                     -36-
<PAGE>

          ----------------------------------------------------------------------
           TOTAL              1,215       (100%)          418,480      (100%)
          ======================================================================

          Based on industry statistics, the Company believes that the U.S.
natural gas compressor leasing industry is a highly fragmented business made up
of in excess of 50 companies aggregating approximately 2,200,000 horsepower.
Based on information available to the Company, the Company believes that it is
the fourth largest compressor leasing company in the U.S. based on total units
and the second largest compressor leasing company in the U.S. based on total
operating horsepower.

Compressor Packaging

          The Compressor Packaging business, carried on primarily through MEI,
competes with other manufacturers of compressor units.  The Compressor Packaging
business is dominated by a few major competitors, several of whom also compete
with the Company in the compressor leasing business.  Although sufficient
information is not available to definitively estimate the Company's relative
position in the Compressor Packaging market, management believes that the
Company is the sixth largest Compressor Packaging company in the U.S. based on
estimated 1995 revenues of the Company's competitors in such business.

Production Equipment

          The Production Equipment business is a highly fragmented business with
approximately eight substantial competitors.  The Company believes that, with
the Smith Acquisition, it is among the top five major competitors in the
business.

Business Strategy

          The Company's primary focus will be continued expansion of the
compression rental fleet.  Anticipated levels of capital expenditures, from
internally generated cash flow and bank financing, relating to the rental fleet
amount to approximately $60 million during 1996 and $50 million during 1997.
The rental fleet consisted of 1,215 units aggregating 418,480 horsepower at
December 31, 1995.  With the level of capital expenditures contemplated,
management believes that the Company's rental fleet should grow to approximately
525,000 horsepower by year end 1996.  In addition, the contribution of the
Production Equipment segment is expected to increase, both in terms of revenues
and operating income, in light of the Smith Acquisition.  However, there can be
no assurances that the above projections will actually be met.

          The Company does not anticipate making any material expenditures for
product research and development inasmuch as the Company's Leasing and
Maintenance, Compressor Packaging and Production Equipment segments do not
generally require such expenditures.

                                     -37-
<PAGE>

Operations

          The following tables show (i) the revenues and operating profit (loss)
for each of the years ended December 31, 1995, December 31, 1994 and December
31, 1993 and (ii) the assets of the Company as of December 31, 1995, December
31, 1994 and December 31, 1993, in each case for each of the Leasing and
Maintenance segment, the Compressor Packaging segment, the Production Equipment
segment and the Company's other revenue sources:

<TABLE>
<CAPTION>
===========================================================================================
                                     Year Ended
                                  December 31, 1995     Year Ended         Year Ended
                                  -----------------
                                     (unaudited)     December 31, 1994  December 31, 1993
                                                     -----------------  -----------------
===========================================================================================
<S>                               <C>                <C>                <C>
Revenues:
-------------------------------------------------------------------------------------------
  Leasing and Maintenance          $48,120,115          $32,024,912            $25,722,662
-------------------------------------------------------------------------------------------
  Compressor Packaging              29,593,205           16,201,887             14,034,275
-------------------------------------------------------------------------------------------
  Production Equipment              16,007,855            7,271,641              3,178,386
-------------------------------------------------------------------------------------------
  Other                                776,161              581,526                411,298
-------------------------------------------------------------------------------------------
    TOTAL REVENUES                 $94,497,336          $56,079,966            $43,346,621
-------------------------------------------------------------------------------------------
Operating profit (loss)(1):
-------------------------------------------------------------------------------------------
  Leasing and Maintenance          $26,788,999          $17,070,138            $12,775,114
-------------------------------------------------------------------------------------------
  Compressor Packaging               1,969,070            1,270,314                813,868
-------------------------------------------------------------------------------------------
  Production Equipment                 641,464              363,851               (130,492)
-------------------------------------------------------------------------------------------
  Other(2)                          (2,233,078)          (1,590,505)            (2,066,368)
-------------------------------------------------------------------------------------------
     TOTAL OPERATING PROFIT        $27,166,455          $17,113,798            $11,392,122
===========================================================================================
</TABLE>

(1)  Determined by subtracting expenses from revenues for each segment and
     adding back the corresponding portion of depreciation and amortization
     expense and interest expense.

(2)  Consists primarily of corporate administrative expenses.

<TABLE>
<CAPTION>
========================================================================================
                               December 31, 1995
                               -----------------
                                   (unaudited)     December 31, 1994  December 31, 1993
                                                   -----------------  -----------------
========================================================================================
<S>                            <C>                 <C>                <C>
Assets:
----------------------------------------------------------------------------------------
  Leasing and Maintenance         $226,483,062       $100,428,593       $70,807,541
----------------------------------------------------------------------------------------
  Compressor Packaging               8,832,811          8,453,184         3,535,761
----------------------------------------------------------------------------------------
  Production Equipment              14,101,918          5,562,940         2,140,545
----------------------------------------------------------------------------------------
  Other                              2,988,521            169,435           295,478
----------------------------------------------------------------------------------------
</TABLE>

                                     -38-
<PAGE>

<TABLE>
----------------------------------------------------------------------------------------
    TOTAL ASSETS                  $252,406,312       $114,614,152       $76,779,325
=========================================================================================
<S>                               <C>                <C>                <C>
</TABLE>

Leasing and Maintenance

          The Company provides natural gas compression equipment, on a rental
basis, primarily to natural gas production and transmission companies.  These
rental units are utilized to compress natural gas when the reservoir pressure
for a natural gas field is less than the pressure for the natural gas pipeline
transporting the gas.  The Company also provides maintenance of customer-owned
compressor units as well as compressor parts sales to third parties.

          As of December 31, 1995, the Company's gas compressor fleet consisted
of 1,215 units, ranging from 25 to 2,650 horsepower, of which 93.5% of available
horsepower and 91.6% of the available units were being utilized.  Leases for the
compressor units provide for fixed monthly payments for an average term of
approximately six months and continue thereafter on a monthly basis.  Based on
the Company's historical operations, the Company estimates that the terms of its
leases have extended for an average of approximately 24 months.

          Although natural gas compressors generally do not suffer significant
technological obsolescence, they do require routine maintenance and periodic
refurbishing to prolong their useful life.  In general, the Company anticipates
refurbishing its compressor units approximately every five to six years.

          The Company's compressor leasing activities are located in Texas,
Oklahoma, Arkansas, Louisiana, New Mexico, Mississippi, Alabama, Kansas,
Colorado and offshore Gulf of Mexico, Trinidad, Venezuela and Argentina.

Compressor Packaging

          The Company's Compressor Packaging segment, operated primarily through
MEI, designs, engineers and assembles compression units for sale to third
parties as well as for placement in its compressor fleet.  In general, units to
be sold to third parties are assembled according to such customer's
specifications and sold on a turnkey basis.  Components for such compressor
units are acquired from third party suppliers.  At December 31, 1995, backlog of
fabrication of compressor units amounted to 7.5 million.

Production Equipment

          The Company designs and fabricates and, to a lesser extent, rents a
broad range of oil and gas production equipment designed to heat, separate,
dehydrate and measure crude oil and natural gas.  The product line includes line
heaters, oil and gas separators, glycol dehydration units and skid mounted
production packages designed for both onshore and offshore production

                                     -39-
<PAGE>

facilities.  At December 31, 1995, backlog of production equipment fabrication
amounted to $5.3 million.

Customers

          No amounts received from any individual customer equaled more than 10%
of the Company's consolidated revenues during 1994 or 1995.

Competition

Leasing and Maintenance

          The natural gas compressor leasing business is highly competitive.
Overall, the Company experiences considerable competition from larger companies
with significantly greater financial resources and, on a regional basis, several
smaller companies compete directly with the Company.  Based on information
available to the Company, the Company ranks among the top four companies
providing compressor units on a rental basis based on the number of units and
among the top three based on total available horsepower.  See "-- Market
Position."

          The Company believes that it competes in the Leasing and Maintenance
segment on the basis of price, customer service, including the availability of
personnel in remote locations, flexibility in meeting customer needs and quality
and reliability of its compressors and related services.

Compressor Packaging

          The Company believes that it competes in the Compressor Packaging
segment based on price and quality and that the Company is competitive in both
areas.

