Document:

<PAGE>   1
                                                                    Exhibit 10.4

                         SUBSIDIARY ASSUMPTION AGREEMENT

         SUBSIDIARY ASSUMPTION AGREEMENT (this "Agreement"), dated as of October
15, 2000, made by each of the undersigned subsidiaries (the "New Subsidiaries"
and each, a "New Subsidiary"). Unless otherwise defined herein, all capitalized
terms used herein and defined in the Credit Agreement referred to below are used
herein as so defined.

                                   WITNESSETH:

         WHEREAS, Universal Compression Holdings, Inc. ("Holdings"), Universal
Compression, Inc. (the "Borrower"), various lending institutions from time to
time party thereto, Deutsche Bank Securities Inc., as Lead Arranger and Bankers
Trust Company, as Administrative Agent, have entered into a Credit Agreement,
dated as of May 30, 2000 (as amended, restated, modified and/or supplemented
from time to time the "Credit Agreement");

         WHEREAS, in connection with the Credit Agreement, the Borrower and the
Subsidiary Guarantors have entered into a Subsidiaries Guaranty, dated as of May
30, 2000 (as amended, restated, modified and/or supplemented from time to time,
the "Subsidiaries Guaranty");

         WHEREAS, in connection with the Credit Agreement, Holdings, the
Borrower and the Subsidiary Guarantors have entered into a Pledge Agreement,
dated as of May 30, 2000, (as amended, restated, modified and/or supplemented
from time to time, the "Pledge Agreement");

         WHEREAS, in connection with the Credit Agreement, Holdings, the
Borrower and the Subsidiary Guarantors have entered into a Security Agreement,
dated as of May 30, 2000, (as amended, restated, modified and/or supplemented
from time to time, the "Security Agreement", and together with the Subsidiaries
Guaranty and the Pledge Agreement, the "Documents");

         WHEREAS, each New Subsidiary is a Wholly-Owned Subsidiary of the
Borrower;

         WHEREAS, pursuant to the Credit Agreement, each New Subsidiary is
required to become a party to the Documents; and

         WHEREAS, each New Subsidiary desires to execute and deliver this
Agreement in order to become a party to each of the Documents.

         NOW, THEREFORE, IT IS AGREED:

         1. Subsidiaries Guaranty. By executing and delivering this Agreement,
each New Subsidiary hereby becomes a party to the Subsidiaries Guaranty as a
"Guarantor" thereunder, and hereby expressly assumes all obligations and
liabilities of a "Guarantor" thereunder. Each New Subsidiary hereby makes each
of the representations and warranties contained in the Subsidiaries Guaranty,
after giving effect to this Agreement.

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<PAGE>   2

         2. Pledge Agreement. By executing and delivering this Agreement, each
New Subsidiary hereby becomes a party to the Pledge Agreement as a "Pledgor"
thereunder, and hereby expressly assumes all obligations and liabilities of a
"Pledgor" thereunder. Annexes A, B, C, D, and I to the Pledge Agreement are each
hereby amended by supplementing such Annexes with the information contained on
Annexes A, B, D and I attached to Annex I of this Agreement for each New
Subsidiary. Each New Subsidiary hereby makes each of the representations and
warranties contained in Section 16 of the Pledge Agreement, after giving effect
to this Agreement.

         3. Security Agreement. By executing and delivering this Agreement, each
New Subsidiary hereby becomes a party to the Security Agreement as an "Assignor"
thereunder, and hereby expressly assumes all obligations and liabilities of an
"Assignor" thereunder. Annexes A, B, C, D, E, F and G to the Security Agreement
are each hereby amended by supplementing such Annexes with the information
contained on Annexes A, B, C, D, E, F and G attached to Annex II of this
Agreement for each New Subsidiary. Each New Subsidiary hereby makes each of the
representations and warranties contained in the Security Agreement on the date
hereof, after giving effect to this Agreement.

