Document:

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                                                                   EXHIBIT 10.69

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

                         HANOVER EQUIPMENT TRUST 2001A,

                     THE HANOVER GUARANTORS PARTIES HERETO,

                                       AND

                              WILMINGTON TRUST FSB,
                         AS TRUSTEE AND COLLATERAL AGENT

                       8.50% Senior Secured Notes due 2008

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

                                    INDENTURE

                           Dated as of August 30, 2001

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

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

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                                TABLE OF CONTENTS

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              ARTICLE I Definitions and Incorporation by Reference
SECTION 1.1.   Definitions..................................................  1
SECTION 1.2.   Other Definitions............................................  1
SECTION 1.3.   Incorporation by Reference of Trust Indenture Act............  2
SECTION 1.4.   Rules of Construction........................................  3

                            ARTICLE II The Securities
SECTION 2.1.   Form, Dating and Terms.......................................  3
SECTION 2.2.   Execution and Authentication.................................  9
SECTION 2.3.   Registrar and Paying Agent................................... 10
SECTION 2.4.   Paying Agent To Hold Money in Trust.......................... 11
SECTION 2.5.   Securityholder Lists......................................... 11
SECTION 2.6.   Transfer and Exchange........................................ 11
SECTION 2.7.   Form of Certificate to be Delivered in Connection with
                 Transfers to Institutional Accredited Investors............ 14
SECTION 2.8.   Form of Certificate to be Delivered in Connection with
                 Transfers Pursuant to Regulation S......................... 17
SECTION 2.9.   Mutilated, Destroyed, Lost or Stolen Securities.............. 18
SECTION 2.10.  Outstanding Securities....................................... 19
SECTION 2.11.  Temporary Securities......................................... 19
SECTION 2.12.  Cancellation................................................. 19
SECTION 2.13.  Payment of Interest; Defaulted Interest...................... 20
SECTION 2.14.  Computation of Interest...................................... 21
SECTION 2.15.  CUSIP Numbers................................................ 21
SECTION 2.16.  Taxes........................................................ 21

                       ARTICLE III Covenants of the Issuer
SECTION 3.1.   Payment of Securities........................................ 22
SECTION 3.2.   SEC Reports and Available Information........................ 22
SECTION 3.3.   Asset Disposition Offer...................................... 23
SECTION 3.4.   Change of Control............................................ 24
SECTION 3.5.   Protection of Collateral..................................... 25
SECTION 3.6.   Negative Covenants Regarding Collateral...................... 26
SECTION 3.7.   Non-Consolidation of the Issuer.............................. 26
SECTION 3.8.   No Bankruptcy Petition....................................... 26
SECTION 3.9.   Limitation on Liens; Fixtures................................ 27
SECTION 3.10.  Other Indebtedness........................................... 27
SECTION 3.11.  Guarantees, Loans, Advances and Other Obligations............ 27
SECTION 3.12.  Consolidation, Merger and Sale of Assets..................... 27
SECTION 3.13.  Capital Expenditures......................................... 27
SECTION 3.14.  Payments of Collateral....................................... 28
SECTION 3.15.  No Subsidiaries.............................................. 28

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SECTION 3.16.  Investments.................................................. 28
SECTION 3.17.  Use of Proceeds.............................................. 28
SECTION 3.18.  Impairment of Security Interest.............................. 28
SECTION 3.19.  Compliance with Operative Agreements......................... 28
SECTION 3.20.  Compliance with Laws......................................... 28
SECTION 3.21.  Maintenance of Office or Agency.............................. 29
SECTION 3.22.  Limitations on Lines of Business; Existence.................. 29
SECTION 3.23.  Payment of Taxes and Other Claims............................ 29
SECTION 3.24.  Payments for Consent......................................... 30
SECTION 3.25.  Compliance Certificate....................................... 30
SECTION 3.26.  Further Instruments and Acts................................. 30
SECTION 3.27.  Statement by Officers as to Default.......................... 30

                 ARTICLE IV Covenants of the Hanover Guarantors

                       ARTICLE V Redemption of Securities
SECTION 5.1.   Optional Redemption.......................................... 30
SECTION 5.2.   Applicability of Article..................................... 31
SECTION 5.3.   Election to Redeem; Notice to Trustee........................ 31
SECTION 5.4.   Selection by Trustee of Securities to Be Redeemed............ 31
SECTION 5.5.   Notice of Redemption......................................... 31
SECTION 5.6.   Deposit of Redemption Price.................................. 32
SECTION 5.7.   Securities Payable on Redemption Date........................ 33
SECTION 5.8.   Securities Redeemed in Part.................................. 33

                        ARTICLE VI Defaults and Remedies
SECTION 6.1.   Events of Default............................................ 33
SECTION 6.2.   Acceleration................................................. 36
SECTION 6.3.   Other Remedies............................................... 36
SECTION 6.4.   Waiver of Past Defaults...................................... 37
SECTION 6.5.   Control by Majority.......................................... 37
SECTION 6.6.   Limitation on Suits.......................................... 37
SECTION 6.7.   Rights of Holders to Receive Payment......................... 38
SECTION 6.8.   Collection Suit by Trustee................................... 38
SECTION 6.9.   Trustee May File Proofs of Claim............................. 38
SECTION 6.10.  Priorities................................................... 38
SECTION 6.11.  Undertaking for Costs........................................ 39
SECTION 6.12.  Additional Payments.......................................... 39
SECTION 6.13.  Certain Remedial Matters..................................... 39

                               ARTICLE VII Trustee
SECTION 7.1.   Duties of Trustee............................................ 40
SECTION 7.2.   Rights of Trustee............................................ 41
SECTION 7.3.   Individual Rights of Trustee................................. 42
SECTION 7.4.   Trustee's Disclaimer......................................... 42
SECTION 7.5.   Notice of Defaults........................................... 42
SECTION 7.6.   Reports by Trustee to Holders................................ 42

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SECTION 7.7.   Compensation and Indemnity................................... 43
SECTION 7.8.   Replacement of Trustee....................................... 43
SECTION 7.9.   Successor Trustee by Merger.................................. 44
SECTION 7.10.  Eligibility; Disqualification................................ 44
SECTION 7.11.  Preferential Collection of Claims Against Issuer............. 45
SECTION 7.12.  Trustee's Application for Instruction from the Issuer........ 45
SECTION 7.13.  Proceeds of Collateral; Proceeds Remaining in Account........ 45

          ARTICLE VIII Discharge of Indenture; Defeasance; The Account
SECTION 8.1.   Discharge of Liability on Securities; Defeasance............. 46
SECTION 8.2.   Conditions to Defeasance..................................... 47
SECTION 8.3.   Application of Trust Money................................... 49
SECTION 8.4.   The Account.................................................. 49
SECTION 8.5.   Repayment to Issuer.......................................... 51
SECTION 8.6.   Indemnity for U.S. Government Obligations.................... 52
SECTION 8.7.   Reinstatement................................................ 52
SECTION 8.8.   Other Prepayment Matters..................................... 52

                              ARTICLE IX Amendments
SECTION 9.1.   Without Consent of Holders................................... 52
SECTION 9.2.   With Consent of Holders...................................... 53
SECTION 9.3.   Compliance with Trust Indenture Act.......................... 54
SECTION 9.4.   Revocation and Effect of Consents and Waivers................ 54
SECTION 9.5.   Notation on or Exchange of Securities........................ 55
SECTION 9.6.   Trustee To Sign Amendments................................... 55
SECTION 9.7.   Acknowledgement of Certain Other Matters Requiring Consent... 55
SECTION 9.8.   Nonrecourse.................................................. 56
SECTION 9.9.   Subordination................................................ 56

                             ARTICLE X Miscellaneous
SECTION 10.1.  Trust Indenture Act Controls................................. 57
SECTION 10.2.  Notices...................................................... 57
SECTION 10.3.  Communication by Holders with other Holders.................. 58
SECTION 10.4.  Certificate and Opinion as to Conditions Precedent........... 58
SECTION 10.5.  Statements Required in Certificate or Opinion................ 58
SECTION 10.6.  When Securities Disregarded.................................. 59
SECTION 10.7.  Rules by Trustee, Paying Agent and Registrar................. 59
SECTION 10.8.  Legal Holidays............................................... 59
SECTION 10.9.  GOVERNING LAW................................................ 59
SECTION 10.10. No Recourse Against Others................................... 59
SECTION 10.11. Successors................................................... 59
SECTION 10.12. Multiple Originals........................................... 60
SECTION 10.13. Variable Provisions.......................................... 60
SECTION 10.14. Qualification of Indenture................................... 60
SECTION 10.15. Table of Contents; Headings.................................. 60
SECTION 10.16. Non-Exclusion of the Issuer.................................. 60
SECTION 10.17. Third Party Beneficiaries.................................... 60

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                       ARTICLE XI Collateral and Security
SECTION 11.1.  Collateral and Security Documents; Future Guarantees......... 60
SECTION 11.2.  Recording and Opinions....................................... 61
SECTION 11.3.  Release of Collateral........................................ 63
SECTION 11.4.  Possession and Use of Collateral............................. 63
SECTION 11.5.  Specified Releases of Collateral............................. 63
SECTION 11.6.  Purchaser Protected.......................................... 63
SECTION 11.7.  Authorization of Actions To Be Taken by The Trustee Under
                 the Security Documents..................................... 64
SECTION 11.8.  Authorization of Receipt of Funds by the Trustee Under the
                 Security Documents......................................... 64

                       ARTICLE XII Collateral and Security
SECTION 12.1.  Appointment of Collateral Agent..............................604
SECTION 12.2.  Delegation of Duties......................................... 61
SECTION 12.3.  Exculpatory Provisions....................................... 63
SECTION 12.4.  Reliance by Collateral Agent.................................635

                                       iv
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EXHIBIT A      Form of the Initial Security

EXHIBIT B      Form of the Exchange Security

                                       v
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                              CROSS-REFERENCE TABLE

TIA                                                            Indenture
Section                                                         Section

310(a)(1)              ........................................  7.10
(a)(2)                 ........................................  7.10
(a)(3)                 ........................................  N.A.
(a)(4)                 ........................................  N.A.
(b)                    ........................................  7.8; 7.10
(c)                    ........................................  N.A.
311(a)                 ........................................  7.11
(b)                    ........................................  7.11
(c)                    ........................................  N.A.
312(a)                 ........................................  2.5
(b)                    ........................................  13.3
(c)                    ........................................  13.3
313(a)                 ........................................  7.6
(b)(1)                 ........................................  N.A.
(b)(2)                 ........................................  7.6
(c)                    ........................................  7.6
(d)                    ........................................  7.6
314(a)                 ........................................  3.2; 3.19; 13.2
(b)                    ........................................  N.A.
(c)(1)                 ........................................  13.4
(c)(2)                 ........................................  13.4
(c)(3)                 ........................................  N.A.
(d)                    ........................................  N.A.
(e)                    ........................................  13.5
315(a)                 ........................................  7.1
(b)                    ........................................  7.5; 13.2
(c)                    ........................................  7.1
(d)                    ........................................  7.1
(e)                    ........................................  6.11
316(a)(last sentence)  ........................................  13.6
(a)(1)(A)              ........................................  6.5
(a)(1)(B)              ........................................  6.4
(a)(2)                 ........................................  N.A.
(b)                    ........................................  6.7
317(a)(1)              ........................................  6.8
(a)(2)                 ........................................  6.9
(b)                    ........................................  2.4
318(a)                 ........................................  13.1

N.A. means Not Applicable.

Note: This Cross-Reference Table shall not, for any purpose, be deemed to be
part of this Indenture.

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         INDENTURE dated as of August 30, 2001, among HANOVER EQUIPMENT TRUST
2001A, a Delaware business trust (the "Issuer"), the Hanover Guarantors (as
defined) and WILMINGTON TRUST FSB, as trustee and as Collateral Agent (as
defined) (the "Trustee").

         Each party agrees as follows for the benefit of the other parties and
for the equal and ratable benefit of the Holders of (i) the Issuer's 8.50%
Senior Secured Notes due 2008 on the date hereof (the "Original Securities" or
"Initial Securities"), and (ii) if and when issued in exchange for Initial
Securities as provided in the Exchange and Registration Rights Agreement or a
similar agreement relating to Initial Securities, the Issuer's 8.50% Senior
Secured Notes due 2008 (the "Exchange Securities"; together with Initial
Securities, the "Securities").

                                   ARTICLE I

                   Definitions and Incorporation by Reference

         SECTION 1.1.   Definitions.

         Capitalized Terms not defined herein shall have the meaning given to
such terms in the Participation Agreement in the form attached hereto as Annex A
(the "Participation Agreement"), among the Issuer, Hanover Compression Limited
Partnership, a Delaware limited partnership (the "Lessee"), the certificate
holders and guarantors named therein, Wilmington Trust Company and the Trustee,
as such Participation Agreement may be amended, supplemented or otherwise
modified from time to time.

         SECTION 1.2.   Other Definitions.

                                                                      Defined in
Term                                                                   Section
----                                                                  ----------

"2001A Available Excess Proceeds"...................................    8.4(a)
"Account"...........................................................    8.4(a)
"Agent Member"......................................................    2.1(d)
"Available Excess Proceeds".........................................    3.3(a)
"Asset Disposition Offer"...........................................    3.3
"Asset Disposition Offer Amount"....................................    3.3
"Asset Disposition Offer Period"....................................    3.3
"Asset Disposition Purchase Date"...................................    3.3
"Authenticating Agent"..............................................    2.2
"Bankruptcy Law"....................................................    6.1
"Change of Control".................................................    3.4
"Change of Control Offer"...........................................    3.4
"Change of Control Payment".........................................    3.4
"Change of Control Payment Date"....................................    3.4
"Issuer Order"......................................................    2.2
"Corporate Trust Office"............................................    3.21

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"covenant defeasance option"........................................    8.1(b)
"cross acceleration provision"......................................    6.1
"Custodian".........................................................    6.1
"Defaulted Interest"................................................    2.13
"Event of Default"..................................................    6.1
"Excess Proceeds"...................................................    3.3(a)
"Excess Sale Proceeds"..............................................    8.4(b)
"Exchange Global Note"..............................................    2.1(a)
"Exculpated Person".................................................    9.8
"Global Securities".................................................    2.1(a)
"IAI"...............................................................    2.1(a)
"Institutional Accredited Investor Global Note".....................    2.1(a)
"Issuer Obligations"................................................    11.1(a)
"Issuer Order"......................................................    2.2
"Judgment Default Provision.........................................    6.1
"legal defeasance option"...........................................    8.1(b)
"Legal Holiday".....................................................    10.8
"Net Sale Proceeds".................................................    8.4(b)
"Note Register".....................................................    2.3
"Non-Excluded Taxes"................................................    2.16(a)
"Paying Agent"......................................................    2.3
"Payment Default"...................................................    6.1
"Private Placement Legend"..........................................    2.1(c)
"Registrar".........................................................    2.3
"Regulation S"......................................................    2.1(a)
"Regulation S Global Note"..........................................    2.1(a)
"Regulation S Legend"...............................................    2.1(c)
"Regulation S Note".................................................    2.1(a)
"Resale Restriction Termination Date"...............................    2.6
"Rule 144A".........................................................    2.1(a)
"Rule 144A Global Note".............................................    2.1(a)
"Rule 144A Note"....................................................    2.1(a)
"Special Interest Payment Date".....................................    2.13
"Special Record Date"...............................................    2.13
"QIB"...............................................................    2.1
"Wear and Tear Payment".............................................    8.8(a)

         SECTION 1.3.   Incorporation by Reference of Trust Indenture Act. This
Indenture is subject to the mandatory provisions of the TIA which are
incorporated by reference in and made a part of this Indenture. The following
TIA terms have the following meanings:

         "Commission" means the SEC.

         "indenture securities" means the Securities.
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         "indenture security holder" means a Security holder.

         "indenture to be qualified" means this Indenture.

         "indenture trustee" or "institutional trustee" means the Trustee.

         "obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.

         All other TIA terms used in this Indenture that are defined by the TIA,
defined in the TIA by reference to another statute or defined by SEC rule have
the meanings assigned to them by such definitions.

         SECTION 1.4.   Rules of Construction. Unless the context otherwise
requires:

         (1)    a term has the meaning assigned to it;

         (2)    an accounting term not otherwise defined has the meaning
   assigned to it in accordance with GAAP;

         (3)    "or" is not exclusive;

         (4)    "including" means including without limitation;

         (5)    words in the singular include the plural and words in the plural
   include the singular;

         (6)    unsecured Indebtedness shall not be deemed to be subordinate or
   junior to Secured Indebtedness merely by virtue of its nature as unsecured
   Indebtedness;

         (7)    the principal amount of any noninterest bearing or other
   discount security at any date shall be the principal amount thereof that
   would be shown on a balance sheet of the issuer dated such date prepared in
   accordance with GAAP; and

         (8)    the principal amount of any Preferred Stock shall be (i) the
   maximum liquidation value of such Preferred Stock or (ii) the maximum
   mandatory redemption or mandatory repurchase price with respect to such
   Preferred Stock, whichever is greater.

                                   ARTICLE II

                                 The Securities

         SECTION 2.1.   Form, Dating and Terms. (a) Original Securities are
being offered and sold by the Issuer pursuant to a Purchase Agreement, dated
August 30, 2001, among the Issuer, the Hanover Guarantors and Goldman Sachs &
Co., as representatives of the several initial purchasers named therein. The
Original Securities will be resold initially only to (A) qualified institutional
buyers (as defined in Rule 144A under the Securities Act ("Rule 144A"))
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in reliance on Rule 144A ("QIBs") and (B) Persons other than U.S. Persons (as
defined in Regulation S under the Securities Act ("Regulation S")) in reliance
on Regulation S. Such Original Securities may thereafter be transferred to,
among others, QIBs, purchasers in reliance on Regulation S and IAIs in
accordance with Rule 501 of the Securities Act, in each case in accordance with
the procedure described herein.

         Initial Securities offered and sold to qualified institutional buyers
in the United States of America in reliance on Rule 144A (the "Rule 144A Note")
will be issued on the Issue Date in the form of a permanent global Security,
without interest coupons, substantially in the form of Exhibit A, which is
hereby incorporated by reference and made a part of this Indenture, including
appropriate legends as set forth in Section 2.1(c) (the "Rule 144A Global
Note"), deposited with the Trustee, as custodian for DTC, duly executed by the
Issuer and authenticated by the Trustee as hereinafter provided. The Rule 144A
Global Note may be represented by more than one certificate, if so required by
DTC's rules regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Rule 144A Global Note may
from time to time be increased or decreased by adjustments made on the records
of the Trustee, as custodian for DTC or its nominee, as hereinafter provided.

         Initial Securities offered and sold outside the United States of
America (the "Regulation S Note") in reliance on Regulation S shall be issued in
the form of a permanent global Security substantially in the form of Exhibit A
(the "Regulation S Global Note") deposited with the Trustee, as custodian for
DTC, duly executed by the Issuer and authenticated by the Trustee as hereinafter
provided. The Regulation S Global Note may be represented by more than one
certificate, if so required by DTC's rules regarding the maximum principal
amount to be represented by a single certificate. The aggregate principal amount
of the Regulation S Global Note may from time to time be increased or decreased
by adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.

         Initial Securities resold to institutional "accredited investors" (as
defined in Rules 501(a)(1), (2), (3) and (7) under the Securities Act) who are
not QIBs ("IAIs") in the United States of America will be issued in the form of
a permanent global Security substantially in the form of Exhibit A (the
"Institutional Accredited Investor Global Note") deposited with the Trustee, as
custodian for DTC, duly executed by the Issuer and authenticated by the Trustee
as hereinafter provided. The Institutional Accredited Investor Global Note may
be represented by more that one certificate, if so required by DTC's rules
regarding the maximum principal amount to be represented by a single
certificate. The aggregate principal amount of the Institutional Accredited
Investor Global Note may from time to time be increased or decreased by
adjustments made on the records of the Trustee, as custodian for DTC or its
nominee, as hereinafter provided.

         Exchange Securities exchanged for interests in the Rule 144A Note, the
Regulation S Note and the Institutional Accredited Investor Global Note will be
issued in the form of a permanent global Security substantially in the form of
Exhibit B, which is hereby incorporated by reference and made a part of this
Indenture, deposited with the Trustee as hereinafter provided, including the
appropriate legend set forth in Section 2.1(c) (the "Exchange Global Note"). The
Exchange Global Note may be represented by more than one certificate, if
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so required by DTC's rules regarding the maximum principal amount to be
represented by a single certificate.

         The Rule 144A Global Note, the Regulation S Global Note, the
Institutional Investor Global Note and the Exchange Global Note are sometimes
collectively herein referred to as the "Global Securities."