Production Equipment

          The Company believes that it competes in the Compressor Packaging
segment based on price and quality and that the Company is competitive in both
areas.  Competition in the Production Equipment segment is also based on the
ability to service customers' needs.  The Company believes that with the Smith
Acquisition, it is among the top five major competitors in the Production
Equipment market.

Employees

          As of December 31, 1995, the Company employed approximately 556
people, of which 28 were administrative, 27 were sales, 120 were Compressor
Packaging personnel, 157 were Production Equipment personnel and 224 were in
field service locations.  No employees are

                                     -40-
<PAGE>

represented by labor unions and the Company believes that its relations with its
employees is satisfactory.

Insurance

          Natural gas operations are subject to certain risks, including
explosions, uncontrollable flows of gas or well fluids, fires, pollution and
other environmental risks.  These risks could expose the Company to substantial
liability for injury and loss of life, property damage, pollution and other
environmental damages, and consequential damages, if such damages resulted from
a compressor defect or from the Company's negligence in maintaining, servicing
or refurbishing its compressors.

          The Company believes that is has obtained adequate insurance to cover
such risks; however, no assurance can be given that such insurance will be
adequate to cover the Company's operations in the event the Company incurs
liability in excess of anticipated potential levels or that such insurance will
be generally available in the future or, if available, that premiums will be
commercially reasonable.  See "Risk Factors -- Potential Liability and
Insurance."

Properties and Assets

          As of December 31, 1995, the Company's rental fleet consisted of 1,215
compressor units, five of which are leased and the remainder of which are owned
by the Company, with a total of 418,480 horsepower and an average of 344
horsepower.  By virtue of the Smith Acquisition, the Company also owns
substantially all of the operating assets of the oil and gas production
equipment division of Smith.  The assets acquired include real property located
in Corpus Christi, Texas, a lease and purchase option on real property located
in Columbus, Texas, manufacturing equipment used in the fabrication of oil and
gas production equipment, vehicles, inventory, the name "Smith Industries" and
Smith's logo.

          The Company owns its corporate offices in Houston, Texas, which are
housed in a combination corporate office and compressor fabrication facility
consisting of approximately 190,000 square feet plant capacity located on
twenty-six acres.  This facility (assuming the purchase of the adjacent land) is
anticipated to provide the Company with sufficient space and capacity for at
least the next three years.  The Company also owns (i) a 6,400 square foot
combination office and maintenance shop located on two acres in Oklahoma City,
Oklahoma, (ii) a 4,000 foot combination division office and maintenance facility
situated on five acres of land in Pocola, Oklahoma, (iii) its maintenance
facilities in Midland, Texas and Fort Smith, Arkansas, (iv) real property
located in Corpus Christi, Texas, (v) a 13,000 square feet facility in East
Bernard, Texas which is being converted to a compressor maintenance and
refurbishment facility, and (vi) a lease and purchase option regarding the
212,000 square feet manufacturing facility located on 83 acres in Columbus,
Texas.  In addition, the Company leases its maintenance facilities in Victoria,
Texas and Lafayette, Louisiana under ten-year leases.

                                     -41-
<PAGE>

Litigation

          The Company is not a party to any litigation that, in the judgment of
management, would have a material adverse effect on the Company's operations or
financial condition if adversely determined.

Governmental Regulation

          The Company is subject to various federal and state laws and
regulations relating to environmental protection, including regulations
regarding emission controls.  The Company believes that it is in substantial
compliance with such laws and regulations and that the phasing in of emission
controls and other known standards at the rate currently contemplated by such
laws and regulations will not have a material adverse effect on the Company's
financial condition or results of operations.  However, various state and
federal agencies from time to time consider adopting new laws and regulations or
amending existing laws and regulations regarding environmental protection.
While the Company may be able to pass on the additional costs of complying with
such laws, there can be no assurance that attempts to do so would be successful.
Accordingly, new laws or regulations or amendments to existing laws or
regulations could require the Company to undertake significant capital
expenditures and could otherwise have a material adverse effect on the Company's
financial condition and results of operations.

          From time to time since President Clinton took office, his
administration has proposed various taxes with respect to the energy industry,
none of which have been enacted and all of which have received significant
scrutiny from various industry lobbyists.  At the present time, given the
uncertainties regarding the proposed taxes, including the uncertainties
regarding the terms which the proposed taxes might ultimately contain and the
industries and persons who may ultimately be subject to any such taxes, it is
not possible to determine whether any such tax will have a material adverse
effect on the Company.

                                   MANAGEMENT

Directors and Executive Officers

          The directors and executive officers of the Company are set forth
below.  Positions with the Company include positions with the Company's
predecessors.  All directors hold office until the annual meeting of the
stockholders following their election or until their successors are duly elected
and qualified.  Officers are appointed by and serve at the discretion of the
Board.

<TABLE>
<CAPTION>
===================================================================================================
Name                              Age        Position
----                              ---        --------
----------------------------------------------------------------------------------------------------
<S>                               <C>        <C>
Michael A. O'Connor               60         Chairman of the Board; Director
----------------------------------------------------------------------------------------------------
Michael J. McGhan                 41         President and Chief Executive Officer; Director
----------------------------------------------------------------------------------------------------
</TABLE>

                                     -42-
<PAGE>

<TABLE>
<CAPTION>
===================================================================================================
Name                              Age        Position
----                              ---        --------
----------------------------------------------------------------------------------------------------
<S>                               <C>        <C>
Curtis Bedrich                    53         Chief Financial Officer and Treasurer
----------------------------------------------------------------------------------------------------
William S. Goldberg               37         Executive Vice President; Director
----------------------------------------------------------------------------------------------------
Charles D. Erwin                  35         Vice President, Sales
----------------------------------------------------------------------------------------------------
William C. Bryant                 42         Vice President, Sales-Mid Continent
----------------------------------------------------------------------------------------------------
Maxwell C. McDonald               47         Vice President, Sales-Southeast
----------------------------------------------------------------------------------------------------
Joseph Bradford                   36         Vice President, Operations-Western Division
----------------------------------------------------------------------------------------------------
Donald M. DeVille                 40         Vice President
----------------------------------------------------------------------------------------------------
Teddy J. Head                     43         Vice President
----------------------------------------------------------------------------------------------------
Richard S. Meller                 38         Secretary
----------------------------------------------------------------------------------------------------
Jeri Howell                       43         Assistant Secretary
----------------------------------------------------------------------------------------------------
Ted Collins, Jr.                  56         Director
----------------------------------------------------------------------------------------------------
Robert Wasielewski                33         Director
----------------------------------------------------------------------------------------------------
Melvyn N. Klein                   53         Director
----------------------------------------------------------------------------------------------------
Alvin V. Shoemaker                56         Director
----------------------------------------------------------------------------------------------------
James Hanna                       61         Director
----------------------------------------------------------------------------------------------------
William E. Simon, Jr.             44         Director
----------------------------------------------------------------------------------------------------
Robert R. Furgason                59         Director
----------------------------------------------------------------------------------------------------
Steven L. Kitchen                 50         Director
----------------------------------------------------------------------------------------------------
C. Bob Cline                      49         Director
----------------------------------------------------------------------------------------------------
Mark A. Ruelle                    34         Director
====================================================================================================
</TABLE>

          Michael O'Connor has served as Chairman of the Board and a director of
the Company since January 1992.  Prior thereto, Mr. O'Connor served as president
of Gas Compressors Inc. from 1965 through 1986 and was a private investor from
January 1, 1987 through January 1, 1992.  Mr. O'Connor also serves as a director
of certain affiliates of the Company.

          Michael J. McGhan has served as President and Chief Executive Officer
of the Company since October 1991 and served as Chief Operating Officer of the
Company from December 1990 through October 1991. Mr. McGhan has served as a
director of the Company since March, 1992. Prior thereto, Mr. McGhan was sales
manager of Energy Industries, Inc. ("EII"). Mr. McGhan has been involved in the
gas compression industry for 17 years. Mr. McGhan also serves as a director of
certain affiliates of the Company.

                                     -43-
<PAGE>

          Curtis Bedrich has served as Chief Financial Officer and Treasurer of
the Company since November 1991.  Mr. Bedrich served as Vice President of Adobe
Resources Corporation from 1980 until 1991.  Mr. Bedrich has been involved in
the oil and gas industry for 18 years.

          William S. Goldberg has served as Executive Vice President and
director of the Company since May 1991.  Mr. Goldberg has been employed by GKH
since 1988 and has served as Managing Director of GKH since June 1990.  Mr.
Goldberg also serves as a director of certain affiliates of the Company.

