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                                                                    EXHIBIT 10.2

                    CONSULTING AND NON-COMPETITION AGREEMENT

         This Consulting and Non-Competition Agreement (this "Agreement") is
entered into effective as of the close of business on the day preceding the
Effective Time, by and between Universal Compression, Inc., a Texas corporation
with its principal place of business in Houston, Texas ("UCI") (hereinafter,
UCI, including all predecessors, successors and affiliates, including but not
limited to the GCS Entities, shall be referred to as the "Company"), and Reuben
James Helton, an individual resident of the State of Texas ("Consultant").
Capitalized terms used but not herein defined shall have the meanings assigned
to them in the Merger Agreement (as defined below).

                                   WITNESSETH:

         WHEREAS, UCI desires to engage Consultant to render general management
and operational consulting services to UCI in connection with its business;

         WHEREAS, Consultant desires to accept such engagement upon the terms
and conditions set forth in this Agreement;

         WHEREAS, the parties thereto are entering into that certain Agreement
and Plan of Merger dated August 4, 2000 (the "Merger Agreement"), which provides
for, among other things, (i) the merger of Gas Compression Services, Inc., a
Michigan corporation ("GCSI"), of which Consultant was the principal shareholder
and served as Chairman of the Board, with and into UCI (the "Merger"), and (ii)
a trust, of which Consultant is grantor, to receive substantial consideration
for its ownership interest in GCSI in connection with the Merger; and

         WHEREAS, as a condition to the Merger, and to preserve the value of the
business being acquired by UCI, the Merger Agreement contemplates, among other
things, that UCI shall offer to enter into this Agreement with Consultant;

         NOW, THEREFORE, in consideration of the foregoing and for the covenants
and agreements set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties to
this Agreement, intending to be legally bound, agree as follows:

Section 1. Consulting Services.

         1.1. Consulting Term. Consultant's employment with GCSI shall terminate
on the effective date of this Agreement. The term of this Agreement and
Consultant's consultancy shall commence on the effective date hereof and
continue for a period of five years, subject to its earlier termination pursuant
to Section 1.10 of this Agreement (the "Consulting Term").

         1.2. Consulting Services. Consultant agrees to be available at UCI's
reasonable request to consult with and advise UCI on the strategy, plans, and
objectives of UCI's

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compression service business. Consultant will use his special knowledge,
experience, judgment, and relationships to faithfully and efficiently perform
and fulfill consulting services.

         1.3. Compliance with Applicable Law. In performing the consulting
services, during the Consulting Term, Consultant shall comply with all
applicable federal, state, and local laws and regulations that relate to
Consultant's duties as a consultant, and conduct himself in an ethical manner at
all times.

         1.4. Consulting Fee and 401(k) Plan. UCI agrees to pay Consultant a
consulting fee of $8,333.33 per month plus an additional fee of $471.59 per
month for the first 18 months. Notwithstanding any provisions of this Agreement
to the contrary, UCI's obligation to make the payments contemplated in this
Section shall be contingent upon Consultant's compliance with his obligations
and covenants under this Agreement. Consultant shall not be entitled to make
contributions to the Universal Compression, Inc. 401(k) Retirement and Savings
Plan (the "Universal Plan"). However, Consultant shall be entitled to leave his
vested account balance in the Gas Compression Services, Inc. 401(k) Plan (the
"GCSI Plan") until his account under the GCSI Plan either is distributed in
connection with the termination of the GCSI Plan or distributed at his request
as a result of his termination of employment with GCSI. If the GCSI Plan is
merged into the Universal Plan, Consultant shall be entitled to a distribution
from that plan at his request. In connection with a distribution of his account,
consultant shall be entitled to make a direct rollover contribution to an
individual retirement account established by Consultant or another eligible
retirement plan (other than the Universal Plan).

         1.5. Automobile. UCI will reimburse Consultant up to $1,200 per month
for the lease of an automobile during the term of this Agreement. UCI shall also
issue to Consultant a UCI credit card for gasoline expenses with respect to the
automobile referred to in the preceding sentence. All other operating and
maintenance expenses with respect to such automobile will be the responsibility
of Consultant.

         1.6. Health Insurance. Consultant and his spouse will extend their
coverage under the Gas Compression Services, Inc. group health plan in which
they are enrolled as of the effective date of this Agreement (or under a
successor group health plan made available by UCI) under the continuation health
coverage provisions of Section 4980B of the Internal Revenue Code of 1986, as
amended, and Title 6 of Part I of the Employee Retirement Income Security Act of
1974, as amended (commonly known as "COBRA"), for the 18-month statutory period,
or for such lesser period as Consultant remains eligible under COBRA. At the
time Consultant is no longer eligible for COBRA coverage and until the end of
the Consulting Term, UCI shall either make coverage available to Consultant and
his spouse under the UCI plan at the same level and under the same terms and
conditions as in effect for UCI's full time employees, from time to time, or
shall provide other reasonably comparable coverage to the coverage provided to
UCI's full-time employees under the UCI group health plan during the remainder
of the Consulting Term, which will be without regard to pre-existing conditions
to Consultant or his spouse. In the event of Consultant's death and prior to the
end of the Consulting Term, Consultant's spouse will be entitled, at her expense
and to the extent required by law, to continue such health coverage for a period
not to exceed the period that coverage would be made available to the spouse of
a deceased participant under COBRA.

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         1.7. Life Insurance. During the Consulting Term, UCI shall pay the
premium on Consultant's existing life insurance policy as described in Schedule
I hereto. Should such life insurance policy terminate for any reason, other than
by reason of UCI's failure to pay the premiums pursuant to this Section 1.7, UCI
shall have no obligation to obtain or pay premiums for any other life insurance
policy for the Consultant.

         1.8. Consulting Expenses. UCI agrees to reimburse Consultant for
reasonable expenses incurred in connection with the performance of the
consulting services upon presentation of appropriate supporting documentation
for all consulting expenses. UCI will not reimburse Consultant for any office,
staff, or other overhead expenses.

         1.9. Status of Consultant. Consultant will perform all consulting
services as an independent contractor and not as an employee. As an independent
contractor, Consultant shall be responsible for all taxes and withholding on
payments UCI tenders to Consultant for consulting services under this Agreement.