         The principal of (and premium, if any) and interest on the Securities
shall be payable at the office or agency of the Issuer maintained for such
purpose in Wilmington, Delaware, or at such other office or agency of the Issuer
as may be maintained for such purpose pursuant to Section 2.3; provided,
however, that, at the option of the Issuer, each installment of interest may be
paid by (i) check mailed to addresses of the Persons entitled thereto as such
addresses shall appear on the Note Register or (ii) wire transfer to an account
located in the United States maintained by the payee. Payments in respect of
Securities represented by a Global Security (including principal, premium and
interest) will be made by wire transfer of immediately available funds to the
accounts specified by DTC.

         The Securities may have notations, legends or endorsements required by
law, stock exchange rule or usage, in addition to those set forth on Exhibits A
and B and in Section 2.1(c). The Issuer and the Trustee shall approve the forms
of the Securities and any notation, endorsement or legend on them. Each Security
shall be dated the date of its authentication. The terms of the Securities set
forth in Exhibit A and Exhibit B are part of the terms of this Indenture and, to
the extent applicable, the Issuer and the Trustee, by their execution and
delivery of this Indenture, expressly agree to be bound by such terms.

         (b)    Denominations. The Securities shall be issuable only in fully
registered form, without coupons, and only in denominations of $1,000 and any
integral multiple thereof.

         (c)    Restrictive Legends. Unless and until (i) an Initial Security is
sold under an effective registration statement or (ii) an Initial Security is
exchanged for an Exchange Security in connection with an effective registration
statement, in each case pursuant to the Exchange and Registration Rights
Agreement or a similar agreement,

         (A)    the Rule 144A Global Note and the Institutional Accredited
   Investor Global Note shall bear the following legend (the "Private Placement
   Legend") on the face thereof:

   "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
   AMENDED (THE "SECURITIES ACT"), OR THE SECURITIES LAWS OF ANY STATE OR OTHER
   JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN
   MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR
   OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION UNLESS SUCH
   TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION.

   THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES, ON ITS OWN
   BEHALF AND ON BEHALF OF ANY INVESTOR
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   ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE
   TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION
   TERMINATION DATE") THAT IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE
   DATE HEREOF AND THE LAST DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE
   ISSUER WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY),
   ONLY (A) TO THE ISSUER, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS
   BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE
   SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES
   ACT, TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER"
   AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT THAT PURCHASES FOR ITS OWN
   ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE
   IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D)
   PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
   MEANING OF REGULATION S UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL
   "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3) OR (7)
   UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR ITS OWN ACCOUNT,
   OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, IN EACH CASE
   IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT OF $250,000 OF
   SECURITIES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR FOR OFFER OR
   SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT,
   OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
   REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND THE TRUSTEE'S
   RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSES (D), (E)
   AND (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION
   AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE
   REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION
   TERMINATION DATE." and

         (B)    the Regulation S Global Note shall bear the following legend
   (the "Regulation S Legend") on the face thereof:

   "THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933,
   AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE OFFERED OR
   SOLD WITHIN THE UNITED STATES OR TO OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
   PERSONS EXCEPT AS SET FORTH IN THE FOLLOWING SENTENCE. BY ITS ACQUISITION
   HEREOF, THE HOLDER (1) REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT
   PURCHASING FOR THE ACCOUNT OF A
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                                                                               7

   U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN
   ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT ("REGULATION S"), (2)
   BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH
   SECURITY, PRIOR TO THE DATE (THE "RESALE RESTRICTION TERMINATION DATE") THAT
   IS TWO YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST
   DATE ON WHICH THE ISSUER OR ANY AFFILIATE OF THE ISSUER WAS THE OWNER OF THIS
   SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE ISSUER, (B)
   PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER
   THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE
   PURSUANT TO RULE 144A UNDER THE SECURITIES ACT, TO A PERSON IT REASONABLY
   BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER
   THE SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
   QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS
   BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT
   OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF REGULATION S, (E) TO AN
   INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1),
   (2), (3) OR (7) UNDER THE SECURITIES ACT THAT IS ACQUIRING THE SECURITY FOR
   ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED
   INVESTOR, IN EACH CASE IN A TRANSACTION INVOLVING A MINIMUM PRINCIPAL AMOUNT
   OF $250,000 OF SECURITIES, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO OR
   FOR OFFER OR SALE IN CONNECTION WITH ANY DISTRIBUTION IN VIOLATION OF THE
   SECURITIES ACT, OR (F) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
   REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE ISSUER'S AND
   THE TRUSTEE'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO
   CLAUSES (D), (E) OR (F) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
   CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS
   LEGEND WILL BE REMOVED AFTER 40 CONSECUTIVE DAYS BEGINNING ON AND INCLUDING
   THE LATER OF (A) THE DAY ON WHICH THE SECURITIES ARE OFFERED TO PERSONS OTHER
   THAN DISTRIBUTORS (AS DEFINED IN REGULATION S) AND (B) THE DATE OF THE
   CLOSING OF THE ORIGINAL OFFERING. AS USED HEREIN, THE TERMS "OFFSHORE
   TRANSACTION," "UNITED STATES" AND "U.S. PERSON" HAVE THE MEANINGS GIVEN TO
   THEM BY REGULATION S UNDER THE SECURITIES ACT."

         (C)    The Global Securities, whether or not an Initial Security, shall
   bear the following legend on the face thereof:
<PAGE>

                                                                               8

   "UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
   DEPOSITORY TRUST ISSUER, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK,
   TO THE ISSUER OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT,
   AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH
   OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
   PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
   AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF
   FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE
   REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.

   TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
   NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
   NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
   TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE INDENTURE
   REFERRED TO ON THE REVERSE HEREOF."

         (d)    Book-Entry Provisions. (i) This Section 2.1(d) shall apply only
   to Global Securities deposited with the Trustee, as custodian for DTC.

         (ii)   Each Global Security initially shall (x) be registered in the
   name of DTC for such Global Security or the nominee of DTC, (y) be delivered
   to the Trustee as custodian for DTC and (z) bear legends as set forth in
   Section 2.1(c).

         (iii)  Members of, or participants in, DTC ("Agent Members") shall have
   no rights under this Indenture with respect to any Global Security held on
   their behalf by DTC or by the Trustee as the custodian of DTC or under such
   Global Security, and DTC may be treated by the Issuer, the Trustee and any
   agent of the Issuer or the Trustee as the absolute owner of such Global
   Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
   herein shall prevent the Issuer, the Trustee or any agent of the Issuer or
   the Trustee from giving effect to any written certification, proxy or other
   authorization furnished by DTC or impair, as between DTC and its Agent
   Members, the operation of customary practices of DTC governing the exercise
   of the rights of a Holder of a beneficial interest in any Global Security.

         (iv)   In connection with any transfer of a portion of the beneficial
   interest in a Global Security pursuant to subsection (e) of this Section to
   beneficial owners who are required to hold Definitive Securities, the
   Securities Custodian shall reflect on its books and records the date and a
   decrease in the principal amount of such Global Security in an amount equal
   to the principal amount of the beneficial interest in the Global Security to
   be transferred, and the Issuer shall execute, and the Trustee shall
   authenticate and deliver, one or more Definitive Securities of like tenor and
   amount.
<PAGE>

                                                                               9

         (v)    In connection with the transfer of an entire Global Security to
   beneficial owners pursuant to subsection (e) of this Section, such Global
   Security shall be deemed to be surrendered to the Trustee for cancellation,
   and the Issuer shall execute, and the Trustee shall authenticate and deliver,
   to each beneficial owner identified by DTC in exchange for its beneficial
   interest in such Global Security, an equal aggregate principal amount of
   Definitive Securities of authorized denominations.

         (vi)   The registered Holder of a Global Security may grant proxies and
   otherwise authorize any person, including Agent Members and persons that may
   hold interests through Agent Members, to take any action which a Holder is
   entitled to take under this Indenture or the Securities.

         (e)    Definitive Securities. (i) Except as provided below, owners of
   beneficial interests in Global Securities will not be entitled to receive
   Definitive Securities. If required to do so pursuant to any applicable law or
   regulation, beneficial owners may obtain Definitive Securities in exchange
   for their beneficial interests in a Global Security upon written request in
   accordance with DTC's and the Registrar's procedures. In addition, Definitive
   Securities shall be transferred to all beneficial owners in exchange for
   their beneficial interests in a Global Security if (a) DTC notifies the
   Issuer that it is unwilling or unable to continue as depositary for such
   Global Security or DTC ceases to be a clearing agency registered under the
   Exchange Act, at a time when DTC is required to be so registered in order to
   act as depositary, and in each case a successor depositary is not appointed
   by the Issuer within 90 days of such notice or, (b) the Issuer executes and
   delivers to the Trustee and Registrar an Officers' Certificate stating that
   such Global Security shall be so exchangeable or (c) an Event of Default has
   occurred and is continuing and the Registrar has received a request from DTC.

         (ii)   Any Definitive Security delivered in exchange for an interest in
   a Global Security pursuant to Section 2.1(d)(iv) or (v) shall, except as
   otherwise provided by Section 2.6(c), bear the applicable legend regarding
   transfer restrictions applicable to the Definitive Security set forth in
   Section 2.1(c).

         (iii)  In connection with the exchange of a portion of a Definitive
   Security for a beneficial interest in a Global Security, the Trustee shall
   cancel such Definitive Security, and the Issuer shall execute, and the
   Trustee shall authenticate and deliver, to the transferring Holder a new
   Definitive Security representing the principal amount not so transferred.

         SECTION 2.2.   Execution and Authentication. One Officer shall sign the
Securities for the Issuer by manual or facsimile signature. If an Officer whose
signature is on a Security no longer holds that office at the time the Trustee
authenticates the Security, the Security shall be valid nevertheless.

         A Security shall not be valid until an authorized signatory of the
Trustee manually authenticates the Security. The signature of the Trustee on a
Security shall be conclusive evidence that such Security has been duly and
validly authenticated and issued under this Indenture. A Security shall be dated
the date of its authentication.
<PAGE>

                                                                              10

         At any time and from time to time after the execution and delivery of
this Indenture, the Trustee shall authenticate and make available for delivery:
(1) Original Securities for original issue on the Issue Date in an aggregate
principal amount of $300,000,000 million and (2) Exchange Securities for issue
only in a Registered Exchange Offer pursuant to the Exchange and Registration
Rights Agreement, and only in exchange for Initial Securities of an equal
principal amount, in each case upon a written order of the Issuer signed by two
Officers or by an Officer and either an Assistant Treasurer or an Assistant
Secretary of the Issuer (the "Issuer Order"). Such Issuer Order shall specify
the amount of the Securities to be authenticated and the date on which the
original issue of Securities is to be authenticated and whether the Securities
are to be Initial Securities or Exchange Securities. The aggregate principal
amount of Securities which may be authenticated and delivered under this
Indenture is limited to $300 million outstanding, except for Securities
authenticated and delivered upon registration or transfer of, or in exchange
for, or in lieu of, other Securities of the same class pursuant to Section 2.6,
Section 2.9, Section 2.11, Section 5.8 or Section 9.5 and except for
transactions similar to the Registered Exchange Offer. All Securities issued on
the Issue Date shall be identical in all respects other than issue dates, the
date from which interest accrues and any changes relating thereto.
Notwithstanding anything to the contrary contained in this Indenture, all
Securities issued under this Indenture shall vote and consent together on all
matters as one class and no series of Securities will have the right to vote or
consent as a separate class on any matter.

         The Trustee may appoint an agent (the "Authenticating Agent")
reasonably acceptable to the Issuer to authenticate the Securities. Unless
limited by the terms of such appointment, any such Authenticating Agent may
authenticate Securities whenever the Trustee may do so. Each reference in this
Indenture to authentication by the Trustee includes authentication by the
Authenticating Agent.

         SECTION 2.3.   Registrar and Paying Agent. The Issuer shall maintain an
office or agency where Securities may be presented for registration of transfer
or for exchange (the "Registrar") and an office or agency where Securities may
be presented for payment (the "Paying Agent"). The Issuer shall cause each of
the Registrar and the Paying Agent to maintain an office or agency in
Wilmington, Delaware. The Registrar shall keep a register of the Securities and
of their transfer and exchange (the "Note Register"). The Issuer may have one or
more co-registrars and one or more additional paying agents. The term "Paying
Agent" includes any additional paying agent. Any transfer of a Security shall be
effective only upon appropriate entries with respect thereto being made in the
Note Register. Any assignment or transfer of all or part of a Security shall be
registered on the Note Register only upon surrender for registration of
assignment or transfer of the Security, accompanied by a duly executed form of
assignment, and thereupon one or more new Securities shall be issued to the
designated transferee. Any Security surrendered pursuant to this Section 2.3
shall be returned by the Registrar to the Issuer marked "cancelled."

         The Issuer shall enter into an appropriate agency agreement with any
Registrar, Paying Agent or co-registrar not a party to this Indenture, which
shall incorporate the terms of the TIA. The agreement shall implement the
provisions of this Indenture that relate to such agent. The Issuer shall notify
the Trustee of the name and address of each such agent. If the Issuer fails to
maintain a Registrar or Paying Agent, the Trustee shall act as such and shall be
<PAGE>

                                                                              11

entitled to appropriate compensation therefor pursuant to Section 7.7. The
Issuer may act as Paying Agent, Registrar, co-registrar or transfer agent.

         The Issuer initially appoints the Trustee as Registrar and Paying Agent
for the Securities.

         SECTION 2.4.   Paying Agent To Hold Money in Trust. By no later than
10:00 a.m (New York City time) on the date on which any principal of or interest
on any Security is due and payable, the Issuer shall deposit with the Paying
Agent a sum sufficient to pay such principal or interest when due. The Issuer
shall require each Paying Agent (other than the Trustee) to agree in writing
that such Paying Agent shall hold in trust for the benefit of Security holders
or the Trustee all money held by such Paying Agent for the payment of principal
of or interest on the Securities and shall notify the Trustee in writing of any
default by the Issuer or any Hanover Guarantor in making any such payment. If
the Issuer acts as Paying Agent, it shall segregate the money held by it as
Paying Agent and hold it as a separate trust fund. The Issuer at any time may
require a Paying Agent (other than the Trustee) to pay all money held by it to
the Trustee and to account for any funds disbursed by such Paying Agent. Upon
complying with this Section, the Paying Agent (if other than the Issuer) shall
have no further liability for the money delivered to the Trustee. Upon any
bankruptcy, reorganization or similar proceeding with respect to the Issuer, the
Trustee shall serve as Paying Agent for the Securities.

         SECTION 2.5.   Securityholder Lists. The Trustee shall preserve in as
current a form as is reasonably practicable the most recent list available to it
of the names and addresses of Securityholders. If the Trustee is not the
Registrar, or to the extent otherwise required under the TIA, the Issuer shall
furnish to the Trustee, in writing at least seven Business Days before each
interest payment date and at such other times as the Trustee may request in
writing, a list in such form and as of such date as the Trustee may reasonably
require of the names and addresses of Securityholders.

         SECTION 2.6.   Transfer and Exchange.

                  (a)   The following provisions shall apply with respect to any
         proposed transfer of a Rule 144A Note or an Institutional Accredited
         Investor Global Note prior to the date which is two years after the
         later of the date of its original issue and the last date on which the
         Issuer or any affiliate of the Issuer was the owner of such Securities
         (or any predecessor thereto) (the "Resale Restriction Termination
         Date"):

                  (i)   a transfer of a Rule 144A Note or an Institutional
               Accredited Investor Global Note or a beneficial interest therein
               to a QIB shall be made upon the representation of the transferee
               in the form as set forth on the reverse of the Security that it
               is purchasing for its own account or an account with respect to
               which it exercises sole investment discretion and that it and any
               such account is a "qualified institutional buyer" within the
               meaning of Rule 144A, and is aware that the sale to it is being
               made in reliance on Rule 144A and acknowledges that it has
               received such information regarding the Issuer as such transferee
               has requested pursuant to Rule 144A or has determined not to
               request such information and that
<PAGE>

                                                                              12

               it is aware that the transferor is relying upon its foregoing
               representations in order to claim the exemption from registration
               provided by Rule 144A;

                  (ii)  a transfer of a Rule 144A Note or an Institutional
               Accredited Investor Global Note or a beneficial interest therein
               to an IAI shall be made upon receipt by the Trustee or its agent
               of a certificate substantially in the form set forth in Section
               2.7 from the proposed transferee and, if requested by the Issuer
               or the Trustee, the delivery of an opinion of counsel,
               certification and/or other information satisfactory to each of
               them; and

                  (iii) a transfer of a Rule 144A Note or an Institutional
               Accredited Investor Global Note or a beneficial interest therein
               to a Non-U.S. Person shall be made upon receipt by the Trustee or
               its agent of a certificate substantially in the form set forth in
               Section 2.8 from the proposed transferee and, if requested by the
               Issuer or the Trustee, the delivery of an opinion of counsel,
               certification and/or other information satisfactory to each of
               them.

                  (b)   The following provisions shall apply with respect to any
         proposed transfer of a Regulation S Note prior to the expiration of the
         Restricted Period:

                  (i)   a transfer of a Regulation S Note or a beneficial
               interest therein to a QIB shall be made upon the representation
               of the transferee, in the form of assignment on the reverse of
               the certificate, that it is purchasing the Security for its own
               account or an account with respect to which it exercises sole
               investment discretion and that it and any such account is a
               "qualified institutional buyer" within the meaning of Rule 144A,
               and is aware that the sale to it is being made in reliance on
               Rule 144A and acknowledges that it has received such information
               regarding the Issuer as such transferee has requested pursuant to
               Rule 144A or has determined not to request such information and
               that it is aware that the transferor is relying upon its
               foregoing representations in order to claim the exemption from
               registration provided by Rule 144A;

                  (ii)  a transfer of a Regulation S Note or a beneficial
               interest therein to an IAI shall be made upon receipt by the
               Trustee or its agent of a certificate substantially in the form
               set forth in Section 2.7 from the proposed transferee and, if
               requested by the Issuer or the Trustee, the delivery of an
               opinion of counsel, certification and/or other information
               satisfactory to each of them; and

                  (iii) a transfer of a Regulation S Note or a beneficial
               interest therein to a Non-U.S. Person shall be made upon receipt
               by the Trustee or its agent of a certificate substantially in the
               form set forth in Section 2.8 hereof from the proposed transferee
               and, if requested by the Issuer or the Trustee, receipt by the
               Trustee or its agent of an opinion of counsel, certification
               and/or other information satisfactory to each of them.
<PAGE>

                                                                              13

         After the expiration of the Restricted Period, interests in the
Regulation S Note may be transferred without requiring certification set forth
in Section 2.7, Section 2.8 or any additional certification.

                  (c)   Restricted Securities Legend. Upon the transfer,
         exchange or replacement of Securities not bearing a Restricted
         Securities Legend, the Registrar shall deliver Securities that do not
         bear a Restricted Securities Legend. Upon the transfer, exchange or
         replacement of Securities bearing a Restricted Securities Legend, the
         Registrar shall deliver only Securities that bear a Restricted
         Securities Legend unless there is delivered to the Registrar an Opinion
         of Counsel to the effect that neither such legend nor the related
         restrictions on transfer are required in order to maintain compliance
         with the provisions of the Securities Act.

                  (d)   The Registrar shall retain copies of all letters,
         notices and other written communications received pursuant to Section
         2.1 or this Section 2.6. The Issuer shall have the right to inspect and
         make copies of all such letters, notices or other written
         communications at any reasonable time upon the giving of reasonable
         prior written notice to the Registrar.

                  (e)   Obligations with Respect to Transfers and Exchanges of
         Securities.

                  (i)   To permit registrations of transfers and exchanges, the
               Issuer shall, subject to the other terms and conditions of this
               Article II, execute and the Trustee shall authenticate Definitive
               Securities and Global Securities at the Registrar's or
               co-registrar's request.

                  (ii)  No service charge shall be made to a Holder for any
               registration of transfer or exchange, but the Issuer may require
               payment of a sum sufficient to cover any transfer tax,
               assessments, or similar governmental charge payable in connection
               therewith (other than any such transfer taxes, assessments or
               similar governmental charges payable upon exchange or transfer
               pursuant to Sections 3.3, 3.4 or 9.5).

                  (iii) The Registrar or co-registrar shall not be required to
               register the transfer of or exchange of any Security for a period
               beginning (1) 15 days before the mailing of a notice of an offer
               to repurchase or redeem Securities and ending at the close of
               business on the day of such mailing or (2) 15 days before an
               interest payment date and ending on such interest payment date.