         4. Pledged Securities; Financing Statements. By executing and
delivering this Agreement, each New Subsidiary hereby agrees to:

         (i) deposit as security with the Pledgee (as defined in the Pledge
     Agreement) the Securities (as defined in the Pledge Agreement), if any,
     owned by such New Subsidiary on the date hereof, and deliver to the Pledgee
     certificates or instruments therefor, duly endorsed in blank by such New
     Subsidiary in the case of Notes (as defined in the Pledge Agreement) and
     accompanied by undated stock powers duly executed in blank by such New
     Subsidiary in the case of Stock (as defined in the Pledge Agreement), or
     such other instruments of transfer as are acceptable to the Pledgee; and

         (ii) execute and deliver to the Collateral Agent (as defined in the
     Security Agreement) such financing statements, in form acceptable to the
     Collateral Agent, as the Collateral Agent may request or as are necessary
     or desirable in the opinion of the Collateral Agent to establish and
     maintain a valid, enforceable, first priority perfected security interest
     in the Collateral (as defined in the Security Agreement) owned by such New
     Subsidiary.

         5. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.

         6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK.

                                      * * *

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<PAGE>   3

         IN WITNESS WHEREOF, the undersigned has caused this Agreement to be
duly executed and delivered as of the date first above written.

ADDRESS                                  SUBSIDIARY

                                         GAS COMPRESSION FINANCE CORPORATION

                                         By: /s/ STEPHEN A. SNIDER
                                            ------------------------
                                            Name:  Stephen A. Snider
                                            Title: President

                                         G.C.S. DISTRIBUTING L.L.C.

                                         By: /s/ STEPHEN A. SNIDER
                                            ------------------------
                                            Name:  Stephen A. Snider
                                            Title: Manager

                                         GAS COMPRESSION REALTY L.L.C.

                                         By: /s/ STEPHEN A. SNIDER
                                            ------------------------
                                            Name:  Stephen A. Snider
                                            Title: Manager

ACKNOWLEDGED AND ACCEPTED:

BANKERS TRUST COMPANY,
    as Administrative Agent

By: /s/ MARCUS M. TARKINGTON
   -----------------------------------
   Name:  Marcus M. Tarkington
   Title: Director

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<PAGE>   4
                                                                      ANNEX I TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                                  PLEDGED STOCK
                   (SUPPLEMENT TO ANNEX A TO PLEDGE AGREEMENT)

<TABLE>
<CAPTION>
                                                                           PERCENTAGE OF
                                                                           OUTSTANDING
NAME OF ISSUING                               TYPE OF SHARES    NO. OF     SHARES OF
CORPORATION               CERTIFICATE NO.     COMMON            SHARES     CAPITAL STOCK
---------------           ---------------     --------------    ------     -------------
<S>                       <C>                 <C>               <C>        <C>
Gas Compression Finance          4                               50,000        100%
Corporation
</TABLE>

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<PAGE>   5
                                                                      ANNEX I TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                                  PLEDGED NOTES
                   (SUPPLEMENT TO ANNEX B TO PLEDGE AGREEMENT)

None.

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<PAGE>   6
                                                                      ANNEX I TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                          PLEDGED PARTNERSHIP INTERESTS

                   (SUPPLEMENT TO ANNEX C TO PLEDGE AGREEMENT)

None.

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<PAGE>   7
                                                                      ANNEX I TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                   PLEDGE LIMITED LIABILITY COMPANY INTERESTS

                   (SUPPLEMENT TO ANNEX D TO PLEDGE AGREEMENT)

G.C.S. Distributing L.L.C.

Gas Compression Realty L.L.C.

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<PAGE>   8
                                                                      ANNEX I TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                            LIST OF OFFICE LOCATIONS

                   (SUPPLEMENT TO ANNEX I TO PLEDGE AGREEMENT)

IV.      Gas Compression Finance Corporation
         4440 Brittmoore Road
         Houston, Texas  72480 Aero Park Drive

         2480 Aero park Drive
         Traverse City, Michigan  49686

V.       G.C.S. Distributing L.L.C.
         4400 Brittmoore Road
         Houston, Texas  77041

         2480 Aero Park Drive
         Traverse City, Michigan  49686

VI.      Gas Compression Realty L.L.C.
         4400 Brittmoore Road
         Houston, Texas  77041

         2480 Aero Park Drive
         Traverse City, Michigan  49686

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<PAGE>   9
                                                                      ANNEX I TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                           SCHEDULE OF CHIEF EXECUTIVE
                            OFFICES/RECORD LOCATIONS
                (SUPPLEMENT TO ANNEX A TO THE SECURITY AGREEMENT)
                                       AND
                  SCHEDULE OF EQUIPMENT AND INVENTORY LOCATIONS
                (SUPPLEMENT TO ANNEX B TO THE SECURITY AGREEMENT)