         1.10. Early Termination. In the event that Consultant is unable to
continue to perform the consulting services set forth in Section 1.2 hereof due
to his death or disability, this Agreement shall terminate automatically;
provided, however, that Section 1.6 shall survive such termination in accordance
with its terms.

Section 2. Trade Secrets and Confidential Information.

         2.1. Definitions.

                  1. "Trade Secret" shall mean information, including, but not
         limited to, technical or non-technical data, a formula, pattern,
         compilation, program, device, method, technique, drawing, process,
         financial data, financial plan, product plan, list of actual or
         potential customers or suppliers, or other information similar to any
         of the foregoing, which derives economic value, actual or potential,
         from not being generally known to, and not being readily ascertainable
         by proper means by, other persons who can derive economic value from
         its disclosure or use and which is subject to reasonable efforts by the
         Company or the GCS Entities, or their parents, subsidiaries or
         affiliates, to maintain its secrecy or confidentiality.

                  2. "Confidential Information" shall mean any secret,
         confidential, or proprietary data or information of the Company and the
         GCS Entities, including information received by the Company, the GCS
         Entities or Consultant from any customer or client or potential
         customer or client of the Company or the GCS Entities, or their
         parents, subsidiaries or affiliates, not otherwise included in the
         definition of Trade Secret. The term Confidential Information shall not
         include information that Consultant can show by competent proof has
         become generally known to the public by the act of one who has the
         right to disclose such information without violating any right of the
         Company or any customer or client to which such information pertains.

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         2.2. Background.

                  1. The Company owns, controls, and has exclusive access to
         Confidential Information and Trade Secrets concerning its operations,
         methods, and the sale and development of its products and services,
         including those of the GCS Entities. UCI seeks reasonable protections
         for the Company's and the GCS Entities's valuable Confidential
         Information and Trade Secrets. The parties intend for this Agreement to
         protect all Confidential Information and Trade Secrets owned by the
         Company and the GCS Entities, from disclosure and misappropriation of
         any kind, whether inadvertent or deliberate. Consultant acknowledges
         that the Confidential Information and Trade Secrets are an important
         and valuable asset of UCI and the GCS Entities, for which UCI is paying
         substantial consideration.

                  2. Consultant acknowledges that during the course of his
         executive positions with the GCSI and his consultancy with UCI, he did,
         and will continue to, receive and have access to Confidential
         Information and Trade Secrets of the GCS Entities and the Company,
         including but not limited to confidential and secret business and
         marketing plans, technical data, strategies, and studies, detailed
         customer and/or client lists and information relating to the operations
         and business requirements of those customers and/or clients. Consultant
         agrees that UCI has a legitimate interest in protecting the Company's
         valuable Confidential Information and Trade Secrets. Consultant also
         acknowledges that due to the executive nature of his position with the
         GCSI and his consultancy with UCI, Consultant did, and will continue
         to, perform his duties and responsibilities throughout the Territory
         (as defined in Section 3.1.2). Consultant agrees that the Company's and
         the GCS Entities's customer and client contacts and relations are
         established and maintained at great expense to UCI and that Consultant
         may have, by virtue of his consultancy, unique and extensive exposure
         to and personal contact with the Company's and the GCS Entities's
         customers and clients and that he did, will continue to be able to,
         establish a unique relationship with those customers and clients.

         2.3. Trade Secrets. In consideration for the promises under this
Agreement and his consultancy by UCI, Consultant agrees and covenants that, both
during and after his consultancy with UCI, Consultant will hold in a fiduciary
capacity for the benefit of UCI, and will not directly or indirectly use or
disclose (whether on Consultant's own behalf or on behalf of any other person,
corporation, partnership, venture, or any other entity or form of business),
except as authorized by UCI in connection with the performance of Consultant's
duties, any Trade Secret that Consultant may have or acquire (whether or not
developed or compiled by Consultant and whether or not Consultant has been
authorized to have access to such Trade Secret) during his employment with the
GCS Entities or his consultancy with UCI, for so long as the such information
remains a Trade Secret. At all times, including after termination of
Consultant's employment for any reason, Consultant will take all reasonable
steps necessary to ensure that no Trade Secrets are disclosed, whether
inadvertently or deliberately, misappropriated, stolen, misused or their value
to UCI diminished in any way.

         2.4. Confidential Information. In consideration for the promises under
this Agreement and his consultancy by UCI, Consultant agrees and covenants that,
both during and after his consultancy with UCI, Consultant will hold in a
fiduciary capacity for the benefit of UCI and

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will not directly or indirectly use or disclose (whether on Consultant's own
behalf or on behalf of any other person, corporation, partnership, venture, or
any other entity or form of business), except as authorized by UCI in connection
with the performance of Consultant's duties, any Confidential Information that
Consultant may have or acquire (whether or not developed or compiled by
Consultant and whether or not Consultant has been authorized to have access to
such Confidential Information) during his employment with the GCS Entities and
his consultancy with UCI. At all times, including after termination of
Consultant's employment for any reason, Consultant will take all reasonable
steps necessary to ensure that no Confidential Information is disclosed, whether
inadvertently or deliberately, misappropriated, stolen, misused or its value to
UCI diminished in any way.

         2.5. No Waiver. Consultant acknowledges and agrees that nothing
contained in this Agreement shall be deemed a waiver, modification, or
limitation of any rights UCI may have under applicable federal, state, or local
laws pertaining to the protection of trade secrets or confidential information.

         2.6. No Prior Commitments. Consultant represents and warrants that he
(i) will not use or disclose any trade secrets or other protected information of
any other person or entity during Consultant's consultancy with UCI and (ii)
does not have any agreements, relationships or commitments to any other person
or entity that conflict in any way with Consultant's obligations to UCI under
this Agreement.

Section 3. Non-Competition and Non-Solicitation Covenants.

         3.1. Definitions.

                  1. "Company Business" shall mean the business of designing,
         manufacturing, servicing, operating, marketing, assembling,
         fabricating, renting or leasing of air or gas compressors or devices
         using comparable technologies or other business in which the Company or
         its subsidiaries may be engaged during the term of Consultant's
         consultancy with UCI. To the extent that any entity is primarily
         engaged in a business other than a Company Business, the term "Company
         Business" shall mean the operations, division, segment or subsidiary of
         such entity that is engaged in any Company Business.

                  2. "Territory" shall mean all states in which the GCS Entities
         operate or have customers as of the day before the consummation of the
         Merger as contemplated in the Merger Agreement.