                  (iv)  Prior to the due presentation for registration of
               transfer of any Security, the Issuer, the Trustee, the Paying
               Agent, the Registrar or any co-registrar may deem and treat the
               person in whose name a Security is registered as the absolute
               owner of such Security for the purpose of receiving payment of
               principal of and interest on such Security and for all other
               purposes whatsoever, whether or not such Security is overdue, and
               none of the Issuer, the Trustee, the Paying Agent, the Registrar
               or any co-registrar shall be affected by notice to the contrary.
<PAGE>

                                                                              14

                  (v)   Any Definitive Security delivered in exchange for an
               interest in a Global Security pursuant to Section 2.1(d) shall,
               except as otherwise provided by Section 2.6(c), bear the
               applicable legend regarding transfer restrictions applicable to
               the Definitive Security set forth in Section 2.1(c).

                  (vi)  All Securities issued upon any transfer or exchange
               pursuant to the terms of this Indenture shall evidence the same
               debt and shall be entitled to the same benefits under this
               Indenture as the Securities surrendered upon such transfer or
               exchange.

                  (f)   No Obligation of the Trustee. (i) The Trustee shall have
         no responsibility or obligation to any beneficial owner of a Global
         Security, a member of, or a participant in, DTC or other Person with
         respect to the accuracy of the records of DTC or its nominee or of any
         participant or member thereof, with respect to any ownership interest
         in the Securities or with respect to the delivery to any participant,
         member, beneficial owner or other Person (other than DTC) of any notice
         (including any notice of redemption) or the payment of any amount or
         delivery of any Securities (or other security or property) under or
         with respect to such Securities. All notices and communications to be
         given to the Holders and all payments to be made to Holders in respect
         of the Securities shall be given or made only to or upon the order of
         the registered Holders (which shall be DTC or its nominee in the case
         of a Global Security). The rights of beneficial owners in any Global
         Security shall be exercised only through DTC subject to the applicable
         rules and procedures of DTC. The Trustee may rely and shall be fully
         protected in relying upon information furnished by DTC with respect to
         its members, participants and any beneficial owners.

                  (ii)  The Trustee shall have no obligation or duty to
               monitor, determine or inquire as to compliance with any
               restrictions on transfer imposed under this Indenture or under
               applicable law with respect to any transfer of any interest in
               any Security (including any transfers between or among DTC
               participants, members or beneficial owners in any Global
               Security) other than to require delivery of such certificates and
               other documentation or evidence as are expressly required by, and
               to do so if and when expressly required by, the terms of this
               Indenture, and to examine the same to determine substantial
               compliance as to form with the express requirements hereof.

         SECTION 2.7.   Form of Certificate to be Delivered in Connection with
Transfers to Institutional Accredited Investors.

                                                                          [Date]

Hanover Equipment Trust 2001A
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
<PAGE>

                                                                              15

Attention:  Corporate Trust Administration

Dear Sirs:

         This certificate is delivered to request a transfer of $_________
principal amount of the 8.50% Senior Secured Notes due 2008 (the "Notes") of
Hanover Equipment Trust 2001A (the "Issuer").

         Upon transfer, the Notes would be registered in the name of the new
beneficial owner as follows:

         Name: ___________________________________
         Address: ________________________________
         Taxpayer ID Number: _____________________
         The undersigned represents and warrants to you that:

         1.   We are an institutional "accredited investor" (as defined in Rule
501(a)(1), (2), (3) or (7) under the Securities Act of 1933, as amended (the
"Securities Act")) purchasing for our own account or for the account of such an
institutional "accredited investor" at least $250,000 principal amount of the
Notes, and we are acquiring the Notes not with a view to, or for offer or sale
in connection with, any distribution in violation of the Securities Act. We have
such knowledge and experience in financial and business matters as to be capable
of evaluating the merits and risk of our investment in the Notes and we invest
in or purchase securities similar to the Notes in the normal course of our
business. We and any accounts for which we are acting are each able to bear the
economic risk of our or its investment.

         2.   We understand that the Notes have not been registered under the
Securities Act and, unless so registered, may not be sold except as permitted in
the following sentence. We agree on our own behalf and on behalf of any investor
account for which we are purchasing Notes to offer, sell or otherwise transfer
such Notes prior to the date that is two years after the later of the date of
original issue and the last date on which the Issuer or any affiliate of the
Issuer was the owner of such Notes (or any predecessor thereto) (the "Resale
Restriction Termination Date") only (a) to the Issuer, (b) pursuant to a
registration statement which has been declared effective under the Securities
Act, (c) in a transaction complying with the requirements of Rule 144A under the
Securities Act, to a person we reasonably believe is a qualified institutional
buyer under Rule 144A (a "QIB") that purchases for its own account or for the
account of a QIB and to whom notice is given that the transfer is being made in
reliance on Rule 144A, (d) pursuant to offers and sales that occur outside the
United States within the meaning of Regulation S under the Securities Act, (e)
to an institutional "accredited investor" (within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act) that is purchasing for its own account
or for the account of such an institutional "accredited investor," in each case
in a minimum principal amount of Notes of $250,000 or (f) pursuant to any other
available exemption from the registration requirements of the Securities Act,
subject in each of the foregoing cases to any requirement of law that the
disposition of our property or the property of such investor account or accounts
be at all times within our or their control and in compliance with any
applicable state securities laws. The foregoing restrictions on resale will not
apply subsequent to the Resale Restriction Termination Date. If any resale or
other transfer of the
<PAGE>

                                                                              16

Notes is proposed to be made pursuant to clause (e) above prior to the Resale
Restriction Termination Date, the transferor shall deliver a letter from the
transferee substantially in the form of this letter to the Issuer and the
Trustee, which shall provide, among other things, that the transferee is an
institutional "accredited investor" (within the meaning of Rule 501(a)(1), (2),
(3) or (7) under the Securities Act) and that it is acquiring such Notes for
investment purposes and not for distribution in violation of the Securities Act.
Each purchaser acknowledges that the Issuer and the Trustee reserve the right
prior to any offer, sale or other transfer prior to the Resale Termination Date
of the Securities pursuant to clauses (d), (e) or (f) above to require the
delivery of an opinion of counsel, certifications and/or other information
satisfactory to the Issuer and the Trustee.

         3.   We represent that either: (a) no portion of the assets used to
acquire and hold the Notes or any interest therein constitutes assets of any (i)
employee benefit plan that is subject to Title I of the U.S. Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), (ii) plan, individual
retirement account and other arrangement that is subject to Section 4975 of the
Code or provisions under any federal, state, local, non-U.S. or other laws or
regulations that are similar to such provisions of the Code or ERISA
(collectively, "Similar Laws"), and (iii) other entity whose underlying assets
are considered to include "plan assets" of such plans, accounts and arrangements
(each, a "Plan"); or (b) the purchase and holding of the Notes or any interest
therein will not constitute a non-exempt prohibited transaction within the
meaning of Section 406 of ERISA or Section 4975 of the Code or similar violation
under any applicable Similar Laws.

                                       TRANSFEREE:________________________

                                       BY:________________________________
<PAGE>

                                                                              17

         SECTION 2.8.   Form of Certificate to be Delivered in Connection with
Transfers Pursuant to Regulation S.

                                                                          [Date]

Hanover Equipment Trust 2001A
c/o Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention:  Corporate Trust Administration

         Re:  Hanover Equipment Trust 2001A
              8.50% Senior Secured Notes due 2008 (the "Securities")

Ladies and Gentlemen:

         In connection with our proposed sale of $________ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the United States Securities Act of
1933, as amended (the "Securities Act"), and, accordingly, we represent that:

                  (a)   the offer of the Securities was not made to a person in
         the United States;

                  (b)   either (i) at the time the buy order was originated, the
         transferee was outside the United States or we and any person acting on
         our behalf reasonably believed that the transferee was outside the
         United States or (ii) the transaction was executed in, on or through
         the facilities of a designated off-shore securities market and neither
         we nor any person acting on our behalf knows that the transaction has
         been pre-arranged with a buyer in the United States;

                  (c)   no directed selling efforts have been made in the United
         States in contravention of the requirements of Rule 903(b) or Rule
         904(b) of Regulation S, as applicable; and

                  (d)   the transaction is not part of a plan or scheme to evade
         the registration requirements of the Securities Act.

         In addition, if the sale is made during a restricted period and the
provisions of Rule 903(c)(3) or Rule 904(c)(1) of Regulation S are applicable
thereto, we confirm that such sale has been made in accordance with the
applicable provisions of Rule 903(c)(3) or Rule 904(c)(1), as the case may be.
<PAGE>

                                                                              18

         You and the Issuer are entitled to rely upon this letter and are
irrevocably authorized to produce this letter or a copy hereof to any interested
party in any administrative or legal proceedings or official inquiry with
respect to the matters covered hereby. Terms used in this certificate have the
meanings set forth in Regulation S.

                                       Very truly yours,

                                       [Name of Transferor]

                                       By:____________________________

                                       _______________________________
                                       Authorized Signature

         SECTION 2.9.   Mutilated, Destroyed, Lost or Stolen Securities. If a
mutilated Security is surrendered to the Registrar or if the Holder of a
Security claims that the Security has been lost, destroyed or wrongfully taken,
the Issuer shall issue and the Trustee shall authenticate a replacement Security
if the requirements of Section 8-405 of the Uniform Commercial Code are met and
the Holder satisfies any other reasonable requirements of the Trustee. If
required by the Trustee or the Issuer, such Holder shall furnish an indemnity
bond sufficient in the judgment of the Issuer and the Trustee to protect the
Issuer, the Trustee, the Paying Agent, the Registrar and any co-registrar from
any loss which any of them may suffer if a Security is replaced, and, in the
absence of notice to the Issuer, any Hanover Guarantor or the Trustee that such
Security has been acquired by a bona fide purchaser, the Issuer shall execute
and upon Issuer Order the Trustee shall authenticate and make available for
delivery, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, bearing a number not contemporaneously outstanding.

         In case any such mutilated, destroyed, lost or stolen Security has
become or is about to become due and payable, the Issuer in its discretion may,
instead of issuing a new Security, pay such Security.

         Upon the issuance of any new Security under this Section, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) in connection
therewith.

         Every new Security issued pursuant to this Section in lieu of any
mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Issuer and any other obligor upon the
Securities and a Security Obligation under the Hanover Guarantee, whether or not
the mutilated, destroyed, lost or stolen Security shall be at any time
enforceable by anyone, and shall be entitled to all benefits of this Indenture
equally and proportionately with any and all other Securities duly issued
hereunder.
<PAGE>

                                                                              19

         The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities.

         SECTION 2.10.  Outstanding Securities. Securities outstanding at any
time are all Securities authenticated by the Trustee except for those canceled
by it, those delivered to it for cancellation and those described in this
Section as not outstanding. A Security ceases to be outstanding in the event the
Issuer holds the Security, provided, however, that (i) for purposes of
determining which are outstanding for consent or voting purposes hereunder,
Securities shall cease to be outstanding in the event the Issuer or an Affiliate
of the Issuer holds the Security and (ii) in determining whether the Trustee
shall be protected in making a determination whether the Holders of the
requisite principal amount of outstanding Securities are present at a meeting of
Holders of Securities for quorum purposes or have consented to or voted in favor
of any request, demand, authorization, direction, notice, consent, waiver,
amendment or modification hereunder, or relying upon any such quorum, consent or
vote, only Securities which a Trust Officer of the Trustee actually knows to be
held by the Issuer or an Affiliate of the Issuer shall not be considered
outstanding.

         If a Security is replaced pursuant to Section 2.9, it ceases to be
outstanding unless the Trustee and the Issuer receive proof satisfactory to them
that the replaced Security is held by a bona fide purchaser.

         If the Paying Agent segregates and holds in trust, in accordance with
this Indenture, on a redemption date or maturity date money sufficient to pay
all principal and interest payable on that date with respect to the Securities
(or portions thereof) to be redeemed or maturing, as the case may be, and the
Paying Agent is not prohibited from paying such money to the Securityholders on
that date pursuant to the terms of this Indenture, then on and after that date
such Securities (or portions thereof) cease to be outstanding and interest on
them ceases to accrue.

         SECTION 2.11.  Temporary Securities. Until Definitive Securities are
ready for delivery, the Issuer may prepare and the Trustee shall authenticate
temporary Securities. Temporary Securities shall be substantially in the form of
Definitive Securities but may have variations that the Issuer considers
appropriate for temporary Securities. Without unreasonable delay, the Issuer
shall prepare and the Trustee shall authenticate Definitive Securities. After
the preparation of Definitive Securities, the temporary Securities shall be
exchangeable for Definitive Securities upon surrender of the temporary
Securities at any office or agency maintained by the Issuer for that purpose and
such exchange shall be without charge to the Holder. Upon surrender for
cancellation of any one or more temporary Securities, the Issuer shall execute,
and the Trustee shall authenticate and make available for delivery in exchange
therefor, one or more Definitive Securities representing an equal principal
amount of Securities. Until so exchanged, the Holder of temporary Securities
shall in all respects be entitled to the same benefits under this Indenture as a
holder of Definitive Securities.

         SECTION 2.12.  Cancellation. The Issuer at any time may deliver
Securities to the Trustee for cancellation. The Registrar and the Paying Agent
shall forward to the Trustee any Securities surrendered to them for registration
of transfer, exchange or payment. The
<PAGE>

                                                                              20

Trustee and no one else shall cancel all Securities surrendered for registration
of transfer, exchange, payment or cancellation and dispose of such Securities in
accordance with its internal policies including delivery of a Certificate of
Destruction describing such Securities. The Issuer may not issue new Securities
to replace Securities it has paid or delivered to the Trustee for cancellation
for any reason other than in connection with a transfer or exchange.

         SECTION 2.13.  Payment of Interest; Defaulted Interest. Interest on any
Security which is payable, and is punctually paid or duly provided for, on any
interest payment date shall be paid to the Person in whose name such Security
(or one or more predecessor Securities) is registered at the close of business
on the regular record date for such interest at the office or agency of the
Issuer maintained for such purpose pursuant to Section 2.3.

         Any interest on any Security which is payable, but is not paid when the
same becomes due and payable and such nonpayment continues for a period of 30
days shall forthwith cease to be payable to the Holder on the regular record
date by virtue of having been such Holder, and such defaulted interest and (to
the extent lawful) interest on such defaulted interest at the rate borne by the
Securities (such defaulted interest and interest thereon herein collectively
called "Defaulted Interest") shall be paid by the Issuer, at its election in
each case, as provided in clause (a) or (b) below:

                  (a)   The Issuer may elect to make payment of any Defaulted
         Interest to the Persons in whose names the Securities (or their
         respective predecessor Securities) are registered at the close of
         business on a Special Record Date (as defined below) for the payment of
         such Defaulted Interest, which shall be fixed in the following manner.
         The Issuer shall notify the Trustee in writing of the amount of
         Defaulted Interest proposed to be paid on each Security and the date
         (not less than 30 days after such notice) of the proposed payment (the
         "Special Interest Payment Date"), and at the same time the Issuer shall
         deposit with the Trustee an amount of money equal to the aggregate
         amount proposed to be paid in respect of such Defaulted Interest or
         shall make arrangements satisfactory to the Trustee for such deposit
         prior to the date of the proposed payment, such money when deposited to
         be held in trust for the benefit of the Persons entitled to such
         Defaulted Interest as in this clause provided. Thereupon the Trustee
         shall fix a record date (the "Special Record Date") for the payment of
         such Defaulted Interest which shall be not more than 15 days and not
         less than 10 days prior to the Special Interest Payment Date and not
         less than 10 days after the receipt by the Trustee of the notice of the
         proposed payment. The Trustee shall promptly notify the Issuer of such
         Special Record Date, and in the name and at the expense of the Issuer,
         shall cause notice of the proposed payment of such Defaulted Interest
         and the Special Record Date and Special Interest Payment Date therefor
         to be given in the manner provided for in Section 10.2, not less than
         10 days prior to such Special Record Date. Notice of the proposed
         payment of such Defaulted Interest and the Special Record Date and
         Special Interest Payment Date therefor having been so given, such
         Defaulted Interest shall be paid on the Special Interest Payment Date
         to the Persons in whose names the Securities (or their respective
         predecessor Securities) are registered at the close of business on such
         Special Record Date and shall no longer be payable pursuant to the
         following clause (b).
<PAGE>

                                                                              21

                  (b)   The Issuer may make payment of any Defaulted Interest in
         any other lawful manner not inconsistent with the requirements of any
         securities exchange on which the Securities may be listed, and upon
         such notice as may be required by such exchange, if, after notice given
         by the Issuer to the Trustee of the proposed payment pursuant to this
         clause, such manner of payment shall be deemed practicable by the
         Trustee.

         Subject to the foregoing provisions of this Section, each Security
delivered under this Indenture upon registration of, transfer of or in exchange
for or in lieu of any other Security shall carry the rights to interest accrued
and unpaid, and to accrue, which were carried by such other Security.

         SECTION 2.14.  Computation of Interest. Interest on the Securities
shall be computed on the basis of a 360-day year of twelve 30-day months.

         SECTION 2.15.  CUSIP Numbers. The Issuer in issuing the Securities may
use "CUSIP" numbers (if then generally in use) and, if so, the Trustee shall use
"CUSIP" numbers in notices of redemption as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness of such numbers either as printed on the Securities or as contained
in any notice of a redemption and that reliance may be placed only on the other
identification numbers printed on the Securities, and any such redemption shall
not be affected by any defect in or omission of such CUSIP numbers. The Issuer
shall promptly notify the Trustee of any change in the CUSIP numbers.

         SECTION 2.16.  Taxes. All payments made by the Issuer under this
Indenture and the Securities shall be made free and clear of, and without
deduction or withholding for or on account of, any present or future income,
stamp or other taxes, levies, imposts, duties, charges, fees, deductions or
withholdings, now or hereafter imposed, levied, collected, withheld or assessed
by any governmental authority in the event that the Securities are determined
not to be debt for income tax purposes, excluding net income taxes and franchise
taxes (imposed in lieu of net income taxes) imposed on a Securityholder as a
result of a present or former connection between the jurisdiction of the
government or taxing authority imposing such tax and such Securityholder
(excluding a connection arising solely from such Securityholder having executed,
delivered, performed its obligations or received a payment under, or enforced,
this Indenture or the Securities) or any political subdivision or taxing
authority thereof or therein (all such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions and withholdings being hereinafter called
"Non-Excluded Taxes"). If any Non-Excluded Taxes are required to be withheld
from any amounts payable to Securityholder hereunder or under the Securities,
the amounts so payable to such Securityholder shall be increased to the extent
necessary to yield to such Securityholder (after payment of all Non-Excluded
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Indenture and the Securities. Whenever any
Non-Excluded Taxes are payable by the Issuer, as promptly as possible thereafter
the Issuer shall send to such Securityholder a certified copy of an original
official receipt received by the Issuer showing payment thereof. If the Issuer
fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority
or fails to remit the required receipts or other required documentary evidence,
the Issuer shall indemnify the Securityholders for any incremental taxes,
interest or penalties that may become payable by Certificate Holder as
<PAGE>

                                                                              22

a result of any such failure. The agreements in this subsection shall survive
the termination of this Indenture and the payment of the Securities and all
other amounts payable hereunder.

         It is the intent of the parties hereto that the Securities will be
treated as debt for United States federal income tax purposes.

                                   ARTICLE III

                             Covenants of the Issuer

         SECTION 3.1.   Payment of Securities. The Issuer shall promptly pay the
principal of and interest on the Securities on the dates and in the manner
provided in the Securities and in this Indenture. Principal and interest shall
be considered paid on the date due if on such date the Trustee or the Paying
Agent holds in accordance with this Indenture money sufficient to pay all
principal and interest then due and the Trustee or the Paying Agent, as the case
may be, is not prohibited from paying such money to the Securityholders on that
date pursuant to the terms of this Indenture.

         The Issuer shall pay interest on overdue principal at the rate
specified therefor in the Securities, and it shall pay interest on overdue
installments of interest at the same rate to the extent lawful.

         Notwithstanding anything to the contrary contained in this Indenture,
the Issuer may, to the extent it is required to do so by law, deduct or withhold
income or other similar taxes imposed by the United States of America from
principal or interest payments hereunder.

