Document:

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                                                                     EXHIBIT 4.2

                          HANOVER EQUIPMENT TRUST 2001B

                                  $250,000,000

                    8.75% Senior Secured Securities Due 2011

                   EXCHANGE AND REGISTRATION RIGHTS AGREEMENT
                   ------------------------------------------

                                                                 August 30, 2001

Goldman, Sachs & Co.
   As representative of the several Purchasers
   Named in Schedule I hereto
85 Broad Street
New York, New York  10004

Ladies and Gentlemen:

                  Hanover Equipment Issuer 2001B, a special purpose Delaware
business trust (the "Issuer"), proposes to issue and sell to Goldman, Sachs &
                     ------
Co., J.P. Morgan Securities Inc., Salomon Smith Barney Inc. and Credit Suisse
First Boston Corporation (the "Purchasers"), upon the terms and subject to the
                               ----------
conditions set forth in a purchase agreement dated August 16, 2001 (the
"Purchase Agreement"), $250,000,000 million aggregate principal amount of its
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8.75% Senior Secured Securities Due 2011 (the "Securities") to be jointly and
                                               ----------
severally guaranteed on a senior subordinated basis by Hanover Compressor
Company, a Delaware corporation ("Hanover") and the subsidiaries of Hanover
listed on Schedule I hereto (Hanover and such subsidiaries collectively, the
"Guarantors"). Capitalized terms used but not defined herein shall have the
 ----------
meanings given to such terms in the Purchase Agreement.

                  As an inducement to the Purchasers to enter into the Purchase
Agreement and in satisfaction of a condition to the obligations of the
Purchasers thereunder, the Issuer and the Guarantors agree with the Purchasers,
for the benefit of the holders (including the Purchasers) of the Securities and
the Exchange Securities (as defined herein) (collectively, the "Holders"), as
                                                                -------
follows:

                  1. Registered  Exchange Offer.  The Issuer shall (i) prepare
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and, not later than 120 days following the date of original issuance of the
Securities (the "Issue Date"), file with the Commission a registration statement
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(the "Exchange Offer Registration Statement") on an appropriate form under the
      -------------------------------------
Securities Act with respect to a proposed offer to the Holders of the Securities
(the "Registered Exchange Offer") to issue and deliver to such Holders, in
      -------------------------
exchange for the Securities, a like aggregate principal amount of debt
securities of the Issuer (the "Exchange Securities")  that are identical in all
                               -------------------
material respects to the Securities, except for the

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                                                                               2

transfer restrictions relating to the Securities, (ii) use its reasonable best
efforts to cause the Exchange Offer Registration Statement to become effective
under the Securities Act no later than 150 days after the Issue Date and the
Registered Exchange Offer to be consummated no later than 180 days after the
Issue Date and (iii) keep the Exchange Offer Registration Statement effective
for not less than 20 business days (or longer, if required by applicable law)
after the date on which notice of the Registered Exchange Offer is mailed to the
Holders (such period being called the "Exchange Offer Registration Period"). The
                                       ----------------------------------
Exchange Securities will be issued under the Indenture or an indenture (the
"Exchange Securities Indenture") among the Issuer, the Guarantors and the
 -----------------------------
Trustee or such other bank or trust company that is reasonably satisfactory to
the Purchasers, as trustee (the "Exchange Securities Trustee"), such indenture
                                 ---------------------------
to be identical in all material respects to the Indenture, except for the
transfer restrictions relating to the Securities (as described above).

                  Upon the effectiveness of the Exchange Offer Registration
Statement, the Issuer shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for Exchange Securities (assuming that such
Holder (a) is not an affiliate of the Issuer or an Exchanging Dealer (as defined
herein) not complying with the requirements of the next sentence, (b) is not a
Purchaser holding Securities that have, or that are reasonable likely to have,
the status of an unsold allotment in an initial distribution, (c) acquires the
Exchange Securities in the ordinary course of such Holder's business and (d) has
no arrangements or understandings with any person to participate in the
distribution of the Exchange Securities) and to trade such Exchange Securities
from and after their receipt without any limitations or restrictions under the
Securities Act and without material restrictions under the securities laws of
the several states of the United States. The Issuer, the Guarantors, the
Purchasers and each Exchanging Dealer acknowledge that, pursuant to current
interpretations by the Commission's staff of Section 5 of the Securities Act,
each Holder that is a broker-dealer electing to exchange Securities, acquired
for its own account as a result of market-making activities or other trading
activities, for Exchange Securities (an "Exchanging Dealer"), is required to
                                         -----------------
deliver a prospectus containing substantially the information set forth in Annex
A hereto on the cover, in Annex B hereto in the "Exchange Offer Procedures"
section and the "Purpose of the Exchange Offer" section and in Annex C hereto in
the "Plan of Distribution" section of such prospectus in connection with a sale
of any such Exchange Securities received by such Exchanging Dealer pursuant to
the Registered Exchange Offer.

                  In connection with the Registered Exchange Offer, the Issuer
shall:

                  (a)     mail to each Holder a copy of the prospectus forming
         part of the Exchange Offer Registration Statement, together with an
         appropriate letter of transmittal and related documents;

                  (b)     keep the Registered Exchange Offer open for not less
         than 20 business days (or longer, if required by applicable law) after
         the date on which notice of the Registered Exchange Offer is mailed to
         the Holders;

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                                                                               3

                  (c)    utilize the services of a depositary for the Registered
         Exchange Offer with an address in the Borough of Manhattan, The City
         of New York;

                  (d)    permit Holders to withdraw tendered Securities at any
         time prior to the close of business, New York City time, on the last
         business day on which the Registered Exchange Offer shall remain open;
         and

                  (e)    otherwise comply in all respects with all laws that are
         applicable to the Registered Exchange Offer.

                  As soon as practicable after the close of the Registered
Exchange Offer, the Issuer shall:

                  (a)    accept for exchange all Securities tendered and not
         validly withdrawn pursuant to the Registered Exchange Offer;

                  (b)    deliver to the Trustee for cancellation all Securities
         so accepted for exchange; and

                  (c)    cause the Trustee or the Exchange Securities Trustee,
         as the case may be, promptly to authenticate and deliver to each
         Holder, Exchange Securities equal in principal amount to the Securities
         of such Holder so accepted for exchange.

                  The Issuer shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 180 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Issuer shall make such prospectus and any amendment or supplement
thereto available to any broker-dealer for use in connection with any resale of
any Exchange Securities for a period of not less than 180 days after the
consummation of the Registered Exchange Offer.

                  The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Securities and the Exchange Securities shall
vote and consent together on all matters as one class and that none of the
Securities or the Exchange Securities will have the right to vote or consent as
a separate class on any matter.

                  Interest on each Exchange Security issued pursuant to the
Registered Exchange Offer will accrue from the last interest payment date on
which interest was paid on the Securities surrendered in exchange therefor or,
if no interest has been paid on the Securities, from the Issue Date.

                  Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Issuer that at the time of the
consummation of the Registered Exchange Offer (i)

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                                                                               4

any Exchange Securities received by such Holder will be acquired in the ordinary
course of business, (ii) such Holder will have no arrangements or understanding
with any person to participate in the distribution of the Securities or the
Exchange Securities within the meaning of the Securities Act and (iii) such
Holder is not an affiliate of the Issuer or, if it is such an affiliate, such
Holder will comply with the registration and prospectus delivery requirements of
the Securities Act to the extent applicable.

                  Notwithstanding any other provisions hereof, the Issuer and
the Guarantors will ensure that (i) any Exchange Offer Registration Statement
and any amendment thereto and any prospectus forming part thereof and any
supplement thereto complies in all material respects with the Securities Act and
the rules and regulations of the Commission thereunder, (ii) any Exchange Offer
Registration Statement and any amendment thereto does not, when it becomes
effective, contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading and (iii) any prospectus forming part of any Exchange
Offer Registration Statement, and any supplement to such prospectus, does not,
as of the consummation of the Registered Exchange Offer, include an untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.

                  2. Shelf Registration. If (i) because of any change in law or
                     ------------------
applicable interpretations thereof by the Commission's staff the Issuer is not
permitted to effect the Registered Exchange Offer as contemplated by Section 1
hereof, or (ii) for any other reason the Registered Exchange Offer is not
consummated within 180 days after the Issue Date, or (iii) any Securities
tendered pursuant to the Registered Exchange Offer are not exchanged for
Exchange Securities within 10 days of being accepted in the Registered Exchange
Offer, or (iv) any Purchaser so requests with respect to Securities not eligible
to be exchanged for Exchange Securities in the Registered Exchange Offer and
held by it following the consummation of the Registered Exchange Offer, or (v)
any applicable law or interpretations do not permit any Holder to participate in
the Registered Exchange Offer, then the following provisions shall apply:

                  (a)  The Issuer and the Guarantors shall file as promptly as
         practicable (but in no event more than 30 days after so required or
         requested pursuant to this Section 2 and not earlier than 120 days
         after the Issue Date) with the Commission (the "Shelf Filing
                                                         ------------
         Deadline"), and thereafter shall use its reasonable best efforts to
         --------
         cause to be declared effective, a shelf registration statement on an
         appropriate form under the Securities Act relating to the offer and
         sale of the Transfer Restricted Securities (as defined below) by the
         Holders thereof from time to time in accordance with the methods of
         distribution set forth in such registration statement (hereafter, a
         "Shelf Registration Statement" and, together with any Exchange Offer
          ----------------------------
         Registration Statement, a "Registration Statement").
                                    ----------------------

                  (b)  The Issuer and the Guarantors shall use their reasonable
         best efforts to keep the Shelf Registration Statement continuously
         effective in order to permit the prospectus forming part thereof to be
         used by Holders of Transfer Restricted Securities for a period ending
         on the earlier of (i) two years from the Issue Date or such shorter
         period that will terminate when all the Transfer Restricted Securities
         covered by the Shelf Registration

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                                                                               5

          Statement have been sold pursuant thereto and (ii) the date on which
          the Securities become eligible for resale without volume restrictions
          pursuant to Rule 144 under the Securities Act (in any such case, such
          period being called the "Shelf Registration Period").  Notwithstanding
                                   -------------------------
          the foregoing, if the Board of Directors of Hanover determines in good
          faith that is in the best interests of the Issuer and the Guarantors
          not to disclose the existence of facts surrounding any proposed or
          pending material corporate transaction or other material development
          involving the Issuer or the Guarantors, the Issuer and the Guarantors
          may allow the Shelf Registration Statement to fail to be effective or
          the  prospectus contained therein to be unusable as a result of such
          nondisclosure for up to 60 days in any year during the two-year period
          of effectiveness required by Section 2 hereof.

                  (c)  Notwithstanding any other provisions hereof, the Issuer
          and each of the Guarantors will ensure that (i) any Shelf Registration
          Statement and any amendment thereto and any prospectus forming part
          thereof and any supplement thereto complies in all material respects
          with  the  Securities Act and the rules and regulations of the
          Commission thereunder, (ii) any Shelf Registration Statement and any
          amendment thereto (in either case, other than with respect to
          information included therein in reliance upon or in conformity with
          written information furnished to the Issuer by or on behalf of any
          Holder specifically for use therein (the "Holders' Information")) does
                                                    --------------------
          not, when it becomes effective, contain an untrue statement of a
          material fact or omit to state a material fact required to be stated
          therein or necessary to make the statements therein not misleading and
          (iii) any prospectus forming part of any Shelf Registration Statement,
          and any supplement to such prospectus (in either case, other than with
          respect to Holders' Information), does not include an untrue statement
          of a material fact or omit to state a material fact necessary in order
          to make the statements therein, in the light of the circumstances
          under which they were made, not misleading.

                  (d)  In the absence of the events described in clauses (i)
          through (vi) of the first paragraph of this Section 2, the Issuer and
          the Guarantors shall not be permitted to discharge their obligations
          hereunder by means of the filing of a Shelf Registration Statement.

                  3.   Additional Interest. (e) The parties hereto agree that
                       -------------------
the Holders of Transfer Restricted Securities will suffer damages if the Issuer
and the Guarantors fail to fulfill their obligations under Section 1 or Section
2, as applicable, and that it would not be feasible to ascertain the extent of
such damages.  Accordingly, if (i) the Exchange Offer Registration Statement is
not filed with the Commission on or prior to 120 days after the Issue Date, (ii)
the Exchange Offer Registration Statement is not declared effective within 150
days after the Issue  Date, (iii) the Registered Exchange Offer is not
consummated on or prior to 180 days after the Issue Date, (iv) the Shelf
Registration Statement is not filed with the Commission on or by the Shelf
Filing Deadline and/or declared effective within 120 days after the Shelf Filing
Deadline, or (v) the Shelf Registration Statement is filed by the date of the
Shelf Filing Deadline and declared effective within 120 days after the Shelf
Filing Deadline but shall thereafter cease to be effective (at any time that the
Issuer and the Guarantors are obligated to maintain the effectiveness thereof)
without being succeeded within 30 days by an additional Registration

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                                                                               6

Statement filed and declared effective (each such event referred to in
clauses (i) through (v), a "Registration Default"), the Issuer and the
                            --------------------
Guarantors will jointly and severally be obligated to pay additional interest to
each Holder of Transfer Restricted Securities, during the period of one or more
such Registration Defaults, in an amount equal to $ 0.192 per week per $1,000
principal amount of Transfer Restricted Securities held by such Holder until (i)
the applicable Registration Statement is filed, (ii) the Exchange Offer
Registration Statement is declared effective and the Registered Exchange Offer
is consummated, (iii) the Shelf Registration Statement is declared effective or
(iv) the Shelf Registration Statement again becomes effective, as the case may
be. Following the cure of all Registration Defaults, the accrual of additional
interest will cease. As used herein, the term "Transfer Restricted Securities"
                                               ------------------------------
means each Security until the earliest to occur of (i) the date on which such
Security has been exchanged for a freely transferable Exchange Security in the
Registered Exchange Offer, (ii) the date on which it has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (iii) the date on which it is distributed to the
public pursuant to Rule 144 under the Securities Act or is saleable pursuant to
Rule 144(k) under the Securities Act. Notwithstanding anything to the contrary
in this Section 3(a), neither the Issuer nor the Guarantors shall be required to
pay additional interest to a Holder of Transfer Restricted Securities if such
Holder failed to comply with its obligations to make the representations set
forth in the second to last paragraph of Section 1 or failed to provide the
information required to be provided by it, if any, pursuant to Section 4(n).

              (b) The Issuer shall notify the Trustee and the Paying Agent under
the Indenture immediately upon the happening of each and every registration
Default.  The Issuer and the Guarantors shall pay the additional interest due on
the Transfer Restricted Securities by depositing  with the Paying Agent (which
may not be the Issuer for these purposes), in trust, for the benefit of the
Holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the additional interest then due.  The additional interest due shall be
payable on each interest payment date specified by the Indenture and the
Securities to the record holder entitled to receive the interest payment to be
made on such date. Each obligation to pay additional interest shall be deemed to
accrue from and including the date of the applicable Registration Default.

              (c) The parties hereto agree that the additional interest provided
for in this Section 3 constitute a reasonable estimate of and are intended to
constitute the sole damages that will be suffered by Holders of Transfer
Restricted Securities by reason of the failure of (i) the Shelf Registration
Statement or the Exchange Offer Registration Statement to be filed, (ii) the
Shelf Registration Statement to remain effective or (iii) the Exchange Offer
Registration Statement to be declared effective and the Registered Exchange
Offer to be consummated, in each case to the extent required by this Agreement.

              4.  Registration Procedures.  In connection with any Registration
                  -----------------------
Statement, the following provisions shall apply:

              (a) The Issuer shall (i) furnish to each Purchaser, prior to the
     filing thereof with the Commission, a copy of the Registration Statement
     and each amendment thereof and each supplement, if any, to the prospectus
     included therein and shall use its reasonable

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                                                                               7

best efforts to reflect in each such document, when so filed with the
Commission, such comments as any Purchaser may reasonably propose; (ii) include
the information set forth in Annex A hereto on the cover, in Annex B hereto in
the "Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement, and
include the information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to the Registered Exchange Offer; and (iii) if requested by
any Purchaser, include the information required by Items 507 or 508 of
Regulation S-K, as applicable, in the prospectus forming a part of the Exchange
Offer Registration Statement.

         (b)      The Issuer shall advise each Purchaser, each Exchanging Dealer
and the Holders (if applicable) and, if requested by any such person, confirm
such advice in writing (which advice pursuant to clauses (ii)-(v) hereof shall
be accompanied by an instruction to suspend the use of the prospectus until the
requisite changes have been made):

                        (i)    when any Registration Statement and any amendment
         thereto have been filed with the Commission and when such Registration
         Statement or any post-effective amendment thereto has become effective;

                        (ii)   of any request by the Commission for amendments
         or supplements to any Registration Statement or the prospectus included
         therein or for additional information;

                        (iii)  of the issuance by the Commission of any stop
         order suspending the effectiveness of any Registration Statement or the
         initiation of any proceedings for thatpurpose;

                        (iv)   of the receipt by the Issuer of any notification
         with respect to the suspension of the qualification of the Securities
         or the Exchange Securities for sale in any jurisdiction or the
         initiation or threatening of any proceeding for such purpose; and

                        (v)    of the happening of any event that requires the
         making of any changes in any Registration Statement or the prospectus
         included therein in order that the statements therein are not
         misleading and do not omit to state a material fact required to be
         stated therein or necessary to make the statements therein not
         misleading.

         (c)      The Issuer and the Guarantors will make every reasonable
effort to obtain the withdrawal at the earliest possible time of any order
suspending the effectiveness of any Registration Statement.

         (d)      The Issuer will furnish or make available to each Holder of
Transfer Restricted Securities included within the coverage of any Shelf
Registration Statement,

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                                                                               8

without charge, at least one conformed copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial statements and
schedules and, if any such Holder so requests in writing, all exhibits thereto
(including those, if any, incorporated by reference).

     (e) The Issuer will, during the Shelf Registration Period, promptly deliver
to each Holder of Transfer Restricted Securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
prospectus (including  each  preliminary prospectus) included in such Shelf
Registration Statement and any amendment or supplement thereto as such Holder
may reasonably request; and the Issuer consents to the use of such prospectus or
any amendment or supplement thereto by each of the selling Holders of Transfer
Restricted Securities in connection  with the offer and sale of the Transfer
Restricted Securities covered by such prospectus or any amendment or supplement
thereto.

     (f) The Issuer will furnish or make available to each Purchaser and each
Exchanging Dealer, and to any other Holder who so requests, without charge, at
least one conformed copy of the Exchange Offer Registration Statement and any
post-effective amendment thereto, including financial statements and schedules
and, if any Purchaser or Exchanging Dealer or any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).

     (g) The Issuer will, during the Exchange Offer Registration Period or the
Shelf Registration Period, as applicable, promptly deliver to each Purchaser,
each Exchanging Dealer and such other persons that are required to deliver a
prospectus following the Registered Exchange Offer, without charge, as many
copies of the final prospectus included in the Exchange Offer Registration
Statement or the Shelf Registration Statement and any amendment or supplement
thereto as such Purchaser, Exchanging Dealer or other persons may reasonably
request; and the Issuer and the Guarantors consent to the use of such prospectus
or any amendment or supplement thereto by any such Purchaser, Exchanging Dealer
or other persons, as applicable, as aforesaid.

     (h) Prior to the effective date of any Registration Statement, the Issuer
and the Guarantors will use their reasonable best efforts to register or
qualify, or cooperate with the Holders of Securities or Exchange Securities
included therein and their respective counsel in connection with the
registration or qualification of, such Securities or Exchange Securities for
offer and sale under the securities or blue sky laws of such jurisdictions as
any such Holder reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the offer and sale in such jurisdictions
of the Securities or Exchange Securities covered by such Registration Statement;
provided that the Issuer and the Guarantors will not be required to qualify
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generally to do business in any jurisdiction where it is not then so qualified
or to take any action which would subject it to general service of process or
to taxation in any such jurisdiction where it is not then so subject.

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                                                                               9

     (i) The Issuer and the Guarantors will cooperate with the Holders of
Securities or Exchange Securities to facilitate the timely preparation and
delivery of certificates representing Securities or Exchange Securities to be
sold pursuant to any Registration Statement free of any restrictive legends and
in such denominations and registered in such names as the Holders thereof may
request in writing prior to sales of Securities or Exchange Securities pursuant
to such Registration Statement.

     (j) If any event contemplated by Section 4(b)(ii) through (v) occurs during
the period for which the Issuer and the Guarantors are required to maintain an
effective Registration Statement, the Issuer will promptly prepare and file with
the Commission a post-effective amendment to the Registration Statement or a
supplement to the related prospectus or file any other required document so
that, as thereafter delivered to purchasers of the Securities or Exchange
Securities from a Holder, the prospectus will not include an untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.

     (k) Not later than the effective date of the applicable Registration
Statement, the Issuer will provide a CUSIP number for the Securities and the
Exchange Securities, as the case may be, and provide the applicable trustee with
printed certificates for the Securities or the Exchange Securities, as the case
may be, in a form eligible for deposit with The Depository Trust Company.

     (l) The Issuer and the Guarantors will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of Section
11(a) of the Securities Act; provided that in no event shall such earning
                             --------
statement be delivered later than 45 days after the end of a 12-month period (or
90 days, if such period is a fiscal year) beginning with the first month of the
Issuer's first fiscal quarter commencing after the effective date of the
applicable Registration Statement, which statement shall cover such 12-month
period.

     (m) The Issuer and the Guarantors will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.