CHIEF EXECUTIVE OFFICE:

IV.      Gas Compression Finance Corporation
         4440 Brittmoore Road
         Houston, Texas  7704

V.       G.C.S. Distributing L.L.C.
         4400 Brittmoore Road
         Houston, Texas  77041

VI.      Gas Compression Realty L.L.C.
         4400 Brittmoore Road
         Houston, Texas  77041

ADDITIONAL LOCATIONS:

VII.     Gas Compression Finance Corporation
         2480 Aero Park Drive
         Traverse City, Michigan  49686

VIII.    G.C.S. Distributing L.L.C.
         2480 Aero Park Drive
         Traverse City, Michigan  49686

IX.      Gas Compression Realty L.L.C.
         2480 Aero Park Drive
         Traverse City, Michigan  49686

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<PAGE>   10
                                                                     ANNEX II TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                  SCHEDULE OF TRADE, FICTITIOUS AND OTHER NAMES
                (SUPPLEMENT TO ANNEX C TO THE SECURITY AGREEMENT)

Gas Compression Services, Inc. ("GCS")

Gas Compression Finance Corporation ("GCFC")

G.C.S. Distributing L.L.C.

Gas Compression Realty L.L.C.

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<PAGE>   11
                                                                     ANNEX II TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                                SCHEDULE OF MARKS
                (SUPPLEMENT TO ANNEX D TO THE SECURITY AGREEMENT)

www.gascompression.com

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<PAGE>   12
                                                                     ANNEX II TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                 SCHEDULE OF LICENSE AGREEMENTS AND ASSIGNMENTS
                (SUPPLEMENT TO ANNEX E TO THE SECURITY AGREEMENT)

None.

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<PAGE>   13
                                                                     ANNEX II TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                      SCHEDULE OF PATENTS AND APPLICATIONS
                (SUPPLEMENT TO ANNEX F TO THE SECURITY AGREEMENT)

None.

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<PAGE>   14
                                                                     ANNEX II TO
                                                           SUBSIDIARY ASSUMPTION
                                                                       AGREEMENT

                     SCHEDULE OF COPYRIGHTS AND APPLICATIONS
                (SUPPLEMENT TO ANNEX G TO THE SECURITY AGREEMENT)

None.

14 of 14<PAGE>   1

                                                               EXHIBIT 10.5

                              WAIVER AND AGREEMENT
                           RE SEPTEMBER FUNDINGS UNDER
                       UNIVERSAL SYNTHETIC LEASE FACILITY

         WAIVER AND AGREEMENT (this "Waiver and Agreement"), dated as of
September 13, 2000, among UNIVERSAL COMPRESSION HOLDINGS, INC. (the
"Guarantor"), UNIVERSAL COMPRESSION, INC. (the "Lessee"), WILMINGTON TRUST
COMPANY, not in its individual capacity, but solely as Trustee of Universal
Compression Trust (2000-1) under the Trust Agreement dated as of May 25, 2000
(the "Lessor"), BANKERS TRUST COMPANY, as Administrative Agent (the
"Administrative Agent") and as Collateral Agent (the "Collateral Agent"), the
financial institutions party to the Participation Agreement (referred to below)
as Certificate Holders (the "Certificate Holders") and the financial
institutions party to the Participation Agreement as Lenders (the "Lenders").
All capitalized terms used herein and not otherwise defined herein shall have
the respective meanings provided such terms in Appendix A to the Participation
Agreement referred to below.

                                   WITNESSETH:

         WHEREAS, the Guarantor, the Lessee, the Lessor, Wilmington Trust
Company, in its individual capacity, (the "Trust Company"), the Administrative
Agent, the Collateral Agent, the Certificate Holders and the Lenders, among
others, are parties to the Participation Agreement, dated as of May 30, 2000 (as
amended, modified or supplemented to, but not including, the date hereof, the
"Participation Agreement"); and

         WHEREAS, the Lessee has requested that the Lessor, the Lenders and the
Certificate Holders provide the waivers set forth herein and the Lessor and the
undersigned Lenders and Certificate Holders have agreed to provide such waivers
on the terms and conditions and in consideration of the covenants by the Lessee
set forth herein;

         NOW, THEREFORE, it is agreed:

         1. With respect to a proposed funding under the Participation Agreement
on September 15, 2000, or such later date in September 2000 as may be agreed by
the Administrative Agent and the Lessee (the "First Proposed Funding" and the
date of such funding, the "First Proposed Funding Date"), the Majority Lenders
and Majority Certificate Holders parties hereto agree, subject to satisfaction
of all of the conditions set forth in Section 2 hereof, as follows:

                  (a) the condition precedent that the Lessee deliver on or
before September 7, 2000 a Certificate of Equipment pursuant to Section
3.1(b)(v) of the Participation Agreement is hereby waived;

                  (b) the condition precedent that the Lessee deliver on or
before September 12, 2000 a Funding Notice pursuant to Section 3.1(b)(x) of the
Participation Agreement is hereby waived;

<PAGE>   2

                  (c) the condition precedent that the Administrative Agent and
Lessor shall have received prior to the First Proposed Funding Date lien
searches pursuant to Section 3.1(b)(xv) of the Participation Agreement is hereby
waived; and

                  (d) the requirement that fundings under the Participation
Agreement shall take place on the 30th of each calendar month is hereby waived.

         2.       Each of the waivers set forth in Section 1 hereof shall be
subject to satisfaction of each of the following conditions:

                  (a) the Lessee shall have delivered on September 13, 2000 a
Certificate of Equipment that, but for the date of delivery, satisfies the
requirements of Section 3.1(b)(v) of the Participation Agreement;

                  (b) the Lessee shall have delivered on September 14, 2000 a
Funding Notice that, but for the date of delivery, satisfies the requirements of
Section 3.1(b)(x) of the Participation Agreement and includes wire instructions
instructing the Collateral Agent to wire transfer the amounts to be advanced by
the Certificate Holders and Lenders to the secured lenders the ("GCSI Lenders")
of Gas Compression Services, Inc. ("GCSI") and other related persons identified
on Schedule 1 hereto;

                  (c) the Lessee shall have delivered on September 13, 2000 a
copy of the agreement by which the Lessee has agreed to acquire GCSI and written
confirmations from each of the GCSI Lenders (other than the Industrial Revenue
Bonds and the Bank One line of credit) of the amounts required to pay off and
discharge all of the amounts owed by GCSI to such GCSI Lender upon the closing
of the Lessee's acquisition of GCSI, each such agreement and letter certified as
true and correct by Lessee; and

                  (d) the Lessee shall have completed its acquisition of GCSI
concurrently with the First Proposed Funding.

         3. The Lessee shall deliver on or before October 13, 2000 (a) lien
searches that satisfy, but for the date of delivery, the requirements of Section
3.1(b)(xv) of the Participation Agreement with respect to the Subject Items and
(b) lien searches in the name of GCSI that satisfy, but for the date of delivery
and the name of the party searched, the requirements of Section 3.1(b)(xv) of
the Participation Agreement with respect to each jurisdiction in which GCSI or
any Subject Item is located.

         4. The Lessee shall cause any Lien of any GCSI Lender on any Subject
Item to be discharged or released on or at the time of the First Proposed
Funding.

         5. Notwithstanding any provision in the Operative Documents to the
contrary but subject to the requirements of Section 4 hereof, the Lessee agrees
to cause any Lien on any Subject Item that is not a Permitted Lien to be
released within ten Business Days of the Lessee's receipt of written notice
thereof.

                                      -2-
<PAGE>   3

         6. The parties hereto agree that if the First Proposed Funding occurs
on a date other than September 29, 2000, the first LIBOR Lease Payment Period
for the Subject Items shall, at the option of the Administrative Agent,
terminate on September 29, 2000 or the last LIBOR Banking Day of October 2000.

         7. With respect to a proposed funding under the Participation Agreement
on September 29, 2000 (the "Second Proposed Funding"), the parties hereto agree
that, provided all of the conditions precedent under the Participation Agreement
have been satisfied for such funding, such funding may occur on September 29,
2000, notwithstanding the occurrence of the First Proposed Funding.

         8. Lessee agrees that any failure to comply with the covenants set
forth in Sections 3, 4 or 5 herein shall constitute a Lease Event of Default.

         9. This Waiver and Agreement is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision (or of
any provision beyond the specific waivers granted herein with respect to such
provision) of the Participation Agreement or any other Operative Document or
with respect to any fundings other than the First Proposed Funding or the Second
Proposed Funding.