         SECTION 3.2.   SEC Reports and Available Information. (a)
Notwithstanding that the Issuer may not be subject to the reporting requirements
of Section 13 or 15(d) of the Exchange Act, to the extent permitted by the
Exchange Act, the Issuer will file with the Commission, and provide the Trustee
and the Holders of the Securities with, the annual reports and the information,
documents and other reports (or copies of such portions of any of the foregoing
as the Commission may by rules and regulations prescribe) that are specified in
Sections 13 and 15(d) of the Exchange Act within the time periods specified
therein. In the event that the Issuer is not permitted to file such reports,
documents and information with the Commission pursuant to the Exchange Act, the
Issuer will nevertheless provide such Exchange Act information to the Trustee
and the Holders of the Securities as if the Issuer were subject to the reporting
requirements of Section 13 or 15(d) of the Exchange Act within the time periods
specified therein. The Issuer shall also comply with the other provisions of TIA
(S) 314(a). Delivery of such reports, information and documents to the Trustee
is for informational purposes only and the Trustee's receipt of such shall not
constitute constructive notice of any information contained therein or
determinable from information contained therein, including the Issuer's
compliance with any of its covenants hereunder (as to which the Trustee is
entitled to rely exclusively on Officers' Certificates).
<PAGE>

                                                                              23

         SECTION 3.3.   Asset Disposition Offer. (a) To the extent that Hanover
or any of its Restricted Subsidiaries makes any Asset Disposition pursuant to
Section 9.6(a) of the Participation Agreement, any Net Available Cash from such
Asset Dispositions that are not applied or invested as provided in Section
9.6(a) of the Participation Agreement will be deemed to constitute "Excess
Proceeds." On the 361st day after an Asset Disposition, if the aggregate amount
of Excess Proceeds exceeds $25.0 million, Hanover will notify the Issuer that it
will, upon notice by the Trustee, cause the Lessee to purchase Equipment having
a Termination Value equal to or less than the amount (the "2001A Available
Excess Proceeds"), if any, by which such excess amount (the "Available Excess
Proceeds") exceeds the portion of such Available Excess Proceeds made available
for an "Asset Disposition Offer" pursuant to the 2001B Indenture. The Issuer
shall promptly make an offer ("Asset Disposition Offer") to all holders of
Securities to purchase the maximum principal amount of Securities that may be
purchased out of the 2001A Available Excess Proceeds, taking into account the
proportionate amount of Certificate Holder Contributions to be repaid, at an
offer price in cash in an amount equal to 100% of the principal amount of the
Securities, plus accrued and unpaid interest to the date of purchase, in
accordance with the procedures set forth in this Indenture, in each case in
multiples of $1,000. To the extent that the aggregate amount of Securities so
validly tendered and not properly withdrawn pursuant to an Asset Disposition
Offer and the proportionate amount of Certificate Holder Contributions to be
repaid is less than the 2001A Available Excess Proceeds, Hanover may use any
remaining 2001A Available Excess Proceeds for general corporate purposes,
subject to the other covenants contained in this Indenture and the Participation
Agreement. If the aggregate principal amount of Securities surrendered by
holders thereof and the proportionate amount of Certificate Holder Contributions
to be repaid exceeds the amount of 2001A Available Excess Proceeds, the
Securities and the corresponding amount of Certificate Holder Contributions
shall be purchased and repaid, as applicable, on a pro rata basis. Upon
completion of such Asset Disposition Offer, the amount of Excess Proceeds shall
be reset at zero.

         (b)  The Asset Disposition Offer will remain open for a period of 20
Business Days following its commencement, except to the extent that a longer
period is required by applicable law (the "Asset Disposition Offer Period"). No
later than five Business Days after the termination of the Asset Disposition
Offer Period (the "Asset Disposition Purchase Date"), the Issuer will purchase
the principal amount of Securities required to be purchased pursuant to this
Section 3.2 (the "Asset Disposition Offer Amount") or, if less than the Asset
Disposition Offer Amount has been so validly tendered, all Securities validly
tendered in response to the Asset Disposition Offer.

         (1)  If the Asset Disposition Purchase Date is on or after an interest
     record date and on or before the related interest payment date, any accrued
     and unpaid interest will be paid to the Person in whose name a Security is
     registered at the close of business on such record date, and no additional
     interest will be payable to Holders who tender Securities pursuant to the
     Asset Disposition Offer.

         (2)  On or before the Asset Disposition Purchase Date, the Issuer will,
     to the extent lawful, accept for payment, on a pro rata basis to the extent
     necessary, the Asset Disposition Offer Amount of Securities or portions of
     Securities so validly tendered and not properly withdrawn pursuant to the
     Asset Disposition Offer, or if less than the Asset
<PAGE>

                                                                              24

     Disposition Offer Amount has been validly tendered and not properly
     withdrawn, all Securities so validly tendered and not properly withdrawn,
     in each case in integral multiples of $1,000. The Issuer will deliver to
     the Trustee an Officers' Certificate stating that such Securities or
     portions thereof were accepted for payment by the Issuer in accordance with
     the terms of this Section 3.3. The Issuer or the Paying Agent, as the case
     may be, will promptly (but in any case not later than five Business Days
     after the termination of the Asset Disposition Offer Period) mail or
     deliver to each tendering Holder of Securities an amount equal to the
     purchase price of the Securities so validly tendered and not properly
     withdrawn by such Holder and accepted by the Issuer for purchase, and the
     Issuer will promptly issue a new Security, and the Trustee, upon delivery
     of an Officers' Certificate from the Issuer will authenticate and mail or
     deliver such new Security to such Holder, in a principal amount equal to
     any unpurchased portion of the Security surrendered; provided that each
     such new Security will be in a principal amount of $1,000 or an integral
     multiple of $1,000. Any Security not so accepted will be promptly mailed or
     delivered by the Issuer to the Holder thereof. The Issuer will publicly
     announce the results of the Asset Disposition Offer on the Asset
     Disposition Purchase Date.

         (c)  The Issuer will comply, to the extent applicable, with the
requirements of Section 14(e) of the Exchange Act and any other securities laws
or regulations in connection with the repurchase of Securities pursuant to this
Indenture. To the extent that the provisions of any securities laws or
regulations conflict with this Section 3.3, the Issuer will comply with the
applicable securities laws and regulations and will not be deemed to have
breached its obligations under this Indenture by virtue of complying with such
securities laws and regulations.

         SECTION 3.4.   Change of Control. If a Change of Control with respect
to Hanover occurs, each registered holder of Securities will have the right to
require the Issuer to repurchase all or any part (equal to $1,000 or an integral
multiple thereof) of such Holder's Securities at a purchase price in cash equal
to 101% of the principal amount of the Securities plus accrued and unpaid
interest, if any, to the date of purchase (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date). The Issuer will redeem the Securities with the proceeds
from an Equipment Purchase plus any Supplemental Rent paid in conjunction
therewith by the Lessee pursuant to, and in accordance with, Section 20.1(c) of
the Lease. A proportionate amount of Certificate Holder Contributions, including
the Certificate Holder Yield on each Certificate so repaid, shall be repaid by
the Issuer.

         Within 30 days following any Change of Control, the Issuer, at the
direction of Hanover or the Lessee, will mail a notice (the "Change of Control
Offer") to each registered Holder, with a copy to the Trustee and to each
Certificate Holder, stating: (i) that a Change of Control has occurred and that
such Holder has the right to require the Issuer pursuant to this Section 3.4 to
purchase such Holder's Securities at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase (subject to the right of Holders of record on a record date to
receive interest on the relevant interest payment date) (the "Change of Control
Payment"); (ii) the repurchase date (which shall be no earlier than 30 days nor
later than 60 days from the date such notice is mailed) (the "Change of
<PAGE>

                                                                              25

Control Payment Date"); and (iii) the procedures determined by the Issuer,
consistent with this Indenture, that a Holder must follow in order to have its
Securities repurchased.

         On the Change of Control Payment Date, the Issuer will, to the extent
lawful, (i) accept for payment all Securities or portions of Securities (in
integral multiples of $1,000) properly tendered under the Change of Control
Offer, (ii) deposit with the Paying Agent an amount equal to the Change of
Control Payment in respect of all the Securities or portions of Securities so
tendered; and (iii) deliver or cause to be delivered to the Trustee the
Securities so accepted together with an Officers' Certificate stating the
aggregate principal amount of Securities or portions of Securities being
purchased by the Issuer. The Paying Agent will promptly mail to each Holder of
the Securities so tendered the Change of Control Payment for such Securities,
and the Trustee will promptly authenticate and mail (or cause to be transferred
by book entry) to each Holder a new Security equal in principal amount to any
unpurchased portion of the Securities surrendered, if any; provided that each
such new Security will be in a principal amount of $1,000 or an integral
multiple of $1,000.

         If the Change of Control Payment Date is on or after an interest record
date and on or before the related interest payment date, any accrued and unpaid
interest, if any, will be paid to the Person in whose name a Security is
registered at the close of business on such record date, and no additional
interest will be payable to Holders who tender pursuant to the Change of Control
Offer.

         The Issuer will not be required to make a Change of Control Offer upon
a Change of Control if a third party makes the Change of Control Offer in the
manner, at the times and otherwise in compliance with the requirements set forth
in this Indenture applicable to a Change of Control Offer made by the Issuer and
purchases all Securities validly tendered and not withdrawn under such Change of
Control Offer.

         The Issuer will comply, to the extent applicable, with the requirements
of Section 14(e) of the Exchange Act and any other securities laws or
regulations in connection with the repurchase of Securities pursuant to this
Section 3.4. To the extent that the provisions of any securities laws or
regulations conflict with provisions of this Indenture, the Issuer will comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations described in this Indenture by virtue of its
compliance with applicable law.

         SECTION 3.5.   Protection of Collateral. The Issuer will from time to
time execute and deliver all amendments hereto and all such financing
statements, continuation statements, instruments of further assurance and other
instruments, and will take such other action reasonably necessary or advisable
to:

     (1) grant more effectively the security interest in all or any portion of
         the Collateral;

     (2) maintain or preserve the Lien of this Indenture (and the priority
         thereof) or carry out more effectively the purposes hereof;

     (3) perfect, publish notice of, or protect the validity of the security
         interest in the Collateral created pursuant to the Operative
         Agreements;
<PAGE>

                                                                              26

     (4) enforce any of the items of the Collateral;

     (5) preserve and defend its right, title and interest to the Collateral and
         the rights of the Trustee in such Collateral against the claims of all
         Persons (other than the Holders or any Person claiming through the
         Holders), including any claims that any Unit of Equipment is a
         fixture; or

     (6) pay any and all taxes levied or assessed upon all or any part of the
         Collateral.

         SECTION 3.6.   Negative Covenants Regarding Collateral. The Issuer will
not, without, the prior written consent of the Trustee (acting at the direction
of the Required Holders)

         (a)  except as otherwise permitted by this Indenture, take or fail to
take, any action, and will use its reasonable best efforts not to permit any
action to be taken by others, which would release any Person from any of such
Person's covenants or obligations under any agreement or instrument included in
the Collateral, or which would result in the amendment, hypothecation,
subordination, termination or discharge or, or impair the validity or the
effectiveness of, any such agreement or instrument. In furtherance of the
effectiveness of the foregoing, the Issuer will not amend, modify or terminate
the Lease and/or the Security Agreement or grant any waiver or consent from
compliance with the express terms thereof;

         (b)  (i) permit the validity or effectiveness of this Indenture to be
impaired, (ii) permit the Lien of any Security Document to be subordinated,
terminated or discharged, except as permitted in accordance with the terms of
Article VIII or Section 11.1 hereof, or (iii) permit any Person to be released
from any covenants or obligations with respect to such Collateral, except as may
be expressly permitted by the Operative Agreements.

         SECTION 3.7.   Non-Consolidation of the Issuer. The Issuer shall be
operated in such a manner that it shall not be substantively consolidated with
the trust estate of any other Person in the event of the bankruptcy or
insolvency of the Issuer or such other Person. Without limiting the foregoing,
the Issuer shall (a) conduct its business in its own name, (b) maintain its
books and records separately from those of any other Person, (c) maintain its
bank accounts separately from those of any other Person, (d) maintain separate
financial statements, showing its assets and liabilities separate and apart from
those of any other Person, (e) pay its own liabilities and expenses only out of
its own funds, (f) enter into a transaction with an Affiliate only if such
transaction is commercially reasonably and on the same terms as would be
available in an arms' length transaction with a Person that is not an Affiliate,
(g) allocate fairly and reasonably any overhead expenses that are shared with an
Affiliate, (h) hold itself out as a separate entity, (i) maintain adequate
capital in light of its contemplated business operations and (i) observe all
other appropriate trust and other organizational formalities.

         SECTION 3.8.   No Bankruptcy Petition. The Issuer shall not (a)
commence any insolvency proceeding seeking to have an order for relief entered
with respect to it, or seeking reorganization, arrangement, adjustment, wind-up,
liquidation, dissolution, composition or other relief with respect to it or its
debts, (b) seek appointment of a receiver, trustee, custodian or other similar
official for it or any part of its assets, (c) make a general assignment for the
benefit of
<PAGE>

                                                                              27

creditors, or (d) take any action in furtherance of, or consenting or
acquiescing in, any of the foregoing.

         SECTION 3.9.   Limitation on Liens; Fixtures. The Issuer shall not (i)
directly or indirectly create, Incur or suffer to exist any Lien (other than
Permitted Liens) on any of its property or assets, including the Collateral, or
any part thereof or any interest therein or the proceeds thereof; (ii) permit
the Lien of the Security Documents not to constitute a valid first priority
perfected security interest in the Collateral or (iii) permit any Equipment to
be considered a fixture under applicable local law. The Issuer shall duly pay
and discharge (i) immediately upon the attachment thereof, all Liens (other than
Permitted Liens) on any Collateral, (ii) as and when due, all of its
Indebtedness and other obligations before the time that any Lien attaches unless
and only to the extent that any such amounts are not yet due and payable or the
validity thereof is being contested in good faith by appropriate proceedings so
long as such proceedings do not involve any danger of the sale, forfeiture or
loss of the items of Equipment or any interest therein and the Issuer maintains
or causes Hanover and the Lessee to maintain appropriate reserves with respect
thereto or has made adequate provision for the payment thereof, in accordance
with GAAP and approved by the Administrative Agent and (iii) all taxes imposed
upon or against it or its property or assets, or upon any property leased by it,
prior to the date on which penalties attach thereto.

         SECTION 3.10.  Other Indebtedness. The Issuer shall not contract for,
create, Incur, assume or suffer to exist any Indebtedness other than (i) the
Securities issued pursuant to this Indenture, (ii) any fees and all other
amounts payable pursuant to the provisions of the Participation Agreement, and
(iii) trade payables and expense accruals Incurred in the ordinary course of
business and which are incidental to the purposes permitted pursuant to the
Trust Agreement.

         SECTION 3.11.  Guarantees, Loans, Advances and Other Obligations. The
Issuer will not make any loan, advance or credit to, or guarantee (directly or
indirectly or by an instrument having the effect of assuring another's payment
or performance on any obligation or capability of so doing, or otherwise),
endorse (except for the endorsement of checks for collection or deposit) or
otherwise become contingently liable, directly or indirectly, in connection with
the obligations, stock or dividends of, or own, purchase, repurchase or acquire
(or agree contingently to do so) any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other Person.

         SECTION 3.12.  Consolidation, Merger and Sale of Assets. The Issuer
shall not consolidate with or merge with or into any other Person or sell,
convey, transfer or lease any of its assets (including the Collateral), whether
in a single transaction or a series of related transactions, to any Person,
except for (i) any such sale, conveyance or transfer contemplated in this
Indenture or the Operative Agreements and (ii) any lease of Equipment in
accordance with the terms of the Lease.

         SECTION 3.13.  Capital Expenditures. The Issuer will not make any
expenditure (by long-term or operating lease or otherwise) for capital assets
(both realty and personalty), except for (a) acquisition of additional Equipment
from the Lessee pursuant to the Bill of Sale or
<PAGE>

                                                                              28

(b) overhaul expenses or capital improvements to the Equipment made in the
ordinary course of business and in accordance with the terms of the
Participation Agreement.

         SECTION 3.14.  Payments of Collateral. In the event that the Issuer
receives from any Person any payments with respect to the Collateral (to the
extent such Collateral has not been released from the Lien of the Security
Documents in accordance with Section 11.1 hereof), the Issuer shall receive such
payment in trust for the Trustee and subject to the Trustee's security interest
and shall immediately deposit such payment in the Account.

         SECTION 3.15.  No Subsidiaries. The Issuer shall not create any
Subsidiaries.

         SECTION 3.16.  Investments. The Issuer shall not make or permit to
exist any Investment in any Person.

         SECTION 3.17.  Use of Proceeds. The Issuer shall use the proceeds of
the Securities solely to finance the Issuer's acquisition of Equipment and
related Collateral in accordance with the terms of the Operative Agreements and
for costs related to such transactions. The Issuer shall not permit any proceeds
of the Securities to be used, either directly or indirectly, for the purpose,
whether immediate, incidental or ultimate, of "purchasing or carrying any margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System, as amended from time to time, and shall furnish each
Holder, upon such Holder's request, a statement in conformity with the
requirements of Regulation U.

         SECTION 3.18.  Impairment of Security Interest. The Issuer shall not
take or omit to take any action, which action or omission might or would have
the result of affecting or impairing the security interest in favor of the
Trustee on behalf of the Holders with respect to the Collateral, and the Issuer
shall not grant to any Person (other than the Trustee on behalf of the Holders)
any interest whatsoever in the Collateral, except, in either case, as expressly
permitted by the terms of the Security Agreement.

         SECTION 3.19.  Compliance with Operative Agreements. The Issuer shall
at all times (a) observe and perform all covenants, conditions and obligations
required to be performed by it under each Operative Agreement to which it is a
party and (b) observe and perform, or cause to be observed and performed all the
covenants, conditions and obligations of the Lessee under the Lease, even in the
event the Lease is terminated at its stated expiration, following a Lease Event
of Default or otherwise. The Issuer shall not enter into, or be a party to, any
transaction with any Person, except the transactions set forth in this
Indenture, the Participation Agreement or the Lease, as applicable, and as
expressly permitted thereby.

         SECTION 3.20.  Compliance with Laws. The Issuer shall comply with all
applicable statutes, rules, regulations, orders and restrictions of the United
States of America, all states and municipalities thereof and of any governmental
department, commission, board, regulatory authority, bureau, agency and
instrumentality of the foregoing, in respect of the conduct of its business and
the ownership of its property. The Issuer shall promptly take, and maintain the
effectiveness of, all action to effectuate the Participation Agreement, this
Indenture or the Lease, as applicable, or otherwise that may, from time to time,
be necessary or appropriate under applicable law in connection with the
performance by the Issuer of its obligations under
<PAGE>

                                                                              29

the Participation Agreement, this Indenture or the Lease, as applicable, or the
taking of any action hereby or thereby contemplated, or necessary for the
legality, validity, binding effect or enforceability of the Participation
Agreement, this Indenture or the Lease, as applicable, or for the making of any
payment or transfer or remittance of any funds by the Issuer under the
Participation Agreement, this Indenture or the Lease, as applicable.

         SECTION 3.21.  Maintenance of Office or Agency. The Issuer will
maintain in Wilmington, Delaware, an office or agency where the Securities may
be presented or surrendered for payment, where, if applicable, the Securities
may be surrendered for registration of transfer or exchange and where notices
and demands to or upon the Issuer in respect of the Securities and this
Indenture may be served. The principal corporate trust office of the Trustee, or
if the Trustee's principal corporate trust office is not located in Wilmington,
Delaware, any other office or agency maintained by the Trustee in Wilmington,
Delaware (the "Corporate Trust Office"), shall be such office or agency of the
Issuer, unless the Issuer shall designate and maintain some other office or
agency for one or more of such purposes. The Issuer will give prompt written
notice to the Trustee of any change in the location of any such office or
agency. If at any time the Issuer shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,
such presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office of the Trustee, and the Issuer hereby appoints the
Trustee as its agent to receive all such presentations, surrenders, notices and
demands.

         The Issuer may also from time to time designate one or more other
offices or agencies (in or outside of Wilmington, Delaware) where the Securities
may be presented or surrendered for any or all such purposes and may from time
to time rescind any such designation; provided, however, that no such
designation or rescission shall in any manner relieve the Issuer of its
obligation to maintain an office or agency in Wilmington, Delaware for such
purposes. The Issuer will give prompt written notice to the Trustee of any such
designation or rescission and any change in the location of any such other
office or agency.

         SECTION 3.22.  Limitations on Lines of Business; Existence. The Issuer
will not enter into any business other than the maintenance of its existence,
the acquisition, leasing, financing and sale of the Equipment and the taking of
such actions as are required to comply with the other covenants of the Issuer
under the Operative Agreements and the Exchange and Registration Rights
Agreement. The Issuer will do or cause to be done all things necessary to
preserve and keep in full force and effect its existence, rights (both under the
certificate of trust of the Issuer and by statute) and franchises.

         SECTION 3.23.  Payment of Taxes and Other Claims. The Issuer will pay
or discharge or cause to be paid or discharged, before the same shall become
delinquent, (i) all material taxes, assessments and governmental charges levied
or imposed upon the Issuer or upon the income, profits or property of the Issuer
and (ii) all lawful claims for labor, materials and supplies, which, if unpaid,
might by law become a material liability or lien upon the property of the
Issuer; provided, however, that the Issuer shall not be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings and for which appropriate reserves, if necessary (in
the good faith judgment of management of the Issuer), are being
<PAGE>

                                                                              30

maintained in accordance with GAAP or where the failure to effect such payment
will not be disadvantageous to the Holders.