     (n) The Issuer may require each Holder of Transfer Restricted Securities to
be  registered pursuant to any Shelf Registration Statement to furnish to the
Issuer such information concerning the Holder and the distribution of such
Transfer Restricted Securities as the Issuer may from time to time reasonably
require for inclusion in such Shelf Registration Statement, and the Issuer may
exclude from such registration the Transfer Restricted Securities of any Holder
that fails to furnish such information within a reasonable time after receiving
such request.

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                                                                              10

     (o) In the case of a Shelf Registration Statement, each Holder of Transfer
Restricted Securities to be registered pursuant thereto agrees by acquisition of
such Transfer Restricted Securities that, upon receipt of any notice from the
Issuer pursuant to Section 4(b)(ii) through (v), such Holder will discontinue
disposition of such Transfer Restricted Securities until such Holder's receipt
of copies of the supplemental or amended prospectus contemplated by Section 4(j)
or until advised in writing (the "Advice") by the Issuer that the use of the
                                  ------
applicable prospectus may be resumed. If the Issuer shall give any notice under
Section 4(b)(ii) through (v) during the period that the Issuer is required to
maintain an effective Registration Statement (the "Effectiveness Period"), such
                                                   --------------------
Effectiveness Period shall be extended by the number of days during such period
from and including the date of the giving of such notice to and including the
date when each seller of Transfer Restricted Securities  covered by such
Registration Statement shall have received (x) the copies of the supplemental or
amended prospectus contemplated by Section 4(j) (if an amended or supplemental
prospectus is required) or (y) the  Advice (if no amended or supplemental
prospectus is required).

     (p) In the case of a Shelf Registration Statement, the Issuer and the
Guarantors shall enter into such customary agreements (including, if requested,
an underwriting agreement in customary form) and take all such other action, if
any, as Holders of a majority in aggregate principal amount of the Securities
and Exchange Securities being sold or the managing underwriters (if any) shall
reasonably request in order to facilitate any disposition of Securities or
Exchange Securities pursuant to such Shelf Registration Statement.

     (q) In the case of a Shelf Registration Statement, the Issuer shall (i)
make reasonably available for inspection by a representative of, and Special
Counsel (as defined  below) acting for, Holders of a majority in aggregate
principal amount of the Securities and Exchange Securities being sold and any
underwriter participating in any disposition of Securities or Exchange
Securities pursuant to such Shelf Registration Statement, all relevant financial
and other records, pertinent corporate documents and properties of the Issuer
and its subsidiaries and (ii) use its reasonable best efforts to have its
officers, directors, employees, accountants and counsel supply all relevant
information reasonably requested by such representative, Special Counsel or any
such underwriter (an "Inspector") in connection with such Shelf Registration
                      ---------
Statement, in each case as shall be reasonably necessary to enable such persons
to conduct a reasonable investigation within the meaning of Section 11 of the
Securities Act.

     (r) In the case of a Shelf Registration Statement, the Issuer shall, if
requested by Holders of a majority in aggregate principal amount of the
Securities and Exchange Securitiesbeing sold, their Special Counsel or the
managing underwriters (if any) in connection with such Shelf Registration
Statement, use its reasonable best efforts to cause (i) its counsel to deliver
an opinion relating to the Shelf Registration Statement and the Securities or
Exchange Securities, as applicable, in customary form, (ii) its officers to
execute and deliver all customary documents and certificates requested by
Holders of a majority in aggregate principal amount of the Securities and
Exchange Securities being sold, their Special Counsel or the managing
underwriters (if any) and (iii) its independent

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                                                                              11

         public accountants to provide a comfort letter or letters in customary
         form, subject to receipt of appropriate documentation as contemplated,
         and only if permitted, by Statement of Auditing Standards No. 72.

               5. Registration Expenses. The Issuer and the Guarantors will bear
                  ---------------------
all expenses incurred in connection with the performance of their obligations
under Sections 1, 2, 3 and 4 and the Issuer will reimburse the Purchasers and
the Holders for the reasonable fees and disbursements of one firm of attorneys
(in addition to any local counsel) chosen by the Holders of a majority in
aggregate principal amount of the Securities and the Exchange Securities to be
sold pursuant to each Registration Statement (the "Special Counsel") acting for
                                                   ---------------
the Purchasers or Holders in connection therewith.

               6. Indemnification. (a) In the event of a Shelf Registration
                  ---------------
Statement or in connection with any prospectus delivery pursuant to an Exchange
Offer Registration Statement by any Purchaser or Exchanging Dealer, as
applicable, the Issuer and each of the Guarantors shall, jointly and severally,
indemnify and hold harmless each Holder (including, without limitation, any such
Purchaser or Exchanging  Dealer), its affiliates, their respective officers,
directors, employees, representatives and agents, and each person, if any, who
controls such Holder within the meaning of the Securities Act or the Exchange
Act(collectively referred to for purposes of this Section 6 and Section 7 as a
Holder) from and against any loss, claim, damage or liability, joint or several,
or any action in respect thereof (including, without limitation, any loss,
claim, damage, liability or action relating to purchases and sales of Securities
or Exchange Securities), to which that Holder may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state  statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and shall reimburse
each Holder promptly upon demand for any legal or other expenses reasonably
incurred  by that Holder in connection with investigating or defending or
preparing to defend against or appearing as a third party witness in connection
with any such loss, claim, damage, liability  or action as such expenses are
incurred;  provided, however, that the Issuer and the Guarantors shall not be
           --------  -------
liable  in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with any Holders' Information; and
provided, further, that with respect to any such untrue statement in or omission
--------  -------
from any related  preliminary  prospectus, the indemnity agreement contained in
this Section 6(a) shall not inure to the benefit of any Holder from whom the
person asserting any such loss, claim, damage, liability or action received
Securities or Exchange Securities to the extent that such loss, claim, damage,
liability or action of or with respect to such Holder results from the fact that
both (A) a copy of the final prospectus was not sent or given to such person at
or prior to the written confirmation of the sale of such Securities or Exchange
Securities to such person and (B) the untrue statement in or omission from the
related preliminary prospectus was corrected in the

<PAGE>
                                                                              12

final prospectus unless, in either case, such failure to deliver the final
prospectus was a result of non-compliance by the Issuer with Section 4(d), 4(e),
4(f) or 4(g).

     (b) In the event of a Shelf Registration Statement, each Holder shall
indemnify and hold harmless the Issuer, each Guarantor, their respective
affiliates, and their respective officers, directors, employees, representatives
and agents, and each person, if any, who controls the Issuer or any Guarantor
within the meaning of the Securities Act or the Exchange Act (collectively
referred to for purposes of this Section 6(b) and Section 7 as the Issuer), from
and against any loss, claim, damage or liability, joint or several, or any
action in respect thereof, to which the Issuer may become subject, whether
commenced or threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any such Registration Statement or any prospectus forming part
thereof or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case only
to the extent that the untrue statement or alleged untrue statement or omission
or alleged omission  was made in reliance upon and in conformity with any
Holders' Information furnished to the Issuer by such Holder, and shall reimburse
the Issuer for any legal or other expenses reasonably incurred by the Issuer in
connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
                                                           --------  -------
that no such Holder shall be liable for any indemnity claims hereunder in excess
of the amount of net proceeds received by such Holder from the sale of
Securities or Exchange Securities pursuant to such Shelf Registration Statement.

     (c) Promptly after receipt by an indemnified  party under this Section 6 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party pursuant to Section 6(a) or 6(b), notify the indemnifying party in writing
of the claim or the commencement of that action; provided, however, that the
                                                 --------  -------
failure to notify the indemnifying party shall not relieve it from any liability
which it may have under this Section 6 except to the extent that it has been
materially prejudiced (through the forfeiture of substantive rights or defenses)
by such failure; and provided, further, that the failure to notify the
                     --------  -------
indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under this Section 6. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel reasonably satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 6 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than the reasonable costs of investigation; provided, however,
                                                          --------  -------
that an indemnified party shall have the right to employ its own counsel in any
such

<PAGE>
                                                                              13

action, but the fees, expenses and other charges of such counsel for the
indemnified party will be at the expense of such indemnified party unless (1)
the employment of counsel by the indemnified party has been authorized in
writing by the indemnifying party, (2) the indemnified party has reasonably
concluded (based upon advice of counsel to the indemnified party) that there may
be legal defenses available to it or other indemnified parties that are
different from or in addition to those available to the indemnifying party, (3)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (4) the indemnifying party
has not in fact employed counsel reasonably satisfactory to the indemnified
party to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm of attorneys (in
addition to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity agreements
contained in Sections 6(a) and 6(b), shall use all reasonable efforts to
cooperate with the indemnifying party in the defense of any such action or
claim. No indemnifying party shall be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with its written consent or if there be a
final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.

             7.  Contribution. If the indemnification provided for in Section 6
                 ------------
is unavailable or insufficient to hold harmless an indemnified party under
Section 6(a) or 6(b), then each indemnifying  party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such  proportion as shall be appropriate to
reflect the relative benefits received by the Issuer and the Guarantors from the
offering and sale of the Securities, on the one hand, and a Holder with respect
to the sale by such Holder of Securities or Exchange Securities, on the other,
or (ii) if the allocation provided by clause (i) above is not  permitted  by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Issuer and the Guarantors on the one hand and such Holder on the other with
respect to the statements or omissions that resulted in such loss, claim, damage
or liability, or action in respect thereof, as well as any other relevant
equitable considerations.  The relative benefits received by the Issuer and the
Guarantors on the one hand and a Holder on the other with respect to such
offering and such sale shall be deemed to be in the same proportion as the total
net proceeds from the offering of the Securities

<PAGE>
                                                                              14

(before deducting expenses) received by or on behalf of the Issuer as set
forth in the Purchase Agreement, on the one hand, bear to the total proceeds
received by such Holder with respect to its sale of Securities or Exchange
Securities, on the other. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to the Issuer and the Guarantors or information supplied by the Issuer
and the Guarantors on the one hand or to any Holders' Information supplied by
such Holder on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The parties hereto agree that it would not be just
and equitable if contributions pursuant to this Section 7 were to be determined
by pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7
shall be deemed to include, for purposes of this Section 7, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 7, an indemnifying party that is
a Holder of Securities or Exchange Securities shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Securities or Exchange Securities sold by such indemnifying party to any
purchaser exceeds the amount of any damages which such indemnifying party has
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.

           8. Rules 144 and 144A. The Issuer shall use its reasonable best
              ------------------
efforts to file the reports required to be filed by it under the Securities Act
and the Exchange Act in a timely manner and, if at any time the Issuer is not
required to file such reports, it will, upon the written request of any Holder
of Transfer Restricted Securities, make publicly available other information so
long as necessary to permit sales of such Holder's securities pursuant to Rules
144 and 144A. Each of the Issuer and the Guarantors covenant that it will take
such further action as any Holder of Transfer Restricted Securities may
reasonably request, all to the extent required from time to time to enable such
Holder to sell Transfer Restricted Securities without registration under the
Securities Act within the limitation of the exemptions provided by Rules 144 and
144A (including, without limitation, the requirements of Rule 144A(d)(4)). Upon
the written request of any Holder of Transfer Restricted Securities, each of the
Issuer and the Guarantors shall deliver to such Holder a written statement as to
whether it has complied with such requirements. Notwithstanding the foregoing,
nothing in this Section 8 shall be deemed to require the Issuer to register any
of its securities pursuant to the Exchange Act.

           9. Underwritten Registrations. If any of the Transfer Restricted
              --------------------------
Securities covered by any Shelf Registration Statement are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering will be selected by the Holders of
a majority in aggregate principal amount of such Transfer Restricted Securities
included in such offering, subject to the consent of the Issuer

<PAGE>
                                                                              15

(which shall not be unreasonably withheld or delayed), and such Holders shall be
responsible for all underwriting commissions and discounts in connection
therewith.

          No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.

          10. Miscellaneous. (a) Amendments and Waivers. The provisions of this
              -------------      ----------------------
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, unless the Issuer has
obtained the written consent of Holders of a majority in aggregate principal
amount of the Securities and the Exchange Securities, taken as a single class.
Notwithstanding the foregoing, a waiver or consent to depart from the provisions
hereof with respect to a matter that relates exclusively to the rights of
Holders whose Securities or Exchange Securities are being sold pursuant to a
Registration Statement and that does not directly or indirectly affect the
rights of other Holders may be given by Holders of a majority in aggregate
principal amount of the Securities and the Exchange Securities being sold by
such Holders pursuant to such Registration Statement.

          (b) Notices. All notices and other communications provided for or
              -------
permitted hereunder shall be made in writing by hand-delivery, first-class mail,
telecopier or air courier guaranteeing next-day delivery:

          (1) if to a Holder, at the most current address given by such Holder
     to the Issuer in accordance with the provisions of this Section 10(b),
     which address initially is, with respect to each Holder, the address of
     such Holder maintained by the Registrar under the Indenture, with a copy in
     like manner to Goldman, Sachs & Co., J.P. Morgan Securities Inc., Salomon
     Smith Barney Inc. and Credit Suisse First Boston Corporation.

          (2) if to an Purchaser, initially at its address set forth in the
     Purchase Agreement;

          (3) if to the Issuer, initially at the address of the Issuer set forth
     in the Purchase Agreement; and

          (4) if to the Guarantors, initially at the address of the Guarantors
     set forth in the Purchase Agreement.

          All such notices and communications shall be deemed to have been duly
given: when delivered by hand, if personally delivered; one business day after
being delivered to a next-day air courier; five business days after being
deposited in the mail; and when receipt is acknowledged by the recipient's
telecopier machine, if sent by telecopier.

          (c) Successors And Assigns. This Agreement shall be binding upon the
              ----------------------
Issuer, the Guarantors and their respective successors and assigns.

<PAGE>
                                                                              16

     (d) Counterparts. This Agreement may be executed in any number of
         ------------
counterparts (which may be delivered in original form or by telecopier) and by
the parties hereto in separate counterparts, each of which when so executed
shall be deemed to be an original and all of which taken together shall
constitute one and the same agreement.

     (e) Definition of Terms. For purposes of this Agreement, (a) the term
         -------------------
"business day" means any day on which the New York Stock Exchange, Inc. is open
for trading, (b) the term "subsidiary" has the meaning set forth in Rule 405
under the Securities Act and (c) except where otherwise expressly provided, the
term "affiliate" has the meaning set forth in Rule 405 under the Securities Act.

     (f) Headings. The headings in this Agreement are for convenience of
         --------
reference only and shall not limit or otherwise affect the meaning hereof.

     (g) Governing Law. This Agreement shall be governed by and construed in
         -------------
accordance with the laws of the State of New York.

     (h) Remedies. In the event of a breach by the Issuer or any of the
         --------
Guarantors or by any Holder of any of their respective obligations under this
Agreement, each Holder or the Issuer or any Guarantor, as the case may be, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages (other than the recovery of damages for a breach by the
Issuer or any Guarantor of their respective obligations under Sections 1 or 2
hereof for which additional interest has been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Issuer, each Guarantor and each Holder agree that monetary
damages would not be adequate compensation for any loss incurred by reason of a
breach by it of any of the provisions of this Agreement and hereby further agree
that, in the event of any action for specific performance in respect of such
breach, it shall waive the defense that a remedy at law would be adequate.

     (i) No Inconsistent Agreements. Each of the Issuer and each Guarantor
         --------------------------
represents, warrants and agrees that (i) it has not entered into, and shall not,
on or after the date of this Agreement, enter into any agreement that is
inconsistent with the rights granted to the Holders in this Agreement or
otherwise conflicts with the provisions hereof, (ii) it has not previously
entered into any agreement which remains in effect granting any registration
rights with respect to any of its debt securities to any person other than that
certain Registration Rights Agreement dated December 15, 1999 by and among
Hanover Compressor Capital Trust (the "Trust"), Hanover Compressor Company and
the other parties named therein relating to the Trust's 7.25% Convertible
Preferred Securities (TIDES), and (iii) without limiting the generality of the
foregoing, without the written consent of the Holders of a majority in aggregate
principal amount of the then outstanding Transfer Restricted Securities, it
shall not grant to any person the right to request the Issuer to register any
debt securities of the Issuer under the Securities Act unless the rights so
granted are not in conflict or inconsistent with the provisions of this
Agreement.

     (j) No Piggyback on Registrations. Neither the Issuer nor any of its
         -----------------------------
security holders (other than the Holders of Transfer Restricted Securities in
such capacity) shall have the

<PAGE>
                                                                              17

right to include any securities of the Issuer in any Shelf Registration or
Registered Exchange Offer other than Transfer Restricted Securities.

     (k) Severability. The remedies provided herein are cumulative and not
         ------------
exclusive of any remedies provided by law. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable best efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.

<PAGE>
                                                                              18

                  Please confirm that the foregoing correctly sets forth the
agreement among the Issuer, the Guarantors and the Purchasers.

                                                Very truly yours,

                                                HANOVER EQUIPMENT TRUST 2001B

                                                By:   WILMINGTON TRUST COMPANY,
                                                      not individually but
                                                      solely as trustee of the
                                                      Issuer

                                                      By________________________
                                                      Name:
                                                      Title:

                                                HANOVER COMPRESSOR COMPANY

                                                By______________________________
                                                  Name:
                                                  Title:

                                                HANOVER COMPRESSION LIMITED
                                                PARTNERSHIP

                                                By______________________________
                                                  Name:
                                                  Title:

                                                HANOVER COMPRESSOR LIMITED
                                                HOLDINGS, LLC

                                                By _____________________________
                                                   Name:
                                                   Title:

<PAGE>
                                                                             19

                                               HANOVER LAND LIMITED PARTNERSHIP

                                               By ______________________________
                                                  Name:
                                                  Title:

                                               HANOVER/SMITH LIMITED PARTNERSHIP

                                               By ______________________________
                                                  Name:
                                                  Title:

                                               HANOVER MAINTECH LIMITED
                                               PARTNERSHIP

                                               By ______________________________
                                                  Name:
                                                  Title:

                                               HANOVER ACQUISITION LIMITED
                                               PARTNERSHIP

                                               By ______________________________
                                                  Name:
                                                  Title:

                                               EUREKA ENERGY LIMITED PARTNERSHIP

                                               By ______________________________
                                                  Name:
                                                  Title:

<PAGE>
                                                                              20

                                                     HANOVER APPLIED PROCESS
                                                     SOLUTIONS, INC.

                                                     By ________________________
                                                         Name:
                                                         Title:

                                                     HANOVER OEC COMPRESSION
                                                     CORPORATION

                                                     By ________________________
                                                         Name:
                                                         Title:

Accepted:

GOLDMAN, SACHS & CO.
J.P. MORGAN SECURITIES INC.
SALOMON SMITH BARNEY INC.
CREDIT SUISSE FIRST BOSTON CORPORATION

By: Goldman, Sachs & Co.

By____________________________
    Authorized Signatory

<PAGE>

                                                                      SCHEDULE I

                                   GUARANTORS

Hanover Compressor Company
Hanover Compression Limited Partnership
Hanover Compressor Limited Holdings, LLC
Hanover Land Limited Partnership
Hanover/Smith Limited Partnership
Hanover Maintech Limited Partnership
Hanover Acquisition Limited Partnership
Eureka Energy Limited Partnership
Hanover Applied Process Solutions, Inc.
Hanover OEC Compression Corporation

<PAGE>

                                                                         ANNEX A

                  Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Securities where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Issuer has agreed that, for a period of 180 days after the
Expiration Date (as defined herein), it will make this Prospectus available to
any broker-dealer for use in connection with any such resale. See "Plan of
Distribution."

<PAGE>

                                                                         ANNEX B

                  Each broker--dealer that receives Exchange Securities for its
own account in exchange for Securities, where such Securities were acquired by
such broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."

<PAGE>

                                                                         ANNEX C

                              PLAN OF DISTRIBUTION

                  Each broker-dealer that receives Exchange Securities for its
own account pursuant to the Registered Exchange Offer must acknowledge that it
will deliver a prospectus in connection with any resale of such Exchange
Securities. This Prospectus, as it may be amended or supplemented from time to
time, may be used by a broker-dealer in connection with resales of Exchange
Securities received in exchange for Securities where such Securities were
acquired as a result of market-making activities or other trading activities.
The Issuer has agreed that, for a period of 180 days after the Expiration Date,
it will make this prospectus, as amended or supplemented, available to any
broker-dealer for use in connection with any such resale. In addition, until
_______________, 2001, all dealers effecting transactions in the Exchange
Securities may be required to deliver a prospectus.1

                  The Issuer will not receive any proceeds from any sale of
Exchange Securities by broker-dealers. Exchange Securities received by
broker-dealers for their own account pursuant to the Registered Exchange Offer
may be sold from time to time in one or more transactions in the
over-the-counter market, in negotiated transactions, through the writing of
options on the Exchange Securities or a combination of such methods of resale,
at market prices prevailing at the time of resale, at prices related to such
prevailing market prices or at negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such Exchange Securities. Any
broker-dealer that resells Exchange Securities that were received by it for its
own account pursuant to the Registered Exchange Offer and any broker or dealer
that participates in a distribution of such Exchange Securities may be deemed to
be an "underwriter" within the meaning of the Securities Act and any profit on
any such resale of Exchange Securities and any commission or concessions
received by any such persons may be deemed to be underwriting compensation under
the Securities Act. The Letter of Transmittal states that, by acknowledging that
it will deliver and by delivering a prospectus, a broker-dealer will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.

                  For a period of 180 days after the Expiration Date the Issuer
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Issuer has agreed to pay all expenses incident
to the Registered Exchange Offer (including the expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any
broker-dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.

--------
1 /  In addition, the legend required by Item 502(e) of Regulation S-K will
     appear on the back cover page of the Registered Exchange Offer prospectus.

<PAGE>

                                                                         ANNEX D

                  CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.