         3.2. Non-Competition. In consideration for the promises under this
Agreement and Consultant's consultancy with UCI, and in order to protect UCI
from unfair competition, Consultant covenants and agrees to the following:

                  1. During Consultant's consultancy with UCI, Consultant will
         not compete with the Company in any manner or in any capacity (whether
         on Consultant's own behalf or as an owner, partner, stockholder,
         investor, officer, director, agent, independent

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         contractor, associate, executive, employee, consultant or licensor),
         including by engaging in the Company Business.

                  2. For a period of 3 years after the termination of
         Consultant's consultancy with UCI, Consultant will not directly or
         indirectly (i) carry on, be engaged in, or take part in any activities
         or services identical or substantially similar to any of Consultant's
         duties and responsibilities with UCI or the GCS Entities anywhere in
         the Territory or (ii) engage in the Company Business (whether on
         Consultant's own behalf or on behalf of any other person, corporation,
         partnership, venture, or any other entity or form of business).

                  3. The covenants in this Section 3 shall not apply to
         Consultant's ownership of common stock of the Company or the
         acquisition by Consultant, solely as an investment, of securities of
         any issuer that is registered under Section 12(b) or 12(g) of the
         Securities Exchange Act of 1934, as amended, and that are listed or
         admitted for trading on any United States national securities exchange
         or that are quoted on the National Association of Securities Dealers
         Automated Quotation System, or any similar system or automated
         dissemination of quotations of securities prices in common use, so long
         as Consultant does not participate in the management of, serve on the
         board of directors of, control, acquire a controlling interest in or
         become a member of a group which exercises direct or indirect control
         of more than five percent (5%) of any class of capital stock of such
         corporation.

         3.3. Non-Solicitation of Customers. In consideration for the promises
under this Agreement and Consultant's consultancy with UCI, and in order to
protect the Company from unfair competition, Consultant covenants and agrees to
the following:

                  1. During Consultant's consultancy with UCI, Consultant will
         not solicit, divert, or take away, or attempt to solicit, divert, or
         take away, any customer, client or actively sought prospective client
         or customer of the Company or the GCS Entities for the benefit of any
         person or entity other than the Company.

                  2. For a period of 3 years after the termination of
         Consultant's consultancy for any reason, Consultant will not, without
         the prior written consent of UCI, directly or indirectly solicit,
         divert, or take away, or attempt to solicit, divert, or take away, any
         customer and/or client of the Company or the GCS Entities with whom
         Consultant had material business contact at any time during the twelve
         months prior to such termination.

         3.4. Non-Solicitation of Employees. In consideration for the promises
under this Agreement and UCI's consultancy of Consultant, and in order to
protect the Company from unfair competition, Consultant covenants and agrees to
the following:

                  1. During Consultant's consultancy with UCI, Consultant will
         not hire (except on behalf of UCI) or solicit or encourage to leave the
         employment or other service of the Company, including the GCS Entities,
         any employee or independent contractor of the Company, including the
         GCS Entities (except in connection with the business and affairs of
         UCI).

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                  2. For a period of 3 years after the termination of
         Consultant's consultancy for any reason, Consultant will not, for any
         reason (whether on Consultant's own behalf or on behalf of any other
         person, corporation, partnership, venture, or any other entity or form
         of business), directly or indirectly solicit or encourage to leave
         consultancy or other service of UCI, including the GCS Entities, any
         employee or independent contractor of UCI, including the GCS Entities,
         with whom Consultant had material business contact any time during the
         twelve months prior to such termination.

Section 4. Work Product.

         4.1. Ownership of Work Product.

                  1. Consultant agrees to promptly report and disclose to UCI
         all developments, discoveries, methods, processes, designs, inventions,
         ideas, or improvements (hereinafter collectively called "Work
         Product"), conceived, made, implemented, or reduced to practice by
         Consultant, whether alone or acting with others, during the Consulting
         Term, that are developed (i) while performing consulting services, or
         (ii) while utilizing, directly or indirectly, the Company's equipment,
         supplies, facilities, or Trade Secret information. Consultant
         acknowledges and agrees that all Work Product is the sole and exclusive
         property of UCI. Consultant agrees to assign, and hereby automatically
         assigns, without further consideration, to UCI any and all rights,
         title, and interest in and to all Work Product; provided, however, that
         this Section shall not apply to any Work Product for which no
         equipment, supplies, facilities, or trade secret information of the
         Company was used and which was developed entirely on Consultant's own
         time, unless the Work Product (i) relates directly to UCI's business or
         its actual or demonstratably anticipated research or development, or
         (ii) results from any work performed by Consultant for UCI.

                  2. UCI, its successors and assigns, shall have the right to
         obtain and hold in its or their own name copyright registrations,
         trademark registrations, patents and any other protection available to
         the Work Product.

         4.2. Cooperation. Consultant agrees to perform, upon the reasonable
request of UCI, during or after the Consulting Term, such further acts as may be
necessary or desirable to transfer, perfect, and defend UCI's ownership of the
Work Product, including but not limited to: (i) executing, acknowledging, and
delivering any requested affidavits and documents of assignment and conveyance;
(ii) assisting in the preparation, prosecution, procurement, maintenance and
enforcement of all copyrights and/or patents with respect to the Work Product in
any countries; (iii) providing testimony in connection with any proceeding
affecting the right, title, or interest of UCI in any Work Product; and (iv)
performing any other acts deemed necessary or desirable to carry out the
purposes of this Agreement. UCI shall reimburse all reasonable out-of-pocket
expenses incurred by Consultant at UCI's request in connection with the
foregoing.

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Section 5. Reasonableness of Covenants and Injunctive Relief.

         Consultant agrees and acknowledges that the consideration he will
receive for the restrictions, prohibitions, and covenants specified in Sections
2, 3, and 4 of this Agreement is fair and adequate. In return, Consultant agrees
to enter into the restrictions, prohibitions, and covenants specified in
Sections 2, 3, and 4 in order to provide UCI with what he considers to be
reasonable protection for its interests. Consultant agrees the covenants are
reasonable, fair and equitable and contain reasonable limitations as to time,
geographical area and scope of activities to be restricted and that such
covenants do not impose a greater restraint on Consultant than is necessary to
protect the goodwill, confidential information and other legitimate business
interests of the Company, including its investment in the GCS Entities.
Consultant further acknowledges and confirms that his full and faithful
observance of each of the covenants contained in this Agreement will not cause
him any undue hardship, financial or otherwise. Accordingly, Consultant
acknowledges that he could cause irreparable injury to UCI by violating these
covenants and UCI shall therefore be entitled to injunctive relief enjoining a
breach or threatened breach. Consultant further acknowledges that UCI shall also
have the right to seek a remedy at law in addition to equitable relief in the
event of any such breach.