         SECTION 3.24.  Payments for Consent. The Issuer will not, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fees or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or provisions
of this Indenture or the Securities unless such consideration is offered to be
paid or is paid to all Holders of the Securities that consent, waive or agree to
amend in the time frame set forth in the solicitation documents relating to such
consent, waiver or amendment.

         SECTION 3.25.  Compliance Certificate. The Issuer shall deliver to the
Trustee within 120 days after the end of each Fiscal Year of the Issuer an
Officers' Certificate stating that in the course of the performance by the
signers of their duties as Officers of the Issuer they would normally have
knowledge of any Default or Event of Default and whether or not the signers know
of any Default or Event of Default that occurred during such period. If they do,
the certificate shall describe the Default or Event of Default, its status and
what action the Issuer is taking or proposes to take with respect thereto. The
Issuer also shall comply with TIA (S) 314(a)(4).

         SECTION 3.26.  Further Instruments and Acts. Upon request of the
Trustee, the Issuer will execute and deliver such further instruments and do
such further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture and the Operative Agreements.

         SECTION 3.27.  Statement by Officers as to Default. The Issuer shall
deliver to the Trustee, as soon as possible and in any event within five days
after the Issuer becomes aware of the occurrence of any Event of Default or an
event which, with notice or the lapse of time or both, would constitute an Event
of Default, an Officers' Certificate setting forth the details of such Event of
Default or default and the action which the Issuer proposes to take with respect
thereto.

                                   ARTICLE IV

                       Covenants of the Hanover Guarantors

         Each of the Hanover Guarantors hereby agrees that so long as this
Indenture is in effect, such guarantor shall comply with the covenants set forth
in Section 9 of the Participation Agreement in the form attached hereto as
Annex A.

                                    ARTICLE V

                            Redemption of Securities

         SECTION 5.1.   Optional Redemption. (a) The Issuer may redeem all or,
from time to time, a part, of the Securities subject to the conditions and at
the redemption prices
<PAGE>

                                                                              31

specified in the form of Securities set forth in Exhibits A and B hereto, which
are hereby incorporated by reference and made a part of this Indenture, together
with accrued and unpaid interest to the Redemption Date. Payments pursuant to
any such redemption shall be applied in accordance with the provisions of
Section 8.4(b)(9).

         (b)  The Issuer shall only be permitted to redeem the Securities
pursuant to Section 5.1(a) if simultaneously with such prepayment the Issuer
distributes to the Certificate Holders an amount equal to the proportionate
Certificate Holder Contribution, together with accrued Certificate Holder Yield
thereon. Such payments shall be made to the Issuer to be distributed in
accordance with the terms of the Trust Agreement.

         SECTION 5.2.   Applicability of Article. Redemption of Securities at
the election of the Issuer or otherwise, as permitted or required by any
provision of this Indenture, shall be made in accordance with such provision and
this Article.

         SECTION 5.3.   Election to Redeem; Notice to Trustee. The election of
the Issuer to redeem any Securities pursuant to Section 5.1 shall be evidenced
by a Board Resolution. In case of any redemption at the election of the Issuer,
the Issuer shall, upon not later than the earlier of the date that is 30 (or 10,
in the case of a Special Redemption (as defined in Exhibit A)), days prior to
the Redemption Date fixed by the Issuer or the date on which notice is given to
the Holders (except as provided in Section 5.5 or unless a shorter notice shall
be satisfactory to the Trustee), notify the Trustee of such Redemption Date and
of the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section 5.4.

         SECTION 5.4.   Selection by Trustee of Securities to Be Redeemed. In
the case of any partial redemption, the Trustee will select the Securities for
redemption in compliance with the requirements of the principal national
securities exchange, if any, on which the Securities are listed or, if the
Securities are not listed, then on a pro rata basis, by lot or by such other
method as the Trustee in its sole discretion will deem to be fair and
appropriate, although no Security of $1,000 in original principal amount or less
will be redeemed in part. If any Security is to be redeemed in part only, the
notice of redemption relating to that Security will state the portion of the
principal amount thereof to be redeemed. A new Security in principal amount
equal to the unredeemed portion thereof will be issued in the name of the holder
thereof upon cancellation of the original Security.

         The Trustee shall promptly notify the Issuer in writing of the
Securities selected for redemption and, in the case of any Securities selected
for partial redemption, the principal amount thereof to be redeemed.

         For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to redemption of Securities shall relate, in
the case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.

         SECTION 5.5.   Notice of Redemption. Notice of redemption shall be
given in the manner provided for in Section 10.2 not less than 30 (or 10, in the
case of a Special
<PAGE>

                                                                              32

Redemption (as defined in Exhibit A)) nor more than 60 days prior to the
Redemption Date, to each Holder of Securities to be redeemed. The Trustee shall
give notice of redemption in the Issuer's name and at the Issuer's expense;
provided, however, that the Issuer shall deliver to the Trustee, at least 45 (or
15, in the case of a Special Redemption (as defined in Exhibit A)) days prior to
the Redemption Date, an Officers' Certificate requesting that the Trustee give
such notice and setting forth the information to be stated in such notice as
provided in the following items.

         All notices of redemption shall state:

         (1)  the Redemption Date,

         (2)  the redemption price and the amount of accrued interest to the
     Redemption Date payable as provided in Section 5.7, if any,

         (3)  if less than all outstanding Securities are to be redeemed, the
     identification of the particular Securities (or portion thereof) to be
     redeemed, as well as the aggregate principal amount of Securities to be
     redeemed and the aggregate principal amount of Securities to be outstanding
     after such partial redemption,

         (4)  in case any Security is to be redeemed in part only, the notice
     which relates to such Security shall state that on and after the Redemption
     Date, upon surrender of such Security, the Holder will receive, without
     charge, a new Security or Securities of authorized denominations for the
     principal amount thereof remaining unredeemed,

         (5)  that on the Redemption Date the redemption price (and accrued
     interest, if any, to the Redemption Date payable as provided in Section
     5.7) will become due and payable upon each such Security, or the portion
     thereof, to be redeemed, and, unless the Issuer defaults in making the
     redemption payment, that interest on Securities called for redemption (or
     the portion thereof) will cease to accrue on and after said date,

         (6)  the place or places where such Securities are to be surrendered
     for payment of the Redemption Price and accrued interest, if any,

         (7)  the name and address of the Paying Agent,

         (8)  that Securities called for redemption must be surrendered to the
     Paying Agent to collect the Redemption Price,

         (9)  the CUSIP number, and that no representation is made as to the
     accuracy or correctness of the CUSIP number, if any, listed in such notice
     or printed on the Securities, and

         (10) the paragraph of the Securities pursuant to which the Securities
     are to be redeemed.

         SECTION 5.6.   Deposit of Redemption Price. Prior to any Redemption
Date, the Issuer shall deposit with the Trustee or with a Paying Agent (or, if
the Issuer is acting as its own
<PAGE>

                                                                              33

Paying Agent, segregate and hold in trust as provided in Section 2.4) an amount
of money sufficient to pay the redemption price of, and accrued interest on, all
the Securities which are to be redeemed on that date.

         SECTION 5.7.   Securities Payable on Redemption Date. Notice of
redemption having been given as aforesaid, the Securities so to be redeemed
shall, on the Redemption Date, become due and payable at the redemption price
therein specified (together with accrued interest, if any, to the Redemption
Date), and from and after such date (unless the Issuer shall default in the
payment of the Redemption Price and accrued interest) such Securities shall
cease to bear interest. Upon surrender of any such Security for redemption in
accordance with said notice, such Security shall be paid by the Issuer at the
redemption price, together with accrued interest, if any, to the Redemption Date
(subject to the rights of Holders of record on the relevant record date to
receive interest due on the relevant interest payment date).

         If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate borne by the
Securities.

         SECTION 5.8.   Securities Redeemed in Part. Any Security which is to be
redeemed only in part (pursuant to the provisions of this Article) shall be
surrendered at the office or agency of the Issuer maintained for such purpose
pursuant to Section 3.10 (with, if the Issuer or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Issuer and the Trustee duly executed by, the Holder thereof or such Holder's
attorney duly authorized in writing), and the Issuer shall execute, and the
Trustee shall authenticate and make available for delivery to the Holder of such
Security at the expense of the Issuer, a new Security or Securities, of any
authorized denomination as requested by such Holder, in an aggregate principal
amount equal to and in exchange for the unredeemed portion of the principal of
the Security so surrendered, provided that each such new Security will be in a
principal amount of $1,000 or integral multiple thereof.

                                   ARTICLE VI

                              Defaults and Remedies

         SECTION 6.1.   Events of Default. An "Event of Default" occurs if:

         (1)  the Issuer defaults in any payment of interest or additional
interest (as required by the Exchange and Registration Rights Agreement) on any
Security when due continued for 30 days;

         (2)  the Issuer defaults in the payment of the principal or premium, if
any, of any Security when due at its Stated Maturity, upon optional redemption,
upon required repurchase, upon declaration or otherwise;

         (3)  Hanover or any Hanover Guarantor fails to comply with its
obligations under (i) Section 9.10 of the Participation Agreement or (ii), prior
to the execution and delivery
<PAGE>

                                                                              34

of the Participation Agreement, Article IV hereof, which default shall continue
unremedied for a period of 30 days after receipt of notice thereof;

         (4)  (A) the Issuer fails to comply with any of Sections 3.2 through
3.27 inclusive (in each case other than a failure to repurchase Securities when
required pursuant to Section 3.3 or 3.4, which failure shall constitute an Event
of Default under Section 6.1(2)) and (B) such failure continues for 30 days
after the notice specified below (with such notice only given after the expiry
of the periods permitted to perform an obligation);

         (5)  the Issuer defaults in the performance of or a breach by the
Issuer of any other covenant or agreement in this Indenture or under the
Securities (other than those referred to in (1), (2), (3) or (4) above) or any
covenant, representation or warranty under the Lease, the Participation
Agreement or any other Operative Agreement, or contained in any document
delivered pursuant to any of the foregoing (in each case other than a covenant,
representation or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with) and such default continues
for 60 days after the notice specified below (with such notice only given after
the expiry of the periods permitted to perform an obligation);

         (6)  the occurrence and continuation of a Lease Event of Default;

         (7)  the Operative Agreements no longer create a first priority lien on
all the Collateral for the benefit of the Trustee, in its capacity as Collateral
Agent (subject to Permitted Exceptions);

         (8)  there is a default under any mortgage, indenture or instrument
under which there may be issued or by which there may be secured or evidenced
any Indebtedness for money borrowed by Hanover or any of its Restricted
Subsidiaries (or the payment of which is guaranteed by Hanover or any of its
Restricted Subsidiaries), other than Indebtedness owed to Hanover or a
Restricted Subsidiary, whether such Indebtedness or guarantee now exists, or is
created after the date of this Indenture, which default (a) is caused by a
failure to pay principal of, or interest or premium, if any, on such
Indebtedness prior to the expiration of the grace period provided in such
Indebtedness ("Payment Default") or (b) results in the acceleration of such
Indebtedness prior to its maturity (the "cross acceleration provision") and, in
each case, the principal amount of any such Indebtedness, together with the
principal amount of any other such Indebtedness under which there has been a
Payment Default or the maturity of which has been so accelerated, aggregates
$20.0 million or more;

         (9)  (A) the Issuer, Hanover or any Significant Subsidiary or a group
of Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for Hanover and its Restricted Subsidiaries),
would constitute a Significant Subsidiary, pursuant to or within the meaning of
any Bankruptcy Law (as defined below):

         (i)  commences a voluntary case;

         (ii) consents to the entry of an order for relief against it in an
     involuntary case;

         (iii)consents to the appointment of a Custodian (as defined below) of
     it or for any substantial part of its property; or
<PAGE>

                                                                              35

         (iv) makes a general assignment for the benefit of its creditors; or
     takes any comparable action under any foreign laws relating to insolvency;

         (B)  a court of competent jurisdiction enters an order or decree under
any Bankruptcy Law that:

         (i)  is for relief against the Issuer, Hanover or any Significant
     Subsidiary or any group of Restricted Subsidiaries that, taken together (as
     of the latest audited consolidated financial statements for Hanover and its
     Restricted Subsidiaries) would constitute a Significant Subsidiary in an
     involuntary case;

         (ii) appoints a Custodian of the Issuer, Hanover or any Significant
     Subsidiary or any group of Restricted Subsidiaries that, taken together (as
     of the latest audited consolidated financial statements for Hanover and its
     Restricted Subsidiaries) would constitute a Significant Subsidiary or for
     any substantial part of their property; or

         (iii) orders the winding up or liquidation of the Issuer, Hanover or
     any Significant Subsidiary or any group of Restricted Subsidiaries that,
     taken together (as of the latest audited consolidated financial statements
     for Hanover and its Restricted Subsidiaries) would constitute a Significant
     Subsidiary;

or any similar relief is granted under any foreign laws and the order, decree or
relief remains unstayed and in effect for 60 days;

         (10) failure by the Issuer, Hanover or any of its Restricted
Subsidiaries to pay final judgments aggregating in excess of $20.0 million or
its foreign currency equivalent at the time (net of any amounts with respect to
which a reputable and creditworthy insurance company has acknowledged liability
in writing), which judgments are not paid, discharged or stayed for a period of
60 days (the "Judgment Default Provision"); or

         (11) any respective Guarantee of any of the Hanover Guarantors ceases
to be in full force and effect (except as contemplated by the terms of this
Indenture and the Participation Agreement), or is declared in a judicial
proceeding to be null and void, or any Hanover Guarantor denies or disaffirms
its obligations under the terms of this Indenture, the Participation Agreement
or its Hanover Guarantee.

         The foregoing will constitute Events of Default whatever the reason for
any such Event of Default and whether it is voluntary or involuntary or is
effected by operation of law or pursuant to any judgment, decree or order of any
court or any order, rule or regulation of any administrative or governmental
body.

         The term "Bankruptcy Law" means Title 11, United States Code, or any
similar Federal or state law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, custodian or similar official
under any Bankruptcy Law.

         Notwithstanding the foregoing, a Default under clause (4) or (5) of
this Section 6.1 will not constitute an Event of Default until the Trustee or
the Holders of at least 25% in principal amount of the outstanding Securities
notify the Issuer of the Default and the Issuer does
<PAGE>

                                                                              36

not cure such Default within the time specified in said clause (4) or (5) after
receipt of such notice. Such notice must specify the Default, demand that it be
remedied and state that such notice is a "Notice of Default".

         The Issuer shall deliver to the Trustee, within 30 days after the
occurrence thereof, written notice in the form of an Officers' Certificate of
any Default or Event of Default under clauses (3), (4), (5), (6), (7), (8), (9),
(10) or (11) of this Section 6.1, which such notice shall contain the status
thereof and a description of the action being taken or proposed to be taken by
the Issuer in respect thereof.

         SECTION 6.2.   Acceleration. If an Event of Default (other than an
Event of Default specified in Section 6.1(9)) occurs and is continuing, the
Trustee by notice to the Issuer, or the Holders of at least 25% in principal
amount of the outstanding Securities by notice to the Issuer and the Trustee,
may, and the Trustee at the request of such Holders shall, declare the principal
of, premium, if any, and accrued and unpaid interest, on all the Securities to
be due and payable; provided, however, that so long as any Bank Indebtedness
remains outstanding, no such acceleration shall be effective until the earlier
of (i) two business days after delivery of written notice to Hanover, the Lessee
and the Representative under such Bank Indebtedness and (ii) the day on which
any Bank Indebtedness is accelerated. Upon such a declaration, such principal,
premium, if any, and accrued and unpaid interest will be due and payable
immediately. In the event of a declaration of acceleration because an Event of
Default set forth in Section 6.1(8) above has occurred and is continuing, the
declaration of acceleration shall be automatically annulled if the event of
default or payment default triggering such Event of Default pursuant to Section
6.1(8) shall be remedied or cured by Hanover or a Restricted Subsidiary of
Hanover or waived by the holders of the relevant Indebtedness within 20 days
after the declaration of acceleration with respect thereto and if (i) the
annulment of the acceleration of the Securities would not conflict with any
judgment or decree of a court of competent jurisdiction and (ii) all existing
Events of Default, except nonpayment of principal, premium or interest on the
Securities that became due solely because of such acceleration, have been cured
or waived. If an Event of Default described in Section 6.1(9) occurs and is
continuing, the principal of, premium, if any, and accrued and unpaid interest
on all the Securities will become and be immediately due and payable without any
declaration or other act on the part of the Trustee or any Holders. No such
rescission shall affect any subsequent Default or Event of Default or impair any
right consequent thereto.

         SECTION 6.3.   Other Remedies. If an Event of Default occurs and is
continuing, the Trustee may pursue any available remedy to collect the payment
of principal of (or premium, if any) or interest on the Securities or to enforce
the performance of any provision of the Securities or this Indenture.

         The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay or
omission by the Trustee or any Securityholder in exercising any right or remedy
accruing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative.
<PAGE>

                                                                              37

         SECTION 6.4.   Waiver of Past Defaults. The Holders of a majority in
principal amount of the outstanding Securities by notice to the Trustee may (a)
waive, by their consent (including, without limitation consents obtained in
connection with a purchase of, or tender offer or exchange offer for,
Securities), an existing Default or Event of Default and its consequences except
(i) a Default or Event of Default in the payment of the principal of, or
premium, if any, or interest on a Security or (ii) a Default or Event of Default
in respect of a provision that under Section 9.2 cannot be amended without the
consent of each Securityholder affected and (b) rescind any such acceleration
with respect to the Securities and its consequences if (1) rescission would not
conflict with any judgment or decree of a court of competent jurisdiction and
(2) all existing Events of Default, other than the nonpayment of the principal
of, premium, if any, and interest on the Securities that have become due solely
by such declaration of acceleration, have been cured or waived. When a Default
or Event of Default is waived, it is deemed cured, but no such waiver shall
extend to any subsequent or other Default or Event of Default or impair any
consequent right.

         SECTION 6.5.   Control by Majority. The Holders of a majority in
principal amount of the outstanding Securities may direct the time, method and
place of conducting any proceeding for any remedy available to the Trustee or of
exercising any trust or power conferred on the Trustee. This Indenture provides
that in the event an Event of Default has occurred and is continuing, the
Trustee will be required in the exercise of its powers to use the degree of care
that a prudent person would use in the conduct of its own affairs. However, the
Trustee may refuse to follow any direction that conflicts with law or this
Indenture or, subject to Sections 7.1 and 7.2, that the Trustee determines is
unduly prejudicial to the rights of other Securityholders or would involve the
Trustee in personal liability; provided, however, that the Trustee may take any
other action deemed proper by the Trustee that is not inconsistent with such
direction. Prior to taking any action hereunder, the Trustee shall be entitled
to indemnification satisfactory to it in its sole discretion against all losses
and expenses caused by taking or not taking such action.

         SECTION 6.6.   Limitation on Suits. Subject to the provisions of this
Indenture relating to the duties of the Trustee, if an Event of Default occurs
and is continuing, the Trustee will be under no obligation to exercise any of
the rights or powers under this Indenture at the request or direction of any of
the holders unless such holders have offered to the Trustee reasonable indemnity
or security against any loss, liability or expense. Except to enforce the right
to receive payment of principal, premium, if any, or interest when due, no
holder may pursue any remedy with respect to the Indenture or the Securities
unless:

         (1)  such Holder has previously given to the Trustee written notice
     stating that an Event of Default is continuing;

         (2)  Holders of at least 25% in outstanding principal amount of the
     Securities have requested the Trustee to pursue the remedy;

         (3)  such Holder or Holders offer to the Trustee reasonable security or
     indemnity against any loss, liability or expense;

         (4)  the Trustee does not comply with the request within 60 days after
     receipt of the request and the offer of security or indemnity; and
<PAGE>

                                                                              38

         (5)  the Holders of a majority in principal amount of the outstanding
     Securities have not given the Trustee a direction that, in the opinion of
     the Trustee, is inconsistent with such request within such 60-day period.

         A Securityholder may not use this Indenture to prejudice the rights of
another Securityholder or to obtain a preference or priority over another
Securityholder.

         SECTION 6.7.   Rights of Holders to Receive Payment. Notwithstanding
any other provision of this Indenture (including, without limitation, Section
6.6), the right of any Holder to receive payment of principal of, premium (if
any) or interest on the Securities held by such Holder, on or after the
respective due dates expressed in the Securities, or to bring suit for the
enforcement of any such payment on or after such respective dates, shall not be
impaired or affected without the consent of such Holder.

         SECTION 6.8.   Collection Suit by Trustee. If an Event of Default
specified in Section 6.1(1) or (2) occurs and is continuing, the Trustee may
recover judgment in its own name and as trustee of an express trust against the
Issuer for the whole amount then due and owing (together with interest on any
unpaid interest to the extent lawful) and the amounts provided for in
Section 7.7.