          Charles D. Erwin has served as a Vice President of the Company since
October 1990 and served as a sales representative of EII from 1985 until October
1990.  Mr. Erwin has been involved in the gas compression industry for 10 years.

          William C. Bryant has served as a Vice President of the Company since
October 1990 and served as a sales representative of EII from 1988 until October
1990.  Mr. Bryant has been involved in the gas compression industry for 20
years.

          Maxwell C. McDonald has served as a Vice President of the Company
since December 1990 and served as President of C&B from 1985 until its
acquisition by the Company in 1990. Mr. McDonald has been involved in the gas
compression industry for 22 years.

          Joe Bradford has served as a Vice President of the Company since March
1993 and served as Operations Manager from January 1, 1991 until March 1993.
Mr. Bradford served as mechanic supervisor of HEI from 1987 until January 1991.
Mr. Bradford has been involved in the oil and gas industry for 20 years.

          Donald M. DeVille has served as a Vice President of the Company since
February 14, 1996.  Mr. DeVille has been involved in the gas compression
industry for 16 years.

          Teddy J. Head has served as a Vice President of the Company since
February 14, 1996.  Mr. Head has been involved in the gas compression industry
for 22 years.

          Richard S. Meller has served as Secretary of the Company since October
1991.  Mr. Meller is a partner of the law firm of Neal, Gerber & Eisenberg,
which provides legal services to the Company and GKH.

          Jeri Howell has served as Assistant Secretary of the Company since May
15, 1995.

          Ted Collins, Jr. has served as a director of the Company since April
1992.  Mr. Collins is the President of Collins & Ware Properties, Inc., a
natural gas producer.  Mr. Collins has 35 years of experience in the oil and gas
industry.

                                     -44-
<PAGE>

          Robert Wasielewski has served as a director of the Company since May
15, 1995.  Mr. Wasielewski has served as an Associate of GKH since October 1991.
Prior to that time, Mr. Wasielewski was a Vice President of Citicorp's leveraged
capital division.  Mr. Wasielewski also serves as a director of certain
affiliates of the Company.

          Melvyn N. Klein has served as a director of the Company since May
1991.  Mr. Klein is the sole stockholder of a corporation which is a general
partner of GKH Partners, L.P.  Mr. Klein has been an attorney and counselor-at-
law since 1968.  Mr. Klein serves as a director of Bayou Steel Corporation,
Anixter International Corporation, Santa Fe Energy Resources, Inc., Savoy
Pictures Entertainment, Inc. and certain privately held companies.  Mr. Klein is
also a founder and principal of Questor Partners Fund, L.P.

          Alvin V. Shoemaker has served as a director of the Company since May
1991 and has been a private investor since his retirement as chairman of the
board of The First Boston Corporation in January 1989.

          James Hanna has served as a director of the Company since May 15,
1995.  Mr. Hanna is the President of Hanna Oil and Gas Company, and a director
of the Independent Petroleum Association of America and the Merchants National
Bank of Fort Smith, Arkansas.  Mr. Hanna has 35 years of experience in the oil
and gas industry.

          William E. Simon, Jr. has served as a director of the Company since
December 21, 1995.  Mr. Simon is also the Executive Director of William E. Simon
& Sons, L.L.C., a private investment company based in Morristown, New Jersey and
is a former Assistant United States Attorney for the Southern District of New
York.

          Robert R. Furgason has served as a director of the Company since May
15, 1995.  Mr. Furgason is the President of Texas A&M University -- Corpus
Christi, and has held a series of faculty and administrative positions at
various universities.  Mr. Furgason is the former President of the Accreditation
Board for Engineering and Technology Board of Directors, and also serves on a
number of other accreditation and policy boards.

          Steven L. Kitchen has served as a director of the Company since March
1, 1996.

          C. Bob Cline has served as a director of the Company since December
21, 1995.  Mr. Cline is Chairman, President and Chief Executive Officer of
Westar Capital, Inc., a subsidiary of Western Resources, Inc. and a shareholder
of the Company.  Mr. Cline has 24 years of experience in the oil and gas
industry.

          Mark A. Ruelle has served as a director of the Company since December
31, 1995.  Mr. Ruelle is also vice president, corporate development of Western
Resources, Inc.  Mr. Ruelle has held various positions with Western Resources
Inc. in regulation, treasury, finance and planning since 1986.

                                     -45-
<PAGE>

Compensation of Directors

          Non-employee directors of the Company generally do not receive any
compensation for serving on the Board but are entitled to reimbursement for
expenses incurred in connection with their attendance at Board meetings.  The
foregoing notwithstanding, the Company has agreed to pay Mr. Furgason an annual
director's fee equal to $15,000, plus $2,500 per Board meeting attended in
person by Mr. Furgason, subject to an annual cap of $20,000.

Options

1992 Stock Plan

          In April 1992, the Board adopted the Company's Stock Compensation Plan
(the "1992 Stock Plan"), which provides for the granting of options to executive
officers, directors, employees or advisors of the Company.  The 1992 Stock Plan
permits the Board to issue options with respect to a maximum of 15% of the total
shares of Common Stock outstanding, computed on a fully diluted basis and
including shares which are issuable under the 1992 Stock Plan, at the time of
the grant of an option.  As of December 31, 1995, options with respect to 1,023
shares of Common Stock were outstanding, 945.60 of which were presently vested,
and the remainder of which will generally vest ratably over the next two years.
With respect to these options, 172.5 are exercisable at $1.00 per share and
850.5 are exercisable at $725 per share.  Options granted under the 1992 Stock
Plan are nonstatutory options and are not classified as "incentive stock
options" within the meaning of Section 422 of the Code.

          The exercise price for additional options which may be granted under
the 1992 Stock Plan would be determined by a committee appointed by the Board
(the "Committee"), which Committee is currently comprised of the members of the
Board, and may be less than the fair market value of the Common Stock on the
date of grant.  Other than the maximum number of shares available under the 1992
Stock Plan, there is no minimum or maximum number of shares that may be granted
to any person.  Options granted under the 1992 Stock Plan generally expire
within a specified number of days of the termination of employment of an
optionee who is an employee.  Options granted under the 1992 Stock Plan fully
vest and become exercisable for a specified number of days upon the death or
permanent disability of the optionee and are forfeited upon the termination for
Cause of the optionee.  In addition, options granted under the 1992 Stock Plan
fully vest and become exercisable upon the occurrence of a change in control
accompanied by a constructive termination of employment of such optionee, all as
more fully described in the 1992 Stock Plan.

          Options may not be transferred other than by will or the laws of
descent and distribution, and during the lifetime of an optionee may be
exercised only by the optionee.  The term of each option granted under the 1992
Stock Plan may not exceed fifteen years from the date the option is granted.
Options may become exercisable in whole at grant or in installments

                                     -46-
<PAGE>

over time, as determined by the Committee. Under the terms of the 1992 Stock
Plan, payment upon the exercise of an option may be in cash, by delivery of
shares of Common Stock with a fair market value equal to the aggregate exercise
price or, if the optionee's stock option agreement so provides, by delivery of a
promissory note with such terms as the Committee may approve.

          The acceleration of options in the event of a change of control could
be seen as an anti-takeover provision and may have the effect of discouraging a
proposal for merger or other efforts to purchase or sell control of the Company.

1993 Option Plan

          In connection with the 1993 Offering, the Board adopted the 1993
Management Stock Option Plan (the "1993 Option Plan") pursuant to which members
of the Company's management who purchased Common Stock in the 1993 Offering were
issued options to purchase one-third of one share of Common Stock at a purchase
price of $725 per share (subject to adjustment for stock splits, stock dividends
and other similar events) for each share of Common Stock owned by such persons
or purchased by such persons in the 1993 Offering.  Such options vest ratably
over a five year period which began on June 23, 1993 and are governed by the
terms of the 1993 Option Plan and individual option agreements (the "1993 Option
Agreements").  As of December 31, 1995, options with respect to 1,514 shares of
Common Stock were outstanding, and options with respect to 605.60 were presently
vested.  Other than with respect to the applicable exercise price and the actual
vesting and expiration dates, the 1993 Option Plan and the 1993 Option
Agreements are substantially the same as the Employee Option Plan and the
Employee Option Agreements, respectively.