Section 6. Reformation.

         If any of the covenants or promises of this Agreement, including but
not limited to the covenants in Sections 2, 3 and 4, are determined by any court
of law or equity, with jurisdiction over this matter, to be unreasonable or
unenforceable, in whole or in part, as written, the parties hereby consent to
and affirmatively request that said court reform the covenant or promise so as
to be reasonable and enforceable and to accomplish, as closely as possible, the
intent of the parties with respect to such provision and that said court enforce
the covenant or promise as reformed.

Section 7. Company Property.

         All the Company's property, equipment, funds, books, records, files,
memoranda, reports, lists, drawings, plans, sketches, documents, Confidential
Information, Trade Secrets, Work Product, and other material (together with all
copies thereof), including that of the GCS Entities, which Consultant shall have
used, prepared or come in contact with, or possession of, during the course of,
or as a result of, his executive positions with the GCS Entities or his
consultancy with UCI shall, as between the parties hereto, remain the sole
property of UCI. Upon the termination of this Agreement or upon the prior demand
of UCI, Consultant shall immediately return all such property or materials and
thereafter shall not remove or cause to be removed such materials from the
premises of UCI.

Section 8. Indemnification.

         Consultant agrees to defend, indemnify, and hold harmless UCI, any of
its affiliated companies, and the directors, officers, employees, and agents of
each of them, from and against any and all claims, losses, damages, suits, fees,
judgements, costs and expenses (including attorneys' fees) which UCI may suffer
or incur arising out of or in connection with (i) injuries to

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persons (including death) or loss of, or damage to, property, occasioned by
negligence, unlawful act, or willful misconduct of Consultant, and (ii) any
claim that UCI's use of any Work Product or portion thereof, infringes or
violates any patent, copyright, trade secret, or other third party intellectual
property right. In the event that UCI is in any way enjoined from using any Work
Product, or any portion thereof, Consultant shall promptly, at his expense
(including, but not limited to the payment of any royalties occasioned by the
following) either (i) provide to UCI non-infringing means of using the Work
Product, or (ii) negotiate and procure for UCI the right to use the Work Product
without restriction.

Section 9. Miscellaneous.

         9.1. Assignment. This Agreement is for the personal services of
Consultant, and the rights and obligations of Consultant under this Agreement
are not assignable or delegable in whole or in part by Consultant without the
prior written consent of UCI. This Agreement is assignable in whole or in part
to any parent, subsidiaries, or affiliates of UCI or to any successor in
interest to UCI or the business of UCI.

         9.2. Applicable Law. This Agreement has been entered into in and shall
be governed by and construed under the laws of the State of Texas (except to the
extent that its choice of law rules would apply the laws of another State).

         9.3. Consent to Jurisdiction. Consultant consents, and waives any
objection, to personal jurisdiction and venue in the federal and state courts in
the State of Texas in any action by UCI to enforce this Agreement.

         9.4. Dispute between the Parties. IN THE EVENT A DISPUTE OR CLAIM
ARISES BETWEEN CONSULTANT AND UCI ARISING OUT OF, RELATED TO, OR IN CONNECTION
WITH THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHER LEGAL CAUSE OF ACTION,
OR EQUITABLE REMEDY, CONSULTANT AND COMPANY BOTH EXPRESSLY AGREE TO WAIVE THEIR
RIGHT TO A TRIAL BY JURY, WHETHER IN FEDERAL OR STATE COURT, AND TO WAIVE THE
RIGHT TO RECOVER ANY PUNITIVE DAMAGES, EXEMPLARY DAMAGES OR STATUTORY PENALTIES
IMPOSED BY LAW. THIS PROVISION SPECIFICALLY ACKNOWLEDGES THAT THE PARTIES INTEND
FOR ANY AND ALL DISPUTES, CAUSES OF ACTIONS, CLAIMS, LAWSUITS, OR OTHER
EQUITABLE REMEDIES TO BE RESOLVED BY A COURT OF COMPETENT JURISDICTION BEFORE A
JUDGE, AND THE PARTIES EXPRESSLY WAIVE THEIR RIGHTS TO PUNITIVE DAMAGES OR
STATUTORY PENALTIES OF ANY KIND IMPOSED BY LAW. THE PARTIES CONFIRM THEIR
AGREEMENT TO THIS SECTION 9.4 BY INITIALING BELOW:

/s/ ERNIE L. DANNER       /s/ REUBEN JAMES HELTON
--------------------      -----------------------
UCI                       Consultant

         9.5. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.

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         9.6. Headings and Captions. The headings and captions used in this
Agreement are for convenience of reference only, and shall in no way define,
limit, expand or otherwise affect the meaning or construction of any provision
of this Agreement.

         9.7. Attorneys' Fees. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party will be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.

         9.8. Modification. Except as provided in Section 6, no provision of
this Agreement may be amended, changed, altered, modified or waived except in
writing signed by Consultant and an officer of UCI, which writing shall
specifically reference this Agreement and the provision which the parties intend
to waive or modify.

         9.9. Severability. Except as provided in Section 6, should any
provision of this Agreement be declared or determined by any court of competent
jurisdiction to be unenforceable or invalid for any reason, the validity of the
remaining parts, terms or provisions of this Agreement shall not be affected
thereby and the invalid or unenforceable part, term or provision shall be deemed
not to be a part of this Agreement.

         9.10. Waiver. The waiver by any party to this Agreement of a breach of
any of the provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent or simultaneous breach of the same or different
provisions.

         9.11. Survival. Any provision of this Agreement which is expressly or
by implication intended to survive the termination of this Agreement, including
Sections 2, 3, and 4, shall survive and remain in effect after the termination
of this Agreement.

         9.12. Jointly Drafted. The parties and their respective counsel have
participated jointly in the negotiation and drafting of this Agreement. In the
event that an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.