                  Name:  _______________________________________________________

                  Address: _____________________________________________________

If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.<PAGE>

                                                                     EXHIBIT 4.4

                                     ANNEX A

                         Rules of Usage and Definitions

                                 Rules of Usage
                                 --------------

          The following rules of usage shall apply to this Annex A and the
Operative Agreements (and each appendix, schedule, exhibit and annex to the
foregoing) unless otherwise required by the context or unless otherwise defined
therein:

          (a) Except as otherwise expressly provided, any definitions defined
     herein or in any other document shall be equally applicable to the singular
     and plural forms of the terms defined.

          (b) Except as otherwise expressly provided, references in any document
     to articles, sections, paragraphs, clauses, annexes, appendices, schedules
     or exhibits are references to articles, sections, paragraphs, clauses,
     annexes, appendices, schedules or exhibits in or to such document.

          (c) The headings, subheadings and table of contents used in any
     document are solely for convenience of reference and shall not constitute a
     part of any such document nor shall they affect the meaning, construction
     or effect of any provision thereof.

          (d) References to any Person shall include such Person, its successors
     and permitted assigns and transferees.

          (e) Except as otherwise expressly provided, reference to any agreement
     means such agreement as amended, modified, extended or supplemented from
     time to time in accordance with the applicable provisions thereof.

          (f) Except as otherwise expressly provided, references to any law
     includes any amendment or modification to such law and any rules or
     regulations issued thereunder or any law enacted in substitution or
     replacement therefor.

          (g) When used in any document, words such as "hereunder", "hereto",
     "hereof" and "herein" and other words of like import shall, unless the
     context clearly indicates to the contrary, refer to the whole of the
     applicable document and not to any particular article, section, subsection,
     paragraph or clause thereof.

          (h) References to "including" means including without limiting the
     generality of any description preceding such term and for purposes hereof
     the rule of ejusdem generis shall not be applicable to limit a general
                 ------- -------
     statement, followed by or referable to an enumeration of specific matters,
     to matters similar to those specifically mentioned.

          (i) Each of the parties to the Operative Agreements and their counsel
     have reviewed and revised, or requested revisions to, the Operative
     Agreements, and the usual

<PAGE>
                                                                               2

rule of construction that any ambiguities are to be resolved against the
drafting party shall be inapplicable in the construing and interpretation of the
Operative Agreements and any amendments or exhibits thereto.

          (j) The Rules of Usage and Definitions relate to a number of the
Operative Agreements but for convenience are attached to the Participation
Agreement. Notwithstanding the foregoing, a provision concerning the amendment
to an Operative Agreement shall govern the amendment of this Annex A with
                                                             -------
respect to the definitions used or referenced in such Operative Agreement.

                                   Definitions
                                   -----------

          "ABR" shall mean, for any day, a rate per annum (rounded upwards, if
           ---
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime Rate
in effect on such day, (b) the Base CD Rate in effect on such day plus 1% and
(c) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%. For
purposes hereof: "Prime Rate" shall mean the rate of interest per annum publicly
                  ----------
announced from time to time by Chase as its prime rate in effect at its
principal office in New York City (the Prime Rate not being intended to be the
lowest rate of interest charged by Chase in connection with extensions of credit
to debtors); "Base CD Rate" shall mean the sum of (a) the product of (i) the
              ------------
Three-Month Secondary CD Rate and (ii) a fraction, the numerator of which is one
and the denominator of which is one minus the C/D Reserve Percentage and (b) the
C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for any day,
                      -----------------------------
the secondary market rate for three-month certificates of deposit reported as
being in effect on such day (or, if such day shall not be a Business Day, the
next preceding Business Day) by the Board of Governors of the Federal Reserve
System (the "Board") through the public information telephone line of the
             -----
Federal Reserve Bank of New York (which rate will, under the current practices
of the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so reported
on such day or such next preceding Business Day, the average of the secondary
market quotations for three-month certificates of deposit of major money center
banks in New York City received at approximately 10:00 A.M., New York City time,
on such day (or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Lessor from three New York City negotiable certificate of
deposit dealers of recognized standing selected by it; and "Federal Funds
                                                            -------------
Effective Rate" shall mean, for any day, the weighted average of the rates on
--------------
overnight federal funds transactions with members of the Federal Reserve System
arranged by federal funds brokers, as published on the next succeeding Business
Day by the Federal Reserve Lender of New York, or, if such rate is not so
published for any day which is a Business Day, the average of the quotations for
the day of such transactions received by the Lessor from three federal funds
brokers of recognized standing selected by it. If for any reason the Lessor
shall have determined (which determination shall be conclusive absent manifest
error) that it is unable to ascertain the Base CD Rate or the Federal Funds
Effective Rate, or both, for any reason, including the inability or failure of
the Lessor to obtain sufficient quotations in accordance with the terms thereof,
the ABR shall be determined without regard to clause (b) or (c), or both, of the
first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability no longer exist. Any change in the ABR due

<PAGE>
                                                                               3

     to a change in the Prime Rate, the Three-Month Secondary CD Rate or the
     Federal Funds Effective Rate shall be effective as of the opening of
     business on the effective day of such change in the Prime Rate, the
     Three-Month Secondary CD Rate or the Federal Funds Effective Rate,
     respectively.

          "Account" has the meaning set forth in Section 8.4(a) of the
           -------
     Indenture.

          "Additional Assets" means
           -----------------

          (1) any property or assets (other than Indebtedness and Capital Stock)
     to be used by Hanover or a Restricted Subsidiary in a Related Business;

          (2) the Capital Stock of a Person that becomes a Restricted Subsidiary
     as a result of the acquisition of such Capital Stock by Hanover or a
     Restricted Subsidiary of Hanover; or

          (3) Capital Stock constituting a minority interest in any Person that
     at such time is a Restricted Subsidiary of Hanover;

provided, however, that, in the case of clauses (2) and (3), such Restricted
Subsidiary is primarily engaged in a Related Business.

          "Advance" shall mean an advance of proceeds of the Securities and an
           -------
     advance of the Certificate Holder Contribution, in each case pursuant to
     Section 5.1 of the Participation Agreement to pay Equipment Costs.

          "Affected Equipment" shall have the meaning given to such term in
           ------------------
     Section 16.2 of the Lease.

          "Affiliate" of any specified Person means any other Person, directly
           ---------
     or indirectly, controlling or controlled by or under direct or indirect
     common control with such specified Person. For the purposes of this
     definition, "control" when used with respect to any Person means the power
     to direct the management and policies of such Person, directly or
     indirectly, whether through the ownership of voting securities, by contract
     or otherwise; and the terms "controlling" and "controlled" have meanings
     correlative to the foregoing; provided that beneficial ownership of 10% or
     more of the Voting Stock of a Person shall be deemed to be control. For the
     purposes of the Operative Agreements, the Trust Company and Wilmington
     Trust FSB shall not be considered Affiliates of each other or of any other
     party to the Participation Agreement.

          "After Tax Basis" shall mean, with respect to any payment to be
           ---------------
     received, the amount of such payment increased so that, after deduction of
     the amount of all taxes required to be paid by the recipient (less any tax
     savings realized and the present value of any tax savings projected to be
     realized by the recipient as a result of the payment of the indemnified
     amount) with respect to the receipt by the recipient of such amounts, such
     increased payment (as so reduced) is equal to the payment otherwise
     required to be made.

          "Agent Member" has the meaning set forth in Section 2.1(d) of the
           ------------
     Indenture.

<PAGE>
                                                                               4

          "Appraisal" shall mean, with respect to the Equipment, an appraisal,
           ---------
     prepared by a reputable independent appraiser of such Equipment. The
     Appraisal shall state an estimate of the value thereof as of the date of
     the Appraisal and at the end of the Term and may cover more than one Unit.

          "Appraisal Procedure" shall have the meaning given such term in
           -------------------
     Section 21.4 of the Lease.

          "Asset Disposition" shall mean any direct or indirect sale, lease
           -----------------
     (other than an operating lease entered into in the ordinary course of
     business), transfer, issuance or other disposition, or a series of related
     sales, leases, transfers, issuances or dispositions that are part of a
     common plan, of shares of Capital Stock of a Subsidiary (other than
     directors' qualifying shares), property or other assets (each referred to
     for the purposes of this definition as a "disposition") by Hanover or any
     of its Restricted Subsidiaries, including any disposition by means of a
     merger, consolidation or similar transaction.

          Notwithstanding the preceding, the following items shall not be deemed
     to be Asset Dispositions:

          (1) a disposition by a Restricted Subsidiary to Hanover or by Hanover
     or a Restricted Subsidiary to a Restricted Subsidiary in which Hanover will
     hold, directly or indirectly, at least the same ownership percentage as it
     did prior to such disposition;

          (2) the sale of Cash Equivalents in the ordinary course of business;

          (3) a disposition of inventory in the ordinary course of business;

          (4) a disposition of obsolete or worn out equipment or equipment that
     is no longer useful in the conduct of the business of Hanover and its
     Restricted Subsidiaries and that is disposed of in each case in the
     ordinary course of business;

          (5) transactions permitted under Section 9.10 of the Participation
     Agreement (other than with respect to any Sale/Leaseback Transaction
     involving all or substantially all of the properties and assets of Hanover
     or of one or more Subsidiaries of Hanover, which properties and assets, if
     held by Hanover instead of such Subsidiaries, would constitute all or
     substantially all of the properties and assets of Hanover on a consolidated
     basis);

          (6) an issuance of Capital Stock by a Restricted Subsidiary of Hanover
     to Hanover or to a Wholly-Owned Subsidiary (other than a Receivables
     Entity);

          (7) for purposes of Section 9.6 of the Participation Agreement only,
     the making of a Permitted Investment or a disposition subject to Section
     9.3 of the Participation Agreement;

          (8) sales of accounts receivable and related assets or an interest
     therein of the type specified in the definition of "Qualified Receivables
     Transaction" to a Receivables Entity;

<PAGE>
                                                                               5

          (9)  dispositions of assets selected by the Board of Directors as not
     constituting an Asset Disposition with an aggregate fair market value since
     the Issue Date of less than $10 million;

          (10) dispositions in connection with Permitted Liens;

          (11) Sales of Equipment pursuant to Sale/Leaseback Transactions;

          (12) the licensing or sublicensing of intellectual property or other
     general intangibles and licenses, leases or subleases of other property in
     the ordinary course of business which do not materially interfere with the
     business of Hanover and its Restricted Subsidiaries; and

          (13) foreclosure on assets.

          "Asset Disposition Offer" has the meaning set forth in Section 3.3 of
           -----------------------
     the Indenture.

          "Asset Disposition Offer Amount" has the meaning set forth in Section
           ------------------------------
     3.3 of the Indenture.

          "Asset Disposition Offer Period" has the meaning set forth in Section
           ------------------------------
     3.3 of the Indenture.

          "Asset Disposition Purchase Date" has the meaning set forth in Section
           -------------------------------
     3.3 of the Indenture.

          "Assignment of Lease" shall mean the Assignment of Lease, Rents and
           -------------------
     Guarantee dated as of the Release Date from the Lessor to the Collateral
     Agent for the benefit of the Securityholders and the Certificate Holders,
     as amended, supplemented or otherwise modified from time to time in
     accordance with the terms thereof or of any other Operative Agreement.

          "Attributable Indebtedness" in respect of a Sale/Leaseback Transaction
           -------------------------
     shall mean, as at the time of determination, the present value (discounted
     at the interest rate borne by the notes, compounded semi-annually) of the
     total obligations of the lessee for rental payments during the remaining
     term of the lease included in such Sale/Leaseback Transaction (including
     any period for which such lease has been extended).

          "Authenticating Agent" has the meaning set forth in Section 2.2 of the
           --------------------
     Indenture.

          "Available Excess Proceeds" has the meaning set forth in Section
           -------------------------
     3.3(a) of the Indenture.

          "Average Life" shall mean, as of the date of determination, with
           ------------
     respect to any Indebtedness or Preferred Stock, the quotient obtained by
     dividing (1) the sum of the products of the numbers of years from the date
     of determination to the dates of each successive scheduled principal
     payment of such Indebtedness or redemption or similar

<PAGE>
                                                                               6

     payment with respect to such Preferred Stock multiplied by the amount of
     such payment by (2) the sum of all such payments.

          "Bank Indebtedness" shall mean any and all amounts, whether
           -----------------
     outstanding on the Issue Date or Incurred after the Issue Date, payable by
     Hanover and/or the Lessee or any Subsidiary of Hanover under or in respect
     of the Senior Credit Agreement and any related notes, collateral documents,
     letters of credit and Guarantees and any Interest Rate Agreement entered
     into in connection with the Senior Credit Agreement, including principal,
     premium, if any, interest (including interest accruing on or after the
     filing of any petition in bankruptcy or for reorganization relating to
     Hanover and/or the Lessee at the rate specified therein whether or not a
     claim for post filing interest is allowed in such proceedings), fees,
     charges, expenses, reimbursement obligations, Guarantees and all other
     amounts payable thereunder or in respect thereof.

          "Bankruptcy Laws" has the meaning set forth in Section 6.1 of the
           ---------------
     Indenture.

          "Basic Rent" shall mean the sum of (i) the Debt Basic Rent and (ii)
           ----------
     the Contribution Basic Rent, calculated as of the applicable date on which
     each is due.

          "Beneficiary; Beneficiaries" shall have the meaning set forth in the
           --------------------------
     Preliminary Statement of the Hanover Guarantee.

          "Bill of Sale" shall have the meaning set forth in Section 6.1(r) of
           ------------
     the Participation Agreement.

          "Board of Directors" shall mean, as to any Person, the board of
           ------------------
     directors of such Person or any duly authorized committee thereof.

          "Business Day" shall mean any day other than a Saturday, Sunday or
           ------------
     other day on which the Indenture Trustee or commercial banks in New York
     City or Wilmington, Delaware are authorized or required by law to close.

          "Capital Stock" of any Person shall mean any and all shares,
           -------------
     interests, rights to purchase, warrants, options, participation or other
     equivalents of or interests in (however designated) equity of such Person,
     including any Preferred Stock, but excluding any debt securities
     convertible into such equity.

          "Capitalized Lease Obligations" shall mean an obligation that is
           -----------------------------
     required to be classified and accounted for as a capitalized lease for
     financial reporting purposes in accordance with GAAP, and the amount of
     Indebtedness represented by such obligation will be the capitalized amount
     of such obligation at the time any determination thereof is to be made as
     determined in accordance with GAAP, and the Stated Maturity thereof will be
     the date of the last payment of rent or any other amount due under such
     lease prior to the first date such lease may be terminated without penalty.

<PAGE>
                                                                               7

          "Cash Equivalents" shall mean:
           ----------------

          (1)   securities issued or directly and fully Guaranteed or
                insured by the United States Government or any agency
                or instrumentality of the United States (provided
                that the full faith and credit of the United States
                is pledged in support thereof), having maturities of
                not more than one year from the date of acquisition;

          (2)   marketable general obligations issued by any state of
                the United States of America or any political
                subdivision of any such state or any public
                instrumentality thereof maturing within one year from
                the date of acquisition of the United States
                (provided that the full faith and credit of the
                United States is pledged in support thereof) and, at
                the time of acquisition, having a credit rating of
                "A" or better from either Standard & Poor's Ratings
                Services or Moody's Investors Service, Inc.;

          (3)   certificates of deposit, time deposits, eurodollar
                time deposits, overnight bank deposits or bankers'
                acceptances having maturities of not more than one
                year from the date of acquisition thereof issued by
                any commercial bank the long-term debt of which is
                rated at the time of acquisition thereof at least "A"
                or the equivalent thereof by Standard & Poor's
                Ratings Services, or "A" or the equivalent thereof by
                Moody's Investors Service, Inc., and having combined
                capital and surplus in excess of $500.0 million;

          (4)   repurchase obligations with a term of not more than
                seven days for underlying securities of the types
                described in clauses (1), (2) and (3) entered into
                with any bank meeting the qualifications specified in
                clause (3) above;

          (5)   commercial paper rated at the time of acquisition
                thereof at least "A-2" or the equivalent thereof by
                Standard & Poor's Ratings Services or "P-2" or the
                equivalent thereof by Moody's Investors Service,
                Inc., or carrying an equivalent rating by a
                nationally recognized rating agency, if both of the
                two named rating agencies cease publishing ratings of
                investments, and in any case maturing within one year
                after the date of acquisition thereof; and

          (6)   interests in any investment company or money market fund which
                invests solely in instruments of the type specified in clauses
                (1) through (5) above.

          "Casualty" shall mean any damage or destruction of all or any portion
           --------
     of a Unit as a result of fire or other casualty.

          "Certificate" shall mean a certificate issued pursuant to the Trust
           -----------
     Agreement to evidence an investment in the beneficial ownership of the
     Trust Estate, and shall include any certificate issued in exchange therefor
     or replacement thereof.

<PAGE>
                                                                               8

          "Certificate Holders" shall mean General Electric Capital Corporation,
           -------------------
     and its permitted successors and assigns.

          "Certificate Holder Contribution" shall mean the investments of funds
           -------------------------------
     in the Issuer made by the Certificate Holders pursuant to the Trust
     Agreement and the Participation Agreement.

          "Certificate Holder Yield" shall mean an amount, as of any Certificate
           ------------------------
     Holder Yield Payment Date, sufficient to provide the Certificate Holders
     with an annual pre-tax yield on the Certificate Holder Contribution equal
     to the applicable Yield Rate.

          "Certificate Holder Yield Payment Date" shall mean the first day of
           -------------------------------------
     March, June, September and December.

          "Change of Control" shall mean:
           -----------------

          (1) any "person" or "group" of related persons (as such terms are used
     in Sections 13(d) and 14(d) of the Exchange Act) is or becomes the
     beneficial owner (as defined in Rules 13d-3 and 13d-5 under the Exchange
     Act, except that such person or group shall be deemed to have "beneficial
     ownership" of all shares that any such person or group has the right to
     acquire, whether such right is exercisable immediately or only after the
     passage of time), directly or indirectly, of more than 51% of the total
     voting power of the Voting Stock of Hanover (or its successor by merger,
     consolidation or purchase of all or substantially all of its assets) (for
     the purposes of this clause, such person or group shall be deemed to
     beneficially own any Voting Stock of Hanover held by an entity, if such
     person or group "beneficially owns" (as defined above), directly or
     indirectly, more than 51% of the voting power of the Voting Stock of such
     parent entity);

          (2) during any period of two consecutive years, individuals who at the
     beginning of such period constituted the Board of Directors of Hanover
     (together with any new directors whose election by such Board of Directors
     or whose nomination for election by the shareholders of Hanover was
     approved by a vote of at least a majority of the directors of Hanover then
     still in office who were either directors at the beginning of such period
     or whose election or nomination for election was previously so approved)
     cease for any reason to constitute a majority of the Board of Directors of
     Hanover then in office;

          (3) the sale, lease, transfer, conveyance or other disposition (other
     than by way of merger or consolidation), in one or a series of related
     transactions, of all or substantially all of the assets of Hanover and its
     Restricted Subsidiaries taken as a whole to any "person" (as such term is
     used in Sections 13(d) and 14(d) of the Exchange Act); or

          (4) the adoption by the stockholders of Hanover of a plan or proposal
     for the liquidation or dissolution of Hanover.

          "Change of Control Offer" has the meaning set forth in Section 3.4 of
           -----------------------
     the Indenture.

<PAGE>
                                                                               9

          "Change of Control Payment" has the meaning set forth in Section 3.4
           -------------------------
     of the Indenture.

          "Change of Control Payment Date" has the meaning set forth in Section
           ------------------------------
     3.4 of the Indenture.

          "Chase" shall mean The Chase Manhattan Bank, a New York banking
           -----
     corporation.

          "Claims" shall mean any and all actions, suits, penalties, claims and
           ------
     demands and reasonable out-of-pocket liabilities, losses, costs and
     expenses (including, without limitation, reasonable attorney's fees and
     expenses) of any nature whatsoever.

          "Closing Date" means the date on which the Initial Securities are
           ------------
     originally issued.

          "Code" shall mean the Internal Revenue Code of 1986, as amended from
           ----
     time to time, or any successor statute thereto.

          "Collateral" shall mean all assets of the Lessor, now owned or
           ----------
     hereafter acquired, upon which a Lien is purported to be created by the
     Security Documents.

          "Collateral Agent" means Wilmington Trust FSB, acting in the capacity
           ----------------
     of collateral agent pursuant to the Indenture and certain other of the
     Operative Agreements.

          "Commonly Controlled Entity" shall mean an entity, whether or not
           --------------------------
     incorporated, which is under common control with Hanover within the meaning
     of Section 4001(a)(14) of ERISA or is part of a group which includes Lessee
     and which is treated as a single employer under Section 414 of the Code.

          "Common Stock" shall mean with respect to any Person, any and all
           ------------
     shares, interest or other participations in, and other equivalents (however
     designated and whether voting or nonvoting) of such Person's common stock
     whether or not outstanding on the Issue Date, and includes, without
     limitation, all series and classes of such common stock.

          "Condemnation" shall mean any taking or sale of the use, access, or
           ------------
     title to any Unit or any part thereof, wholly or partially (temporarily or
     permanently), by or on account of any actual eminent domain proceeding or
     other taking of action by any Person having the power of eminent domain.

          "Consent to Assignment" shall mean the Lessee's Consent to Assignment
           ---------------------
     dated as of the Release Date from the Lessee and the Guarantors to the
     Collateral Agent with respect to the Assignment of Lease, as amended,
     supplemented or otherwise modified from time to time in accordance with the
     terms thereof or of any other Operative Agreement.