Senior Executive Plan

          In connection with the 1993 Offering, Messrs. O'Connor and McGhan were
granted options pursuant to the Company's Senior Executive Stock Option Plan
(the "Senior Executive Plan") to purchase up to 1,291.95 and 645.97 shares of
Common Stock, respectively, at an exercise price of $833.75 per share (subject
to adjustment for stock splits, stock dividends and similar events).  Such
options vest ratably over a seven year period which began on June 29, 1993 and
will fully vest upon an optionee's death or permanent disability or upon the
occurrence of a Capital Event (as defined in the Senior Executive Plan)
resulting in a compounded annual return of 20% actually realized on the shares
of Common Stock purchased in the 1993 Offering.  In addition, on May 15, 1995,
Messrs. McGhan and Bedrich were granted options to purchase 215.32 and 430.65
shares of Common Stock, respectively, under the Senior Executive Plan.  Such
options have the same terms as those issued to Messrs. O'Connor and McGhan in
connection with the 1993 Offering, except that such options will vest ratably
over a seven year period which began on May 15, 1995.

                                      -47-
<PAGE>

          Options granted under the Senior Executive Plan generally expire
within a specified number of days of the termination of employment of an
optionee, and such options will be forfeited upon the termination for Cause of
an optionee.  The term of each option may not exceed 10 years from the date the
option is granted.  Options may not be transferred other than by will or the
laws of descent and distribution, and during the lifetime of an optionee may be
exercised only by the optionee.  Options granted under the Senior Executive Plan
are nonstatutory options and are not classified as "incentive stock options"
within the meaning of Section 422 of the Code.

          Pursuant to the agreements executed in connection with the grant of
options under the Senior Executive Plan, each of Messrs. O'Connor, McGhan and
Bedrich agreed that he will not, during the term of such agreement and for a
period of one year thereafter, (i) compete with any business of the Company and
(ii) without the Company's consent, disclose to persons outside the Company
confidential information concerning the Company.

1995 Management Option Plan

          In connection with the 1995 Management Offering at $1,100 per share,
the Board adopted the 1995 Management Stock Option Plan (the "1995 Management
Option Plan"), pursuant to which members of the Company's management and
employees who purchased Common Stock in the 1995 Management Offering were issued
options to purchase one-third of one share of Common Stock at a purchase price
of $1,100 per share (subject to adjustment for stock splits, stock dividends and
other similar events) for each share of Common Stock purchased by such persons
in the 1995 Management Offering.  Such options vest ratably over a five year
period which began on July 7, 1995, and are governed by the terms of the 1995
Management Option Plan and individual option agreements (the "1995 Management
Option Agreements").  As of the date of this Offering Memorandum, options with
respect to 83.33 shares of Common Stock were outstanding, none of which were
presently vested.  Other than with respect to the applicable exercise price and
the actual vesting and expiration dates, the 1995 Management Option Plan and the
1995 Management Option Agreements are substantially the same as the Employee
Option Plan and the Employee Option Agreements, respectively.

1995 Employee Option Plan

          In connection with the 1995 Employee Offering at $1,500 per share, the
Board adopted the 1995 Employee Stock Option Plan (the "1995 Employee Option
Plan"), pursuant to which members of the Company's management who purchased
Common Stock in the 1995 Employee Offering were issued options to purchase one-
third of one share of Common Stock at a purchase price of $1,500 per share
(subject to adjustment for stock splits, stock dividends and other similar
events) for each share of Common Stock purchased by such persons in the 1995
Employee Offering.  Such options vest ratably over a five year period which
began on August 31, 1995, and are governed by the terms of the 1995 Employee
Option Plan and individual

                                     -48-
<PAGE>

option agreements (the "1995 Employee Option Agreements"). As of the date of
this Offering Memorandum, options with respect to 575.67 shares of Common Stock
were outstanding, none of which were presently vested. Other than with respect
to the applicable exercise price and the actual vesting and expiration dates,
the 1995 Employee Option Plan and the 1995 Employee Option Agreements are
substantially the same as the Employee Option Plan and the Employee Option
Agreements, respectively.

Rode Issuance

          In connection with the Company's acquisition of PGN, the Company
granted Walter Rode, a former shareholder of PGN, options to purchase 190.45
shares of Common Stock at $1,500 per share.  The terms of these options are
identical to the 1995 Employee Option Plan, except that the vesting period began
on September 8, 1995.

Winds Issuance

          In connection with the issuance of 15 shares of Common Stock to each
of Glen Wind and Kurt Wind (30 shares total) as of January 24, 1996, the Company
granted to each of Glen Wind and Kurt Wind options to acquire 75 shares of
Common Stock (150 shares total) at $1 per share exercisable on terms
substantially similar to the terms of the options granted under the 1995
Employee Offering.

Incentive Option Plan

          In connection with the 1993 Offering, the Board adopted the Company's
Incentive Option Plan, which was amended and restated as of July 20, 1995 (as
amended, the "Incentive Option Plan"), participation in which was open to
members of management who participated in the 1993 Offering and who are employed
by the Company or any of its subsidiaries or affiliates at the time of a Capital
Event (as defined in the Incentive Option Plan) (each a "1993 Eligible
Participant").

          Pursuant to the Incentive Option Plan as presently constituted, the
Company granted certain employees options to purchase 8,554 shares of Common
Stock at an exercise price of $725 per share.  The options vest ratably over a
five year period commencing July 20, 1995 and are governed by the Incentive
Option Plan and individual option agreements (the "Incentive Option
Agreements"). As of the date of this Offering Memorandum, options with respect
to 8,554 shares of Common Stock were outstanding, none of which are presently
vested.  Other than with respect to the applicable exercise price and the actual
vesting and expiration dates, the Incentive Option Plan and the Incentive Option
Agreements are substantially the same as the Employee Option Plan and the
Employee Option Agreements.

                                     -49-
<PAGE>

Summary Compensation Table

          The following table sets forth the total compensation that was awarded
to, earned by or paid to Michael J. McGhan, Michael O'Connor, Curtis Bedrich,
Maxwell McDonald and Charles Erwin (the five other most highly paid executive
officers) as a group during the year ended December 31, 1995.

<TABLE>
<CAPTION>
=================================================================================================================
                                            Annual Compensation        Long Term              All Other
                                                                  Compensation Awards      Compensation(1)
                                             Salary     Bonus        Option Grants
=================================================================================================================
<S>                                         <C>        <C>        <C>                      <C>
CEO and four other most highly
 compensated executive officers...........  $500,000  $527,120            --                     $4,326
=================================================================================================================
</TABLE>

(1)  Consisting of life insurance premiums.

Option Grants in Last Fiscal Year

          During the year ended December 31, 1995, the Company granted the
following number of Options:  (i) 645.97 under the Senior Executive Plan, (ii)
83.33 under the 1995 Management Option Plan, (iii) 575.67 under the 1995
Employee Option Plan, (iv) 8,554 under the Incentive Option Plan and (v) 190.45
to Walter Rode in connection with the Company's acquisition of PGN.  The Company
has not, to date, granted any stock appreciation rights.

Fiscal Year End Option Values

          Shown below is information with respect to unexercised options to
purchase Common Stock in effect as of year-end 1995, all of which were granted
pursuant to the existing option plans of the Company as described in this
Offering Memorandum.  See "Management -- Options."  None of such options have
been exercised.

<TABLE>
<CAPTION>
=================================================================================================================
                                                Number of Unexercised Options   Value of Unexercised in-the-Money
                                                     December 31, 1995             Options at December 31, 1995
                                                     -----------------             ----------------------------
                                                Exercisable      Unexercisable   Exercisable         Unexercisable
------------------------------------------------------------------------------------------------------------------
<S>                                             <C>              <C>            <C>                  <C>
CEO and four other most highly
 compensated executive officers                 1,893.66          9,468.33           $2,036,781       $9,836,610
==================================================================================================================
</TABLE>

Employment Contracts and Other Agreements

          In connection with the Gale Force Acquisition, the Company entered
into an employment agreement with Alan D. Lavenue providing for a two year term.
In connection with the Astra acquisition, the Company adopted a severance plan
for Astra employees.  Such

                                     -50-
<PAGE>

severance plan for Astra employees. Such severance plan provides that if, within
12 months following the Astra acquisition, an Astra employee is terminated
without cause or his or her compensation is reduced by 5% or more as measured
relative to his or her compensation level at the effective time of the Astra
acquisition, such employee is entitled to receive a severance payment equal to
(i) the product of (a) 12 and (b) the employee's average compensation for the 12
month period preceding such employee's termination, less (ii) the amount of
compensation actually paid to such employee since the effective time of the
Astra acquisition.