         9.13. No Third-Party Beneficiaries. Except as provided in Sections 1.6
and 9.1, nothing herein, expressed or implied, is intended or will be construed
to confer upon or give to any person, firm, corporation or legal entity, other
than the parties hereto and the parent of UCI and its subsidiaries or
affiliates, any rights, remedies or other benefits under or by reason of this
Agreement.

         9.14. Entire Agreement. This Agreement constitutes a single integrated
contract expressing the entire agreement of the parties hereto. There are no
other agreements, written or oral, express or implied, between the parties
hereto, concerning the subject matter hereof.

         9.15. Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by or on behalf of the party making the same and
shall be delivered personally or

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by telecopy transmission or sent by registered or certified mail (return receipt
requested) or by any national overnight courier service (with postage and other
fees prepaid) as follows:

                                            If to UCI:

                                            Universal Compression, Inc.
                                            4440 Brittmoore Road
                                            Houston, Texas 77041
                                            Attention:  Ms. Valerie L. Banner
                                            Telephone No.: (713) 335-7000
                                            Telecopy No.: (713) 466-6720

                                            If to the Consultant:

                                            Reuben James Helton
                                            Route 1, Box 42
                                            Weimer, Texas 78962
                                            Telephone No.: (979) 263-5334

or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Any such notice,
communication or delivery shall be deemed given or made (a) on the date of
delivery if delivered in person (by courier service or otherwise), (b) upon
transmission by facsimile if receipt is confirmed by telephone, provided
transmission is made during regular business hours, or if not, the next business
day, or (c) on the fifth business day after it is mailed by registered or
certified mail.

         9.16. Understanding. The parties herewith covenant and agree that they
have read and fully understand the contents and the effect of this Agreement.
Consultant and UCI warrant and agree that they have had a reasonable opportunity
and been advised in writing to seek the advice of an attorney as to such content
and effect. The parties accept each and all of the terms, provisions, and
conditions of this Agreement, and do so voluntarily and with full knowledge and
understanding of the contents, nature and effect of this Agreement.

                            [SIGNATURE PAGE FOLLOWS]

                                       11
<PAGE>   12

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

                                        UNIVERSAL COMPRESSION, INC.

                                        By:    /s/ Ernie L. Danner
                                           -------------------------------------
                                        Name:  Ernie L. Danner
                                        Title: Executive Vice President

                                                     CONSULTANT

                                               /s/ Reuben James Helton
                                        ----------------------------------------
                                        Reuben James Helton

                                       12
<PAGE>   13

                                   SCHEDULE I

Policy for term life insurance to age 95 with Federal Kemper Life Assurance
Company of Long Grove, Illinois 80049.

Insured: Reuben J. Helton
Policy Date: October 16, 1995
Policy Number: FK2300391
Face Amount: $10,000,000
Expiry Date: October 16, 2038<PAGE>   1
                                                                    EXHIBIT 10.3

                  NON-DISCLOSURE AND NON-COMPETITION AGREEMENT

         This Non-Disclosure and Non-Competition Agreement (this "Agreement") is
made and entered into effective as of the close of business on the day preceding
the Effective Time, by and between Universal Compression Holdings, Inc., a
Delaware corporation with its principal place of business in Houston, Texas
(including all predecessors, successors and affiliates, including but not
limited to the GCS Entities, the "Company"), and Michael Pahl, an individual
resident of the State of Michigan ("Executive"). Capitalized terms used but not
herein defined shall have the meanings assigned to them in the Merger Agreement
(as referenced below).

         WHEREAS, the parties have entered into that certain Agreement and Plan
of Merger dated August 4, 2000 (the "Merger Agreement"), which provides for,
among other things, (i) the merger of Gas Compression Services, Inc., a Michigan
corporation ("GCSI"), with and into Universal Compression, Inc., a Texas
corporation and wholly-owned subsidiary of the Company, and (ii) Executive to
receive substantial consideration for his ownership interest in GCSI in
connection with the Merger; and

         WHEREAS, as a condition to the Merger, and to preserve the value of the
business being acquired by the Company, the Merger Agreement contemplates, among
other things, that Executive shall enter into this Agreement;

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

Section 1. Definitions.

         For purposes of this Agreement, the following terms shall have the
following meanings:

         1.1 "Company Business" shall mean the business of designing,
manufacturing, servicing, operating, marketing, assembling, fabricating, renting
or leasing of air or gas compressors or devices using comparable technologies or
other business in which the Company or its subsidiaries may be engaged
immediately following the consummation of the Merger. To the extent that any
entity is primarily engaged in a business other than a Company Business, the
term "Company Business" shall mean the operations, division, segment or
subsidiary of such entity that is engaged in any Company Business.

         1.2 "Confidential Information" shall mean any secret, confidential, or
proprietary data or information of the Company and GCSI, including information
received by the Company, GCSI or Executive from any customer or client or
potential customer or client of the Company or GCSI, or their parents,
subsidiaries or affiliates, not otherwise included in the definition of Trade
Secret. The term Confidential Information shall not include information that
Executive can show by competent proof has become generally known to the public
by the act of one who

<PAGE>   2

has the right to disclose such information without violating any right of the
Company or any customer or client to which such information pertains.

         1.3 "Inventions" shall mean any and all developments, discoveries,
concepts, methods, processes, designs, inventions, ideas, or improvements,
whether or not patentable, conceived, made, implemented, or reduced to practice
by Executive, whether alone or acting with others, during Executive's employment
by the Company and GCSI, that are developed (i) on the Company's or GCSI's time,
or (ii) while utilizing, directly or indirectly, the Company's or GCSI's
equipment, supplies, facilities, or Trade Secret information.

         1.4 "Territory" shall mean all states in which GCSI operates or has
customers as of the day before the consummation of the Merger as contemplated in
the Merger Agreement.

         1.5 "Trade Secret" shall mean information, including, but not limited
to, technical or non-technical data, a formula, pattern, compilation, program,
device, method, technique, drawing, process, financial data, financial plan,
product plan, list of actual or potential customers or suppliers, or other
information similar to any of the foregoing, which derives economic value,
actual or potential, from not being generally known to, and not being readily
ascertainable by proper means by, other persons who can derive economic value
from its disclosure or use and which is subject to reasonable efforts by the
Company or GCSI, or their parents, subsidiaries or affiliates, to maintain its
secrecy or confidentiality.