         SECTION 6.9.   Trustee May File Proofs of Claim. The Trustee may file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee and the Securityholders
allowed in any judicial proceedings relative to the Issuer or its creditors or
properties and, unless prohibited by law or applicable regulations, may vote on
behalf of the Holders in any election of a trustee in bankruptcy or other Person
performing similar functions, and any Custodian in any such judicial proceeding
is hereby authorized by each Holder to make payments to the Trustee and, in the
event that the Trustee shall consent to the making of such payments directly to
the Holders, to pay to the Trustee any amount due it for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and its counsel, and any other amounts due the Trustee under Section 7.7.

         SECTION 6.10.  Priorities. If the Trustee collects any money or
property pursuant to this Article VI, it shall pay out the money or property in
the following order:

         First:    to the Trustee for amounts due under Section 7.7;

         Second:   to Securityholders for amounts due and unpaid on the
     Securities for principal, premium, if any, and interest, ratably, without
     preference or priority of any kind, according to the amounts due and
     payable on the Securities for principal and interest, respectively; and

         Third:    to the Issuer for distribution as provided for in the Trust
     Agreement.
<PAGE>

                                                                              39

         The Trustee may fix a record date and payment date for any payment to
Securityholders pursuant to this Section. At least 15 days before such record
date, the Issuer shall mail to each Securityholder and the Trustee a notice that
states the record date, the payment date and amount to be paid.

         SECTION 6.11.  Undertaking for Costs. In any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the Trustee
for any action taken or omitted by it as Trustee, a court in its discretion may
require the filing by any party litigant in the suit of an undertaking to pay
the costs of the suit, and the court in its discretion may assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in the
suit, having due regard to the merits and good faith of the claims or defenses
made by the party litigant. This Section does not apply to a suit by the
Trustee, a suit by the Issuer, a suit by a Holder pursuant to Section 6.7 or a
suit by Holders of more than 10% in outstanding principal amount of the
Securities.

         SECTION 6.12.  Additional Payments. In the case of any Event of Default
occurring by reason of any willful action (or inaction) taken (or not taken) by
or on behalf of the Issuer with the intention of avoiding payment of the premium
that the Issuer would have had to pay if the Issuer then had elected to redeem
the Securities pursuant to the optional redemption provisions of this Indenture
or was required to repurchase the Securities, an equivalent premium shall also
become and be immediately due and payable to the extent permitted by law upon
the acceleration of the Securities. If an Event of Default occurs prior to
September 1, 2005 by reason of any willful action (or inaction) taken (or not
taken) by or on behalf of the Issuer with the intention of avoiding the
prohibition on redemption of the Securities prior to September 1, 2005, the
premium specified in this Indenture for optional redemptions occurring in the
twelve-month period beginning September 1, 2005 shall also become immediately
due and payable to the extent permitted by law upon the acceleration of the
Securities.

         SECTION 6.13.  Certain Remedial Matters. Notwithstanding any other
provision of this Indenture or any other Operative Agreement:

         (i)  the Issuer shall at all times, to the exclusion of the Collateral
Agent, 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 its rights under the Participation
Agreement; and

         (ii) the Issuer shall at all times retain the right, but not to the
exclusion of the Collateral Agent, (A) to receive from the Lessee all notices,
certificates and other documents and all information that the Lessee is
permitted or required to give or furnish to the "Lessor" pursuant to the Lease,
the Participation Agreement or any other Operative Document, (B) to inspect the
Equipment, (C) to retain all rights with respect to insurance that Section 14 of
the Lease specifically confers upon the "Lessor", (D) to provide such insurance
as the Lessee shall have failed to maintain or as the Issuer may desire and (E)
to enforce compliance by the Lessee with the provisions of Sections 8, 9, 10, 11
and 14 of the Lease.
<PAGE>

                                                                              40

                                   ARTICLE VII

                                     Trustee

         SECTION 7.1.   Duties of Trustee. (a) If an Event of Default has
occurred and is continuing, the Trustee shall exercise the rights and powers
vested in it by this Indenture and use the same degree of care and skill in
their exercise as a prudent Person would exercise or use under the circumstances
in the conduct of such Person's own affairs; provided that if an Event of
Default occurs and is continuing, the Trustee will be under no obligation to
exercise any of the rights or powers under this Indenture at the request or
direction of any of the Holders unless such Holders have offered to the Trustee
reasonable indemnity or security against loss, liability or expense.

         (b)  Except during the continuance of an Event of Default:

         (1)  the Trustee undertakes to perform such duties and only such duties
     as are specifically set forth in this Indenture and no implied covenants or
     obligations shall be read into this Indenture against the Trustee; and

         (2)  in the absence of bad faith on its part, the Trustee may
     conclusively rely, as to the truth of the statements and the correctness of
     the opinions expressed therein, upon certificates or opinions furnished to
     the Trustee and conforming to the requirements of this Indenture. However,
     in the case of any such certificates or opinions which by any provisions
     hereof are specifically required to be furnished to the Trustee, the
     Trustee shall examine such certificates and opinions to determine whether
     or not they conform on their face to the requirements of this Indenture
     (but need not confirm or investigate the accuracy of mathematical
     calculations or other facts stated therein).

         (a)  The Trustee may not be relieved from liability for its own
     negligent action, its own negligent failure to act or its own willful
     misconduct, except that:

         (1)  this paragraph does not limit the effect of paragraph (b) of this
     Section;

         (2)  the Trustee shall not be liable for any error of judgment made in
     good faith by a Trust Officer unless it is proved that the Trustee was
     negligent in ascertaining the pertinent facts; and

         (3)  the Trustee shall not be liable with respect to any action it
     takes or omits to take in good faith in accordance with a direction
     received by it pursuant to Section 6.5.

         (b)  Every provision of this Indenture that in any way relates to the
              Trustee is subject to paragraphs (a), (b) and (c) of this Section.

         (c)  The Trustee shall not be liable for interest on any money received
              by it except as the Trustee may agree in writing with the Issuer.
<PAGE>

                                                                              41

         (d)  Money held in trust by the Trustee need not be segregated from
              other funds except to the extent required by law.

         (e)  No provision of this Indenture shall require the Trustee to expend
              or risk its own funds or otherwise incur financial liability in
              the performance of any of its duties hereunder or in the exercise
              of any of its rights or powers, if it shall have reasonable
              grounds to believe that repayment of such funds or adequate
              indemnity against such risk or liability is not reasonably
              assured to it.

         (f)  Every provision of this Indenture relating to the conduct or
              affecting the liability of or affording protection to the Trustee
              shall be subject to the provisions of this Section and to the
              provisions of the TIA.

         (g)  Unless otherwise specifically provided in this Indenture, any
              demand, request, direction or notice from the Issuer shall be
              sufficient if signed by an Officer of the Issuer.

         (h)  The Trustee shall be under no obligation to exercise any of the
              rights or powers vested in it by this Indenture at the request or
              direction of any of the Holders unless such Holders shall have
              offered to the Trustee reasonable security or indemnity
              satisfactory to it against the costs, expenses (including
              reasonable attorneys' fees and expenses) and liabilities that
              might be incurred by it in compliance with such request or
              direction.

         SECTION 7.2.   Rights of Trustee. Subject to Section 7.1, (a) The
Trustee may conclusively rely on any document (whether in its original or
facsimile form) reasonably believed by it to be genuine and to have been signed
or presented by the proper person. The Trustee need not investigate any fact or
matter stated in the document.

              (b) Before the Trustee acts or refrains from acting, it may
         require an Officers' Certificate and/or an Opinion of Counsel. The
         Trustee shall not be liable for any action it takes or omits to take in
         good faith in reliance on an Officers' Certificate or Opinion of
         Counsel.

              (c) The Trustee may act through its attorneys and agents and shall
         not be responsible for the misconduct or negligence of any agent
         appointed with due care.

              (d) The Trustee shall not be liable for any action it takes or
         omits to take in good faith which it believes to be authorized or
         within its rights or powers, unless the Trustee's conduct constitutes
         willful misconduct or negligence.

              (e) The Trustee may consult with counsel of its selection, and the
         advice or opinion of counsel with respect to legal matters relating to
         this Indenture and the Securities shall be full and complete
         authorization and protection from liability in respect to any action
         taken, omitted or suffered by it hereunder in good faith and in
         accordance with the advice or opinion of such counsel.
<PAGE>

                                                                              42

         SECTION 7.3.   Individual Rights of Trustee. The Trustee in its
individual or any other capacity may become the owner or pledgee of Securities
and may otherwise deal with the Issuer or its Affiliates with the same rights it
would have if it were not Trustee. Any Paying Agent, Registrar, co-registrar or
co-paying agent may do the same with like rights. However, the Trustee must
comply with Sections 7.10 and 7.11.

         SECTION 7.4.   Trustee's Disclaimer. The Trustee shall not be
responsible for and makes no representation as to the validity or adequacy of
this Indenture or the Securities, it shall not be accountable for the Issuer's
use of the proceeds from the Securities, and it shall not be responsible for any
statement of the Issuer in this Indenture or in any document issued in
connection with the sale of the Securities or in the Securities other than the
Trustee's certificate of authentication.

         SECTION 7.5.   Notice of Defaults. If a Default or Event of Default
occurs and is continuing and if a Trust Officer has actual knowledge thereof,
the Trustee shall mail to each Securityholder notice of the Default or Event of
Default within 90 days after it occurs. Except in the case of a Default or Event
of Default in payment of principal of, premium (if any), or interest on any
Security (including payments pursuant to the optional redemption or required
repurchase provisions of such Security, if any), the Trustee may withhold the
notice if and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of Securityholders.

         SECTION 7.6.   Reports by Trustee to Holders. As promptly as
practicable after each May 15 beginning with the May 15, following the date of
this Indenture, and in any event prior to July 15 in each year, the Trustee
shall mail to each Securityholder a brief report dated as of such May 15 that
complies with TIA (S) 313(a). The Trustee also shall comply with TIA (S) 313(b).
The Trustee shall also transmit by mail all reports required by TIA (S) 313(c).

         A copy of each report at the time of its mailing to Securityholders
shall be filed with the SEC and each stock exchange (if any) on which the
Securities are listed. The Issuer agrees to notify promptly the Trustee whenever
the Securities become listed on any stock exchange and of any delisting thereof.
<PAGE>

                                                                              43

         SECTION 7.7.   Compensation and Indemnity. The Issuer shall pay to the
Trustee from time to time reasonable compensation for its acceptance of this
Indenture and services hereunder as the Issuer and the Trustee shall from time
to time agree in writing. The Trustee's compensation shall not be limited by any
law on compensation of a trustee of an express trust. The Issuer shall reimburse
the Trustee upon request for all reasonable out-of-pocket expenses incurred or
made by it, including costs of collection, costs of preparing and reviewing
reports, certificates and other documents, costs of preparation and mailing of
notices to Securityholders and reasonable costs of counsel retained by the
Trustee in connection with the delivery of an Opinion of Counsel or otherwise,
in addition to the compensation for its services. Such expenses shall include
the reasonable compensation and expenses, disbursements and advances of the
Trustee's agents, counsel, accountants and experts. The Issuer shall indemnify
the Trustee against any and all loss, liability, damages, claims or expense
(including reasonable attorneys' fees and expenses) incurred by it without
negligence or willful misconduct on its part in connection with the
administration of this trust and the performance of its duties hereunder,
including the costs and expenses of enforcing this Indenture (including this
Section 7.7) and of defending itself against any claims (whether asserted by any
Securityholder, the Issuer or otherwise). The Trustee shall notify the Issuer
promptly of any claim for which it may seek indemnity. Failure by the Trustee to
so notify the Issuer shall not relieve the Issuer of its obligations hereunder.
The Issuer shall defend the claim and the Trustee may have separate counsel and
the Issuer shall pay the fees and expenses of such counsel provided that the
Issuer shall not be required to pay such fees and expenses if it assumes the
Trustee's defense, and, in the reasonable judgment of outside counsel to the
Trustee, there is no conflict of interest between the Issuer and the Trustee in
connection with such defense. The Issuer need not reimburse any expense or
indemnify against any loss, liability or expense incurred by the Trustee through
the Trustee's own willful misconduct or negligence.

         To secure the Issuer's payment obligations in this Section, the Trustee
shall have a lien prior to the Securities on all money or property held or
collected by the Trustee other than money or property held in trust to pay
principal of and interest on particular Securities. The Trustee's right to
receive payment of any amounts due under this Section 7.7 shall not be
subordinate to any other liability or Indebtedness of the Issuer.

         The Issuer's payment obligations pursuant to this Section shall survive
the discharge of this Indenture. When the Trustee incurs expenses after the
occurrence of a Default specified in Section 6.1(9) or (10) with respect to the
Issuer, the expenses are intended to constitute expenses of administration under
any Bankruptcy Law.

         SECTION 7.8.   Replacement of Trustee. The Trustee may resign at any
time by so notifying the Issuer. The Holders of a majority in principal amount
of the Securities may remove the Trustee by so notifying the Trustee and may
appoint a successor Trustee. The Issuer shall remove the Trustee if:

                  (a)   the Trustee fails to comply with Section 7.10;

                  (b)   the Trustee is adjudged bankrupt or insolvent;
<PAGE>

                                                                              44

                  (c)   a receiver or other public officer takes charge of the
         Trustee or its property; or

                  (d)   the Trustee otherwise becomes incapable of acting.

         If the Trustee resigns or is removed by the Issuer or by the Holders of
a majority in principal amount of the Securities and such Holders do not
reasonably promptly appoint a successor Trustee, or if a vacancy exists in the
office of the Trustee for any reason (the Trustee in such event being referred
to herein as the retiring Trustee), the Issuer shall promptly appoint a
successor Trustee.

         A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Issuer. Thereupon the resignation
or removal of the retiring Trustee shall become effective, and the successor
Trustee shall have all the rights, powers and duties of the Trustee under this
Indenture. The successor Trustee shall mail a notice of its succession to
Securityholders. The retiring Trustee shall promptly transfer all property held
by it as Trustee to the successor Trustee, subject to the lien provided for in
Section 7.7.

         If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee or the Holders of
10% in principal amount of the Securities may petition, at the Issuer's expense,
any court of competent jurisdiction for the appointment of a successor Trustee.

         If the Trustee fails to comply with Section 7.10, any Securityholder
may petition any court of competent jurisdiction for the removal of the Trustee
and the appointment of a successor Trustee.

         Notwithstanding the replacement of the Trustee pursuant to this
Section, the Issuer's obligations under Section 7.7 shall continue for the
benefit of the retiring Trustee.

         SECTION 7.9.   Successor Trustee by Merger. If the Trustee consolidates
with, merges or converts into, or transfers all or substantially all its
corporate trust business or assets to, another corporation or banking
association, the resulting, surviving or transferee corporation without any
further act shall be the successor Trustee.

         In case at the time such successor or successors by merger, conversion
or consolidation to the Trustee shall succeed to the trusts created by this
Indenture, any of the Securities shall have been authenticated but not
delivered, any such successor to the Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Securities so
authenticated; and in case at that time any of the Securities shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor to the Trustee; provided that the right to adopt the certificate of
authentication of any predecessor Trustee or authenticate Securities in the name
of any predecessor Trustee shall only apply to its successor or successors by
merger, consolidation or conversion.

         SECTION 7.10.  Eligibility; Disqualification. The Trustee shall at all
times satisfy the requirements of TIA (S) 310(a). The Trustee shall have a
combined capital and surplus
<PAGE>

                                                                              45

of at least $100 million as set forth in its most recent published annual report
of condition. The Trustee shall comply with TIA (S) 310(b); provided, however,
that there shall be excluded from the operation of TIA (S) 310(b)(1) any
indenture or indentures under which other securities or certificates of interest
or participation in other securities of the Issuer are outstanding if the
requirements for such exclusion set forth in TIA (S) 310(b)(1) are met.

         SECTION 7.11.  Preferential Collection of Claims Against Issuer. The
Trustee shall comply with TIA ss. 311(a), excluding any creditor relationship
listed in TIA ss. 311(b). A Trustee who has resigned or been removed shall be
subject to TIA ss. 311(a) to the extent indicated.

         SECTION 7.12.  Trustee's Application for Instruction from the Issuer.
Any application by the Trustee for written instructions from the Issuer may, at
the option of the Trustee, set forth in writing any action proposed to be taken
or omitted by the Trustee under this Indenture and the date on and/or after
which such action shall be taken or such omission shall be effective. The
Trustee shall not be liable for any action taken by, or omission of, the Trustee
in accordance with a proposal included in such application on or after the date
specified in such application (which date shall not be less than three Business
Days after the date any officer of the Issuer actually receives such
application, unless any such officer shall have consented in writing to any
earlier date) unless prior to taking any such action (or the effective date in
the case of an omission), the Trustee shall have received written instructions
in response to such application specifying the action to be taken or omitted.

         SECTION 7.13.  Proceeds of Collateral; Proceeds Remaining in Account.
All moneys (a) collected by the Trustee (and the Collateral Agent) under the
Hanover Guarantee, upon any sale or disposition of the Trust Estate pursuant to
Section 17.3 of the Lease (together with all other moneys received by the
Trustee thereunder) or pursuant to any other Operative Agreement and (b)
contained in the Account on the date of an acceleration of the Securities or on
the Stated Maturity (excluding, in the case of any application made pursuant to
this Section 7.13 on the Stated Maturity, an amount equal to the aggregate
amount of Excess Sale Proceeds or Final Rent Payment deposited in the Account on
or prior to such date, which amount shall instead be applied at the Stated
Maturity in accordance with Section 8.4(b)(4) or Section 8.4(b)(5),
respectively), or deposited in the Account thereafter, shall be applied as
follows:

         First, to the payment of (i) any and all sums advanced by the Trustee
     in order to preserve the Trust Estate or preserve its security interest
     therein and (ii) the expenses of retaking, holding, preparing for sale,
     charter or lease, selling or otherwise disposing or realizing on the Trust
     Estate, or of any exercise by the Trustee of its rights under the Operative
     Agreements, together with reasonable attorneys' fees and court costs;

         Second, to the payment of the amounts then due and unpaid for principal
     of and interest on the Securities, together with any applicable premiums
     with respect to the Securities and all other amounts then due the Holders
     under the Operative Agreements, ratably to all the Holders according to the
     amounts due and payable on the Securities in respect of principal, interest
     and any applicable premium and all other amounts due the Holders under the
     Operative Agreements;
<PAGE>

                                                                              46

         Third, to each Person indemnified by the Issuer, other than the
     Certificate Holders, for all amounts then due, on a pari passu basis;

         Fourth, to the Issuer for all amounts then due the Issuer under
     Section 13 of the Participation Agreement;

         Fifth, to the Issuer, for distribution to the Certificate Holders as
     provided for in the Trust Agreement of an amount equal to the aggregate
     outstanding Certificate Holder Contributions and all amounts then due and
     payable on account of the Certificate Holder Yield together with any
     applicable premium with respect to the Certificates; and

         Sixth, to the extent moneys remain after application pursuant to
     clauses First through Fifth above, to the Lessee or to whomever may be
     lawfully entitled to receive such surplus.

                                  ARTICLE VIII

                 Discharge of Indenture; Defeasance; The Account

         SECTION 8.1.   Discharge of Liability on Securities; Defeasance. (a)
Subject to Section 8.1(c), when (i)(x) the Issuer delivers to the Trustee all
outstanding Securities (other than Securities replaced pursuant to Section 2.9)
for cancellation or (y) all outstanding Securities not theretofore delivered for
cancellation have become due and payable, whether at maturity or upon redemption
or will become due and payable within one year or are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name and at the expense
of the Issuer and the Issuer or any Hanover Guarantor irrevocably deposits or
causes to be deposited with the Trustee as trust funds in trust solely for the
benefit of the Holders money in U.S. dollars, non-callable U.S. Government
Obligations, or a combination thereof, in such amounts as will be sufficient
without consideration of any reinvestment of interest to pay and discharge the
entire indebtedness on such Securities not theretofore delivered to the Trustee
for cancellation for principal, premium, if any, and accrued interest to the
date of maturity or redemption, (ii) no Default or Event of Default shall have
occurred and be continuing on the date of such deposit or shall occur as a
result of such deposit and such deposit will not result in a breach or violation
of, or constitute a default under, any other instrument to which the Issuer or
any Hanover Guarantor is a party or by which the Issuer or any Hanover Guarantor
is bound; (iii) the Issuer or any Hanover Guarantor has paid or caused to be
paid all sums payable by it under this Indenture and the Securities; and (iv)
the Issuer has delivered irrevocable instructions to the Trustee under this
Indenture to apply the deposited money toward the payment of such Securities at
maturity or the Redemption Date, as the case may be, then the Trustee shall
acknowledge satisfaction and discharge of this Indenture on demand of the Issuer
(accompanied by an Officers' Certificate and an Opinion of Counsel stating that
all conditions precedent specified herein relating to the satisfaction and
discharge of this Indenture have been complied with) and at the cost and expense
of the Issuer.