Compensation Committee and Insider Participation

          The Compensation Committee of the Board consists of Messrs. Goldberg,
Shoemaker, O'Connor and Furgason.  All decisions with respect to compensation
are made by the Board after consideration of the advice of the Compensation
Committee.  From time to time, Mr. McGhan will participate in the deliberations
regarding compensation of the other executive officers of the Company.

<TABLE>
<CAPTION>
====================================================================================================================================
                           OPTIONS ISSUED PURSUANT    OPTIONS ISSUED PURSUANT    OPTIONS ISSUED PURSUANT    OPTIONS ISSUED PURSUANT
                           TO THE 1995 MANAGEMENT      TO THE 1995 EMPLOYEE      TO THE INCENTIVE OPTION    TO THE SENIOR EXECUTIVE
                                 OPTION PLAN             STOCK OPTION PLAN                PLAN                       PLAN
------------------------------------------------------------------------------------------------------------------------------------
<S>                       <C>                        <C>                        <C>                        <C>
CEO and four other most
 highly compensated
 executive officers                  14.34                     152.00                   6,499.76                     645.97
====================================================================================================================================
</TABLE>

Certain Relationships and Related Transactions

          GKH and certain other stockholders of the Company formerly owned
substantially all of the common stock of Combustion.  Combustion was in the
business of refurbishing existing natural gas compressors to bring them into
compliance with certain environmental emissions regulations.  On March 21, 1995,
the Company borrowed $500,000 from Combustion in order to fund certain working
capital needs.  This loan was evidenced by a demand promissory note of the
Company payable to the order of Combustion.  On November 20, 1995, Combustion
merged with and into the Company and as a result thereof, the shareholders of
Combustion received 338.43 shares of Common Stock.

          Mr. Collins, one of the Company's directors and minority stockholders,
controls a corporation which owns a 50% interest in a joint venture to which the
Company leases compressors pursuant to a long-term lease which provides for
monthly payments of $56,450.

                                     -51-
<PAGE>

          Mr. Hanna, one of the Company's directors and minority stockholders,
is the President of Hanna Oil and Gas Company, to which the Company leases
compressors pursuant to month-to-month leases which provide for aggregate
monthly payments of $32,775.

          GKH and the Company have entered into an agreement whereby in exchange
for investment banking and financial advisory services to be rendered by GKH,
the Company has agreed to pay GKH a fee equal to .75% of the value of the
Company determined and payable at such time (i) a capital transaction is
consummated resulting in GKH Investments, L.P. owning less than 25% of the
outstanding Common Stock or (ii) any other transaction occurs resulting in the
effective sale of the Company or its business by the current owners.

                             PRINCIPAL STOCKHOLDERS

Principal Stockholders

          The following table sets forth certain information regarding the
beneficial ownership of the Common Stock of the Company as of December 31, 1995
(i) by each person who is known by the Company to own beneficially more than 5%
of any class of the outstanding Common Stock, (ii) by each director and the
chief executive officer and the four other most highly compensated executive
officers of the Company and (iii) by all of the Company's directors and
executive officers as a group.

<TABLE>
<CAPTION>
==============================================================================================
                                                 Stock Beneficially      Percentage of Stock
Name of Person or Group                                Owned           Beneficially Owned(1)
----------------------                                 -----           ---------------------
----------------------------------------------------------------------------------------------
<S>                                              <C>                     <C>
GKH Investments, L.P.(2)                            64,053.54                   49.9405%
----------------------------------------------------------------------------------------------
Joint Energy Development Investments                11,111.11                    8.6630%
 Limited Partnership
----------------------------------------------------------------------------------------------
Astra Resources, Inc. (Westar Capital, Inc.)        30,555.56                   23.8232%
----------------------------------------------------------------------------------------------
Ted Collins, Jr.                                          855                         *
----------------------------------------------------------------------------------------------
William S. Goldberg(3)                                     --                        --
----------------------------------------------------------------------------------------------
Robert Wasielewski                                         --                        --
----------------------------------------------------------------------------------------------
Melvyn N. Klein(4)                                         --                        --
----------------------------------------------------------------------------------------------
Michael J. McGhan                                      648.51                         *
----------------------------------------------------------------------------------------------
Michael A. O'Connor                                  2,055.07                    1.6023%
----------------------------------------------------------------------------------------------
</TABLE>

                                     -52-
<PAGE>

<TABLE>
<CAPTION>
==============================================================================================
                                                 Stock Beneficially      Percentage of Stock
Name of Person or Group                                Owned           Beneficially Owned(1)
----------------------                                 -----           ---------------------
----------------------------------------------------------------------------------------------
<S>                                              <C>                     <C>
Alvin V. Shoemaker(5)                                   1,622.09                 1.2647%
----------------------------------------------------------------------------------------------
Maxwell C. McDonald                                       754.94                      *
----------------------------------------------------------------------------------------------
Curtis Bedrich                                            750.33                      *
----------------------------------------------------------------------------------------------
James Hanna                                                1,875                 1.4619%
----------------------------------------------------------------------------------------------
William E. Simon, Jr.(6)                                1,827.66                 1.4250%
----------------------------------------------------------------------------------------------
Robert A. Furgason                                            --                     --
----------------------------------------------------------------------------------------------
Charles D. Erwin                                         190.290                      *
----------------------------------------------------------------------------------------------
William C. Bryant                                        240.940                      *
----------------------------------------------------------------------------------------------
Joseph Bradford                                          103.290                      *
----------------------------------------------------------------------------------------------
Donald M. DeVille                                        126.000                      *
----------------------------------------------------------------------------------------------
All directors and officers as a group(7)              10,859.120                 8.4623%
==============================================================================================
</TABLE>

--------------------------------------------------------
*Represents less than 1% of the outstanding Common Stock.

(1)  There are presently 198.40 treasury shares issued which are not counted as
     outstanding in calculating the beneficial ownership percentages.

(2)  Does not include 2,419.69 shares of Common Stock (1.882% of the outstanding
     shares) owned by GKH Partners, L.P., a Delaware limited partnership, as
     nominee for GKH Private Limited, a Singapore corporation.  GKH Partners,
     L.P. is the general partner of GKH Investments, L.P.

(3)  Does not include 255.80 shares of Common Stock (less than 1% of the
     outstanding shares) owned by Mr. Goldberg's wife, Nancy K. Goldberg, not
     individually, but solely as trustee of the Nancy K. Goldberg Declaration of
     Trust.  Mr. Goldberg disclaims beneficial ownership of such shares.

(4)  Mr. Klein, who is a director of the Company, is the sole stockholder of a
     corporation which is a general partner of GKH Partners, L.P.  Mr. Klein
     disclaims beneficial ownership of all shares owned by GKH Partners, L.P.
     and GKH Investments, L.P. and such shares are not included in the number of
     shares owned by Mr. Klein.

                                     -53-
<PAGE>

(5)  Mr. Shoemaker disclaims beneficial ownership of shares owned indirectly by
     his affiliates.

(6)  Mr. Simon disclaims beneficial ownership of shares owned by his affiliates.

(7)  Does not include shares owned by all directors and officers as a group or
     their affiliates for which such directors and officers disclaim beneficial
     ownership.

Stockholders' Agreements

1992 Stockholders' Agreement

          In connection with the 1992 Offering, the persons participating
therein, the Company, HEI, GKH and certain other present and former stockholders
of the Company entered into that certain Stockholders' Agreement dated April 10,
1992 (the "1992 Stockholders' Agreement").  The 1992 Stockholders' Agreement
restricts the sale of Common Stock held by the parties thereto and provides for,
among other things, (i) the right of first refusal of the Company and the right
of second refusal of the other parties thereto with respect to any proposed
transfer of Common Stock (except transfers to affiliates) by a party thereto
other than GKH, (ii) the right of the parties thereto who own a majority of the
shares of Common Stock held by all parties thereto to compel the other parties
thereto to sell their Common Stock upon the sale by such majority of all of
their Common Stock and (iii) the right of each party thereto to participate in
the sale by one or more parties thereto of more than 50% of the outstanding
Common Stock held by all parties thereto.  The 1992 Stockholders' Agreement does
not contain provisions regarding the ability of the Company to redeem all of a
stockholder's Common Stock upon the termination of his employment with the
Company.