          "Consolidated Coverage Ratio" shall mean as of any date of
           ---------------------------
     determination, with respect to any Person, the ratio of (x) the aggregate
     amount of Consolidated EBITDA of

<PAGE>
                                                                              10

     such Person for the period of the most recent four consecutive fiscal
     quarters ending prior to the date of such determination for which financial
     statements are in existence to (y) Consolidated Fixed Charges for such four
     fiscal quarters, provided, however, that:

          (1) if Hanover or any Restricted Subsidiary:

              (a)      has Incurred any Indebtedness since the beginning of such
                       period that remains outstanding on such date of
                       determination or if the transaction giving rise to the
                       need to calculate the Consolidated Coverage Ratio
                       involves an Incurrence of Indebtedness, Consolidated
                       EBITDA and Consolidated Fixed Charges for such period
                       will be calculated after giving effect on a pro forma
                       basis to such Indebtedness as if such Indebtedness had
                       been Incurred on the first day of such period (except
                       that in making such computation, the amount of
                       Indebtedness under any revolving credit facility
                       outstanding on the date of such calculation will be
                       computed based on (i) the average daily balance of such
                       Indebtedness during such four fiscal quarters or such
                       shorter period for which such facility was outstanding or
                       (ii) if such facility was created after the end of such
                       four fiscal quarters, the average daily balance of such
                       Indebtedness during the period from the date of creation
                       of such facility to the date of such calculation) and the
                       discharge of any other Indebtedness repaid, repurchased,
                       defeased or otherwise discharged with the proceeds of
                       such new Indebtedness as if such discharge had occurred
                       on the first day of such period; or

              (b)      has repaid, repurchased, defeased or otherwise discharged
                       any Indebtedness since the beginning of the period that
                       is no longer outstanding on such date of determination or
                       if the transaction giving rise to the need to calculate
                       the Consolidated Coverage Ratio involves a discharge of
                       Indebtedness (in each case other than Indebtedness
                       incurred under any revolving credit facility unless such
                       Indebtedness has been permanently repaid and the related
                       commitment terminated), Consolidated EBITDA and
                       Consolidated Fixed Charges for such period will be
                       calculated after giving effect on a pro forma basis to
                       such discharge of such Indebtedness, including with the
                       proceeds of such new Indebtedness, as if such discharge
                       had occurred on the first day of such period;

          (2) if since the beginning of such period Hanover or any Restricted
              Subsidiary will have made any Asset Disposition or if the
              transaction giving rise to the need to calculate the Consolidated
              Coverage Ratio is an Asset Disposition:

              (a)      the Consolidated EBITDA for such period will be reduced
                       by an amount equal to the Consolidated EBITDA (if
                       positive) directly attributable to the assets which are
                       the subject of such Asset

<PAGE>
                                                                              11

               Disposition for such period or increased by an amount equal to
               the Consolidated EBITDA (if negative) directly attributable
               thereto for such period; and

          (b)  Consolidated Fixed Charges for such period will be reduced by an
               amount equal to the Consolidated Fixed Charges directly
               attributable to any Indebtedness of Hanover or any Restricted
               Subsidiary repaid, repurchased, defeased or otherwise discharged
               with respect to Hanover and its continuing Restricted
               Subsidiaries in connection with such Asset Disposition for such
               period (or, if the Capital Stock of any Restricted Subsidiary is
               sold, the Consolidated Fixed Charges for such period directly
               attributable to the Indebtedness of such Restricted Subsidiary to
               the extent Hanover and its continuing Restricted Subsidiaries are
               no longer liable for such Indebtedness after such sale);

     (3)  if since the beginning of such period Hanover or any Restricted
          Subsidiary (by merger or otherwise) will have made an Investment in
          any Restricted Subsidiary (or any Person which becomes a Restricted
          Subsidiary or is merged with or into Hanover) or an acquisition of
          assets, including any acquisition of assets occurring in connection
          with a transaction causing a calculation to be made hereunder, which
          constitutes all or substantially all of an operating unit, division or
          line of business, Consolidated EBITDA and Consolidated Fixed Charges
          for such period will be calculated after giving pro forma effect
          thereto (including the Incurrence of any Indebtedness) as if such
          Investment or acquisition occurred on the first day of such period;
          and

     (4)  if since the beginning of such period any Person (that subsequently
          became a Restricted Subsidiary or was merged with or into Hanover or
          any Restricted Subsidiary since the beginning of such period) will
          have made any Asset Disposition or any Investment or acquisition of
          assets that would have required an adjustment pursuant to clause (2)
          or (3) above if made by Hanover or a Restricted Subsidiary during such
          period, Consolidated EBITDA and Consolidated Fixed Charges for such
          period will be calculated after giving pro forma effect thereto as if
          such Asset Disposition or Investment or acquisition of assets occurred
          on the first day of such period.

     For purposes of this definition, whenever pro forma effect is to be given
to any calculation under this definition, the pro forma calculations will be
determined in good faith by a responsible financial or accounting officer of
Hanover (including pro forma expense and cost reductions calculated on a basis
consistent with Regulation S-X under the Securities Act). If any Indebtedness
bears a floating rate of interest and is being given pro forma effect, the
interest expense on such Indebtedness will be calculated as if the rate in
effect on the date of determination had been the applicable rate for the entire

<PAGE>
                                                                              12

period (taking into account any Interest Rate Agreement applicable to such
Indebtedness if such Interest Rate Agreement has a remaining term in excess of
12 months).

     "Consolidated EBITDA" for any period means, without duplication, the
      -------------------
Consolidated Net Income for such period, plus the following to the extent
deducted in calculating such Consolidated Net Income:

     (1)  Consolidated Interest Expense;

     (2)  Consolidated Income Taxes;

     (3)  consolidated depreciation expense;

     (4)  consolidated amortization of intangibles;

     (5)  other non-cash charges reducing Consolidated Net Income (excluding any
          such non-cash charge to the extent it represents an accrual of or
          reserve for cash charges in any future period or amortization of a
          prepaid cash expense that was paid in a prior period not included in
          the calculation); and

     (6)  Consolidated Rental Expense.

Notwithstanding the preceding sentence, clauses (2) through (6) relating to
amounts of a Restricted Subsidiary of a Person will be added to Consolidated Net
Income to compute Consolidated EBITDA of such Person only to the extent (and in
the same proportion) that the net income (loss) of such Restricted Subsidiary
was included in calculating the Consolidated Net Income of such Person and, to
the extent the amounts set forth in clause (1) and clauses (3) through (6) are
in excess of those necessary to offset a net loss of such Restricted Subsidiary
or if such Restricted Subsidiary has net income for such period included in
Consolidated Net Income, only if a corresponding amount would be permitted at
the date of determination to be paid as a dividend to Hanover by such Restricted
Subsidiary without prior approval (that has not been obtained), pursuant to the
terms of its charter and all agreements, instruments, judgments, decrees,
orders, statutes, rules and governmental regulations applicable to that
Restricted Subsidiary or its stockholders.

     "Consolidated Fixed Charges" means, with respect to any Person for any
      --------------------------
period, the sum, without duplication, of Consolidated Interest Expense and
Consolidated Rental Expense.

     "Consolidated Income Taxes" means, with respect to any Person for any
      -------------------------
period, taxes imposed upon such Person or other payments required to be made by
such Person by any governmental authority which taxes or other payments are
calculated by reference to the income or profits of such Person or such Person
and its Restricted Subsidiaries (to the extent such income or profits were
included in computing Consolidated Net Income

<PAGE>
                                                                              13

for such period), regardless of whether such taxes or payments are required to
be remitted to any governmental authority.

     "Consolidated Interest Expense" means, for any period, the total interest
      -----------------------------
expense of Hanover and its consolidated Restricted Subsidiaries, whether paid or
accrued, plus, to the extent not included in such interest expense:

     (1)  interest expense attributable to Capitalized Lease Obligations and the
          interest portion of rent expense associated with Attributable
          Indebtedness in respect of the relevant lease giving rise thereto to
          the extent not already included in Consolidated Rental Expense,
          determined as if such lease were a capitalized lease in accordance
          with GAAP and the interest component of any deferred payment
          obligations;

     (2)  amortization of debt discount and debt issuance cost;

     (3)  non-cash interest expense;

     (4)  commissions, discounts and other fees and charges owed with respect to
          letters of credit and bankers' acceptance financing;

     (5)  interest actually paid by Hanover or any Restricted Subsidiary under
          any Guarantee of Indebtedness or other obligation of any other Person;

     (6)  net costs associated with Hedging Obligations (including amortization
          of fees);

     (7)  the consolidated interest expense of such Person and its Restricted
          Subsidiaries that was capitalized during such period;

     (8)  the product of (a) all dividends paid or payable in cash, Cash
          Equivalents or Indebtedness or accrued during such period on any
          series of Disqualified Stock of such Person or on Preferred Stock of
          its Restricted Subsidiaries payable to a party other than Hanover or a
          Wholly-Owned Subsidiary, times (b) a fraction, the numerator of which
          is one and the denominator of which is one minus the then current
          combined federal, state, provincial and local statutory tax rate of
          such Person, expressed as a decimal, in each case, on a consolidated
          basis and in accordance with GAAP; and

     (9)  the cash contributions to any employee stock ownership plan or similar
          trust to the extent such contributions are used by such plan or trust
          to pay interest or fees to any Person (other than Hanover) in
          connection with Indebtedness Incurred by such plan or trust; provided,
          however, that there will be excluded therefrom any such interest
          expense of any Unrestricted Subsidiary to the extent the related
          Indebtedness is not Guaranteed or paid by Hanover or any Restricted
          Subsidiary.

<PAGE>
                                                                              14

For purposes of the foregoing, total interest expense will be determined after
giving effect to any net payments made or received by Hanover and its
Subsidiaries with respect to Interest Rate Agreements.

     "Consolidated Net Income" means, for any period, the net income (loss) of
      -----------------------
Hanover and its Restricted Subsidiaries determined on a consolidated basis in
accordance with GAAP; provided, however, that there will not be included in such
Consolidated Net Income:

     (1)  any net income (loss) of any Person if such Person is not a Restricted
          Subsidiary, except that:

          (a)  subject to the limitations contained in clauses (4), (5) and (6)
               below, Hanover's equity in the net income of any such Person for
               such period will be included in such Consolidated Net Income up
               to the aggregate amount of cash actually distributed by any
               Person during such period to Hanover or a Restricted Subsidiary
               as a dividend or other distribution (subject, in the case of a
               dividend or other distribution to a Restricted Subsidiary, to the
               limitations contained in clause (3) below); and

          (b)  Hanover's equity in a net loss of any such Person (other than an
               Unrestricted Subsidiary) for such period will be included in
               determining such Consolidated Net Income to the extent such loss
               has been funded with cash from Hanover or a Restricted
               Subsidiary;

     (2)  any net income (loss) of any Person acquired by Hanover or a
          Subsidiary in a pooling of interests transaction for any period prior
          to the date of such acquisition;

     (3)  any net income (but not loss) of any Restricted Subsidiary if such
          Subsidiary is subject to restrictions, directly or indirectly, on the
          payment of dividends or the making of distributions by such Restricted
          Subsidiary, directly or indirectly, to Hanover, except that:

          (a)  subject to the limitations contained in clauses (4), (5) and (6)
               below, Hanover's equity in the net income of any such Restricted
               Subsidiary for such period will be included in such Consolidated
               Net Income up to the aggregate amount of cash that could have
               been distributed by such Restricted Subsidiary during such period
               to Hanover or another Restricted Subsidiary as a dividend
               (subject, in the case of a dividend to another Restricted
               Subsidiary, to the limitation contained in this clause); and

          (b)  Hanover's equity in a net loss of any such Restricted Subsidiary
               for such period will be included in determining such Consolidated
               Net Income;

<PAGE>
                                                                              15

          (4)  any gain (loss) realized upon the sale or other disposition of
               any property, plant or equipment of Hanover or its consolidated
               Restricted Subsidiaries (including pursuant to any Sale/Leaseback
               Transaction) which is not sold or otherwise disposed of in the
               ordinary course of business and any gain (loss) realized upon the
               sale or other disposition of any Capital Stock of any Person;

          (5)  any extraordinary gain or loss; and

          (6)  the cumulative effect of a change in accounting principles.

          "Consolidated Rental Expense" means, for any period, the aggregate of
           ---------------------------
     the rental expense of Hanover and its Restricted Subsidiaries related to
     Operating Lease Facilities of Hanover and its Restricted Subsidiaries for
     such period, determined on a consolidated basis.

          "Contractual Obligation" shall mean, as to any Person, any provision
           ----------------------
     of any security issued by such Person or of any agreement, instrument or
     other undertaking to which such Person is a party or by which it or any of
     its property is bound.

          "Contribution Basic Rent" shall mean the Certificate Holder Yield due
           -----------------------
     on the Certificate Holder Contribution on a Scheduled Interest Payment Date
     pursuant to the Trust Agreement.

          "Contribution Percentage" shall mean three percent (3%).
           -----------------------

          "Control Purchase" shall have the meaning set forth in Section 20.1(c)
           ----------------
     of the Lease.

          "Control Tendered Amount" shall mean the aggregate principal amount of
           -----------------------
     Securities tendered by the Securityholders and the aggregate pro rata
     portion of Certificates redeemed upon the occurrence of a Change of Control
     with respect to Hanover, in accordance with the provisions of Section 20.1
     of the Lease.

          "Corporate Trust Office" has the meaning set forth in Section 3.21 of
           ----------------------
     the Indenture.

          "covenant defeasance option" has the meaning set forth in Section
           --------------------------
     8.1(b) of the Indenture.

          "cross acceleration provision" has the meaning set forth in Section
           ----------------------------
     6.1 of the Indenture.

          "Currency Agreement" shall mean in respect of a Person any foreign
           ------------------
     exchange contract, currency swap agreement or other similar agreement as to
     which such Person is a party or a beneficiary.

          "Custodian" has the meaning set forth in Section 6.1 of the Indenture.
           ---------

<PAGE>
                                                                              16

          "Debt Basic Rent" shall mean the interest due on the Securities on any
           ---------------
     Scheduled Interest Payment Date pursuant to the Indenture.

          "Debt Percentage" shall mean ninety-seven percent (97%).
           ---------------

          "Default" shall mean any event which is, or after notice or passage of
           -------
     time or both would be, an Event of Default.

          "Defaulted Interest" shall have the meaning set forth in Section 2.13
           ------------------
     of the Indenture.

          "Designated Senior Indebtedness" shall mean (1) the Bank Indebtedness
           ------------------------------
     and the Synthetic Guarantees and (2) any other Senior Indebtedness or
     Guarantor Senior Indebtedness, as applicable, which, at the date of
     determination, has an aggregate principal amount outstanding of, or under
     which, at the date of determination, the holders thereof are committed to
     lend up to, at least $25.0 million and is specifically designated in the
     instrument evidencing or governing such Senior Indebtedness or Guarantor
     Senior Indebtedness, as applicable, as "Designated Senior Indebtedness" for
     purposes of the Participation Agreement.

          "Disposition" shall mean with respect to any property, any sale,
           -----------
     lease, sale and leaseback, assignment, conveyance, transfer or other
     disposition thereof. The terms "Dispose" and "Disposed of" shall have
     correlative meanings.

          "Disposition Tendered Amount" shall mean the aggregate principal
           ---------------------------
     amount of Securities tendered by the Securityholders and the aggregate pro
     rata portion of Certificate Holder Contributions repaid pursuant to an
     Asset Disposition Offer (as such term is defined in Section 20.1 of the
     Indenture).

          "Disqualified Stock" means, with respect to any Person, any Capital
           ------------------
     Stock of such Person which by its terms (or by the terms of any security
     into which it is convertible or for which it is exchangeable) or upon the
     happening of any event:

          (1) matures or is mandatorily redeemable pursuant to a sinking fund
     obligation or otherwise;

          (2) is convertible or exchangeable for Indebtedness or Disqualified
     Stock (excluding Capital Stock which is convertible or exchangeable solely
     at the option of Hanover or a Restricted Subsidiary); or

          (3) is redeemable at the option of the holder of the Capital Stock
     thereof, in whole or in part,

     in each case on or prior to the date that is 91 days after the date (a) on
     which the notes mature or (b) on which there are no notes outstanding,
     provided that only the portion of Capital Stock which so matures or is
     mandatorily redeemable, is so convertible or exchangeable or is so
     redeemable at the option of the holder thereof prior to such date will be
     deemed to be Disqualified Stock; provided, further, that

<PAGE>
                                                                              17

     any Capital Stock that would constitute Disqualified Stock solely because
     the holders thereof have the right to require Hanover to repurchase such
     Capital Stock upon the occurrence of a change of control or asset sale
     (each defined in a substantially identical manner to the corresponding
     definitions in the participation agreement) shall not constitute
     Disqualified Stock if the terms of such Capital Stock (and all such
     securities into which it is convertible or for which it is ratable or
     exchangeable) provide that Hanover may not repurchase or redeem any such
     Capital Stock (and all such securities into which it is convertible or for
     which it is ratable or exchangeable) pursuant to such provision prior to
     compliance by Hanover with the provisions of the Section 9.6 of the
     Participation Agreement and such repurchase or redemption complies with
     Section 9.3 of Participation Agreement.

          "Dollars" and "$" shall mean dollars in lawful currency of the United
           ---------------
     States of America.

          "Domestic Subsidiary" shall mean any Restricted Subsidiary that is
           -------------------
     organized under the laws of the United States of America or any state
     thereof or the District of Columbia.

          "DTC" shall mean The Depository Trust Company, its nominees and their
           ---
     respective successors and assigns, or such other depository institution
     hereinafter appointed by the Issuer.

          "Environmental Claim" shall mean any claim, notice of claim,
           -------------------
     complaint, notice of violation, letter, or other assertion or inquiry of
     any kind concerning any asserted or actual violation of or liability under
     any Environmental Law or any asserted or actual violation or liability
     relating to any Hazardous Substance.

          "Environmental Law" shall mean any and all Federal, state, local or
           -----------------
     municipal laws, rules, orders, regulations, statutes, ordinances, codes,
     decrees or requirements of any Governmental Authority regulating, relating
     to or imposing liability or standards of conduct concerning environmental
     protection matters, including without limitation, Hazardous Substances, as
     now or may at any time hereafter be in effect.

          "Environmental Violation" shall mean any activity, occurrence or
           -----------------------
     condition that violates or results in non-compliance with any applicable
     Environmental Laws or results in a written complaint or other written claim
     from a Governmental Authority with respect to any Environmental Laws.

          "Equipment" means the collective reference to all Units that are then
           ---------
     owned by the Lessor and leased to the Lessee including all Units that are
     subsequently conveyed to the Lessor as Replacement Equipment.

          "Equipment Cost" shall mean for each Unit, the amount set forth on
           --------------
     Schedule A to the Lease as the "Equipment Cost" for such Unit.

<PAGE>
                                                                              18

        "Equipment Leases" shall mean (i) the Lease dated as of June 15, 1999
         ----------------
(as amended, supplemented or otherwise modified from time to time), between
Hanover Equipment Trust 1999A, as lessor, and HCI, as lessee, (ii) the Lease
dated as of March 13, 2000 (as amended, supplemented or otherwise modified from
time to time), between Hanover Equipment Trust 2000A, as lessor, and HCI , as
lessee, (iii) the Lease dated as of October 27, 2000 (as amended, supplemented
or otherwise modified from time to time), between Hanover Equipment Trust 2000B,
as lessor, and Lessee, as lessee, (iv) the Lease (as defined in this Annex A)
and (v) any lease, in connection with and dated as of the date of an Additional
Participation Agreement (as amended, supplemented or otherwise modified from
time to time), between a Delaware business trust, as lessor, and HCI or Lessee,
as lessee.

        "Equity Proceeds Purchase Price" shall be as defined in Section
         ------------------------------
20.1(b) of the Lease.

        "ERISA" shall mean the Employee Retirement Income Security Act of
         -----
1974, as amended from time to time.

        "Escrow Agreement" shall mean that certain Escrow Agreement dated as of
         ----------------
the Closing Date among Lessee, Lessor, the Indenture Trustee and the Certificate
Holders.

        "Escrowed Funds" shall have the meaning set forth in Section 1
         --------------
of the Escrow Agreement for the term "Escrow Property".

        "Eurocurrency Reserve Requirements" shall mean for any day as
         ---------------------------------
applied to a Certificate Holder Contribution, the aggregate (without
duplication) of the rates (expressed as a decimal) of reserve requirements in
effect on such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board or other Governmental
Authority having jurisdiction with respect thereto) dealing with reserve
requirements prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Board) maintained by a member
bank of the Federal Reserve System.

        "Eurodollar Base Rate" shall mean, with respect to each day during each
         --------------------
Interest Period, the rate per annum determined on the basis of the rate for
deposits in Dollars for a period equal to one month commencing on the first day
of such Interest Period appearing on Page 3750 of the Telerate screen as of
11:00 A.M., London time, two Business Days prior to the beginning of such
Interest Period. In the event that such rate does not appear on Page 3750 of the
Telerate screen (or otherwise on such screen), the "Eurodollar Base Rate" shall
                                                    --------------------
be determined by reference to such other comparable publicly available service
for displaying eurodollar rates as may be selected by the Lessor, or, in the
absence of such availability, by reference to the rate at which the Lessor is
offered Dollar deposits at or about 11:00 A.M., New York City time, two Business
Days prior to the beginning of such Interest Period in the interbank eurodollar
market where its eurodollar and foreign currency and exchange operations are
then being conducted for delivery on the first day of such Interest Period for
one month.

<PAGE>
                                                                             19

        "Eurodollar Rate" shall mean with respect to each day during
         ---------------
each Interest Period, a rate per annum determined for such day in accordance
with the following formula (rounded upward to the nearest 1/100th of 1%):

                              Eurodollar Base Rate
                              --------------------
                    1.00 - Eurocurrency Reserve Requirements

        "Event of Default" shall mean a Lease Event of Default or an
         ----------------
Indenture Event of Default.