Section 2. Background.

         2.1 The Company owns, controls, and has exclusive access to
Confidential Information and Trade Secrets concerning its operations, methods,
and the sale and development of its products and services, including those of
GCSI. The Company seeks reasonable protections for its and GCSI's valuable
Confidential Information and Trade Secrets. The parties intend for this
Agreement to protect all Confidential Information and Trade Secrets owned by the
Company and GCSI, and from disclosure and misappropriation of any kind, whether
inadvertent or deliberate. Executive acknowledges that the Confidential
Information and Trade Secrets are an important and valuable asset of the Company
and GCSI, for which the Company is paying substantial consideration.

         2.2 Executive acknowledges that during the course of his employment
with GCSI and the Company, he did, and may continue to, receive and have access
to Confidential Information and Trade Secrets of GCSI and the Company, including
but not limited to confidential and secret business and marketing plans,
technical data, strategies, and studies, detailed customer and/or client lists
and information relating to the operations and business requirements of those
customers and/or clients. Executive agrees that the Company has a legitimate
interest in protecting its valuable Confidential Information and Trade Secrets.
Executive also acknowledges that due to the executive nature of his position
with GCSI and the Company, Executive did, and may continue to, perform his
duties and responsibilities throughout the Territory. Executive agrees that the
Company's and GCSI's customer and client contacts and relations are established
and maintained at great expense to the Company and that Executive did, and may
continue to, have, by virtue of his employment, unique and extensive exposure to
and

                                      -2-
<PAGE>   3

personal contact with the Company's and GCSI's customers and clients and that he
did, and may continue to be able to, establish a unique relationship with those
customers and clients.

Section 3. Protection of Trade Secrets and Confidential Information.

         3.1 Trade Secrets. In consideration of the premises and for the
promises under this Agreement, Executive agrees and covenants that, upon
consummation of the Merger, Executive will hold in a fiduciary capacity for the
benefit of the Company, and will not directly or indirectly use or disclose
(whether on Executive's own behalf or on behalf of any other person,
corporation, partnership, venture, or any other entity or form of business),
except as authorized by the Company in connection with the performance of
Executive's duties, any Trade Secret that Executive may have or acquire (whether
or not developed or compiled by Executive and whether or not Executive has been
authorized to have access to such Trade Secret) during employment with GCSI or
the Company, for so long as such information remains a Trade Secret. At all
times immediately following the consummation of the Merger, Executive will take
all reasonable steps necessary to ensure that no Trade Secrets are disclosed,
whether inadvertently or deliberately, misappropriated, stolen, misused or their
value to the Company diminished in any way.

         3.2 Confidential Information. In consideration of the premises and for
the promises under this Agreement, Executive agrees and covenants that, upon
consummation of the Merger, Executive will hold in a fiduciary capacity for the
benefit of the Company and will not directly or indirectly use or disclose
(whether on Executive's own behalf or on behalf of any other person,
corporation, partnership, venture, or any other entity or form of business),
except as authorized by the Company in connection with the performance of
Executive's duties, any Confidential Information that Executive may have or
acquire (whether or not developed or compiled by Executive and whether or not
Executive has been authorized to have access to such Confidential Information)
during his employment with GCSI and the Company. At all times immediately
following the consummation of the Merger, Executive will take all reasonable
steps necessary to ensure that no Confidential Information is disclosed, whether
inadvertently or deliberately, misappropriated, stolen, misused or its value to
the Company diminished in any way.

         3.3 No Waiver. Executive acknowledges and agrees that nothing contained
in this Agreement shall be deemed a waiver, modification, or limitation of any
rights the Company may have under applicable federal, state, or local laws
pertaining to the protection of trade secrets or confidential information.

Section 4. Protection Against Unfair Competition.

         4.1 Non-Competition. In consideration of the premises and for the
promises under this Agreement, and in order to protect the Company from unfair
competition, Executive covenants and agrees to the following:

                  a. During Executive's employment with the Company, Executive
         will not compete with the Company in any manner or in any capacity
         (whether on Executive's own behalf or as an owner, partner,
         stockholder, investor, officer, director, agent,

                                      -3-
<PAGE>   4

         independent contractor, associate, executive, consultant or licensor),
         including by engaging in the Company Business.

                  b. For a period of 2 years after the termination of
         Executive's employment for any reason, Executive will not directly or
         indirectly (i) carry on, be engaged in, or take part in any activities
         or services identical or substantially similar to any of Executive's
         duties and responsibilities with the Company or GCSI, anywhere in the
         Territory, or (ii) engage in the Company Business (whether on
         Executive's own behalf or on behalf of any other person, corporation,
         partnership, venture, or any other entity or form of business).

                  c. The covenants in this Section 4 shall not apply to
         Executive's ownership of common stock of the Company or the acquisition
         by Executive, solely as an investment, of securities of any issuer that
         is registered under Section 12(b) or 12(g) of the Securities Exchange
         Act of 1934, as amended, and that are listed or admitted for trading on
         any United States national securities exchange or that are quoted on
         the National Association of Securities Dealers Automated Quotations
         System, or any similar system or automated dissemination of quotations
         of securities prices in common use, so long as Executive does not
         participate in the management of, serve on the board of, control,
         acquire a controlling interest in or become a member of a group which
         exercises direct or indirect control of more than five percent (5%) of
         any class of capital stock of such corporation.

         4.2 Non-Solicitation of Customers. In consideration of the premises and
for the promises under this Agreement, and in order to protect the Company from
unfair competition, Executive covenants and agrees to the following:

                  a. During Executive's employment with the Company, Executive
         will not solicit, divert, or take away, or attempt to solicit, divert,
         or take away, any customer and/or client or actively sought prospective
         client and/or customer of the Company or GCSI, for the benefit of any
         person or entity other than Company.

                  b. For a period of 2 years after the termination of
         Executive's employment with the Company for any reason, Executive will
         not, without prior written consent of the Company, directly or
         indirectly solicit, divert, or take away, or attempt to solicit,
         divert, or take away, any customer and/or client of the Company or GCSI
         with whom Executive had material business contact at any time during
         the twelve months prior to such termination.