          Upon consummation of the 1993 Offering, the Company, HEHC, GKH and
certain persons who purchased Common Stock pursuant thereto entered into that
certain Stockholders' Agreement, dated as of June 29, 1993 (the "1993
Stockholders' Agreement") which substantially superseded the 1992 Stockholders'
Agreement as among the Company and each person who executed the 1993
Stockholders' Agreement.  However, the 1992 Stockholders' Agreement remains in
full force and effect as among the parties thereto which still own shares of
Common Stock.  See "-- 1993 Stockholders' Agreement."

Hanna Stockholders' Agreement

          In connection with the Hanna Acquisition, the Company, GKH, HEHC and
HIG entered into that certain Supplemental Stockholders' Agreement dated as of
October 8, 1993 (the "Hanna Stockholders' Agreement").  The Hanna Stockholders'
Agreement restricts the sale of Common Stock held by the parties thereto and
provides for, among other things, (i) the right of first refusal of the Company
with respect to any proposed transfer of Common Stock (except transfers to
affiliates by HIG), (ii) the right of GKH to compel HIG to sell its Common Stock

                                     -54-
<PAGE>

upon the sale by GKH of all of its Common Stock and (iii) the right of HIG to
participate in the sale by GKH of more than fifty percent of the Common Stock
then owned by GKH.  The Hanna Stockholders' Agreement will terminate six months
after 10% or more of the Common Stock is listed on a nationally recognized
exchange or quoted on the National Association of Securities Dealers Automated
Quotation System ("NASDAQ").

Brenda K. Phillips Stockholders' Agreement

          In connection with the resignation of Brenda K. Phillips ("Phillips"),
a former employee and current stockholder of the Company, Phillips, the Company,
HEHC and GKH entered into that certain Supplemental Stockholders' Agreement,
dated November 19, 1993, the terms of which are similar to those of the Hanna
Stockholders' Agreement.

HEHC Stockholders' Agreement

          In connection with the HEHC Merger, the Company, GKH and the other
former stockholders of HEHC (the "HEHC Stockholders") entered into that certain
Supplemental Stockholders' Agreement dated as of January 27, 1995 (the "HEHC
Stockholders' Agreement").  The HEHC Stockholders' Agreement restricts the sale
of Common Stock held by the parties thereto (subject to certain exceptions for
dispositions pursuant to an effective registration statement under the
Securities Act or pursuant to any public distribution pursuant to Rule 144 of
the Securities Act, and except for dispositions of Common Stock by GKH to its
partners) and provides for, among other things, (i) the right of first refusal
of GKH with respect to any proposed transfer of Common Stock (except transfers
to affiliates) by an HEHC Stockholder, (ii) the right of GKH to compel the HEHC
Stockholders to sell their Common Stock upon the sale by GKH of all of its
Common Stock and (iii) the right of each HEHC Stockholder to participate in the
sale by GKH of any or all of its Common Stock.  The HEHC Stockholders' Agreement
also contains provisions regarding the right of the HEHC Stockholders to
designate a maximum of two members of the Board (the "HEHC Designees"), as well
as a requirement that such HEHC Designees approve certain transactions and acts
engaged in by the Company.  Each party to the HEHC Stockholders' Agreement also
agrees to notify the Board if it or any of its affiliates engages in or makes an
investment in any business or entity competitive with the business then being
conducted by the Company or any subsidiary thereof.  The HEHC Stockholders'
Agreement would terminate upon the consummation of a publicly registered
offering of twenty-five percent or more of the Common Stock.  The parties to the
HEHC Stockholders' Agreement are also parties to the Amended and Restated
Registration Rights Agreement.  See "-- Registration Rights Agreements."

Gale Force Stockholders' Agreement

          In connection with the Gale Force Acquisition, the Company, GKH, and
certain persons who acquired Common Stock pursuant to the Gale Force Acquisition
(the "Gale Force

                                     -55-
<PAGE>

Stockholders") entered into that certain Supplemental Stockholders' Agreement,
dated as of March 8, 1995 (the "Gale Force Stockholders' Agreement"). The Gale
Force Stockholders' Agreement restricts the sale of Common Stock held by the
parties thereto and provides for, among other things, (i) the right of first
refusal of the Company and the right of second refusal of GKH with respect to
any proposed transfer of Common Stock (except transfers to affiliates) by a Gale
Force Stockholder, (ii) the right of GKH to compel the Gale Force Stockholders
to sell their Common Stock upon the sale by GKH of all of its Common Stock and
(iii) the right of each Gale Force Stockholder to participate in the sale by (a)
GKH of more than fifty percent of the Common Stock then owned by GKH or (b) by
GKH and other stockholders of the Company of more than fifty percent of the
outstanding Common Stock of the Company. The Gale Force Stockholders' Agreement
also contains provisions whereby the Gale Force Stockholders agree to vote their
shares in order to ensure the election to the Board of Messrs. O'Connor and
McGhan and such other individuals as nominated by GKH. In addition, in the event
the Company offers GKH the opportunity to purchase additional shares of Common
Stock, the Gale Force Stockholders will have the right to acquire their
respective pro rata share of such Common Stock on the same terms and conditions
offered to GKH. The Gale Force Stockholders' Agreement will terminate upon ten
percent or more of the Common Stock being listed on a nationally recognized
exchange or quoted on the NASDAQ. The parties to the Gale Force Stockholders'
Agreement are also parties to the Amended and Restated Registration Rights
Agreement. See "--Registration Rights Agreements."

JEDI Stockholders' Agreement

          In connection with the Series B Preferred Stock Issuance and the
issuance of Common Stock to JEDI, the Company, GKH and JEDI entered into that
certain Stockholders' Agreement dated as of August 7, 1995 (the "JEDI
Stockholders' Agreement"), containing terms substantially similar to those
contained in the Stockholders' Agreement, except that (i) until the earlier to
occur of the Company having satisfied all of its obligations to JEDI under the
JEDI Loan Agreement and a public offering of the Common Stock, JEDI has the
right with respect to certain equity offerings of the Company to existing
Company stockholders (each a "Rights Offering") (a) to subscribe for the first
fifteen percent of such Rights Offering on an exclusive basis, (b) subscribe for
its pro rata share of the remaining equity under the Rights Offering and (c)
cause its duly licensed affiliate to underwrite all of such Rights Offering in
the event JEDI and the Company can mutually agree on the terms of such
underwriting, (ii) so long as JEDI owns at least 7.5% of the outstanding Common
Stock (on a fully diluted basis) and generally does not hold an equity interest
in a competitor of the Company, JEDI has certain rights regarding notice of and
attendance at meetings of the Board and has the right to elect one member of the
Board and (iii) the right of inclusion of the non-GKH stockholders parties
thereto is triggered only in the event that GKH proposes to sell all of its
Common Stock and Preferred Stock.  In addition, the agreement terminates upon
the earliest to occur of certain events, including the consummation of a
publicly registered offering of 20% or more of the Common Stock or August 1,
2005.

                                     -56-
<PAGE>

Astra Stockholders' Agreement

          In connection with the Astra merger, the Company, GKH and Astra
Resources entered into that certain stockholders' agreement dated as of December
6, 1995 (the "Astra Stockholders' Agreement") containing terms substantially
similar to those contained in the Stockholders' Agreement except that (i) in the
event the Company makes an equity offering of Common Stock, Astra has the right
to subscribe for such amount of Common Stock as to enable it to maintain a 20%
ownership interest in the Company, (ii) so long as Astra owns at least 15% of
the outstanding Common Stock and does not engage in a competitive business it
shall have the right to nominate that number of directors which would constitute
20% of the members of the Board, and (iii) the right of inclusion of the non-GKH
stockholders parties thereto is triggered only in the event that GKH proposes to
sell all of its Common Stock and Preferred Stock.  In addition, the agreement
terminates upon the earliest to occur of certain events, including consummation
of a publicly registered offering of 20% or more of the Common Stock or August
1, 2005.