         10. The Trust Company is signing this Waiver and Agreement solely in
its capacity as Trustee under the Trust Agreement on behalf of the Lessor and
not in its individual capacity and in no case shall Trust Company (or any entity
acting as successor Trustee under the Trust Agreement) be personally liable for
or on account of any to the statements, representations, warranties, covenants
or obligations stated to be those of Lessor hereunder; provided, however, that
Trust Company (or any such successor Trustee) shall be personally liable
hereunder for any claims or liabilities resulting from or arising out of the
matters expressly set forth in Section 12.15 of the Participation Agreement

         11. This Waiver and Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which counterparts when executed and delivered shall be an original, but all
of which shall together constitute one and the same instrument. A complete set
of counterparts shall be delivered to the Lessee and the Administrative Agent.

         12. THIS WAIVER AND AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE
PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW
OF THE STATE OF NEW YORK.

         13. This Waiver and Agreement shall become effective on the date (the
"Waiver Effective Date") when Guarantor, the Lessee, the Lessor, the Majority
Certificate Holders and the Majority Lenders shall have signed a counterpart
hereof (whether the same or different counterparts) and shall have delivered
(including by way of facsimile transmission) the same to the Administrative
Agent at its notice office.

                                      -3-

<PAGE>   4

         14. Each of the undersigned Certificate Holders hereby instructs the
Lessor to execute and deliver this Amendment.

                                     * * *

                                      -4-
<PAGE>   5

         IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Waiver and Agreement to be duly executed and delivered as of the date
first above written.

                           UNIVERSAL COMPRESSION HOLDINGS, INC.

                           By: /s/ RICHARD W. FITZGERALD
                              ------------------------------------------------
                              Name:  Richard W. FitzGerald
                              Title: Senior Vice President and Chief Financial
                                     Officer

                           UNIVERSAL COMPRESSION, INC.

                           By: /s/ RICHARD W. FITZGERALD
                              ------------------------------------------------
                              Name:  Richard W. FitzGerald
                              Title: Senior Vice President and Chief Financial
                                     Officer

                           BANKERS TRUST COMPANY,
                                 Individually as  a Lender, as Administrative
                                 Agent, and as Collateral Agent

                           By: /s/ MARCUS M. TARKINGTON
                              ------------------------------------------------
                              Name:  Marcus M. Tarkington
                              Title: Director

                           FIRST UNION NATIONAL BANK,
                                 as  a Lender and as a Certificate Holder

                           By: /s/ ROBERT R. WETTEROFF
                              ------------------------------------------------
                              Name:  Robert R. Wetteroff
                              Title: Senior Vice President

<PAGE>   6

                           BANK ONE, N.A.,
                              as a Lender

                           By: /s/ J. CHARLES FREEL, JR.
                              ------------------------------------------------
                              Name:  J. Charles Freel, Jr.
                              Title: First Vice President

                           BANK OF NOVA SCOTIA,
                              as a Lender

                           By: /s/ FCH ASHBY
                              ------------------------------------------------
                              Name:  FCH Ashby
                              Title: Senior Manager Loan Operations

                           WELLS FARGO,
                              as a Lender

                           By: /s/ SPENCER SMITH
                              ------------------------------------------------
                              Name:  Spencer Smith
                              Title: Vice President

                           NATIONAL CITY BANK OF KENTUCKY,
                              as a Lender

                           By: /s/ SCOTT L. BREWER
                              ------------------------------------------------
                              Name:  Scott L. Brewer
                              Title: Assistant Vice President

<PAGE>   7

                           DEUTSCHE BANK AG, NEW YORK BRANCH,
                                 as a Certificate Holder

                           By: /s/ ROBERT F. MARTORANO, JR.
                              ------------------------------------------------
                              Name:  Robert F. Martorano, Jr.
                              Title: Director

                           By: /s/ GENNARO R. D'AGASTINO
                              ------------------------------------------------
                              Name:  Gennaro R. D'Agastino
                              Title: Assistant Vice President

                           WILMINGTON TRUST COMPANY,
                                 not in its individual capacity, but solely as
                                 Trustee of Universal Compression Trust (2000-1)
                                 under the Trust Agreement dated as of May 25,
                                 2000, as Lessor

                           By: /s/ ROBERT P. HINES, JR.
                              ------------------------------------------------
                              Name:  Robert P. Hines, Jr.
                              Title: Financial Services Officer

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