         (b)  Subject to Sections 8.1(c) and 8.2, the Issuer at any time may
terminate (i) all its obligations under the Securities and this Indenture
("legal defeasance option"), and after
<PAGE>

                                                                              47

giving effect to such legal defeasance, any omission to comply with such
obligations shall no longer constitute a Default or Event of Default or (ii) its
obligations under Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.14, 3.15, 3.16, 3.18, 3.19, 3.20, 3.22 (with respect to the first
sentence thereof) and 3.24 and the Issuer may omit to comply with and shall have
no liability in respect of any term, condition or limitation set forth in any
such covenant, whether directly or indirectly, by reason of any reference
elsewhere herein to any such covenant or by reason of any reference in any such
covenant to any other provision herein or in any other document and such
omission to comply with such covenants shall no longer constitute a Default or
an Event of Default under Section 6.1(4) and the operation of Sections 6.1(3),
6.1(8), 6.1(9) (but only with respect to a Significant Subsidiary), 6.1(10) (but
only with respect to a Restricted Subsidiary) and 6.1(11), and the events
specified in such Sections shall no longer constitute an Event of Default (this
clause (ii) being referred to as the "covenant defeasance option"), but except
as specified above, the remainder of this Indenture and the Securities shall be
unaffected thereby. The Issuer may exercise its legal defeasance option
notwithstanding its prior exercise of its covenant defeasance option. If the
Issuer exercises its covenant defeasance option, the Issuer may elect to have
any Subsidiary Guarantees in effect at such time terminate.

         If the Issuer exercises its legal defeasance option, payment of the
Securities may not be accelerated because of an Event of Default, and the
Hanover Guarantees in effect at such time shall terminate. If the Issuer
exercises its covenant defeasance option, payment of the Securities may not be
accelerated because of an Event of Default specified in Section 6.1(4) (as such
Section relates to Sections 3.2, 3.3, 3.4, 3.5, 3.6, 3.7, 3.8, 3.9, 3.10, 3.11,
3.12, 3.13, 3.14, 3.15, 3.16, 3.18, 3.19, 3.20, 3.22 (with respect to the first
sentence thereof), 3.24, 6.1(3), 6.1(8), 6.1(9) (but only with respect to a
Restricted Subsidiary), 6.1(10) (but only with respect to a Restricted
Subsidiary) or 6.1(11).

         Upon satisfaction of the conditions set forth herein and upon request
of the Issuer, the Trustee shall acknowledge in writing the discharge of those
obligations that the Issuer terminates.

         (c)  Notwithstanding the provisions of Sections 8.1(a) and (b), the
Issuer's obligations in Sections 2.1(d), 2.1(e), 2.2, 2.3, 2.4, 2.5, 2.6, 2.9,
2.10, 2.11, 2.12, 2.16, 3.1, 3.21, 3.22 (with respect to the second sentence
thereof), 3.23, 3.25, 3.26, 3.27, 7.7, and 7.8 and in this Article 8 shall
survive until the Securities have been paid in full. Thereafter, the Issuer's
obligations in Sections 7.7, 8.4, 8.5 and 8.6 shall survive.

         SECTION 8.2.   Conditions to Defeasance. The Issuer may exercise its
legal defeasance option or its covenant defeasance option only if:

                  (a)   the Issuer irrevocably deposits in trust with the
         Trustee for the benefit of the Holders money in U.S. dollars or U.S.
         Government Obligations or a combination thereof for the payment of
         principal, premium, if any, and interest on the Securities to maturity
         or redemption, as the case may be;

                  (b)   the Issuer delivers to the Trustee a certificate from a
         nationally recognized firm of independent accountants expressing their
         opinion that the payments of principal and interest when due and
         without reinvestment on the deposited U.S.
<PAGE>

                                                                              48

         Government Obligations plus any deposited money without investment will
         provide cash at such times and in such amounts as will be sufficient to
         pay principal and interest when due on all the Securities to maturity;

                  (c)   no Default or Event of Default shall have occurred and
         be continuing on the date of such deposit or, with respect to certain
         bankruptcy or insolvency Events of Default, on the 91st day after such
         date of deposit;

                  (d)   such legal defeasance or covenant defeasance shall not
         result in a breach or violation of, or constitute a Default under, this
         Indenture or any other material agreement or instrument to which the
         Issuer is a party or by which the Issuer is bound;

                  (e)   the Issuer shall have delivered to the Trustee an
         Opinion of Counsel (subject to customary assumptions and exclusions) to
         the effect that (A) the Securities and (B) assuming no intervening
         bankruptcy of the Issuer between the date of deposit and the 91st day
         following the deposit and that no Holder of the Securities is an
         insider of the Issuer, after the 91st day following the deposit, the
         trust funds will not be subject to the effect of any applicable
         bankruptcy, insolvency, reorganization or similar laws affecting
         creditors' right generally;

                  (f)   the deposit does not constitute a default under any
         other agreement binding on the Issuer;

                  (g)   the Issuer delivers to the Trustee an Opinion of Counsel
         (subject to customary assumptions and exclusions) to the effect that
         the trust resulting from the deposit does not constitute, or is
         qualified as, a regulated investment company under the Investment
         Issuer Act of 1940;

                  (h)   in the case of the legal defeasance option, the Issuer
         shall have delivered to the Trustee an Opinion of Counsel (subject to
         customary assumptions and exclusions) in the United States stating that
         (i) the Issuer has received from, or there has been published by, the
         Internal Revenue Service a ruling, or (ii) since the date of this
         Indenture there has been a change in the applicable federal income tax
         law, in either case to the effect that, and based thereon such Opinion
         of Counsel shall confirm that, the Securityholders will not recognize
         income, gain or loss for federal income tax purposes as a result of
         such defeasance and will be subject to federal income tax on the same
         amounts, in the same manner and at the same times as would have been
         the case if such legal defeasance had not occurred;

                  (i)   in the case of the covenant defeasance option, the
         Issuer shall have delivered to the Trustee an Opinion of Counsel
         (subject to customary assumptions and exclusions) in the United States
         to the effect that the Securityholders will not recognize income, gain
         or loss for federal income tax purposes as a result of such deposit and
         covenant defeasance and will be subject to federal income tax on the
         same amount, in the same manner and at the same times as would have
         been the case if such deposit and covenant defeasance had not occurred;
         and
<PAGE>

                                                                              49

                  (j)   the Issuer delivers to the Trustee an Officers'
         Certificate and an Opinion of Counsel, each stating that all conditions
         precedent to the defeasance and discharge of the Securities and this
         Indenture as contemplated by this Article VIII have been complied with.

         SECTION 8.3.   Application of Trust Money. The Trustee shall hold in
trust money or U.S. Government Obligations deposited with it pursuant to this
Article VIII. It shall apply the deposited money and the money from U.S.
Government Obligations through the Paying Agent and in accordance with the terms
of this Indenture to the payment of principal of and interest on the Securities.

         SECTION 8.4.   The Account. (a) The Trustee shall establish an account
(the "Account") into which the Trustee and the Collateral Agent shall deposit
all payments, receipts and other consideration of any kind whatsoever paid under
the Lease and received by the Trustee, in its capacity as Collateral Agent,
pursuant to the Assignment of Lease.

         (b)  Payments deposited from time to time in the Account shall be paid
out as follows:

         (1)  Any such payment identified by the Lessee as Basic Rent shall be
     paid out of the Account by the Trustee on the relevant Payment Date, and
     shall be applied, first, ratably to the payment of interest and principal
     then due and payable on the Securities until such amounts are paid in full,
     second, to the payment to the Issuer, for distribution to the Certificate
     Holders as provided for in the Trust Agreement, of an amount equal to the
     Certificate Holder Yield then due and payable under the Operative
     Agreements until such amount is paid in full, and, third, the remainder of
     such amount shall be paid out of the Account by the Trustee to such Person
     or Persons as the Issuer may designate.

         (2)  Any payment identified by the Lessee as a payment in respect of
     the Termination Value of any Equipment pursuant to Section 16 of the Lease
     or of the Termination Value of any piece of Equipment pursuant to Section
     20 of the Lease shall be paid out of the Account by the Trustee promptly
     after receipt, and shall be applied, first, ratably to the payment of the
     principal of the Securities that are redeemed in an amount equal to the
     product of (x) Termination Value in respect of such piece or pieces of
     Equipment and (y) the Debt Percentage, together with any applicable premium
     and all accrued and unpaid interest due and payable on such Securities in
     the form of Supplemental Rent under the Lease, and second, to the payment
     to the Issuer, for distribution to the Certificate Holders as provided for
     in the Trust Agreement, of an amount equal to the product of (x) the
     Termination Value in respect of such piece or pieces of Equipment and (y)
     the Contribution Percentage, together with any applicable premium and all
     Certificate Holder Yield due and payable with such amount in the form of
     Supplemental Rent under the Lease.

         (3)  Any payment identified by the Lessee as proceeds of the sale of
     any Equipment pursuant to Section 21 of the Lease (but in any event
     excluding costs and expenses described in Section 21.2(i) of the Lease)
     ("Net Sale Proceeds") shall be paid out of the Account by the Trustee
     promptly after receipt, and shall be applied, first,
<PAGE>

                                                                              50

     ratably to the payment of the principal on the outstanding Securities,
     second, to the payment to the Issuer, for distribution to the Certificate
     Holders as provided for in the Trust Agreement, of an amount not to exceed
     the unpaid Certificate Holder Contribution, and third, the remainder of
     such amount ("Excess Sale Proceeds") shall be held in the Account until the
     Stated Maturity (or, if earlier, the date of an acceleration) for
     application in accordance with Section 8.4(b)(4).

         (4)  On the Stated Maturity, any Excess Sale Proceeds contained in the
     Account shall be applied as follows: first, ratably to the payment of the
     principal and interest on the outstanding Securities, second, to the
     payment to the Issuer, for distribution to the Certificate Holders as
     provided for in the Trust Agreement, of an amount not to exceed the
     Certificate Holder Contribution (whether or not the Lease has terminated
     with respect to any such Equipment), and the Certificate Holder Yield due
     and payable under the Operative Agreements, and third, to the extent monies
     remain, to the Lessee subject to the rights of any other person who may be
     lawfully entitled to receive such surplus.

         (5)  Any payment identified by the Lessee as the Final Rent Payment in
     respect of any piece of Equipment shall be paid out of the Account by the
     Trustee promptly after receipt and shall be applied to the payment of the
     principal of outstanding Securities.

         (6)  Any payment identified by the Lessee as a Wear and Tear Payment or
     any Net Sale Proceeds Shortfall pursuant to Section 21.3 of the Lease shall
     be paid out of the Account by the Trustee promptly after receipt as
     follows: first, ratably to the payment of the principal and interest on the
     outstanding Securities, and second, to the payment to the Issuer for
     distribution to the Certificate Holders as provided for in the Trust
     Agreement.

         (7)  Any payment identified by the Lessee as Supplemental Rent (other
     than any payment of Final Rent Payment) (but in any event excluding all
     Excepted Payments which shall not be paid into the Account) shall be paid
     out of the Account by the Trustee promptly after receipt, and shall be
     applied to the payment of any amounts then owing to the Trustee, the
     Holders, the Certificate Holders and the other parties to the Operative
     Agreements (or any of them) (other than any such amounts payable pursuant
     to the preceding provisions of this Section 8.4(b)) as shall be designated
     by the Lessee (or, in the absence of such designation, ratably according to
     the respective amounts so owing of which the Trustee has received written
     notice).

         (8)  Any payment of insurance proceeds in connection with a Significant
     Casualty or Significant Condemnation shall be paid to the Lessee upon the
     affected piece of Equipment being replaced with Replacement Equipment in
     accordance with the terms of the Lease.

         (9)  Any payment identified by the Lessee as a payment being made
     pursuant to Section 5.1(a) shall be paid out of the Account by the Trustee
     on the relevant Redemption Date, and shall be applied first, ratably to the
     payment of interest then due and payable on the Securities until such
     amounts are paid in full, second, ratably to the payment of principal then
     due and payable on the Securities until such amounts are paid in full, and
     third, ratably to the payment of any applicable premium owing on the
     Securities, if any.
<PAGE>

                                                                              51

         (10) Any such payment identified by the Lessee as a payment being made
     pursuant to Section 5.1(b) shall be paid out of the Account by the Trustee
     on the relevant Redemption Date, and shall be applied first, ratably to the
     payment of Certificate Holder Yield then due and payable on the
     Certificates until such amounts are paid in full, second, ratably to the
     payment of Certificate Holder Contributions then outstanding, and third,
     ratably to the payment of any applicable premium owing on the Certificates,
     if any.

         In the event that the Lessee shall fail to identify the nature of any
payment deposited by it in the Account, or the Trustee in its reasonable
judgment shall determine that the identification made by the Lessee is incorrect
or inappropriate, the nature of such payment shall instead be identified by the
Trustee in its reasonable judgment and applied in the manner specified above
after notifying the Issuer, the Lessee and the Certificate Holders; provided
that, in the event that the Trustee identifies such payment as an Excepted
Payment, such payment shall be paid out of the Account by the Trustee to such
Person or Persons as the Issuer may designate.

         (c)  Upon the satisfaction and discharge of this Indenture pursuant to
Section 8.1, any moneys remaining in the Account shall be paid to such Person or
Persons as the Issuer may direct in writing.

         (d)  Within 30 days after each Payment Date, the Trustee shall provide
the Issuer with an accounting in reasonable detail showing all receipts and
disbursements to and from the Account since the date of the last such
accounting.

         (e)  Notwithstanding anything to the contrary otherwise set forth in
this Indenture or in the Assignment of Lease, Excepted Payments shall not be
paid to the Trustee and shall not be deposited in the Account, but shall be made
at all times directly to the Issuer.

         (f)  To the extent that any monies in the Account represent Excess
Sales Proceeds, the Trustee shall invest such monies at the direction of the
Issuer (or the Issuer's designee, including the Lessee to the extent provided in
Section 11.1 of the Participation Agreement) in securities that are U.S.
Government Obligations or (ii) interest in a money market fund registered under
the Investment Company Act of 1940, as amended, including, without limitation,
the Chase Vista Money Market Mutual Funds or any other mutual fund for which the
Trustee or an Affiliate of the Trustee serves as investment manager,
administrator, shareholder servicing agent, and/or custodian or subcustodian,
notwithstanding that (A) the Trustee or an Affiliate of the Trustee receives
fees from such funds for services rendered, (B) the Trustee charges and colleges
fees for services rendered pursuant to the Indenture, which fees are separate
from the fees received from such funds, and (C) services performed for such
funds and pursuant to this Indenture may at times duplicate those provided to
such funds by the Trustee or its Affiliates.

         SECTION 8.5.   Repayment to Issuer. The Trustee and the Paying Agent
shall promptly turn over to the Issuer upon request any excess money or
securities held by them upon payment of all the obligations under this
Indenture.
<PAGE>

                                                                              52

         Subject to any applicable abandoned property law, the Trustee and the
Paying Agent shall pay to the Issuer upon request any money held by them for the
payment of principal of or interest on the Securities that remains unclaimed for
two years, and, thereafter, Securityholders entitled to the money must look to
the Issuer for payment as general creditors.

         SECTION 8.6.   Indemnity for U.S. Government Obligations. The Issuer
shall pay and shall indemnify the Trustee against any tax, fee or other charge
imposed on or assessed against deposited U.S. Government Obligations or the
principal and interest received on such U.S. Government Obligations.

         SECTION 8.7.   Reinstatement. If the Trustee or Paying Agent is unable
to apply any money or U.S. Government Obligations in accordance with this
Article VIII by reason of any legal proceeding or by reason of any order or
judgment of any court or governmental authority enjoining, restraining or
otherwise prohibiting such application, the obligations of the Issuer under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article VIII until such time as the
Trustee or Paying Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with this Article VIII; provided, however, that, if
the Issuer has made any payment of interest on or principal of any Securities
because of the reinstatement of its obligations, the Issuer shall be subrogated
to the rights of the Holders of such Securities to receive such payment from the
money or U.S. Government Obligations held by the Trustee or Paying Agent.

         SECTION 8.8.   Other Prepayment Matters (a) If on any date the Trustee
or the Issuer shall receive, with respect to any piece of Equipment, any payment
in respect of excess wear and tear pursuant to Section 21.3 of the Lease (a
"Wear and Tear Payment") or any Net Sale Proceeds Shortfall pursuant to Section
21.3 of the Lease, such payment shall be applied in accordance with Section
8.4(b)(6).

         (b)  (i) On any date on which the Lessee is obligated to pay the Issuer
an amount equal to the Termination Value of any Equipment in connection with the
exercise of a Purchase Option or in connection with an Equity Proceeds Purchase,
Control Purchase or Excess Proceeds Purchase, such amount shall be applied to
prepay the Securities on such date in accordance with Section 8.4(b)(2), and
(ii) on any date on which any Equipment shall have been sold pursuant to Section
21 of the Lease, the Issuer shall prepay the Securities on such date in an
amount equal to the proceeds of such sale (net of costs and expenses described
in Section 21.2(i) of the Lease) in accordance with Section 8.4(b)(3).

                                   ARTICLE IX

                                   Amendments

         SECTION 9.1.   Without Consent of Holders. The Issuer, the Hanover
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to or consent of any Securityholder:
<PAGE>

                                                                              53

                  (a)   to cure any ambiguity, omission, defect or inconsistency
         that does not materially adversely affect the rights of any Holder;

                  (b)   to provide for uncertificated Securities in addition to
         or in place of certificated Securities; provided, however, that the
         uncertificated Securities are issued in registered form for purposes of
         Section 163(f) of the Code or in a manner such that the uncertificated
         Securities are described in Section 163(f)(2)(B) of the Code;

                  (c)   to add Guarantees with respect to the Securities or
         release a Hanover Guarantor upon its sale or disposition or designation
         as an Unrestricted Subsidiary; provided, however, that the designation
         or sale or disposition is in accord with the applicable provisions of
         the Indenture;

                  (d)   to further secure the Securities;

                  (e)   to add to the covenants of the Issuer for the benefit of
         the Holders or surrender any right or power conferred upon the Issuer;

                  (f)   to make any change that does not adversely affect the
         rights of any Holder; or

                  (g)   to comply with any requirement of the Commission in
         connection with the qualification of this Indenture under the TIA;

provided, however, that Sections 7.13 and 8.4 shall not be amended without the
consent of the Required Certificate Holders.

         After an amendment under this Section becomes effective, the Issuer
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.

         SECTION 9.2.   With Consent of Holders. The Issuer, the Hanover
Guarantors and the Trustee may amend this Indenture or the Securities without
notice to any Securityholder but with the written consent of the Required
Holders (including, without limitation, consents obtained in connection with a
purchase of, or tender offer or exchange offer for, Securities); provided,
however, that Sections 7.13 and 8.4 shall not be amended without the consent of
the Required Certificate Holders. However, without the consent of each
Securityholder affected, an amendment may not:

                  (a)   reduce the amount of Securities whose Holders must
         consent to an amendment;

                  (b)   reduce the stated rate of or extend the stated time for
         payment of interest on any Security;

                  (c)   reduce the principal of or extend the Stated Maturity of
         any Security;
<PAGE>

                                                                              54

                  (d)   reduce the premium payable upon the redemption or
         repurchase of any Security or change the time at which any Security may
         or shall be redeemed or repurchased as described above under Section
         3.3, Section 3.4 (including an amendment to the definition of "Change
         of Control") or Article V or any similar provision, whether through an
         amendment to or waiver of Section 3.3, Section 3.4 or Article V, a
         definition or otherwise;

                  (e)   make any Security payable in money other than that
         stated in the Security;

                  (f)   impair the right of any Holder to receive payment of
         principal of, premium, if any, and interest on such Holder's Securities
         on or after the due dates therefor or to institute suit for the
         enforcement of any payment on or with respect to such Holder's
         Securities; or

                  (g)   make any change to the amendment provisions which
         require each Holder's consent or to the waiver provisions.

         It shall not be necessary for the consent of the Holders under this
Section to approve the particular form of any proposed amendment, but it shall
be sufficient if such consent approves the substance thereof.

         After an amendment under this Section becomes effective, the Issuer
shall mail to Securityholders a notice briefly describing such amendment. The
failure to give such notice to all Securityholders, or any defect therein, shall
not impair or affect the validity of an amendment under this Section.

         SECTION 9.3.   Compliance with Trust Indenture Act. Every amendment to
this Indenture or the Securities shall comply with the TIA as then in effect.