Registration Rights Agreements

          The Company, GKH and the other parties to the HEHC Stockholders'
Agreement, the Gale Force Stockholders' Agreement, the JEDI Stockholders'
Agreement and the Astra Stockholders' Agreement (GKH and such stockholders,
hereinafter "Holders") are party to that certain Third Amended and Restated
Registration Rights Agreement, dated as of December 5, 1995 (the "Third Amended
and Restated Registration Rights Agreement").  The Third Amended and Restated
Registration Rights Agreement generally provides that in the event the Company
proposes to register under the Securities Act shares of its capital stock or any
other securities, then upon the request of those Holders owning in the aggregate
at least 2.5% of the Common Stock or derivatives thereof (the "Registrable
Securities") then held by all of the Holders, the Company must use its
reasonable best efforts to cause the Registrable Securities so requested by the
Holders to be included in the applicable registration statement; provided,
however, that the Holders' right to have their Registrable Securities so
included in a registration is limited in the event and to the extent that the
managing underwriter(s) of the registration in question are of the opinion that
the inclusion of the number of Registrable Securities held by Holders requesting
inclusion in the applicable registration statement would materially interfere
with the underwriters' ability to effectuate the registration and sale of
securities proposed to be offered and sold pursuant to such registration
statement.  The Company agrees to pay all registration expenses in connection
with registrations of Registrable Securities effected pursuant to the Third
Amended and Restated Registration Rights Agreement; however, all fees and
expenses relating to the distribution of such Registrable Securities are to be
borne by the Company and each Holder pro rata based on the number of Registrable
Securities included in the registration for the account of the Company and each
Holder.  The Company, in connection with filing a registration statement in
accordance with this agreement, would also have the obligation to apply for
listing and use its reasonable best efforts to list the Registrable Securities
being registered on any

                                     -57-
<PAGE>

national exchange on which a class of the Company's equity securities is listed,
or if there is no class of Company equity security so listed, then to use its
reasonable best efforts to qualify such Registrable Securities for inclusion on
the NASDAQ. In addition, after December 5, 1999, any single Holder of Common
Stock which owns 18% or more of the Common Stock has the right to demand the
registration of its Common Stock.

                      DESCRIPTION OF CERTAIN INDEBTEDNESS

          The following summaries relate to (i) certain provisions of the Bank
Credit Agreement and (ii) certain provisions of the JEDI Loan Agreement.  The
summary of the provisions relating to the Bank Credit Agreement and the JEDI
Loan Agreement do not purport to be complete and are qualified in their entirety
by reference to the relevant agreements (including all amendments) relating
thereto, copies of which are available for review at the principal offices of
the Company.

The Bank Credit Agreement and the JEDI Loan Agreement

          The Bank Credit Agreement provides for a four year revolving credit
facility which provides for a maximum commitment of $90,000,000.  Amounts
outstanding under the Bank Credit Agreement bear interest at a rate equal to
LIBOR plus 0.5% to LIBOR plus 1.5% and matures (absent acceleration) on December
18, 1999.  As of December 31, 1995, $16,900,000 was outstanding under the Bank
Credit Agreement.

          The JEDI Loan Agreement provides for a revolving five year committed
availability (through December 19, 2000) of up to $100,000,000 with maturities
ranging from one to seven years.  Amounts outstanding under the JEDI Loan
Agreement bear interest at a rate equal to, at the Company's option, either (i)
the sum of the U.S. Treasury Bill yield to maturity as set forth in the Wall
Street Journal plus a specified margin or (ii) the sum of the LIBOR Base Rate
(as defined in the JEDI Loan Agreement) plus a specified margin.  As of December
31, 1995 principal of $30,000,000 was outstanding under the JEDI Loan Agreement.

          Each of the Bank Credit Agreement and the JEDI Loan Agreement
(collectively, the "Loan Agreements") is secured pursuant to a collateral trust
agreement by all of the assets of the Company and its qualified subsidiaries and
contains certain restrictive covenants that impose limitations (subject to
certain exceptions) on the Company, including, among others, limitations with
respect to (i) maintaining certain ratios, including ratios with respect to (a)
consolidated indebtedness to consolidated capitalization, (b) consolidated
earnings before income tax, depreciation and amortization to consolidated
interest expense and (c) current assets to current liabilities, (ii) incurring
additional indebtedness, (iii) creating, incurring, assuming or suffering to
exist any mortgage, pledge, lien or other encumbrance or security interest, (iv)
creating, incurring, assuming or suffering to exist any guarantee or similar
obligation, (v) effecting certain fundamental changes, including any merger or
sale of all or substantially all of the Company's

                                     -58-
<PAGE>

assets, (vi) selling any of the Company's assets except in the ordinary course
of business or as otherwise permitted, (vii) increasing lease expense in excess
of certain limits, (viii) declaring or paying dividends, (ix) making capital
expenditures in excess of certain prescribed limits, (x) making any advance,
loan or similar investment in any person, (xi) making optional payments or
prepayments or amending the terms of any indebtedness, (xii) entering into any
transaction with affiliates, (xiii) the sale and leaseback of any of the
Company's real or personal property, (xiv) changing the Company's fiscal year
and (xv) entering into agreements which permits the Company to incur liens or
other restrictions on its assets.

          Each of the Loan Agreements contains certain default provisions,
including, among others, (i) failure of the Company to pay any principal or
interest thereunder when due, (ii) breach by the Company or any of its
subsidiaries or affiliates which are parties to the Loan Agreements of any
representation or warranty made therein or in the other documents contemplated
thereby, (iii) default by the Company or any of its subsidiaries in the
observance or performance of any covenant or agreement contained therein or in
the other documents contemplated thereby, (iv) cessation of the security
agreements and related documents executed thereunder to be in full force and
effect, (v) default by the Company or any of its subsidiaries in the payment of
any indebtedness or guarantee in excess of specified amounts, which default
remains in effect for 30 days, or any other breach under agreements with respect
to such indebtedness or guarantees which causes such indebtedness or guarantee
to be accelerated, (vi) occurrence of certain bankruptcy related events, (vii)
occurrence of certain events related to ERISA obligations, (viii) entering of
one or more significant judgements or decrees against the Company or any of its
subsidiaries, (ix) the incurrence by the Company or any of its subsidiaries of
significant liability for remediation or environmental compliance (or penalty
with respect thereto) and (x) under the Bank Credit Agreement, the cessation of
GKH to own directly or indirectly 30% of the issued and outstanding Common
Stock.

                          DESCRIPTION OF CAPITAL STOCK

          The authorized capital stock of the Company currently consists of
500,000 shares of Common Stock and 200,000 shares of Preferred Stock, $.01 par
value per share, of which 50,000 shares have been designated as Series A
Preferred Stock, 15,000 shares have been designated as Series B Preferred Stock
and 135,000 shares remain undesignated ("Preferred Stock").  As of December 31,
1995, 128,259.63 shares of Common Stock are issued and outstanding, and 21,602
shares and 10,000 shares of Series A and Series B Preferred Stock, respectively,
are outstanding.  An additional 22,887.29 shares of Common Stock are reserved
for issuance pursuant to options, warrants and the conversion of the Series B
Preferred Stock.

          The following summary description relating to the capital stock does
not purport to be complete.  For a detailed description, reference is made to
the Certificate of Incorporation of the Company, as amended (the "Certificate"),
which is available at the Company for review.

                                     -59-
<PAGE>

Common Stock

          As of December 31, 1995, there were 128,259.63 shares of Common Stock
outstanding held of record by 100 stockholders (not including 198.40 treasury
shares then held by the Company).  The holders of Common Stock are entitled to
one vote for each share held of record on all matters submitted to a vote of the
stockholders.  Subject to preferential rights with respect to the Preferred
Stock, holders of Common Stock are entitled to receive ratably such dividends as
may be declared by the Board out of legally available funds.  In the event of a
liquidation, dissolution, sale or winding up of the Company, holders of Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities and satisfaction of preferential rights and have no rights to
convert their Common Stock into any other securities.  Holders of Common Stock
have no preemptive or subscription rights unless (i) they are a party to the
Gale Force Stockholders' Agreement, the JEDI Stockholders' Agreement or the
Astra Stockholders' Agreement or (ii) they become a party to the Stockholders'
Agreement, and then only to the extent provided in each such agreement.  See
"Principal Stockholders -- Stockholders' Agreements" and "The Offering --
Stockholders' Agreement -- Preemptive Rights."  There are no redemption or
conversion rights with respect to any shares of Common Stock.  The outstanding
shares of Common Stock are, and the shares of Common Stock to be issued pursuant
to this offering will be, fully paid and nonassessable.