        "Excepted Payments" shall mean:
         -----------------

        (a)   all indemnity payments (including indemnity payments made pursuant
to Section 13 of the Participation Agreement), to which the Lessor, Trust
Company or the Certificate Holders are entitled;

        (b)   any amounts (other than Basic Rent, Termination Value, or payments
due to the Lessor under Section 20 or 21 of the Lease) payable under any
Operative Agreement to reimburse the Lessor, the Trust Company, the Certificate
Holders, or any of their respective Affiliates (including the reasonable
expenses of the Trust Company and the Certificate Holders incurred in connection
with any such payment) for performing or complying with any of the obligations
of Lessee under and as permitted by any Operative Agreement;

        (c)   any amount payable to the Certificate Holders by any transferee of
the interest of the Certificate Holders as the purchase price of the Certificate
Holders' interest in the Trust Estate (or a portion thereof);

        (d)   any insurance proceeds (or payments with respect to risks
self-insured or policy deductibles) under liability policies with respect to the
Equipment other than such proceeds or payments payable to the Lessee or the
Indenture Trustee;

        (e)   any insurance proceeds under policies maintained by the Lessor,
Trust Company or the Certificate Holders;

        (f)   Transaction Expenses or other amounts or expenses paid or payable
to or for the benefit of the Trust Company or the Certificate Holders;

        (g)   all right, title and interest of the Certificate Holders or the
Lessor to any Equipment, any portion thereof or any other property to the extent
any of the foregoing has been released from the Liens of the Security Agreement
and the Assignment of Leases pursuant to the terms thereof and not otherwise
purchased by the Lessee or a third party pursuant to the terms of the Lease;

        (h)   any payments in respect of interest to the extent attributable to
payments referred to in clauses (a) through (g) above; and

<PAGE>
                                                                              20

        (i)   any rights of the Certificate Holders, the Trust Company or the
Lessor to demand, collect, sue for or otherwise receive and enforce payment of
any of the foregoing amounts.

        "Excepted Rights" means the rights of Lessor, at all times to the
         ---------------
exclusion of the Collateral Agent, to retain (A) all rights to Excepted Payments
and to demand, collect or commence an action at law to obtain such payments and
to enforce any judgment with respect thereto, and (B) all of Lessor's rights
under the Participation Agreement and all right, title and interest of the
Lessor in the Shared Rights.

        "Excess Proceeds" shall have the meaning set forth in Section 3.3(a) of
         ---------------
the Indenture.

        "Excess Proceeds Purchase" shall have the meaning set forth in Section
         ------------------------
20.1(d) of the Lease.

        "Excess Proceeds Purchase Price" shall have the meaning set forth in
         ------------------------------
Section 20.1(d) of the Lease.

        "Excess Sales Proceeds" shall have the meaning set forth in Section
         ---------------------
8.4(b)(3) of the Indenture.

        "Exchange Act" shall mean the Securities and Exchange Act of 1934, as
         ------------
amended.

        "Exchange and Registration Rights Agreement" shall mean the Exchange and
         ------------------------------------------
Registration Rights Agreement dated the Issue Date among the Initial Purchasers,
the Hanover Guarantors and the Issuer.

        "Exchange Global Note" shall have the meaning set forth in Section
         --------------------
2.1(a) of the Indenture.

        "Exchange Securities" shall have the meaning ascribed to it in the
         -------------------
second introductory paragraph of the Indenture.

        "Exculpated Person" shall have the meaning set forth in Section 9.8 of
         -----------------
the Indenture.

        "Expiration Date" shall mean September 1, 2011.
         ---------------

        "Expiration Date Election Notice" shall have the meaning set forth in
         -------------------------------
Section 20.2 of the Lease.

        "Expiration Date Purchase Option" shall mean the Lessee's option to
         -------------------------------
purchase all of the Equipment on the Expiration Date in accordance
with Section 20.2 of the Lease.

        "Fair Market Sales Value" shall mean the amount, which in any event
         -----------------------
shall not be less than zero, that would be paid in cash in an arm's-length
transaction between an

<PAGE>
                                                                              21

informed and willing purchaser and an informed and willing seller, neither of
whom is under any compulsion to purchase or sell, respectively, for the
ownership of any piece of Equipment. Fair Market Sales Value shall be determined
based on the assumption that, except for purposes of Section 21.3 of the Lease,
any Unit is in the condition and state of repair required under Section 10.1 of
the Lease and that the Lessee is in compliance with the other requirements of
the Operative Agreements.

     "Fee Letter" shall mean the Fee Letter dated June 28, 2001 from Chase and
      ----------
JP Morgan Securities Inc. to Lessee.

     "Final Rent Payment" for each Unit at any time shall mean an amount equal
      ------------------
to the product of (x) the Equipment Cost in respect of such Unit at such time
and (y) the Tranche A Percentage, but in no event shall the such amount exceed
what is permitted under Statement of Financial Accounting Standards No. 13.

     "Fiscal Year" shall mean the fiscal year of the Issuer ending on December
      -----------
31 of each year.

     "Foreign Subsidiary" means any Restricted Subsidiary that is not organized
      ------------------
under the laws of the United States of America or any state thereof or the
District of Columbia.

     "GAAP" means generally accepted accounting principles in the United States
      ----
of America as in effect as of the date of the Participation Agreement, including
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations based on GAAP contained in
the Participation Agreement will be computed in conformity with GAAP.

     "Global Securities" shall have the meaning set forth in Section 2.1(a) of
      -----------------
the Indenture.

     "Governmental Action" shall mean all permits, authorizations,
      -------------------
registrations, consents, approvals, waivers, exceptions, variances, orders,
judgments, written interpretations, decrees, licenses, exemptions, publications,
filings, notices to and declarations of or with, or required by, any
Governmental Authority, or required by any Legal Requirement, and shall include,
without limitation, all environmental and operating permits and licenses that
are required for the full use and operation of the Equipment.

     "Governmental Authority" shall mean any nation or government, any state or
      ----------------------
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.

     "Guarantee" means any obligation, contingent or otherwise, of any Person
      ---------
directly or indirectly Guaranteeing any Indebtedness of any other Person and any
obligation, direct or indirect, contingent or otherwise, of such Person:

<PAGE>
                                                                              22

     (1)  to purchase or pay (or advance or supply funds for the purchase or
          payment of) such Indebtedness of such other Person (whether arising by
          virtue of partnership arrangements, or by agreement to keep-well, to
          purchase assets, goods, securities or services, to take-or-pay, or to
          maintain financial statement conditions or otherwise); or

     (2)  entered into for purposes of assuring in any other manner the obligee
          of such Indebtedness of the payment thereof or to protect such obligee
          against loss in respect thereof (in whole or in part);

provided, however, that the term "Guarantee" will not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.

     "Guaranteed Obligations" shall have the meaning specified in Section 1(b)
      ----------------------
of the Hanover Guarantee.

     "Guarantor Obligation" means as to any Person (the "guaranteeing person"),
      --------------------                               -------------------
any obligation of (a) the guaranteeing person or (b) another Person (including
without limitation, any bank under any letter of credit) to induce the creation
of which the guaranteeing person has issued a reimbursement, counter indemnity
or similar obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends or other obligations (the "primary obligations")
                                                           -------------------
of any other third Person (the "primary obligor") in any manner, whether
                                ---------------
directly or indirectly, including, without limitation, any obligation of the
guaranteeing person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (i) for the purchase or payment of any such
primary obligation or (ii) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligation of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof; provided, however, that the term Guarantor
                                 --------  -------
Obligation shall not include endorsements of instruments for deposit or
collection in the ordinary course of business. The amount of any Guarantor
Obligation of any guaranteeing person shall be deemed to be the lower of (a) an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantor Obligation is made and (b) the maximum amount
for which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantor Obligation, unless such primary obligation
and the maximum amount for which such guaranteeing person may be liable are not
stated or determinable, in which case the amount of such Guarantor Obligation
shall be such guaranteeing person's maximum reasonably anticipated liability in
respect thereof as determined by Lessee, in good faith.

     "Guarantor" or "Hanover Guarantor" means each of Hanover Compressor Company
      ---------      -----------------
and the Subsidiary Guarantors.

<PAGE>
                                                                              23

     "Guarantor Senior Indebtedness" means, with respect to a Subsidiary
      -----------------------------
Guarantor, the following obligations, whether outstanding on the date of the
Indenture or thereafter issued, created, incurred or assumed, without
duplication:

     (1)  the Bank Indebtedness, the Synthetic Guarantees and all other
          Guarantees, as applicable, by such Subsidiary Guarantor of Senior
          Indebtedness of Hanover or Guarantor Senior Indebtedness of any other
          Subsidiary Guarantor; and

     (2)  all obligations consisting of principal of and premium, if any,
          accrued and unpaid interest on, and fees and other amounts relating
          to, all other Indebtedness of the Subsidiary Guarantor. Guarantor
          Senior Indebtedness includes interest accruing on or after the filing
          of any petition in bankruptcy or for reorganization relating to the
          Subsidiary Guarantor regardless of whether postfiling interest is
          allowed in such proceeding.

     Notwithstanding anything to the contrary in the preceding paragraph,
Guarantor Senior Indebtedness will not include:

     (1)  any Indebtedness which, in the instrument creating or evidencing the
          same or pursuant to which the same is outstanding, it is provided that
          the obligations in respect of such Indebtedness are not superior in
          right of, or are subordinate to, payment of the Securities and the
          Hanover Guarantee;

     (2)  any obligations of such Subsidiary Guarantor to another Subsidiary or
          Hanover;

     (3)  any liability for Federal, state, local, foreign or other taxes owed
          or owing by such Subsidiary Guarantor;

     (4)  any accounts payable or other liability to trade creditors arising in
          the ordinary course of business (including Guarantees thereof or
          instruments evidencing such liabilities);

     (5)  any Indebtedness, Guarantee or obligation of such Subsidiary
          Guarantor that is expressly subordinate or junior in right of payment
          to any other Indebtedness, Guarantee or obligation of such Subsidiary
          Guarantor, including, without limitation, any Guarantor Senior
          Subordinated Indebtedness and Guarantor Subordinated Obligations of
          such Guarantor; or

     (6)  any Capital Stock.

     "Guarantor Senior Subordinated Indebtedness" means, with respect to a
      ------------------------------------------
Subsidiary Guarantor, the obligations of such Subsidiary Guarantor under the
Hanover Guarantee and the 2001A Guarantee and any other Indebtedness of such
Subsidiary Guarantor (whether outstanding on the Issue Date or thereafter
Incurred) that specifically provides that such Indebtedness is to rank equally
in right of payment with the

<PAGE>
                                                                              24

obligations of such Subsidiary Guarantor under the Hanover Guarantee and is not
expressly subordinated by its terms in right of payment to any Indebtedness of
such Subsidiary Guarantor which is not Guarantor Senior Indebtedness of such
Subsidiary Guarantor.

     "Guarantor Subordinated Obligation" means, with respect to a Subsidiary
      ---------------------------------
Guarantor, any Indebtedness of such Subsidiary Guarantor (whether outstanding on
the Issue Date or thereafter Incurred) which is expressly subordinate in right
of payment to the obligations of such Subsidiary Guarantor under its Hanover
Guarantee pursuant to a written agreement.

     "Hanover" shall mean Hanover Compressor Company, a Delaware corporation.
      -------

     "Hanover Guarantee" shall mean the Guarantee dated as of the Release Date
      -----------------
from the Guarantors to the Beneficiaries, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.

     "Hazardous Substance" shall mean any hazardous materials, hazardous waste,
      -------------------
hazardous constituents, hazardous or toxic substances, petroleum products
(including crude oil or any fraction thereof), defined or regulated as such in
or under any Environmental Law, including, without limitation, polychlorinated
biphenyls.

     "HCI" shall mean Hanover Compression Inc., a Delaware corporation.
      ---

     "Hedging Obligations" of any Person means the obligations of such Person
      -------------------
pursuant to any Interest Rate Agreement or Currency Agreement.

     "Highest Lawful Rate" shall have the meaning set forth in Section 14.15 of
      -------------------
the Participation Agreement.

     "Holder" or "Securityholder" shall mean the Person in whose name a Security
     -------      --------------
is registered in the Note Register.

     "HPL" shall mean Houston Pipe Line Company, a Delaware corporation, and its
      ---
successors and assigns.

     "IAI" shall have the meaning set forth in Section 2.1(a) of the Indenture.
      ---

     "Impositions" shall mean, except to the extent described in the following
      -----------
sentence, any and all liabilities, losses, expenses and costs of any kind
whatsoever for fees, taxes, levies, imposts, duties, charges, assessments or
withholdings ("Taxes") (including (i) real and personal property taxes,
               -----
including personal property taxes on any property covered by the Lease that is
classified by Governmental Authorities as personal property, and real estate or
ad valorem taxes in the nature of property taxes; (ii) sales taxes, use taxes
and other similar taxes (including rent taxes and intangibles taxes); (iii) any
excise taxes; (iv) real estate transfer taxes, conveyance taxes, stamp taxes and
documentary recording taxes and fees; (v) taxes that are or are in the nature of
franchise,

<PAGE>

                                                                              25

income, value added, privilege and doing business taxes, license and
registration fees; and (vi) assessments on the Equipment), and in each case all
interest, additions to tax and penalties thereon, which at any time prior to,
during or with respect to the Term or in respect of any period for which the
Lessee shall be obligated to pay Supplemental Rent, may be levied, assessed or
imposed by any Federal, state, city, county or local authority upon or with
respect to (a) the Equipment or any part thereof or interest therein; (b) the
purchase, sale, leasing, financing, refinancing, demolition, construction,
renovation, substitution, subleasing, assignment, control, condition, occupancy,
servicing, maintenance, repair, ownership, possession, activity conducted on,
delivery, insuring, use, operation, improvement, transfer of title, return or
other disposition of the Equipment or any part thereof or interest therein; (c)
the Certificates or Securities or other indebtedness with respect to the
Equipment or any part thereof or interest therein; (d) the rentals, receipts or
earnings arising from the Equipment or any part thereof or interest therein; (e)
the Operative Agreements or any payment made or accrued pursuant thereto; (f)
the income or other proceeds received with respect to the Equipment or any part
thereof or interest therein upon the sale or disposition thereof; (g) any
contract relating to the construction or renovation of the Equipment; (h) the
issuance of the Securities; or (i) otherwise in connection with the transactions
contemplated by the Operative Agreements.

     Notwithstanding the foregoing, the term "Imposition" shall not mean or
     include:

                (i)  Taxes and impositions (other than Taxes that are, or are
     in the nature of, sales, use, rental, value added, transfer or property
     taxes) that are imposed on a Tax Indemnitee by the United States federal
     government that are based on or measured by the gross or net income
     (including taxes based on capital gains and minimum taxes) of such Person;
     provided that this clause (i) shall not be interpreted to prevent a payment
     from being made on an After Tax Basis if such payment is otherwise required
     to be so made;

                (ii) Taxes and impositions (other than Taxes that are, or are in
     the nature of, sales, use, rental, value added, transfer or property taxes)
     that are imposed by any state or local jurisdiction or taxing authority
     within any state or local jurisdiction and that are based upon or measured
     by the gross or net income or gross or net receipts from rental (including
     any minimum taxes, withholding taxes or taxes on or measured by capital,
     net worth, excess profits or items of tax preference or taxes that are
     capital stock, franchise or doing business taxes) except that this clause
     (ii) shall not apply to (and thus shall not exclude) any such Taxes imposed
     on a Tax Indemnitee by a state (or any local taxing authority thereof or
     therein) where the Equipment is located, possessed or used under the Lease
     unless the Tax Indemnitee was subject to such tax in such jurisdiction
     without regard to the transaction contemplated by the Operative Agreements;
     provided that this clause (ii) shall not be interpreted to prevent a
     --------
     payment from being made on an After Tax Basis if such payment is
     otherwise required to be so made;

<PAGE>
                                                                              26

     (iii)   any interest or penalties imposed on a Tax Indemnitee as a result
of the failure of such Tax Indemnitee to file any return or report timely and in
the form prescribed by law or to pay any Tax or imposition; provided that this
                                                            --------
clause (iii) shall not apply (x) if such interest or penalties arise as a result
of a position taken (or requested to be taken) by the Lessee in a contest
controlled by the Lessee under Section 13.2(g) of the Participation Agreement or
(y) to any such interest or penalties that result from such Tax Indemnitee's
complying with the reporting procedures set forth in Section 13.2(d) of the
Participation Agreement;

     (iv)    any Taxes or impositions imposed on the Lessor that are a result of
the Lessor not being considered a "United States person" as defined in Section
7701(a) (30) of the Code;

     (v)     any Taxes which are imposed on a Tax Indemnitee solely as a result
of the gross negligence or willful misconduct of such Tax Indemnitee itself (as
opposed to gross negligence or willful misconduct imputed to such Tax
Indemnitee), but not Taxes imposed as a result of ordinary negligence of such
Tax Indemnitee;

     (vi)    any Taxes or impositions imposed upon the Lessor with respect to
any voluntary transfer, sale, financing or other voluntary disposition by the
Lessor (other than a transfer contemplated and permitted by the Operative
Agreements, including any transfer in connection with (1) the exercise by the
Lessee of its Purchase Option, (2) the occurrence of a Lease Event of Default or
a Credit Agreement Event of Default, or (3) a Casualty or Condemnation affecting
the Equipment) of any interest in the Equipment or any interest in, or created
pursuant to, the Operative Agreements or any voluntary transfer of any interest
in the Lessor (other than in connection with the existence of a Lease Event of
Default or a Credit Agreement Event of Default) or any involuntary transfer of
any of the foregoing interests resulting from the bankruptcy or insolvency of
the Lessor (other than in connection with the existence of a Lease Event of
Default or a Credit Agreement Event of Default);

     (vii)   any gift, or inheritance, taxes;

     (viii)  Taxes imposed on the Tax Indemnitee or any person who is a
"disqualified person", within the meaning of Section 4975(e)(2) of the Code, or
a "party in interest", within the meaning of Section 3(14) of ERISA, by virtue
of such person's relationship to the Tax Indemnitee as the result of any
prohibited transaction, within the meaning of Section 406 of ERISA or Section
4975(c)(1) of the Code, involving the exercise of discretion or control by such
Tax Indemnitee; or

     (ix)    Taxes on, with respect to or measured by any trustee fees for
services rendered as trustee of the Trust.

<PAGE>
                                                                              27

Any Tax or imposition excluded from the defined term "Imposition" in any one of
the foregoing clauses (i) through (vii) shall not be construed as constituting
an Imposition by any provision of any other of the aforementioned clauses.

     "Incur" means issue, create, assume, Guarantee, incur or otherwise become
      -----
liable for; provided, however, that any Indebtedness or Capital Stock of a
Person existing at the time such Person becomes a Restricted Subsidiary (whether
by merger, consolidation, acquisition or otherwise) will be deemed to be
incurred by such Restricted Subsidiary at the time it becomes a Restricted
Subsidiary; and the terms "Incurred" and "Incurrence" have meanings correlative
to the foregoing.

     "Indebtedness" means, with respect to any Person on any date of
      ------------
determination (without duplication):

     (1)  the principal of and premium (if any) in respect of indebtedness of
          such Person for borrowed money;

     (2)  the principal of and premium (if any) in respect of obligations of
          such Person evidenced by bonds, debentures, notes or other similar
          instruments;

     (3)  the principal component of all obligations of such Person in respect
          of letters of credit, bankers' acceptances or other similar
          instruments (including reimbursement obligations with respect thereto
          except to the extent such reimbursement obligation relates to a trade
          payable and such obligation is satisfied within 30 days of
          Incurrence);

     (4)  the principal component of all obligations of such Person to pay the
          deferred and unpaid purchase price of property (except trade
          payables), which purchase price is due more than six months after the
          date of placing such property in service or taking delivery and title
          thereto;

     (5)  Capitalized Lease Obligations and all Attributable Indebtedness of
          such Person;

     (6)  the principal component or liquidation preference of all obligations
          of such Person with respect to the redemption, repayment or other
          repurchase of any Disqualified Stock or, with respect to any
          Subsidiary, any Preferred Stock (but excluding, in each case, any
          accrued dividends);

     (7)  the principal component of all Indebtedness of other Persons secured
          by a Lien on any asset of such Person, whether or not such
          Indebtedness is assumed by such Person; provided, however, that the
          amount of such Indebtedness will be the lesser of (a) the fair market
          value of such asset at such date of determination and (b) the amount
          of such Indebtedness of such other Persons;

     (8)  the principal component of Indebtedness of other Persons to the
          extent Guaranteed by such Person;

<PAGE>
                                                                              28

     (9)  to the extent not otherwise included in this definition, net
          obligations of such Person under Currency Agreements and Interest Rate
          Agreements (the amount of any such obligations to be equal at any time
          to the termination value of such agreement or arrangement giving rise
          to such obligation that would be payable by such Person at such time);
          and

     (10) the obligation to pay the principal and premium (if any) in respect
          of any Operating Lease Facility, in an amount, as determined on the
          date of incurrence of such obligation, equal to the purchase price of
          the related property or assets.

The amount of Indebtedness of any Person at any date will be the outstanding
balance at such date of all unconditional obligations as described above and the
maximum liability, upon the occurrence of the contingency giving rise to the
obligation, of any contingent obligations at such date.