         4.3 Non-Solicitation of Employees. In consideration of the premises and
for the promises under this Agreement, and in order to protect the Company from
unfair competition, Executive covenants and agrees to the following:

                  a. During Executive's employment with the Company, Executive
         will not hire (except on behalf of the Company) or solicit or encourage
         to leave the employment or other service of the Company, including
         GCSI, any employee or independent

                                      -4-
<PAGE>   5

         contractor of the Company, including GCSI (except in connection with
         the business and affairs of the Company).

                  b. For a period of 2 years after the termination of
         Executive's employment with the Company for any reason, Executive will
         not, for any reason (whether on Executive's own behalf or on behalf of
         any other person, corporation, partnership, venture, or any other
         entity or form of business), directly or indirectly solicit or
         encourage to leave employment or other service of the Company,
         including GCSI, any employee or independent contractor of the Company,
         including GCSI, with whom Executive had material business contact at
         any time during the twelve months prior to such termination.

Section 5. Protection of Inventions.

         In consideration of the premises and for the promises under this
Agreement, Executive agrees to the following:

         5.1 Disclosure of Inventions. Executive agrees and covenants that
during his employment with the Company and following the termination of such
employment, Executive shall promptly report and disclose to the Company in
writing all Inventions.

         5.2 Ownership of Inventions. Executive acknowledges and agrees that all
Inventions are the sole and exclusive property of the Company. Executive agrees
to assign, and hereby automatically assigns, without further consideration, to
the Company any and all rights, title, and interest in and to all Inventions;
provided, however, that this Agreement shall not apply to any Inventions for
which no equipment, supplies, facilities, or trade secret information of the
Company or GCSI was used and which was developed entirely on Executive's own
time, unless the Inventions (i) relate directly to the Company's business or its
actual or demonstrably anticipated research or development, or (ii) result from
any work performed by Executive for the Company or GCSI.

         5.3 Patents and Trademarks. The Company, its successors and assigns,
shall have the right to obtain and hold in its or their own name copyright
registrations, trademark registrations, patents and any other protection
available to the Inventions.

         5.4 Cooperation. Executive agrees to perform, upon the reasonable
request of the Company, during or after employment, such further acts as may be
necessary or desirable to transfer, perfect, and defend the Company's ownership
of the Inventions, including but not limited to: (i) executing, acknowledging,
and delivering any requested affidavits and documents of assignment and
conveyance; (ii) assisting in the preparation, prosecution, procurement,
maintenance and enforcement of all copyrights and/or patents with respect to the
Inventions in any countries; (iii) providing testimony in connection with any
proceeding affecting the right, title, or interest of the Company in any
Inventions; and (iv) performing any other acts deemed necessary or desirable to
carry out the purposes of this Agreement. The Company shall reimburse all
reasonable out-of-pocket expenses incurred by Executive at the Company's request
in connection with the foregoing.

                                      -5-
<PAGE>   6

Section 6. Acknowledgements.

         6.1 Reasonable Restrictions. Executive acknowledges and confirms that
the restrictions and covenants contained in this Agreement are reasonably
necessary to protect the good will and legitimate business interests of the
Company, including its investment in GCSI, are not overbroad, overlong, or
unfair (including in duration and scope), and are not the result of
overreaching, duress or coercion of any kind. Executive further acknowledges and
confirms that Executive's full, uninhibited, and faithful observance of each of
the covenants contained in this Agreement will not cause any undue hardship,
financial or otherwise, and that enforcement of each of the covenants contained
herein will not impair Executive's ability to obtain employment commensurate
with Executive's abilities and on terms fully acceptable to Executive or
otherwise to obtain income required for the comfortable support of Executive and
Executive's family and the satisfaction of the needs of Executive's creditors.
Executive acknowledges and confirms that the violation of these covenants and
the disclosure of any Confidential Information or Trade Secrets would cause the
Company serious, irreparable injury or loss. Executive acknowledges and confirms
that his special abilities and knowledge of the Company Business are such that
it would cause the Company serious, irreparable injury or loss if he were to use
such abilities and knowledge to the benefit of a competitor or were to otherwise
violate these covenants. Executive further acknowledges that the restrictions
contained in this Agreement are intended to be, and shall be, for the benefit of
and shall be enforceable by, the Company's successors and assigns.

         6.2 Legal and Equitable Remedies. Executive agrees that for any breach
or threatened breach of any of the provisions of this Agreement, the Company
shall be entitled to immediate injunctive relief and that a restraining order
and/or an injunction may issue against Executive to prevent or restrain any such
breach or threatened breach, in addition to any other rights or remedies at law
the Company may have.

         6.3 No Prior Commitments. Executive represents and warrants that he (i)
will not use or disclose any trade secrets or other protected information of any
other person or entity during Executive's employment with the Company and (ii)
does not have any agreements, relationships, or commitments to any other person
or entity that conflict in any way with Executive's obligations to the Company
under this Agreement.

         6.4 Company Property. All the Company's property, equipment, funds,
books, records, files, memoranda, reports, lists, drawings, plans, sketches,
documents, Confidential Information, Trade Secrets, Work Product, and other
material (together with all copies thereof), including that of the GCS Entities,
which Executive shall have used, prepared or come in contact with, or possession
of, during the course of, or as a result of, his employment with GCSI or the
Company shall, as between the parties hereto, remain the sole property of the
Company. Upon the termination of this Agreement or upon the prior demand of the
Company, Executive shall immediately return all such property or materials and
thereafter shall not remove or cause to be removed such materials from the
premises of the Company.

                                      -6-
<PAGE>   7

Section 7. Miscellaneous.

         7.1 Assignment. This Agreement is assignable in whole or in part to any
parent, subsidiaries, or affiliates of the Company or to any successor to the
Company, whether by merger, consolidation, sale of stock, sale of assets or
otherwise.

         7.2 Applicable Law. This Agreement has been entered into in and shall
be governed by and construed under the laws of the State of Michigan (except to
the extent that its choice of law rules would apply the laws of another State).

         7.3 Consent to Jurisdiction. Executive consents, and waives any
objection, to personal jurisdiction and venue in the federal and state courts in
the State of Michigan in any action by the Company to enforce this Agreement or
an arbitration decision related to this Agreement.