Preferred Stock

          The Company currently has 21,602 shares of Series A and 10,000 shares
of Series B Preferred Stock outstanding.  In addition, the Board has the
authority to cause the Company to issue without any further vote or action by
the stockholders, up to the remaining authorized and unissued number of shares
of Preferred Stock in one or more series, to designate the number of shares
constituting any series, and to fix the rights, preferences, privileges and
restrictions thereof, including dividend rights, conversion rights, voting
rights, rights and terms of redemption, redemption price or prices and
liquidation preferences of such series.

          On August 7 and September 29, 1995, the Company issued the Series A
Preferred Stock in an aggregate amount of 21,602 shares at $1,000 per share,
bearing a 6.5% annual cumulative dividend.  Dividends on the Series A Preferred
Stock are payable in additional shares of Series A Preferred Stock during the
initial three years after issuance, and in cash thereafter.  Each share of
Series A Preferred Stock carries with it a detachable warrant to purchase 0.1667
shares of Common Stock at $1.00 per share, which warrants vest 20% at the time
of issuance and, thereafter, incrementally on a monthly basis over the
subsequent three years.  Upon exercise of the warrants, the holders of the
Common Stock underlying the warrants have so-called "piggy-back" registration
rights with respect thereto.  In addition, the holders of the Series A Preferred
Stock have special voting rights along with the holders of the Series B
Preferred Stock with respect to certain enumerated transactions.  All holders of
the Series A Preferred Stock have entered into the Stockholders' Agreement.  See
"Offering -- Stockholders' Agreement."

                                     -60-
<PAGE>

          On August 7, 1995, the Company issued the Series B Preferred Stock to
JEDI in an aggregate amount of 10,000 shares at $1,000 per share, bearing a 6.5%
cumulative dividend.  The 6.5% per share per annum dividend on the Series B
Preferred Stock is payable in additional shares of Series B Preferred Stock
during the initial three years after issuance, and in cash thereafter.  The
Series A Preferred Stock is not redeemable by the Company until (i) any
"Redemption Event" (e.g., sale of all of the Company's assets, a merger in which
the Company is not the surviving corporation or GKH not owning more than 50% of
the outstanding Common Stock) or (ii) the third anniversary of the initial
issuance thereof, and thereafter is redeemable at a price which is based on the
initial purchase price and which varies based on the timing of such redemption.
Upon the occurrence of a Redemption Event, the holders of the Preferred Stock
have the right to require the Company to redeem all or any portion of its Series
B Preferred Stock at $1,000 per share plus accrued but unpaid dividends thereon.
The Series B Preferred Stock is redeemable by the Company and the holders
thereof on the same terms on which the Series A Preferred Stock may be redeemed.
Following the third anniversary of the issuance of the Series B Preferred Stock
or upon a Redemption Event, JEDI is permitted to convert the Series B Preferred
Stock into shares of Common Stock at a conversion price equal to the greater of
(i) $2,100 and (ii) the product of (A) 6.4 and (B) a per share calculation of
the Company's earnings before interest, taxes, depreciation and amortization for
a given period, less the Company's consolidated long term debt and liquidation
preference of the Preferred Stock (without premium) at a given time.  The
conversion price of the Series B Preferred Stock is also subject to standard
anti-dilution adjustments.  In addition, the holders of the Series B Preferred
Stock have special voting rights along with the holders of the Series A
Preferred Stock (as defined below) with respect to certain enumerated
transactions.

Options

          The Company currently has outstanding options to purchase 322.5 shares
of Common Stock at $1.00 per share.  Of these options, 172.5 were issued to
certain executive officers in connection with the 1992 Stock Plan and 75 were
issued to each of Glen Wind and Kurt Wind (150 total) in connection with their
purchase of Common Stock as of January 24, 1996.  The options issued in
connection with the 1992 Stock Plan expire at various times in 2007 and the
options issued to each of Glen Wind and Kurt Wind on January 24, 2006.

          The Company currently has outstanding options to purchase 10,918.50
shares of Common Stock at $725 per share.  Of these options, 850.5 were issued
to certain executive officers in connection with the 1992 Stock Plan, 1,514 were
issued to certain members of the Company's management in connection with the
1993 Option Plan and 8,554 were issued to Company management in connection with
the Incentive Option Plan.  The options issued pursuant to the 1992 Stock Plan
expire at various times in 2007, the options issued pursuant to the 1993 Option
Plan expire on June 29, 2003 and the options issued pursuant to the Incentive
Option Plan expire on July 20, 2005.

                                     -61-
<PAGE>

          The Company currently has outstanding options to purchase 2,583.89
shares of Common Stock at $833.75 per share.  All such options were issued to
certain executive officers in connection with the Senior Executive Plan.  With
respect to these options, 1,937.92 will expire June 29, 2003 and 645.97 will
expire May 15, 2005.

          The Company currently has outstanding options to purchase 83.33 shares
of Common Stock at $1,100 per share.  All such options were granted under the
1995 Management Option Plan and will expire on July 7, 2005.

          The Company currently has outstanding options to purchase 766.12
shares of Common Stock at $1,500 per share.  With respect to these options,
575.67 were granted under the 1995 Employee Option Plan and will expire on
August 31, 2005 and 190.45 were granted to Walter Rode in connection with the
acquisition of PGN and will expire on September 8, 2005.

          The Company currently has outstanding options to purchase 89 shares of
Common Stock at $1,551 per share.  These options were issued to Don DeVille on
terms substantially similar to terms governing the options granted under the
1995 Employee Offering and will expire on January 19, 2006.

          As long as the options remain unexercised and outstanding, the holders
thereof will have the opportunity to profit from an increase in the value of the
Common Stock, if any, without assuming the risk of ownership.

Special Provisions of the Certificate of Incorporation and Delaware Law

Limitation of Director Liability

          Section 102(b)(7) of the Delaware General Corporation Law ("Section
102(b)") authorizes corporations to limit or eliminate the personal liability of
directors to corporations and their stockholders for monetary damages for breach
of directors' fiduciary duty of care.  Although Section 102(b) does not change
directors' duty of care, it enables corporations to limit available relief to
equitable remedies such as injunction or rescission.  The Company's Certificate
of Incorporation limits the liability of directors to the Company or its
stockholders (in their capacity as directors but not in their capacity as
officers) to the fullest extent permitted by Section 102(b).  Specifically,
directors of the Company will not be personally liable for monetary damages for
breach of a director's fiduciary duty as a director, except for liability (i)
for any breach of the director's duty of loyalty to the Company or its
stockholders (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) for unlawful
payments of dividends or unlawful stock repurchases or redemptions as provided
in Section 174 of the Delaware General Corporation Law or (iv) for any
transaction from which the director derived an improper personal benefit.  The
Certificate of Amendment provides for mandatory indemnification of directors and
officers of the Company and also

                                     -62-
<PAGE>

includes a provision regarding compromises or arrangements between the Company
and its creditors.

Indemnification

          To the maximum extent permitted by law, the Company's Certificate of
Incorporation and Bylaws provide for mandatory indemnification of directors and
permit indemnification of officers, employees and agents of the Company against
all expense, liability and loss to which they may become subject or which they
may incur as a result of being or having been a director, officer, employee or
agent of the Company.  In addition, the Company must advance or reimburse
directors, and may advance or reimburse officers, employees and agents for
expenses incurred by them in connection with indemnifiable claims.

                             ADDITIONAL INFORMATION

          The Company intends to supply its stockholders on an annual basis with
a copy of its audited financial statements.

          Each prospective investor and/or his purchaser or other
representatives are hereby granted access to, and are invited to review, all
materials available to the Company relating to this offering or anything set
forth in this Offering Memorandum.

          The Company will answer all inquiries from prospective investors or
their representatives relating to the transactions contemplated hereunder and
will afford prospective investors and their representatives the opportunity to
obtain any additional information (to the extent that the Company possesses such
information or can acquire it without unreasonable effort or expense) necessary
to verify the accuracy of the information set forth in this Offering Memorandum.

          Each prospective investor should use this opportunity to communicate
directly with his own legal counsel, accountants and other professional advisors
who can help the prospective investor evaluate the merits and risks of a
purchase of the Shares and the tax and legal aspects thereof.

                                     -63-

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