     In addition, "Indebtedness" of any Person shall include Indebtedness
                   ------------
described in the preceding paragraph that would not appear as a liability on the
balance sheet of such Person if:

     (1)  such Indebtedness is the obligation of a partnership or joint venture
          that is not a Restricted Subsidiary (a "Joint Venture");

     (2)  such Person or a Restricted Subsidiary of such Person is a general
          partner of the Joint Venture (a "General Partner"); and

     (3)  there is recourse, by contract or operation of law, with respect to
          the payment of such Indebtedness to property or assets of such Person
          or a Restricted Subsidiary of such Person; and then such Indebtedness
          shall be included in an amount not to exceed:

          (a)  the lesser of (i) the net assets of the General Partner and (ii)
               the amount of such obligations to the extent that there is
               recourse, by contract or operation of law, to the property or
               assets of such Person or a Restricted Subsidiary of such Person;
               or

          (b)  if less than the amount determined pursuant to clause (a)
               immediately above, the actual amount of such Indebtedness that is
               recourse to such Person or a Restricted Subsidiary of such
               Person, if the Indebtedness is evidenced by a writing and is for
               a determinable amount and the related interest expense shall be
               included in Consolidated Interest Expense to the extent actually
               paid by Hanover or its Restricted Subsidiaries.

     "Indemnified Person" shall mean the Trust Company, in its individual
      ------------------
capacity and as Trustee, Wilmington Trust FSB, in its individual capacity, as
Indenture Trustee and as Collateral Agent, the Lessor, the Certificate Holders,
the Securityholders, and their

<PAGE>
                                                                              29

respective successors, assigns, directors, shareholders, partners, officers,
employees, agents an Affiliates.

     "Indenture" shall mean the Indenture dated as of the Closing Date among the
      ---------
Lessor, the Hanover Guarantors and the Indenture Trustee, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.

     "Indenture Event of Default" shall mean any event or condition which, with
      --------------------------
the lapse of time or the giving of notice, or both, would constitute an Event of
Default under Section 5.1 of the Indenture.

     "Indenture Trustee" (as used in the Indenture, the "Trustee") means the
      -----------------
Person named as the "Trustee" in the first paragraph of the Indenture until a
successor trustee shall have become such pursuant to the applicable provisions
of the Indenture, and thereafter "Indenture Trustee" shall mean or include each
Person who is then a trustee thereunder.

     "Initial Purchasers" shall mean J.P. Morgan Securities Inc., Goldman, Sachs
      ------------------
& Co., Salomon Smith Barney and Credit Suisse First Boston.

     "Initial Securities" shall have the meaning ascribed to it in the second
      ------------------
introductory paragraph of the Indenture.

     "Insolvent" shall mean, with respect to any Multiemployer Plan, the
      ---------
condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.

     "Institutional Accredited Investor Global Note" shall have the meaning set
      ---------------------------------------------
forth in Section 2.1(a) of the Indenture.

     "Insurance Requirements" shall mean all terms and conditions of any
      ----------------------
insurance policy required by the Lease to be maintained by the Lessee and all
requirements of the issuer of any such policy.

     "Interest Period" shall mean, with respect to the Certificate Holder
      ---------------
Contribution:

          (i)  initially, the period commencing on date the Certificate Holder
     Contribution is made and ending one month thereafter; and

          (ii) thereafter, each period commencing on the last day of the
     immediately preceding Interest Period applicable to the Certificate Holder
     Contribution and ending one month thereafter;

provided that the foregoing provisions relating to Interest Periods are subject
--------
to the following:

          (i)  if any Interest Period would otherwise end on a day that is not a
     Business Day, such Interest Period shall be extended to the next succeeding

<PAGE>
                                                                              30

     Business Day unless the result of such extension would be to carry such
     Interest Period into another calendar month in which event such Interest
     Period shall end on the immediately preceding Business Day;

          (ii)  any Interest Period that would otherwise extend beyond the
     Expiration Date shall end on the Expiration Date; and

          (iii) any Interest Period that begins on the last Business Day of a
     calendar month (or on a day for which there is no numerically corresponding
     day in the calendar month at the end of such Interest Period) shall end on
     the last Business Day of a calendar month.

     "Interest Rate Agreement" means with respect to any Person any interest
      -----------------------
rate protection agreement, interest rate future agreement, interest rate option
agreement, interest rate swap agreement, interest rate cap agreement, interest
rate collar agreement, interest rate hedge agreement or other similar agreement
or arrangement as to which such Person is party or a beneficiary.

     "Investment" means, with respect to any Person, all investments by such
      ----------
Person in other Persons (including Affiliates) in the form of any direct or
indirect advance, loan (other than advances to customers in the ordinary course
of business) or other extension of credit (including by way of Guarantee or
similar arrangement, but excluding any debt or extension of credit represented
by a bank deposit other than a time deposit) or capital contribution to (by
means of any transfer of cash or other property to others or any payment for
property or services for the account or use of others), or any purchase or
acquisition of Capital Stock, Indebtedness or other similar instruments issued
by, such Person and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; provided that
none of the following will be deemed to be an Investment:

     (1)  Hedging Obligations entered into in the ordinary course of business
          and in compliance with the Participation Agreement;

     (2)  endorsements of negotiable instruments and documents in the ordinary
          course of business; and

     (3)  an acquisition of assets, Capital Stock or other securities by Hanover
          or a Subsidiary for consideration to the extent such consideration
          consists exclusively of common equity securities of Hanover.

     For purposes of Section 9.3 of the Participation Agreement,

     (1)  "Investment" will include the portion (proportionate to Hanover's
          equity interest in a Restricted Subsidiary to be designated as an
          Unrestricted Subsidiary) of the fair market value of the net assets of
          such Restricted Subsidiary of Hanover at the time that such Restricted
          Subsidiary is designated an Unrestricted Subsidiary; provided,
          however, that upon a redesignation of such Subsidiary as a Restricted
          Subsidiary, Hanover will

<PAGE>
                                                                              31

               be deemed to continue to have a permanent "Investment" in an
               Unrestricted Subsidiary in an amount (if positive) equal to (a)
               Hanover's "Investment" in such Subsidiary at the time of such
               redesignation less (b) the portion (proportionate to Hanover's
               equity interest in such Subsidiary) of the fair market value of
               the net assets (as conclusively determined by the Board of
               Directors of Hanover in good faith) of such Subsidiary at the
               time that such Subsidiary is so re-designated a Restricted
               Subsidiary; and

          (2)  any property transferred to or from an Unrestricted Subsidiary
               will be valued at its fair market value at the time of such
               transfer, in each case as determined in good faith by the Board
               of Directors of Hanover.

          "Investment Company Act" shall mean the Investment Company Act of
           ----------------------
1940, as amended, together with the rules and regulations promulgated
thereunder.

          "Issue Date" means the date on which the notes are originally issued.
           ----------

          "Issuer" shall refer to the Lessor.
           ------

          "Issuer Obligations" shall have the meaning set forth in Section
           ------------------
11.1(a) of the Indenture.

          "Issuer Order" has the meaning set forth in Section 2.2 of the
           ------------
Indenture.

          "Judgment Default Provision" shall have the meaning set forth in
           --------------------------
Section 6.1 of the Indenture.

          "Lease" shall mean the lease dated as of the Release Date between the
           -----
Lessor and the Lessee, together with any Lease Supplements, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof or of any other Operative Agreement.

          "Lease Default" shall mean any event or condition which, with the
           -------------
lapse of time or the giving of notice, or both, would constitute a Lease Event
of Default.

          "Lease Event of Default" shall have the meaning given to such term in
           ----------------------
Section 17.1 of the Lease.

          "Lease Secured Obligations" shall have the meaning set forth in
           -------------------------
Section 28.1 of the Lease.

          "Lease Supplement" means each lease supplement substantially in the
           ----------------
form of Exhibit A to the Lease, together with all attachments and schedules
thereto, as such lease supplement may be supplemented, amended or modified
from time to time.

          "Legal Defeasance Option" shall have the meaning set forth in Section
           -----------------------
8.1(b) of the Indenture.

<PAGE>
                                                                              32

          "Legal Holiday" shall have the meaning ascribed to it in Section 10.8
           -------------
     of the Indenture.

          "Legal Requirements" shall mean all Federal, state, county, municipal
           ------------------
     and other governmental statutes, laws, rules, orders, regulations,
     ordinances, judgments, decrees and injunctions affecting any Equipment or
     the use or alteration thereof, whether now or hereafter enacted and in
     force, including any that require repairs, modifications or alterations in
     or to any Equipment or in any way limit the use and enjoyment thereof and
     any that may relate to Environmental Laws, and all permits, certificates of
     occupancy, licenses, authorizations and regulations relating thereto, and
     all covenants, agreements, restrictions and encumbrances contained in any
     instruments which are either of record or known to the Lessee affecting any
     Equipment.

          "Lessee" shall mean Hanover Compression Limited Partnership, a
           ------
     Delaware limited partnership and a wholly owned subsidiary of Hanover, or
     its assigns or successors.

          "Lessee Financing Statements" shall mean UCC financing statements
           ---------------------------
     appropriately completed and executed by the Lessee, as debtor, for filing
     in the appropriate state (and, where required by the UCC, county) offices
     in order to protect the Lessor's interest under the Lease as a security
     agreement, as the same may be supplemented, amended or modified from time
     to time, and as the same shall be assigned to the Collateral Agent pursuant
     to appropriate UCC financing statements.

          "Lessor" shall mean Hanover Equipment Trust 2001B, a Delaware business
           ------
     trust, or its successor and assigns.

          "Lessor Financing Statements" shall mean UCC financing statements
           ---------------------------
     appropriately completed and executed by the Lessor, as debtor, for filing
     in the appropriate state (and where required by the UCC, county) offices in
     order to perfect a security interest in favor of the Collateral Agent in
     the collateral covered by the Security Agreement, as the same may be
     supplemented, amended or modified from time to time.

          "Lessor Lien" shall mean any Lien, true lease or sublease, defect in
           -----------
     title or disposition of title arising as a result of (a) any claim against
     the Lessor, the Collateral Agent, the Trust Company, the Certificate
     Holders or any Affiliate of the Lessor, the Collateral Agent, the Trust
     Company and/or the Certificate Holders, not resulting from the transactions
     contemplated by the Operative Agreements, (b) any act or omission of the
     Lessor, the Collateral Agent, the Trust Company, the Certificate Holders or
     any Affiliate of the Lessor, the Collateral Agent, the Trust Company and/or
     the Certificate Holders, which is not required by the Operative Agreements
     or is in violation of any of the terms of the Operative Agreements, (c) any
     claim against the Lessor, the Collateral Agent, the Trust Company, the
     Certificate Holders or any Affiliate of the Lessor, the Collateral Agent,
     the Trust Company and/or the Certificate Holders, with respect to Taxes or
     Transaction Expenses against which the Lessee is not required to indemnify
     the Lessor, the Collateral Agent, the Trust Company, the Certificate
     Holders or any Affiliate of the Lessor, the Collateral Agent, the Trust
     Company and/or the Certificate Holders,

<PAGE>
                                                                              33

pursuant to the Participation Agreement or (d) any claim against the Lessor
arising out of any transfer by the Lessor of all or any portion of the interest
of the Lessor in the Equipment, the Trust Estate or the Operative Agreements
other than the transfer of title to or possession of the Equipment by the Lessor
pursuant to and in accordance with the Lease, the Indenture or the Participation
Agreement or pursuant to the exercise of the remedies set forth in Section 17 of
the Lease.

     "Lien" means any mortgage, pledge, security interest, encumbrance, lien or
      ----
charge of any kind (including any conditional sale or other title retention
agreement or lease in the nature thereof).

     "Limited Deficiency Amount" shall mean, with respect to each Unit, the
      -------------------------
amount equal to the sum of the Equipment Cost with respect to such Unit on each
Payment Date less the Final Rent Payment as of such date with respect to such
Unit.

     "Limited Recourse Event of Default" shall mean:
      ---------------------------------

     (i)  the occurrence of any Lease Event of Default under Sections 17.1(iv)
of the Lease (A) the existence of which is specifically premised on a breach of
a representation, warranty, covenant, term or condition that contains the words
or clauses "material", "immaterial", "in all material respects", or "Material
Adverse Effect", and (B) with respect to which the party enforcing such Lease
Event of Default did not or could not apply commercially reasonable standards in
determining that such Lease Event of Default occurred;

     (ii) the occurrence of a Lease Event of Default described in Section
17.1(iv) of the Lease that is the result of a breach of the representation
contained in Section 7.4(z) of the Participation Agreement which results from
the failure of the condition contained in Section 6.1(e) or (j) of the
Participation Agreement, and with respect to which the party enforcing such
Lease Event of Default did not or could not apply commercially reasonable
standards in determining that such Lease Event of Default occurred; and

     (iii) the occurrence of a Lease Event of Default described in Section
17.1(iv) of the Lease that is the result of a breach of the representations
contained in Sections 7.4(g), (k), or (l) of the Participation Agreement.

     "Marketing Period" shall mean, if the Lessee has not given the Expiration
      ----------------
Date Election Notice in accordance with Section 20.2 of the Lease, the period
commencing on the date twelve (12) months prior to the Expiration Date and
ending on the Expiration Date.

     "Material Adverse Effect" shall mean a material adverse effect on (a) the
      -----------------------
business, operations, property or condition (financial or otherwise) of Hanover
and its Subsidiaries taken as a whole, (b) the ability of Hanover or any of the
Subsidiaries of Hanover to perform their respective obligations under the
Operative Agreements to which each is a party, or (c) the validity or
enforceability of any of the Operative Agreements to which each is a party or
the rights or remedies of the Collateral Agent or the Indenture Trustee
thereunder.

<PAGE>
                                                                              34

     "Material Subsidiary" means any Restricted Subsidiary of Hanover for which
      -------------------
the aggregate fair market value of all assets owned by such Restricted
Subsidiary is greater than $20.0 million as of the date of determination.

     "Maximum Purchase Option Amount" shall mean 75% of the highest Termination
      ------------------------------
Value of all Equipment owned by the Lessor at any one time during the period
from the first anniversary of the Release Date to 12 months prior to the
Expiration Date.

     "Modifications" shall have the meaning set forth in Section 11.1(a) of the
      -------------
Lease.

     "Multiemployer Plan" shall mean a Plan which is a multiemployer plan as
      ------------------
defined in Section 4001(a)(3) of ERISA.

     "Net Available Cash" from an Asset Disposition means cash payments received
      ------------------
(including any cash payments received by way of deferred payment of principal
pursuant to a note or installment receivable or otherwise, but only as and when
received, but excluding any other consideration received in the form of
assumption by the acquiring Person of Indebtedness or other obligations relating
to the properties or assets that are the subject of such Asset Disposition or
received in any other non-cash form) therefrom, in each case net of:

     (1)  all legal, accounting, investment banking, title and recording tax
          expenses, commissions and other fees and expenses incurred, and all
          Federal, state, provincial, foreign and local taxes required to be
          paid or accrued as a liability under GAAP (after taking into account
          any available tax credits or deductions and any tax sharing
          agreements), as a consequence of such Asset Disposition;

     (2)  all payments made on any Indebtedness which is secured by any assets
          subject to such Asset Disposition, in accordance with the terms of any
          Lien upon such assets, or which must by its terms, or in order to
          obtain a necessary consent to such Asset Disposition, or by applicable
          law be repaid out of the proceeds from such Asset Disposition;

     (3)  all distributions and other payments required to be made to minority
          interest holders in Subsidiaries or joint ventures as a result of such
          Asset Disposition; and

     (4)  the deduction of appropriate amounts to be provided by the seller as a
          reserve, in accordance with GAAP, against any liabilities associated
          with the assets disposed of in such Asset Disposition and retained by
          Hanover or any Restricted Subsidiary after such Asset Disposition.

     "Net Cash Proceeds" with respect to any issuance or sale of Capital Stock,
      -----------------
means the cash proceeds of such issuance or sale net of attorneys' fees,
accountants' fees, underwriters' or placement agents' fees, listing fees,
discounts or commissions and brokerage, consultant and other fees and charges
actually incurred in connection with such issuance or sale and net of taxes paid
or payable as a result of such issuance or sale

<PAGE>
                                                                              35

(after taking into account any available tax credit or deductions and any tax
sharing arrangements).

     "Net Sale Proceeds" shall have the meaning ascribed to it in Section 8.4(b)
      -----------------
of the Indenture.

     "Net Sale Proceeds Shortfall" shall mean the amount by which the proceeds
      ---------------------------
of a sale of a Unit described in Section 21.1 of the Lease (net of all expenses
of sale) are less than the Limited Deficiency Amount for such Equipment.

     "Non-Excluded Taxes" shall have the meaning ascribed to it in Section
      ------------------
2.16(a) of the Indenture.

     "Non-Recourse Debt" means Indebtedness:
      -----------------

     (1)  as to which neither Hanover nor any Restricted Subsidiary (a) provides
          any Guarantee or credit support of any kind (including any
          undertaking, Guarantee, indemnity, agreement or instrument that would
          constitute Indebtedness) or (b) is directly or indirectly liable (as a
          guarantor or otherwise);

     (2)  no default with respect to which (including any rights that the
          holders thereof may have to take enforcement action against an
          Unrestricted Subsidiary) would permit (upon notice, lapse of time or
          both) any holder of any other Indebtedness of Hanover or any
          Restricted Subsidiary to declare a default under such other
          Indebtedness or cause the payment thereof to be accelerated or payable
          prior to its stated maturity; and

     (3)  the explicit terms of which provide there is no recourse against any
          of the assets of Hanover or its Restricted Subsidiaries.

     "Non-U.S. Person" shall mean a person who is not a U.S. person, as defined
      ---------------
in Regulation S.

     "Note Register" means the register of Securities, maintained by the
      -------------
Indenture Trustee, pursuant to Section 2.3 of the Indenture.

     "Officer" means the Chairman of the Board, the President, any Vice
      -------
President, the Treasurer or the Secretary of Hanover or the Trustee, as
applicable.

     "Officer's Certificate" shall mean a certificate signed by two Officers or
      ---------------------
by an Officer and either an Assistant Treasurer or an Assistant Secretary of
Hanover or the Trustee, as applicable.

     "Operating Lease Facility" shall mean any operating lease transaction
      ------------------------
entered into by Hanover or any of its Restricted Subsidiaries resulting in the
off-balance sheet financing of any of Hanover's or such Restricted Subsidiary's
property or assets, including its gas compression equipment.

<PAGE>
                                                                              36

     "Operative Agreements" shall mean, collectively, the Indenture, the
      --------------------
Securities, the Lease, the Participation Agreement, the Hanover Guarantee, the
Assignment of Lease, the Security Agreement, the UCC Financing Statements, the
Trust Agreement, the Consent to Assignment, the Certificates, the Requisition,
the Bills of Sale, and any amendments, supplements or modifications from time to
time of any of the above.

     "Opinion of Counsel" means a written opinion from legal counsel who is
      ------------------
acceptable to the Indenture Trustee. The counsel may be an employee of or
counsel to the Issuer, the Indenture Trustee or Hanover.

     "Original Securities" shall mean the Issuer's 8.75% Senior Secured Notes
      -------------------
due 2011 originally issued on the Issue Date.

     "Overdue Rate" shall mean, at any time, 2% in excess of the Certificate
      ------------
Holder Yield then in effect.

     "Participation Agreement" shall mean the Participation Agreement dated as
      -----------------------
of the Release Date among the Lessee, the Lessor, the Certificate Holders, the
Hanover Guarantors, the Indenture Trustee, the Collateral Agent, the Trust
Company and Wilmington Trust FSB, as it may be amended, supplemented or
otherwise modified from time to time in accordance with the terms thereof or of
any other Operative Agreement.

     "Paying Agent" shall have the meaning ascribed to it in Section 2.3 of the
      ------------
Indenture.

     "Payment Date" shall mean each date on which a payment is otherwise due
      ------------
under the terms of the Indenture or the Trust Agreement.

     "Payment Default" shall have the meaning ascribed to it in Section 6.1 of
      ---------------
the Indenture.

     "PBGC" shall mean the Pension Benefit Guaranty Corporation established
      ----
pursuant to Subtitle A of Title IV of ERISA.

     "Permitted Exceptions" shall mean (i) the respective rights and interests
      --------------------
of the parties to the Operative Agreements as provided in the Operative
Agreements; (ii) the rights of any sublessee or assignee under a sublease or an
assignment or a compressor management agreement expressly permitted by the terms
of the Lease; (iii) Liens arising by operation of law, materialmen's,
mechanics', workmen's, repairmen's, employees', warehousemen's and other like
Liens in connection with any Modifications or arising in the ordinary course of
business for amounts that either are not more than 30 days past due or are being
diligently contested in good faith by appropriate proceedings, so long as such
proceedings satisfy the conditions for the continuation of proceedings to
contest Taxes set forth in Section 13.2(g) of the Participation Agreement; (iv)
Liens of any of the types referred to in clause (iii) above that have been
bonded for not less than the full amount in dispute (or as to which other
security arrangements satisfactory to the Lessor have been made), which bonding
(or arrangements) shall comply with applicable Legal Requirements, and shall
have effectively stayed any execution or enforcement of such

<PAGE>
                                                                              37

Liens; (v) Liens for Taxes not yet due, (vi) Lessor Liens and (vii) all
non-monetary encumbrances, exceptions, restrictions, easements, rights of way,
servitudes, encroachments and irregularities in title, other than Liens which
materially impair the use of the Equipment for its intended purpose.