         7.4 Dispute between the Parties. IN THE EVENT A DISPUTE OR CLAIM ARISES
BETWEEN EXECUTIVE AND THE COMPANY ARISING OUT OF, RELATED TO, OR IN CONNECTION
WITH THIS AGREEMENT, WHETHER IN CONTRACT, TORT OR OTHER LEGAL CAUSE OF ACTION,
OR EQUITABLE REMEDY, EXECUTIVE AND THE COMPANY BOTH EXPRESSLY AGREE TO WAIVE
THEIR RIGHT TO A TRIAL BY JURY, WHETHER IN FEDERAL OR STATE COURT, AND TO WAIVE
THE RIGHT TO RECOVER ANY PUNITIVE DAMAGES, EXEMPLARY DAMAGES OR STATUTORY
PENALTIES IMPOSED BY LAW. THIS PROVISION SPECIFICALLY ACKNOWLEDGES THAT THE
PARTIES INTEND FOR ANY AND ALL DISPUTES, CAUSES OF ACTIONS, CLAIMS, LAWSUITS, OR
OTHER EQUITABLE REMEDIES TO BE RESOLVED BY A COURT OF COMPETENT JURISDICTION
BEFORE A JUDGE, AND THE PARTIES EXPRESSLY WAIVE THEIR RIGHTS TO PUNITIVE DAMAGES
OR STATUTORY PENALTIES OF ANY KIND IMPOSED BY LAW. THE PARTIES CONFIRM THEIR
AGREEMENT TO THIS SECTION 7.4 BY INITIALING BELOW:

------------      -----------
The Company       Executive

         7.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument.

         7.6 Headings and Captions. The headings and captions used in this
Agreement are for convenience of reference only, and shall in no way define,
limit, expand or otherwise affect the meaning or construction of any provision
of this Agreement.

         7.7 Reformation. If any of the covenants in this Agreement are
determined by any court of law or equity, with jurisdiction over this matter, to
be unreasonable or unenforceable, in whole or in part, as written, the parties
hereby consent to and affirmatively request that said court reform the covenant
or promise so as to be reasonable and enforceable and to accomplish, as closely
as possible, the intent of the parties with respect to such provision and that
said court enforce the covenant or promise as reformed.

         7.8 Modification. Except as provided in Section 7.7, no provision of
this Agreement may be amended, changed, altered, modified or waived except in
writing signed by Executive

                                      -7-
<PAGE>   8

and an officer of the Company, which writing shall specifically reference this
Agreement and the provision which the parties intend to waive or modify.

         7.9 Severability. Should any provision of this Agreement be declared or
determined by any court of competent jurisdiction to be unenforceable or invalid
for any reason, the validity of the remaining parts, terms or provisions of this
Agreement shall not be affected thereby and the invalid or unenforceable part,
term or provision shall be deemed not to be a part of this Agreement. This
Section 7.9 shall not apply to any Section which is reformed pursuant to Section
7.7.

         7.10 Attorneys' Fees and Costs. Executive shall be liable to the
Company for its reasonable costs and attorneys' fees incurred in any action to
enforce this Agreement to the extent that the Company is the prevailing party.

         7.11 Waiver. The waiver by any party to this Agreement of a breach of
any of the provisions of this Agreement shall not operate or be construed as a
waiver of any subsequent or simultaneous breach of the same or different
provisions.

         7.12 No Third-Party Beneficiaries. Except as provided in Section 7.1,
nothing herein, expressed or implied, is intended or will be construed to confer
upon or give to any person, firm, corporation or legal entity, other than the
parties and any parent, subsidiary, affiliate, or successor of the Company, any
rights, remedies or other benefits under or by reason of this Agreement.

         7.13 Entire Agreement. This Agreement constitutes a single integrated
contract expressing the entire agreement of the parties. There are no other
agreements, written or oral, express or implied, between the parties, concerning
the subject matter hereof.

         7.14 Jointly Drafted. The parties and their respective counsel have
participated jointly in the negotiation and drafting of this Agreement. In the
event that an ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties, and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of the authorship of any of the provisions of this Agreement.

         7.15 Understanding. Executive herewith covenants and agrees that
Executive has read and fully understands the contents and the effect of this
Agreement. Executive warrants and agrees that Executive has had a reasonable
opportunity and is hereby advised in writing to seek the advice of an attorney
as to such content and effect. Executive accepts each and all of the terms,
provisions, and conditions of this Agreement, and does so voluntarily and with
full knowledge and understanding of the contents, nature, and effect of this
Agreement.

         7.16 Survival. Any provision of this Agreement which is expressly or by
implication intended to survive the termination of this Agreement, including
Sections 3, 4, and 5, shall survive and remain in effect after the termination
of this Agreement.

                                      -8-
<PAGE>   9

         7.17 Notices. All notices, communications and deliveries hereunder
shall be made in writing signed by or on behalf of the party making the same and
shall be delivered personally or by telecopy transmission or sent by registered
or certified mail (return receipt requested) or by any national overnight
courier service (with postage and other fees prepaid) as follows:

                                        If to the Company:

                                        Universal Compression Holdings, Inc.
                                        4440 Brittmoore Road
                                        Houston, Texas  77041
                                        Attention:  Ms. Valerie L. Banner
                                        Telephone No.:  (713) 335-7000
                                        Telecopy No.:  (713) 466-6720

                                        If to the Executive:

                                        Michael Pahl

                                        ----------------------

                                        ----------------------
                                        Telephone No.:
                                                      ----------------------
                                        Telecopy No.:
                                                     ----------------------

or to such other representative or at such other address of a party as such
party hereto may furnish to the other parties in writing. Any such notice,
communication or delivery shall be deemed given or made (a) on the date of
delivery if delivered in person (by courier service or otherwise), (b) upon
transmission by facsimile if receipt is confirmed by telephone, provided
transmission is made during regular business hours, or if not, the next business
day, or (c) on the fifth business day after it is mailed by registered or
certified mail.

                            [SIGNATURE PAGE FOLLOWS]

                                      -9-
<PAGE>   10

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

                                           THE COMPANY:

                                           UNIVERSAL COMPRESSION HOLDINGS, INC.

                                           By:         /s/ Ernie L. Danner
                                              ----------------------------------

                                           Print Name: Ernie L. Danner
                                                      --------------------------

                                           Title:      Executive Vice President
                                                 -------------------------------

                                           EXECUTIVE:

                                               /s/ Michael L. Pahl
                                           -------------------------------------
                                               Michael Pahl

                                           Social Security No.:  ***-**-****
                                                               -----------------

                                      -10-

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