     "Permitted Investment" means an Investment by Hanover or any Restricted
      --------------------
Subsidiary in:

     (1)  Hanover, a Restricted Subsidiary (other than a Receivables Entity) or
          a Person which will, upon the making of such Investment, become a
          Restricted Subsidiary (other than a Receivables Entity); provided,
          however, that the primary business of such Restricted Subsidiary is a
          Related Business;

     (2)  another Person if as a result of such Investment such other Person is
          merged or consolidated with or into, or transfers or conveys all or
          substantially all its assets to, Hanover or a Restricted Subsidiary
          (other than a Receivables Entity); provided, however, that such
          Person's primary business is a Related Business;

     (3)  cash and Cash Equivalents;

     (4)  receivables owing to Hanover or any Restricted Subsidiary created or
          acquired in the ordinary course of business and payable or
          dischargeable in accordance with customary trade terms; provided,
          however, that such trade terms may include such concessionary trade
          terms as Hanover or any such Restricted Subsidiary deems reasonable
          under the circumstances;

     (5)  payroll, travel and similar advances to cover matters that are
          expected at the time of such advances ultimately to be treated as
          expenses for accounting purposes and that are made in the ordinary
          course of business;

     (6)  loans or advances to employees made in the ordinary course of business
          consistent with past practices of Hanover or such Restricted
          Subsidiary;

     (7)  stock, obligations or securities received in settlement of debts
          created in the ordinary course of business and owing to Hanover or any
          Restricted Subsidiary or in satisfaction of judgments or pursuant to
          any plan of reorganization or similar arrangement upon the bankruptcy
          or insolvency of a debtor;

     (8)  Investments made as a result of the receipt of non-cash consideration
          from an Asset Sale that was made pursuant to and in compliance with
          Section 9.6 of the Participation Agreement;

     (9)  Investments in existence on the Issue Date including those made
          through the acquisition of Production Operators Corporation and
          related assets from Schlumberger Technology Corporation on the Issue
          Date;

<PAGE>
                                                                              38

          (10) Currency Agreements, Interest Rate Agreements and related Hedging
               Obligations, which transactions or obligations are Incurred in
               compliance with Section 9.1 of the Participation Agreement;

          (11) Investments by Hanover or any of its Restricted Subsidiaries,
               together with all other Investments pursuant to this clause (11),
               in an aggregate amount at the time of such Investment not to
               exceed $25.0 million outstanding at any one time;

          (12) Investments made in connection with the performance of
               obligations of Hanover or any of its Restricted Subsidiaries
               under the terms of any joint venture agreement to which Hanover
               or any of its Restricted Subsidiaries is a party on the Issue
               Date and identified on a schedule to the Participation Agreement
               on the Issue Date, as these agreements may be amended, modified
               or supplemented from time to time; provided, however, that no
               future amendment, modification or supplement will increase the
               amount of the Investment in a joint venture that is a Permitted
               Investment pursuant to this clause (12) beyond the amount that
               would have been a Permitted Investment pursuant to this clause
               (12) under the terms of the agreements in effect on the Issue
               Date, and provided, further, that no such Investments shall
               exceed $30.0 million in the aggregate;

          (13) Guarantees issued in accordance with Section 9.1 of the
               Participation Agreement; and

          (14) Investments by Hanover or a Restricted Subsidiary in a
               Receivables Entity or any Investment by a Receivables Entity in
               any other Person, in each case, in connection with a Qualified
               Receivables Transaction, provided, however, that any Investment
               in any such Person is in the form of a Purchase Money Note, or
               any equity interest or interests in accounts receivable and
               related assets generated by Hanover or a Restricted Subsidiary
               and transferred to any Person in connection with a Qualified
               Receivables Transaction or any such Person owning such accounts
               receivable.

          "Permitted Liens" means, with respect to any Person:
           ---------------

          (1)  Liens securing Indebtedness and other obligations of Hanover
               and/or the Lessee under the Senior Credit Agreement and related
               Interest Rate Agreements and other Senior Indebtedness and liens
               on assets of Restricted Subsidiaries securing Guarantees of
               Indebtedness and other obligations of Hanover and/or the Lessee
               under the Senior Credit Agreement and other Guarantor Senior
               Indebtedness permitted to be incurred under the Participation
               Agreement;

          (2)  pledges or deposits by such Person under workmen's compensation
               laws, unemployment insurance laws or similar legislation, or good
               faith deposits

<PAGE>
                                                                              39

               in connection with bids, tenders, contracts (other than for the
               payment of Indebtedness) or leases to which such Person is a
               party, or deposits to secure public or statutory obligations of
               such Person or deposits or cash or United States government bonds
               to secure surety or appeal bonds to which such Person is a party,
               or deposits as security for contested taxes or import or customs
               duties or for the payment of rent, in each case Incurred in the
               ordinary course of business;

          (3)  Liens imposed by law, including carriers', warehousemen's and
               mechanics', Liens, in each case for sums not yet due or being
               contested in good faith by appropriate proceedings if a reserve
               or other appropriate provisions, if any, as shall be required by
               GAAP shall have been made in respect thereof;

          (4)  Liens for taxes, assessments or other governmental charges not
               yet subject to penalties for non-payment or which are being
               contested in good faith by appropriate proceedings provided
               appropriate reserves required pursuant to GAAP have been made in
               respect thereof;

          (5)  Liens in favor of issuers of surety or performance bonds or
               letters of credit or bankers' acceptances issued pursuant to the
               request of and for the account of such Person in the ordinary
               course of its business; provided, however, that such letters of
               credit do not constitute Indebtedness;

          (6)  encumbrances, easements or reservations of, or rights of others
               for, licenses, rights of way, sewers, electric lines, telegraph
               and telephone lines and other similar purposes, or zoning or
               other restrictions as to the use of real properties or liens
               incidental to the conduct of the business of such Person or to
               the ownership of its properties which do not in the aggregate
               materially adversely affect the value of said properties or
               materially impair their use in the operation of the business of
               such Person;

          (7)  Liens securing Hedging Obligations so long as the related
               Indebtedness is, and is permitted to be under the Indenture or
               the Participation Agreement, as applicable, secured by a Lien on
               the same property securing such Hedging Obligation;

          (8)  leases and subleases of real property which do not materially
               interfere with the ordinary conduct of the business of Hanover or
               any of its Restricted Subsidiaries;

          (9)  judgment Liens not giving rise to an Event of Default so long as
               such Lien is adequately bonded and any appropriate legal
               proceedings which may have been duly initiated for the review of
               such judgment have not been finally terminated or the period
               within which such proceedings may be initiated has not expired;

<PAGE>
                                                                              40

          (10) Liens for the purpose of securing the payment of all or a part of
               the purchase price of, or Capitalized Lease Obligations with
               respect to, assets or property acquired or constructed in the
               ordinary course of business, provided that:

               (a)  the aggregate principal amount of Indebtedness secured by
                    such Liens is otherwise permitted to be Incurred under the
                    Indenture or the Participation Agreement, as applicable, and
                    does not exceed the cost of the assets or property so
                    acquired or constructed; and

               (b)  such Liens are created within 180 days of construction or
                    acquisition of such assets or property and do not encumber
                    any other assets or property of Hanover or any Restricted
                    Subsidiary other than such assets or property and assets
                    affixed or appurtenant thereto;

          (11) Liens arising solely by virtue of any statutory or common law
               provisions relating to banker's Liens, rights of set-off or
               similar rights and remedies as to deposit accounts or other funds
               maintained with a depositary institution; provided that:

               (a)  such deposit account is not a dedicated cash collateral
                    account and is not subject to restrictions against access by
                    Hanover or the Lessee in excess of those set forth by
                    regulations promulgated by the Federal Reserve Board; and

               (b)  such deposit account is not intended by Hanover or any
                    Restricted Subsidiary to provide collateral to the
                    depository institution;

          (12) Liens arising from Uniform Commercial Code financing statement
               filings regarding operating leases entered into by Hanover and
               its Restricted Subsidiaries in the ordinary course of business;

          (13) Liens existing on the Issue Date;

          (14) Liens on property or shares of stock of a Person at the time such
               Person becomes a Restricted Subsidiary; provided, however, that
               such Liens are not created, incurred or assumed in connection
               with, or in contemplation of, such other Person becoming a
               Restricted Subsidiary; provided further, however, that any such
               Lien may not extend to any other property owned by Hanover or any
               Restricted Subsidiary;

          (15) Liens on property at the time Hanover or a Restricted Subsidiary
               acquired the property, including any acquisition by means of a
               merger or consolidation with or into Hanover or any Restricted
               Subsidiary; provided, however, that such Liens are not created,
               Incurred or assumed in connection with, or in contemplation of,
               such acquisition; provided

<PAGE>
                                                                              41

               further, however, that such Liens may not extend to any other
               property owned by Hanover or any Restricted Subsidiary;

          (16) Liens securing Indebtedness or other obligations of a Restricted
               Subsidiary owing to Hanover or a Wholly-Owned Subsidiary (other
               than a Receivables Entity);

          (17) Liens securing the Securities and the Hanover Guarantees;

          (18) Liens securing Refinancing Indebtedness incurred to refinance
               Indebtedness that was previously so secured, provided that any
               such Lien is limited to all or part of the same property or
               assets (plus improvements, accessions, proceeds or dividends or
               distributions in respect thereof) that secured (or, under the
               written arrangements under which the original Lien arose, could
               secure) the Indebtedness being refinanced or is in respect of
               property that is the security for a Permitted Lien hereunder;

          (19) Liens on assets transferred to a Receivables Entity or on assets
               of a Receivables Entity, in either case incurred in connection
               with a Qualified Receivables Transaction;

          (20) Liens securing Operating Lease Facilities Incurred in compliance
               with Section 9.1 of the Participation Agreement;

          "Permitted Transferee" shall have the meaning set forth in Section
           --------------------
12.1 of the Participation Agreement.

          "Person" means any individual, corporation, partnership, joint
           ------
venture, association, joint-stock company, trust, unincorporated organization,
limited liability company, government or any agency or political subdivision
hereof or any other entity.

          "Plan" shall mean at a particular time, any employee benefit plan
           ----
which is covered by ERISA and in respect of which Lessee, or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.

          "Preferred Stock" as applied to the Capital Stock of any corporation,
           ---------------
means Capital Stock of any class or classes (however designated) which is
preferred as to the payment of dividends, or as to the distribution of assets
upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.

          "Private Placement Legend" shall have the meaning ascribed to it in
           ------------------------
Section 2.1(c) of the Indenture.

          "Public Equity Offering" means an offering for cash by Hanover of its
           ----------------------
common stock, or options, warrants or rights with respect to its common stock
pursuant to a

<PAGE>
                                                                              42

registration statement that has been declared effective by the Securities and
Exchange Commission (other than on Form S-4 or S-8).

          "Purchase Agreement" shall mean the Purchase Agreement dated August
           ------------------
16, 2001 among the Issuer, the Initial Purchasers and the Guarantors.

          "Purchase Money Note" means a promissory note of a Receivables Entity
           -------------------
evidencing a line of credit, which may be irrevocable, from Hanover or any
Restricted Subsidiary of Hanover in connection with a Qualified Receivables
Transaction to a Receivables Entity, which note is repayable from cash
available to the Receivables Entity, other than amounts required to be
established as reserves pursuant to agreements, amounts paid to investors in
respect of interest, principal and other amounts owing to such investors and
amounts owing to such investors and amounts paid in connection with the
purchase of newly generated accounts receivable.

          "Purchase Notice" shall have the meaning set forth in Section 20.1 of
           ---------------
the Lease.

          "Purchase Option" shall have the meaning set forth in Section 20.1 of
           ---------------
the Lease.

          "Purchase Option Price" shall have the meaning set forth in Section
           ---------------------
20.1 of the Lease.

          "QIB" shall have the meaning ascribed to it in Section 2.1 of the
           ---
Indenture.

          "Qualified Receivables Transaction" means any transaction or series of
           ---------------------------------
transactions that may be entered into by Hanover or any of its Restricted
Subsidiaries pursuant to which Hanover or any of its Restricted Subsidiaries
may sell, convey or otherwise transfer to (1) a Receivables Entity (in the
case of a transfer by Hanover or any of its Restricted Subsidiaries) and (2)
any other Person (in the case of a transfer by a Receivables Entity), or may
grant a security interest in, any accounts receivable (whether now existing or
arising in the future) of Hanover or any of its Restricted Subsidiaries, and any
assets related thereto including, without limitation, all collateral securing
such accounts receivable, all contracts and all guarantees or other obligations
in respect of such accounts receivable, the proceeds of such receivables and
other assets which are customarily transferred, or in respect of which security
interests are customarily granted in connection with asset securitization
involving accounts receivable.

          "Receivables Entity" means a Wholly-Owned Subsidiary of Hanover (or
           ------------------
another Person in which Hanover or any Restricted Subsidiary of Hanover makes an
Investment and to which Hanover or any Restricted Subsidiary of Hanover
transfers accounts receivable and related assets) which engages in no activities
other than in connection with the financing of accounts receivable and which is
designated by the Board of Directors of Hanover (as provided below) as a
Receivables Entity:

          (1)  no portion of the Indebtedness or any other obligations
               (contingent or otherwise) of which:

<PAGE>
                                                                              43

               (a)  is guaranteed by Hanover or any Restricted Subsidiary of
                    Hanover (excluding guarantees of Obligations (other than the
                    principal of, and interest on, Indebtedness) pursuant to
                    Standard Securitization Undertakings);

               (b)  is recourse to or obligates Hanover or any Restricted
                    Subsidiary of Hanover in any way other than pursuant to
                    Standard Securitization Undertakings; or

               (c)  subjects any property or asset of Hanover or any Restricted
                    Subsidiary of Hanover, directly or indirectly, contingently
                    or otherwise, to the satisfaction thereof, other than
                    pursuant to Standard Securitization Undertakings;

          (2)  with which neither Hanover nor any Restricted Subsidiary of
               Hanover has any material contract, agreement, arrangement or
               understanding (except in connection with a Purchase Money Note or
               Qualified Receivables Transaction) other than on terms no less
               favorable to Hanover or such Restricted Subsidiary than those
               that might be obtained at the time from Persons that are not
               Affiliates of Hanover, other than fees payable in the ordinary
               course of business in connection with servicing accounts
               receivable; and

          (3)  to which neither Hanover nor any Restricted Subsidiary of Hanover
               has any obligation to maintain or preserve such entity's
               financial condition or cause such entity to achieve certain
               levels of operating results.

          Any such designation by the Board of Directors of Hanover shall be
evidenced to the Indenture Trustee by filing with the Indenture Trustee a
certified copy of the resolution of the Board of Directors of Hanover giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions.

          "Redemption Date" shall mean, with respect to any redemption of
           ---------------
Securities, the date of redemption with respect thereto.

          "Refinancing Indebtedness" means Indebtedness that is Incurred to
           ------------------------
refund, refinance, replace, exchange, renew, repay or extend (including pursuant
to any defeasance or discharge mechanism) (collectively, "refinance,"
"refinances," and "refinanced" shall have a correlative meaning) any
Indebtedness existing on the date of the Participation Agreement or Incurred in
compliance with the Participation Agreement (including Indebtedness of Hanover
that refinances Indebtedness of any Restricted Subsidiary and Indebtedness of
any Restricted Subsidiary that refinances Indebtedness of another Restricted
Subsidiary) including Indebtedness that refinances Refinancing Indebtedness,
provided, however, that:

          (1)  (a) if the Stated Maturity of the Indebtedness being refinanced
               is earlier than the Stated Maturity of the notes, the Refinancing
               Indebtedness has a

<PAGE>
                                                                              44

                    Stated Maturity no earlier than the Stated Maturity of the
                    Indebtedness being refinanced or (b) if the Stated Maturity
                    of the Indebtedness being refinanced is later than the
                    Stated Maturity of the Securities, the Refinancing
                    Indebtedness has a Stated Maturity at least 91 days later
                    than the Stated Maturity of the Securities;

               (2)  the Refinancing Indebtedness has an Average Life at the time
                    such Refinancing Indebtedness is Incurred that is equal to
                    or greater than the Average Life of the Indebtedness being
                    refinanced;

               (3)  such Refinancing Indebtedness is Incurred in an aggregate
                    principal amount (or if issued with original issue discount,
                    an aggregate issue price) that is equal to or less than the
                    sum of the aggregate principal amount (or if issued with
                    original issue discount, the aggregate accreted value) then
                    outstanding of Indebtedness being refinanced (plus, without
                    duplication, any additional Indebtedness Incurred to pay
                    interest or premiums required by the instruments governing
                    such existing Indebtedness and fees incurred in connection
                    therewith); and

               (4)  if the Indebtedness being refinanced is subordinated in
                    right of payment to the notes or the Hanover Guarantee, such
                    Refinancing Indebtedness is subordinated in right of payment
                    to the notes or the Hanover Guarantee on terms at least as
                    favorable to the Securityholders as those contained in the
                    documentation governing the Indebtedness being extended,
                    refinanced, renewed, replaced, defeased or refunded.

               "Register" shall have the meaning set forth in Section 32.3 of
                --------
the Lease.

               "Registered Exchange Offer" shall have the meaning set forth in
                -------------------------
the Exchange and Registration Rights Agreement.

               "Registrar" shall have the meaning ascribed to it in Section 2.3
                ---------
of the Indenture.

               "Regulation S" shall have the meaning ascribed to it in Section
                ------------
2.1(a) of the Indenture.

               "Regulation S Global Note" shall have the meaning ascribed to it
                ------------------------
in Section 2.1(a) of the Indenture.

               "Regulation S Legend" shall have the meaning ascribed to it in
                -------------------
Section 2.1(c) of the Indenture.

               "Regulation S Note" shall have the meaning ascribed to it in
                -----------------
Section 2.1(a) of the Indenture.

               "Related Business" means any business which is the same as or
                ----------------
related, ancillary or complementary to any of the businesses of Hanover and its
Restricted Subsidiaries on the date of the Participation Agreement.

<PAGE>
                                                                              45

          "Release" shall mean any release, pumping, pouring, emptying,
           -------
injecting, escaping, leaching, dumping, seepage, spill, leak, flow, discharge,
disposal or emission of a Hazardous Substance.

          "Release Date" means the Closing Date unless the Escrow Agreement is
           ------------
executed and delivered by the parties thereto, in which case it shall mean the
date the Escrowed Funds are released pursuant to the Escrow Agreement.

          "Rent" shall mean, collectively, the Basic Rent and the Supplemental
           ----
Rent.

          "Reorganization" shall mean, with respect to any Multiemployer Plan,
           --------------
the condition that such plan is in reorganization within the meaning of Section
4241 of ERISA.

          "Replacement Equipment" shall have the meaning set forth in Section 30
           ---------------------
of the Lease.

          "Replacement Equipment Closing Date" shall mean each date on which the
           ----------------------------------
Lessee substitutes Equipment with Replacement Equipment pursuant to Section 30
of the Lease.

          "Reportable Event" shall mean any of the events set forth in Section
           ----------------
4043(c) of ERISA, other than those events as to which the thirty day notice
period is waived by the PBGC.

          "Representative" means any trustee, agent or representative (if any)
           --------------
of an issue of Senior Indebtedness or Guarantor Senior Indebtedness, as the case
may be; provided that when used in connection with the Senior Credit Agreement,
the term "Representative" shall refer to the administrative agent under the
Senior Credit Agreement.

          "Required Certificate Holders" shall mean, at any time, Certificate
           ----------------------------
Holders who hold in the aggregate Certificates that represent 51% or more of the
Certificate Holder Contributions.

          "Required Holders" shall mean, at any time, Securityholders who hold
           ----------------
in the aggregate 51% or more of the principal amount of the outstanding
Securities.

          "Requirement of Law" shall mean, as to any Person, the Certificate of
           ------------------
Incorporation, By-Laws, Articles of Association or other organizational or
governing documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental Authority, in
each case applicable to or binding upon such Person or any of its property or to
which such Person or any of its property is subject.

          "Requisition" shall have the meaning set forth in Section 5.2 of the
           -----------
Participation Agreement.

<PAGE>
                                                                              46

          "Resale Restriction Termination Date" shall have the meaning ascribed
           -----------------------------------
to it in Section 2.6 of the Indenture.

          "Responsible Officer" shall mean, (i) other than with respect to the
           -------------------
Trust Company, Wilmington Trust FSB, Lessor and Indenture Trustee, the chief
executive officer, president, the executive vice president, treasurer or
secretary of any Person, or, with respect to financial matters, the chief
financial officer or treasurer of the applicable Person, and (ii) with respect
to the Trust Company, Wilmington Trust FSB, Lessor and Indenture Trustee, a
Trust Officer.

          "Restricted Investment" shall mean any Investment other than a
           ---------------------
Permitted Investment.

          "Restricted Period" shall mean the 40 consecutive days beginning on
           -----------------
and including the later of (A) the day on which the Initial Securities are
offered to persons other than distributors (as defined in Regulation S under
the Securities Act) and (B) the Issue Date.

          "Restricted Securities Legend" shall mean the Private Placement Legend
           ----------------------------
set forth in clause (A) of Section 2.1(c) of the Indenture or the Regulation S
Legend set forth in clause (B) of Section 2.1(c), as applicable.

          "Restricted Subsidiary" shall mean any Subsidiary of Hanover other
           ---------------------
than an Unrestricted Subsidiary.

          "Rule 144A" shall have the meaning ascribed to it in Section 2.1(a) of
           ---------
the Indenture.

          "Rule 144A Global Note" shall have the meaning ascribed to it in
           ---------------------
Section 2.1(a) of the Indenture.

          "Rule 144A Note" shall have the meaning ascribed to it in Section
           --------------
2.1(a) of the Indenture.

          "Sale/Leaseback Transaction" shall mean an arrangement relating to
           --------------------------
property now owned or hereafter acquired whereby Hanover or a Restricted
Subsidiary transfers such property to a Person and Hanover or a Restricted
Subsidiary leases it from such Person.

          "Scheduled Interest Payment Date" shall mean (a) with respect to the
           -------------------------------
Securities, the last day of each March and September to occur while any
Securities are outstanding, and the Stated Maturity, and (b) with respect to the
Certificates, each Certificate Holder Yield Payment Date.

          "SEC" shall mean the Securities and Exchange Commission.
           ---

          "Securities" shall mean the Initial Securities and Exchange
           ----------
Securities.

<PAGE>
                                                                              47

          "Securities Act" shall mean the Securities Act of 1933, as amended,
           --------------
together with the rules and regulations promulgated thereunder.

          "Securities Custodian" shall mean the custodian with respect to the
           --------------------
Global Security (as appointed by DTC), or any successor Person thereto and shall
initially be the Indenture Trustee.

          "Security Agreement" shall mean that certain Security Agreement dated
           ------------------
as of the Release Date, made by the Lessor in favor of the Collateral Agent,
together with any Security Agreement Supplement, as amended, supplemented or
otherwise modified from time to time.

          "Security Agreement Supplement" shall mean each Security Agreement
           -----------------------------
Supplement substantially in the form of Exhibit A to the Security Agreement
together with all attachments and schedules thereto, as such Security Agreement
Supplement may be supplemented, amended or modified from time to time.

          "Security Documents" shall mean the collective reference to the
           ------------------
Indenture, the Lease, the Assignment of Lease, the Security Agreement, the UCC
Financing Statements and all other security documents hereafter delivered to the
Trustee or the Collateral Agent granting a Lien on any asset or assets of any
Person to secure the obligations and liabilities of the Lessor under the
Indenture and/or under any of the other Operative Documents or to secure any
guarantee of any such obligations and liabilities.

          "Securityholders" shall mean the collective reference to the holders
           ---------------
of the Securities.

          "Senior Credit Agreement" means, with respect to Hanover and/or the
           -----------------------
Lessee, one or more debt facilities (including, without limitation, the Amended
and Restated Senior Credit Agreement, dated March 13, 2000, among Hanover, the
Lessee, The Chase Manhattan Bank, as Administrative Agent, and the lenders
parties thereto, as the same may be, and may have been, amended, supplemented or
otherwise modified from time to time) or commercial paper facilities with banks
or other institutional lenders providing for revolving credit loans, term loans,
receivables financing (including through the sale of receivables to such lenders
or to special purpose entities formed to borrow from such lenders against such
receivables) or letters of credit, in each case, as amended, restated, modified,
renewed, refunded, replaced or refinanced in whole or in part from time to time
(and whether or not with the original administrative agent and lenders or
another administrative agent or agents or other lenders and whether provided
under the original Senior Credit Agreement or any other credit or other
agreement or indenture).

          "Senior Indebtedness" means, whether outstanding on the Issue Date or
           -------------------
thereafter issued, created, Incurred or assumed, the Bank Indebtedness, the
Synthetic Guarantees, Indebtedness related to Hanover's 4.75% Convertible Senior
Notes Due March 15, 2008 and all other Indebtedness of Hanover, including
accrued and unpaid interest (including interest accruing on or after the filing
of any petition in bankruptcy or for reorganization relating to Holdings at the
rate specified in the documentation with respect thereto

<PAGE>
                                                                              48

whether or not a claim for post filing interest is allowed in such proceeding)
and fees relating thereto; provided, however, that Senior Indebtedness will not
include:

          (1)  any Indebtedness which, in the instrument creating or evidencing
               the same or pursuant to which the same is outstanding, it is
               provided that the obligations in respect of such Indebtedness are
               not superior in right of, or are subordinate to, payment of the
               Securities and the Hanover Guarantees;

          (2)  any obligation of Hanover to any Subsidiary;

          (3)  any liability for Federal, state, foreign, local or other taxes
               owed or owing by Hanover;

          (4)  any accounts payable or other liability to trade creditors
               arising in the ordinary course of business (including Guarantees
               thereof or instruments evidencing such liabilities);

          (5)  any Indebtedness, Guarantee or obligation of Hanover that is
               expressly subordinate or junior in right of payment to any other
               Indebtedness, Guarantee or obligation of Hanover, including,
               without limitation, any Senior Subordinated Indebtedness and any
               Subordinated Obligations; or

          (6)  any Capital Stock.

          "Senior Subordinated Indebtedness" means the obligations of Hanover
           --------------------------------
under the Hanover Guarantee, the 2001A Guarantee and any other Indebtedness of
Hanover that specifically provides that such Indebtedness is to rank equally in
right of payment with the obligations of Hanover under the Hanover Guarantee and
is not expressly subordinated by its terms in right of payment to any
Indebtedness or other obligation of Hanover which is not Senior Indebtedness.

          "Shared Rights" means the rights retained by the Lessor, but not to
           -------------
the exclusion of the Collateral Agent, pursuant to Section 6.13 of the
Indenture.

          "Significant Casualty" shall mean a Casualty that in the reasonable,
           --------------------
good faith judgment of the Lessee (as evidenced by an Officer's Certificate)
either (a) renders the related Equipment unsuitable for continued use for its
intended purpose immediately prior to such Casualty or (b) is so substantial in
nature that restoration of such Equipment to substantially its condition as
existed immediately prior to such Casualty would be impracticable or impossible.

          "Significant Condemnation" shall mean a Condemnation that in the
           ------------------------
reasonable, good faith judgment of the Lessee (as evidenced by an Officer's
Certificate) either (a) renders the Equipment unsuitable for continued use for
its intended purpose immediately prior to such Condemnation or (b) is such that
restoration of such Equipment to substantially its condition as existed
immediately prior to such Condemnation would be impracticable or impossible.

<PAGE>
                                                                              49

          "Significant Subsidiary" means any Restricted Subsidiary that would be
           ----------------------
a "Significant Subsidiary" of Hanover within the meaning of Rule 102 under
Regulation S-X promulgated by the SEC.

          "Special Interest Payment Date" shall have the meaning ascribed to it
           -----------------------------
in Section 2.13 of the Indenture.

          "Special Record Date" shall have the meaning ascribed to it in Section
           -------------------
2.13 of the Indenture.

          "Standard Securitization Undertakings" means representations,
           ------------------------------------
warranties, covenants and indemnities entered into by Hanover or any Restricted
Subsidiary of Hanover which are reasonably customary in securitization of
accounts receivable transactions.

          "Stated Maturity" means, with respect to any security, the date
           ---------------
specified in such security as the fixed date on which the payment of principal
of such security is due and payable, including pursuant to any mandatory
redemption provision, but shall not include any contingent obligations to repay,
redeem or repurchase any such principal prior to the date originally scheduled
for the payment thereof.

          "Subordinated Acquisition Note" means the $150.0 million subordinated
           -----------------------------
promissory note between Hanover and Camco International, Inc., maturing on
December 15, 2005.

          "Subordinated Guarantee Obligation" shall mean, as to any Person, any
           ---------------------------------
unsecured Guarantee Obligation the terms of which provide that such Guarantee
Obligation is subordinate and junior in right to the payment of all the
obligations and liabilities of such Person to the Indenture Trustee and the
Securityholders.

          "Subordinated Obligation" means any Indebtedness of Hanover (whether
           -----------------------
outstanding on the Issue Date or thereafter Incurred) which is subordinate or
junior in right of payment to the notes pursuant to a written agreement.

          "Subsidiary" of any Person means any corporation, association,
           ----------
partnership, joint venture, limited liability company or other business entity
of which more than 50% of the total voting power of shares of Capital Stock or
other interests (including partnership and joint venture interests) entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by (1) such Person, (2) such Person and one or more
Subsidiaries of such Person or (3) one or more Subsidiaries of such Person.
Unless otherwise specified herein, each reference to a Subsidiary will refer to
a Subsidiary of Hanover, including without limitation the Lessee.

          "Subsidiary Guarantor" means each of (i) the Lessee, Hanover
           --------------------
Compressor Limited Holdings, LLC, Hanover Land Limited Partnership, Hanover
Maintech Limited Partnership, Hanover/Smith Limited Partnership, Hanover
Acquisition Limited Partnership, Applied Process Solutions, Inc., OEC
Compression Corporation, Eureka

<PAGE>
                                                                              50

Energy Limited Partnership, Production Operators Corporation and Production
Operators, Inc., (ii) each other Subsidiary of Hanover in existence on the Issue
Date that is a guarantor under the Senior Credit Agreement and (iii) each
Restricted Subsidiary (other than a Foreign Subsidiary or a Receivables Entity)
that (A) becomes, or upon its creation or acquisition by Hanover or one or more
of its Restricted Subsidiaries is, a Material Subsidiary and (B) becomes a
guarantor under the Senior Credit Agreement.

          "Supplemental Rent" shall mean (i) all amounts, liabilities and
           -----------------
obligations which Lessee assumes or agrees to pay to Lessor or any other Person
under the Lease or under any of the other Operative Agreements, (ii) all
amounts, liabilities and obligations which Lessor agrees to pay to the
Certificate Holders pursuant to the Lease, Section 2 of the Participation
Agreement or the Trust Agreement and (iii) all amounts, liabilities and
obligations which Lessor agrees to pay to the Securityholders pursuant to the
Securities and the Indenture; provided, however, specifically excluding Basic
                              --------  -------
Rent and the payment of Certificate Holder Contributions and principal on the
Securities except to the extent that the same are paid from payments made
pursuant to clause (i) hereof.

          "Synthetic Guarantees" means, collectively, (i) the Guarantee, dated
           --------------------
as of October 27, 2000 (as the same may be, and may have been amended,
supplemented or otherwise modified from time to time), among the Lessee, Hanover
Equipment Trust 2000B, Bank Hapoalim B.M. and FBTC Leasing Corp., as investors,
the lenders parties thereto and the administrative agent named therein; (ii) the
Guarantee, dated as of March 13, 2000 (as the same may be, and may have been
amended, supplemented or otherwise modified from time to time), among the
Lessee, Hanover Equipment Trust 2000A, First Union National Bank and Scotiabanc
Inc., as investors, the lenders parties thereto and the Administrative Agent;
and (iii) the Guarantee, dated as of June 15, 1999 (as the same may be, and may
have been amended, supplemented or otherwise modified from time to time), among
the Lessee, Hanover Equipment Trust 1999A, Societe Generale Financial
Corporation and FBTC Leasing Corp., as investors, the lenders parties thereto
and the Administrative Agent;.

          "Tax Indemnitee" shall mean the Lessor, the Certificate Holders, the
           --------------
Trust Company, the Indenture Trustee, each Securityholder and their Affiliates,
successors, assignees and assigns.

          "Taxes" shall have the meaning set forth in the definition of
           -----
Impositions.

          "Term" shall mean the period commencing on the Release Date and ending
           ----
on the Expiration Date.

          "Termination Date" shall have the meaning set forth in Section 16.2(a)
           ----------------
of the Lease.

          "Termination Notice" shall have the meaning set forth in Section
           ------------------
16.1(a) of the Lease.

          "Termination Value" shall mean with respect to all of the Equipment,
           -----------------
as of any determination date, an amount equal to the sum of (i) the aggregate
outstanding principal

<PAGE>
                                                                              51

amount of the Securities, accrued and unpaid interest thereon, the applicable
premium, if any, and any other amounts due under the Indenture, plus (ii) the
aggregate outstanding amount of the Certificate Holder Contribution and all
unpaid Certificate Holder Yield thereon, the applicable premium, if any, plus
(iii) all other amounts due and owing to the Certificate Holders, Indenture
Trustee or Securityholders under any Operative Agreements. Termination Value
will only include amounts in excess of the aggregate outstanding principal
amount of the Securities and the aggregate outstanding amount of the Certificate
Holder Contribution if such amounts have not been paid as Supplemental Rent as
required by the Lease (after giving effect to any concurrent payment of
Supplemental Rent). If it is necessary to calculate Termination Value for a
particular Unit, the total Termination Value will be allocated among the
Equipment based upon the relative cost of each Unit.

          "TIDES Trust" shall mean Hanover Compressor Capital Trust, a Delaware
           -----------
business trust, and its successors and assigns.

          "Total Condemnation" shall mean a Condemnation that involves a taking
           ------------------
of Lessor's entire title to a Unit.

          "Tranche A Percentage" shall mean 67.90%.
           --------------------

          "Transaction Expenses" shall mean
           --------------------

          (a) the reasonable out-of-pocket expenses, disbursements and costs of
the Indenture Trustee and the Certificate Holders, including, without
limitation, reasonable attorneys fees and expenses, incurred in connection with
the consummation of the transactions contemplated by the Operative Agreements;

          (b) the reasonable fees and reasonable out-of-pocket expenses of the
Trust Company in connection with the transactions contemplated by the Operative
Agreements, including, without limitation, the initial and annual Trust
Company's fee and all reasonable fees and reasonable out-of pocket expenses of
the Trust Company and any necessary co-trustees (including reasonable counsel
fees and expenses) or any successor trustee, for acting as trustee under the
Trust Agreement;

          (c) any and all Taxes (to the extent provided in Section 13.2 of the
Participation Agreement) and fees incurred in recording or filing any Operative
Agreement or any other transaction document, any bill of sale, security
agreement, notice or financing statement with any public office, registry or
governmental agency in connection with the transactions contemplated by the
Operative Agreements;

          (d) any brokers' fees (with respect to brokers retained by or with the
prior consent of Lessee) and any and all stamp, transfer and other similar
taxes, fees and excises, if any, including any interest and penalties, which are
payable in connection with the acquisition of any Unit;

          (e) all reasonable out-of-pocket costs and expenses incurred in
connection with the enforcement or preservation of any rights under the
Operative Agreements,

<PAGE>
                                                                              52

including, without limitation, the reasonable fees and disbursements of counsel
to the Indenture Trustee, the Securityholders and the Certificate Holders;

          (f) all reasonable out-of-pocket costs and expenses incurred in
     connection with any amendment, supplement or modification to the Operative
     Agreements requested by the Lessee or any Guarantors and any other
     documents prepared in connection therewith, and the consummation and
     administration of the transactions contemplated thereby, including, without
     limitation, the reasonable fees and disbursements of counsel to the
     Indenture Trustee, Securityholders and Certificate Holders; and

          (g) all reasonable out-of-pocket costs and expenses incurred by the
     Lessor, the Lessee, the Certificate Holders or the Indenture Trustee in
     connection with any purchase of any Equipment by the Lessee pursuant to the
     Lease.

          "Trust" shall mean the Lessor.
           -----

          "Trust Agreement" shall mean the Amended and Restated Trust Agreement
           ---------------
dated as of the Closing Date between the Certificate Holders and the Trust
Company, as amended, supplemented and otherwise modified from time to time in
accordance with the terms thereof and of any other Operative Agreement.

          "Trust Company" shall mean Wilmington Trust Company, in its individual
           -------------
capacity, and any successor trustee under the Trust Agreement in its individual
capacity.

          "Trust Estate" shall have the meaning set forth in the Trust
           ------------
Agreement.

          "Trust Officer" shall mean, when used with respect to the Trust
           -------------
Company and Wilmington Trust FSB, any officer within the Corporate Trust
Administration department of the Trust Company, including any vice president,
assistant vice president, assistant secretary, assistant treasurer, trust
officer or any other officer of the Trust Company who customarily performs
functions similar to those performed by the Persons who at the time shall be
such officers, respectively, or to whom any corporate trust matter is referred
because of such person's knowledge of and familiarity with the particular
subject matter and who shall have direct responsibility for the administration
of the transactions contemplated by the Operative Agreements.

          "Trustee" shall mean the Trust Company, not in its individual
           -------
capacity, but solely as trustee under the Trust Agreement.

          "2001B Escrow" shall mean the escrow established pursuant to the
           ------------
Escrow Agreement.

          "2001A Equipment" shall mean the equipment owned by the 2001A Lessor
           ---------------
and leased to Lessee under the 2001A Lease.

          "2001A Guarantee" shall mean the Guarantee dated as of August 31, 2001
           ---------------
from the Hanover Guarantors in connection with the 2001A Lease.

<PAGE>
                                                                              53

          "2001A Indenture" shall mean the Indenture dated as of August 31, 2001
           ---------------
between the 2001A Lessor, the 2001A Indenture Trustee and the Hanover
Guarantors.

          "2001A Indenture Trustee" shall mean Wilmington Trust FSB, in its
           -----------------------
capacity as Indenture Trustee under the 2001A Indenture.

          "2001A Lease" shall mean that Lease dated as of August 31, 2001
           -----------
between the 2001A Lessor and Lessee.

          "2001A Lessor" shall mean Hanover Equipment Trust 2001A, a Delaware
           ------------
business trust.

          "2001A Operative Agreements" shall mean the Operative Agreements
           --------------------------
defined in the 2001A Participation Agreement.

          "2001A Participation Agreement" shall mean the Participation Agreement
           -----------------------------
dated as of August 31, 2001 among Lessee, the 2001 A Lessor, the Certificate
Holders, the 2001A Indenture Trustee, the Hanover Guarantors, the Trust Company
and Wilmington Trust FSB.

          "2001A Termination Value" shall have the meaning set forth in the
           -----------------------
2001A Participation Agreement.

          "UCC Financing Statements" shall mean collectively the Lessee
           ------------------------
Financing Statements and the Lessor Financing Statements.

          "Uniform Commercial Code" and "UCC" shall mean the Uniform Commercial
           -----------------------       ---
Code as in effect in any applicable jurisdiction.

          "Unit" means each piece of Equipment as specifically scheduled and
           ----
described on Schedule A of the Lease and any piece of Replacement Equipment.

          "Unqualified Subsidiary" shall mean any Subsidiary of the Lessee other
           ----------------------
than Qualified Subsidiaries.

          "Unrestricted Subsidiary" means:
           -----------------------

          (1)  any Subsidiary of Hanover that at the time of determination shall
               be designated an Unrestricted Subsidiary by the Board of
               Directors of Hanover in the manner provided below; and

          (2)  any Subsidiary of an Unrestricted Subsidiary.

          The Board of Directors of Hanover may designate any Subsidiary of
Hanover (including any newly acquired or newly formed Subsidiary or a Person
becoming a Subsidiary through merger or consolidation or Investment therein) to
be an Unrestricted Subsidiary only if:

<PAGE>
                                                                              54

          (1)  such Subsidiary or any of its Subsidiaries does not own any
               Capital Stock or Indebtedness of or have any Investment in, or
               own or hold any Lien on any property of, any other Subsidiary of
               Hanover which is not a Subsidiary of the Subsidiary to be so
               designated or otherwise an Unrestricted Subsidiary;

          (2)  all the Indebtedness of such Subsidiary and its Subsidiaries
               shall, at the date of designation, and will at all times
               thereafter, consist of Non-Recourse Debt;

          (3)  such designation and the Investment of Hanover in such Subsidiary
               complies with Section 9.3 of the Participation Agreement;

          (4)  such Subsidiary, either alone or in the aggregate with all other
               Unrestricted Subsidiaries, does not operate, directly or
               indirectly, all or substantially all of the business of Hanover
               and its Subsidiaries;

          (5)  such Subsidiary is a Person with respect to which neither Hanover
               nor any of its Restricted Subsidiaries has any direct or indirect
               obligation:

               (a)  to subscribe for additional Capital Stock of such Person; or

               (b)  to maintain or preserve such Person's financial condition or
                    to cause such Person to achieve any specified levels of
                    operating results; and

          (6)  on the date such Subsidiary is designated an Unrestricted
               Subsidiary, such Subsidiary is not a party to any agreement,
               contract, arrangement or understanding with Hanover or any
               Restricted Subsidiary with terms substantially less favorable to
               Hanover than those that might have been obtained from Persons who
               are not Affiliates of Hanover.

          Any such designation by the Board of Directors of Hanover shall be
evidenced to the Indenture Trustee by filing with the Indenture Trustee a
resolution of the Board of Directors of Hanover giving effect to such
designation and an Officers' Certificate certifying that such designation
complies with the foregoing conditions. If, at any time, any Unrestricted
Subsidiary would fail to meet the foregoing requirements as an Unrestricted
Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for
purposes of the Participation Agreement and any Indebtedness of such Subsidiary
shall be deemed to be Incurred as of such date.

          The Board of Directors of Hanover may designate any Unrestricted
Subsidiary to be a Restricted Subsidiary; provided that immediately after giving
effect to such designation, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof and Hanover could
incur at least $1.00 of additional Indebtedness under Section 9.1 of the
Participation Agreement on a pro forma basis taking into account such
designation.

<PAGE>
                                                                              55

          "U.S. Government Obligations" means securities that are (a) direct
           ---------------------------
obligations of the United States of America for the timely payment of which its
full faith and credit is pledged or (b) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States of
America the timely payment of which is unconditionally guaranteed as a full
faith and credit obligation by the United States of America, which, in either
case, are not callable or redeemable at the option of the issuer thereof, and
shall also include a depository receipt issued by a bank (as defined in Section
3(a)(2) of the Securities Act), as custodian with respect to any such U.S.
Government Obligations or a specific payment of principal or interest on any
such U.S. Government Obligations held by such custodian for the account of the
holder of such depository receipt; provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount payable
to the holder of such depository receipt from any amount received by the
custodian in respect of the U.S. Government Obligations or the specific payment
of principal of or interest on the U.S. Government Obligations evidenced by such
depository receipt.

          "Voting Stock" of a corporation means all classes of Capital Stock of
           ------------
such corporation then outstanding and normally entitled to vote in the election
of directors.

          "Wear and Tear Payment" shall have the meaning set forth in Section
           ---------------------
8.8(a) of the Indenture.

          "Wilmington Trust FSB" means Wilmington Trust FSB, a federal savings
           --------------------
bank, in its individual capacity.

          "Wholly-Owned Subsidiary" means a Restricted Subsidiary of Hanover,
           -----------------------
all of the Capital Stock of which (other than directors' qualifying shares) is
owned by Hanover or another Wholly-Owned Subsidiary.

          "Yield Rate" shall mean (i) 837.5 basis points in excess of the
           ----------
Eurodollar Rate or (ii) 837.5 basis points in excess of ABR, as applicable.

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