         SECTION 9.4.   Revocation and Effect of Consents and Waivers. A consent
to an amendment or a waiver by a Holder of a Security shall bind the Holder and
every subsequent Holder of that Security or portion of the Security that
evidences the same debt as the consenting Holder's Security, even if notation of
the consent or waiver is not made on the Security. However, any such Holder or
subsequent Holder may revoke the consent or waiver as to such Holder's Security
or portion of the Security if the Trustee receives the notice of revocation
before the date the amendment or waiver becomes effective. After an amendment or
waiver becomes effective, it shall bind every Securityholder. An amendment or
waiver shall become effective upon receipt by the Trustee of the requisite
number of written consents under Section 9.1 or 9.2 as applicable.

         The Issuer may, but shall not be obligated to, fix a record date for
the purpose of determining the Securityholders entitled to give their consent or
take any other action described above or required or permitted to be taken
pursuant to this Indenture. If a record date is fixed, then notwithstanding the
immediately preceding paragraph, those Persons who were Securityholders at such
record date (or their duly designated proxies), and only those Persons, shall be
entitled to give such consent or to revoke any consent previously given or to
take any
<PAGE>

                                                                              55

such action, whether or not such Persons continue to be Holders after such
record date. No such consent shall become valid or effective more than 120 days
after such record date.

         SECTION 9.5.   Notation on or Exchange of Securities. If an amendment
changes the terms of a Security, the Trustee may require the Holder of the
Security to deliver it to the Trustee. The Trustee may place an appropriate
notation on the Security regarding the changed terms and return it to the
Holder. Alternatively, if the Issuer or the Trustee so determines, the Issuer in
exchange for the Security shall issue and the Trustee shall authenticate a new
Security that reflects the changed terms. Failure to make the appropriate
notation or to issue a new Security shall not affect the validity of such
amendment.

         SECTION 9.6.   Trustee To Sign Amendments. The Trustee shall sign any
amendment authorized pursuant to this Article IX if the amendment does not
adversely affect the rights, duties, liabilities or immunities of the Trustee.
If it does, the Trustee may but need not sign it. In signing such amendment the
Trustee shall be entitled to receive indemnity reasonably satisfactory to it and
to receive, and (subject to Sections 7.1 and 7.2) shall be fully protected in
relying upon an Officers' Certificate and an Opinion of Counsel stating that
such amendment is authorized or permitted by this Indenture.

         SECTION 9.7.   Acknowledgement of Certain Other Matters Requiring
Consent.

         The parties hereby acknowledge that:

                  (a)   pursuant to the terms of the Participation Agreement,
         the material terms of the Participation Agreement, the Lease (subject
         to certain exceptions set forth below), the Hanover Guarantee and the
         Assignment of Lease may not be amended, supplemented, waived or
         modified without the written agreement and consent of, among others,
         the Trustee with the written consent of the Required Holders
         (including, without limitation, consents obtained in connection with a
         purchase of, or tender offer or exchange offer for, Securities);
         provided, however, that the Issuer, the Lessee and Hanover, the Trustee
         may amend, supplement, waive or modify without the written consent of
         the Required Holders certain provisions of the Lease which relate to,
         among other items, the return and redelivery of the Equipment at the
         expiration of the Lease term, the use of the Equipment and the
         subleasing of the Equipment;

                  (b)   notwithstanding the provisions of Section 9.7(a), no
         party may, without the written consent of each Securityholder affected,
         amend, change or modify in any material respect the obligations of the
         Lessee and/or Hanover (or any of the material provisions or definitions
         with respect thereto) to (i) make payments of rent under the Lease or
         (ii) purchase Equipment yielding proceeds sufficient to enable the
         Issuer to make and consummate a Change of Control Offer; and

                  (c)   certain provisions of the Lease, the Participation
         Agreement and other Operative Agreements which are material to the
         Certificate Holders of the Issuer may not be amended, supplemented,
         waived or modified without their consent if such amendment, waiver,
         supplement or modification would materially adversely affect the
         Certificate Holders.
<PAGE>

                                                                              56

         SECTION 9.8.   Nonrecourse. Anything to the contrary contained in this
Indenture or in any other Operative Agreement notwithstanding, neither the
Certificate Holders, the Trust Company, nor any officer, director or shareholder
thereof, nor any of the Issuer's or the Trust Company's successors or assigns
(all such Persons being hereinafter referred to collectively as the "Exculpated
Person"), shall be personally liable in any respect for any liability or
obligation hereunder or under any other Operative Agreement including the
payment of the principal of, or interest on, the Securities, or for monetary
damages for the breach of performance of any of the representations, warranties,
agreements, undertakings or covenants of the Issuer contained in this Indenture
or any of the other Operative Agreements, and the Trustee and each Holder, by
accepting a Security, agree that, in the event any of them pursues any remedies
available to them under this Indenture or any other Operative Agreement, neither
the Trustee nor the Holders shall have any recourse against the Certificate
Holders, the Trust Company, nor any other Exculpated Person, for any deficiency,
loss or claim for monetary damages or otherwise resulting therefrom and recourse
shall be had solely and exclusively against the Issuer and the Collateral and,
to the extent provided therefore in the Hanover Guarantee, the Hanover
Guarantors; provided, however, each Exculpated Person shall remain liable for
its own gross negligence or willful misconduct and for any breach by such
Exculpated Person of any covenant or representation undertaken or made by it in
its individual capacity as provided herein or in the other Operative Agreements.
Nothing contained herein shall be taken to prevent recourse against the
enforcement of remedies against the Collateral in respect of any and all
liabilities, obligations and undertakings contained in this Indenture or any
other Operative Agreement. Notwithstanding the foregoing provisions of this
Section 9.8, nothing in this Indenture or any other Operative Agreement shall
(a) constitute a waiver, release or discharge of any obligation evidenced or
secured by this Indenture or any other Security Document, (b) limit the right of
the Trustee or any Holder to name the Issuer as a party defendant in any action
or suit for judicial foreclosure and sale under any Security Document, or (c)
affect in any way the validity or enforceability of the Hanover Guarantee or any
other guaranty (whether of payment and/or performance) given to the Trustee or
the Holders, or of any indemnity agreement given by the Issuer, in connection
with the Securities issued hereunder.

         SECTION 9.9.   Subordination. The obligations of each Hanover Guarantor
under this Indenture shall be subordinated in right of payment to the prior
payment of Senior Indebtedness and Guarantor Senior Indebtedness of such Hanover
Guarantor to the same extent as such Hanover Guarantor's payment obligations
under the Guarantee are subordinated to prior payment of Senior Indebtedness and
Guarantor Senior Indebtedness, mutatis mutandis.
<PAGE>

                                                                              57

                                   ARTICLE X

                                  Miscellaneous

         SECTION 10.1.  Trust Indenture Act Controls. If any provision of this
Indenture limits, qualifies or conflicts with another provision which is
required to be included in this Indenture by the TIA, the provision required by
the TIA shall control. Each Hanover Guarantor in addition to performing its
obligations under its Hanover Guarantee shall perform such other obligations as
may be imposed upon it with respect to this Indenture under the TIA.

         SECTION 10.2.  Notices. Any notice or communication shall be in writing
and delivered in person or mailed by first-class mail addressed as follows:

                  if to the Issuer:

                  Hanover Equipment Trust 2001A
                  c/o Wilmington Trust Company
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware 19890
                  Attention: Corporate Trust Administration
                  Telecopy No.: 302-651-8882

                  With a copy to:

                  Morris, James, Hitchens & Williams LLP
                  222 Delaware Avenue
                  10th Floor
                  P. O. Box 2306
                  Wilmington, Delaware 19899
                  Attention: Lewis C. Ledyard III
                  Telecopy No.: (302) 571-1750

                  if to the Trustee:

                  Wilmington Trust FSB
                  Rodney Square North
                  1100 North Market Street
                  Wilmington, Delaware 19890
                  Attention:  Corporate Trust Administration
                  Telecopy No.: (302) 651-8882

                  and

                  Wilmington Trust FSB
<PAGE>

                                                                              58

                  3773 Howard Hughes Parkway, Suite 300N
                  Las Vegas, Nevada  89109
                  Attention:  Corporate Trust Department
                  Telecopy No.:  (702) 866-2244

         The Issuer or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

         Any notice or communication mailed to a registered Securityholder shall
be mailed to the Securityholder at the Securityholder's address as it appears on
the registration books of the Registrar and shall be sufficiently given if so
mailed within the time prescribed.

         Failure to mail a notice or communication to a Securityholder or any
defect in it shall not affect its sufficiency with respect to other
Securityholders. If a notice or communication is mailed in the manner provided
above, it is duly given, whether or not the addressee receives it.

         SECTION 10.3.  Communication by Holders with other Holders.
Securityholders may communicate pursuant to TIA (S) 312(b) with other
Securityholders with respect to their rights under this Indenture or the
Securities. The Issuer, the Trustee, the Registrar and anyone else shall have
the protection of TIA (S) 312(c).

         SECTION 10.4.  Certificate and Opinion as to Conditions Precedent. Upon
any request or application by the Issuer to the Trustee to take or refrain from
taking any action under this Indenture, the Issuer shall furnish to the Trustee:

         (a)      an Officers' Certificate in form and substance reasonably
                  satisfactory to the Trustee stating that, in the opinion of
                  the signers, all conditions precedent, if any, provided for in
                  this Indenture relating to the proposed action have been
                  complied with; and

         (b)      an Opinion of Counsel in form and substance reasonably
                  satisfactory to the Trustee stating that, in the opinion of
                  such counsel, all such conditions precedent have been complied
                  with.

         SECTION 10.5.  Statements Required in Certificate or Opinion. Each
certificate or opinion with respect to compliance with a covenant or condition
provided for in this Indenture shall include:

                  (a)   a statement that the individual making such certificate
         or opinion has read such covenant or condition;

                  (b)   a brief statement as to the nature and scope of the
         examination or investigation upon which the statements or opinions
         contained in such certificate or opinion are based;
<PAGE>

                                                                              59

                  (c)   a statement that, in the opinion of such individual, he
         has made such examination or investigation as is necessary to enable
         him to express an informed opinion as to whether or not such covenant
         or condition has been complied with; and

                  (d)   a statement as to whether or not, in the opinion of such
         individual, such covenant or condition has been complied with.

         In giving such Opinion of Counsel, counsel may rely as to factual
matters on an Officers' Certificate or on certificates of public officials.

         SECTION 10.6.  When Securities Disregarded. In determining whether the
Holders of the required principal amount of Securities have concurred in any
direction, waiver or consent, Securities owned by the Issuer or by any Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with the Issuer shall be disregarded and deemed not to be
outstanding, except that, for the purpose of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities which the Trustee knows are so owned shall be so disregarded. Also,
subject to the foregoing, only Securities outstanding at the time shall be
considered in any such determination.

         SECTION 10.7.  Rules by Trustee, Paying Agent and Registrar. The
Trustee may make reasonable rules for action by, or a meeting of,
Securityholders. The Registrar and the Paying Agent may make reasonable rules
for their functions.

         SECTION 10.8.  Legal Holidays. A "Legal Holiday" is a Saturday, a
Sunday or other day on which commercial banking institutions are authorized or
required to be closed in New York City. If a payment date is a Legal Holiday,
payment shall be made on the next succeeding day that is not a Legal Holiday,
and no interest shall accrue for the intervening period. If a regular record
date is a Legal Holiday, the record date shall not be affected.

         SECTION 10.9.  GOVERNING LAW. THIS INDENTURE AND THE SECURITIES SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK.

         SECTION 10.10. No Recourse Against Others. An incorporator, director,
officer, employee, stockholder or controlling person, as such, of the Issuer or
any Hanover Guarantor shall not have any liability for any obligations of the
Issuer under the Securities, this Indenture or the Hanover Guarantees or for any
claim based on, in respect of or by reason of such obligations or their
creation. By accepting a Security, each Securityholder shall waive and release
all such liability. The waiver and release shall be part of the consideration
for the issue of the Securities.

         SECTION 10.11. Successors. All agreements of the Issuer in this
Indenture and the Securities shall bind their respective successors. All
agreements of the Trustee in this Indenture shall bind its successors.
<PAGE>

                                                                              60

         SECTION 10.12. Multiple Originals. The parties may sign any number of
copies of this Indenture. Each signed copy shall be an original, but all of them
together represent the same agreement. One signed copy is enough to prove this
Indenture.

         SECTION 10.13. Variable Provisions. The Issuer initially appoints the
Trustee as Paying Agent and Registrar and custodian with respect to any Global
Securities.

         SECTION 10.14. Qualification of Indenture. The Issuer shall qualify
this Indenture under the TIA in accordance with the terms and conditions of the
Exchange and Registration Rights Agreement and shall pay all reasonable costs
and expenses (including attorneys' fees and expenses for the Issuer, the Trustee
and the Holders) incurred in connection therewith, including, but not limited
to, costs and expenses of qualification of this Indenture and the Securities and
printing this Indenture and the Securities. The Trustee shall be entitled to
receive from the Issuer any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.

         SECTION 10.15. Table of Contents; Headings. The table of contents,
cross-reference sheet and headings of the Articles and Sections of this
Indenture have been inserted for convenience of reference only, are not intended
to be considered a part hereof and shall not modify or restrict any of the terms
or provisions hereof.

         SECTION 10.16. Non-Exclusion of the Issuer. The Issuer and the Trustee
(a) acknowledge that various provisions of the Lease and the Participation
Agreement require the delivery by Lessee of various instruments and documents to
both the Trustee and to the Issuer and (b) agree that such provisions shall in
no event be read to limit or modify the rights of the Issuer set forth in
Section 7.12. The Issuer and the Trustee further acknowledge and agree that any
provisions of the Assignment of Lease and of this Indenture that purportedly
assign to the Trustee the Issuer's rights to receive any such instruments or
documents shall not create any inference that such deliveries will be made to
the Trustee to the exclusion of the Issuer, and the Issuer shall in all events
retain the right to receive such deliveries.

         SECTION 10.17. Third Party Beneficiaries. The Certificate Holders shall
be third-party beneficiaries of this Indenture.

                                   ARTICLE XI

                             Collateral and Security

         SECTION 11.1.  Collateral and Security Documents; Future Guarantees.
(a) In order to secure the due and punctual payment of the principal of and
interest and premium, if any, on the Securities of each series and the
Certificate Holder Contributions and the Certificate Holder Yield and premium,
if any, on the Certificates when and as the same shall be due and payable,
whether on a Payment Date, Stated Maturity, by acceleration, redemption or
otherwise, and interest on the overdue principal of and interest (to the extent
permitted by law), if any, on the Securities of each series, the Certificate
Holder Contribution and the Certificate
<PAGE>

                                                                              61

Holder Yield and the performance of all other obligations of the Issuer to the
Holders or the Trustee under this Indenture and the Securities of each series
(the "Issuer Obligations"), the Issuer and the Trustee have simultaneously with
the execution of this Indenture entered into the Security Agreement pursuant to
which the Issuer has granted to the Trustee, in its capacity as Collateral
Agent, for the benefit of the Holders of Securities of each series and the
Certificate Holders, a first priority Lien on and security interest in the
Collateral described therein, subject to the exceptions permitted by Section
3.9. Each Hanover Guarantor, by executing its respective Hanover Guarantee and
this Indenture, shall Guarantee the Issuer Obligations. Each Subsidiary of
Hanover that becomes a Material Subsidiary and becomes a guarantor under the
Senior Credit Agreement shall enter into a supplement to the Hanover Guarantee
and an assumption agreement supplemental to the Participation Agreement.
Subsequent to the date of this Indenture, the Issuer and the Hanover Guarantors
shall execute, as soon as practicable, any further security agreements
(substantially in the form of the Security Agreement) or other agreements
necessary and take such other actions as necessary to create and maintain an
effective security interest in the Equipment and all proceeds and products of
any and all of the foregoing.

         The Trustee, the Issuer and the Hanover Guarantors hereby agree that
the Trustee, in its capacity as Collateral Agent, holds the Collateral in trust
for the benefit of the Holders and the Certificate Holders pursuant to the terms
of the Security Documents.

         (b)  Each Holder, by accepting a Security, agrees to all of the terms
and provisions of the Security Documents, as the same may be amended from time
to time pursuant to the provisions of the Security Documents and this Indenture.

         SECTION 11.2.  Recording and Opinions. (a) The Issuer and the Hanover
Guarantors as soon as practicable shall take or cause to be taken all action
required to perfect, maintain, preserve and protect the first priority Lien on
and security interest in the Collateral, subject to the exceptions set forth in
Section 3.9, granted by the Security Documents, including without limitation,
the filing of financing statements, continuation statements and any instruments
of further assurance, in such manner and in such places as may be required by
law fully to preserve and protect the rights of the Holders and the Trustee, as
in its capacity as Collateral Agent, under this Indenture and the Security
Documents to all property now and hereafter comprising the Collateral. The
Issuer shall from time to time promptly pay all financing and continuation
statement recording and/or filing fees, charges and taxes relating to this
Indenture and the Security Documents, any amendments thereto and any other
instruments of further assurance required pursuant to the Security Documents.

         (b)  The Issuer shall furnish to the Trustee promptly after the time of
execution and delivery of this Indenture, Opinion(s) of Counsel either (i)
substantially to the effect that, in the opinion of such Counsel, this Indenture
and the grant of a security interest in the Collateral intended to be made by
the Security Documents and all other instruments of further assurance,
including, without limitation, financing statements, have been properly recorded
and filed to the extent necessary to perfect the security interests in the
Collateral created by the Security Documents and reciting the details of such
action, and stating that as to the security interests created pursuant to the
Security Documents, such recordings and filings are the only recordings and
filings necessary to give notice thereof and that no re-recordings or refilings
are necessary to maintain such notice (other than as stated in such opinion) or
(ii) to the effect that, in the opinion
<PAGE>

                                                                              62

of such counsel, no such action is necessary to perfect such security interests.
To the extent not required by the preceding sentence, the Issuer shall deliver
the opinion(s) required by Section 314(b) of the TIA. Subsequent to the date of
this Indenture, at the time of the execution of any Security Document,
Opinion(s) of Counsel with respect to the identical matters set forth in this
paragraph (ii) and an Opinion of Counsel to the effect that the Security
Documents executed on such date constitute the legally valid, binding and
enforceable obligation of the Issuer, subject to acceptable bankruptcy and
similar exceptions, shall be delivered to the Trustee.

         (c)  The Issuer shall furnish to the Trustee as promptly as practicable
after each May 15, beginning with the May 15 following the date of this
Indenture, and in any event prior to July 15 in each year, an Opinion of
Counsel, dated as of such date, either (i)(A) stating that, in the opinion of
such counsel, action has been taken with respect to the recording, filing,
re-recording and refiling of all supplemental indentures, financing statements
and continuation statements as is necessary to maintain the Lien of the Security
Documents and reciting with respect to the security interests in the Collateral
the details of such action or referring to prior Opinions of Counsel in which
such details are given, and (B) stating that, based on relevant laws as in
effect on the date of such Opinion of Counsel, all financing statements and
continuation statements have been executed and filed that are necessary as of
such date and during the succeeding 12 months fully to maintain the security
interest of the Holders and the Trustee hereunder and under the Security
Documents with respect to the Collateral, or (ii) stating that, in the opinion
of such Counsel, no such action is necessary to maintain such Lien.

         (d)  If the Lessee shall at any time purchase all or any portion of the
Equipment pursuant to Section 16.2 of the Lease or exercise its Purchase Option
or its Maturity Date Purchase Option or make a Control Purchase or Excess
Proceeds Purchase with respect to any of the Equipment under Section 20 of the
Lease, or if the Equipment shall be sold in accordance with Section 21 of the
Lease, then, upon satisfaction of the Issuer's obligation (i) to prepay the
applicable portion of the Securities pursuant to Section 8.8(c) and to pay the
applicable portion of the accrued and unpaid interest on the Securities so
prepaid and any premium, if applicable, and (ii) to prepay the Certificate
Holder Contributions and the Certificate Holder Yield and any applicable premium
when due, the Trustee, in its capacity as Collateral Agent, shall release the
applicable Equipment from the Liens created by the Security Documents. In
addition, upon the payment in full of the Securities and all other amounts owing
by the Issuer or the Lessee hereunder or under any other Operative Agreement,
the Trustee, in its capacity as Collateral Agent, shall release all the
Equipment from the Liens created by the Security Documents. Upon request of the
Issuer following any such release, the Trustee, in its capacity as Collateral
Agent, shall, at the sole cost and expense of the Issuer, execute and deliver to
the Issuer or the Lessee such documents as the Issuer shall reasonably request
to evidence such release.

         (e)  Notwithstanding anything to the contrary herein, upon the payment
in full of (i) the Securities and all other amounts owing by the Issuer or the
Lessee hereunder or under any other Operative Agreement, (ii) the Certificates
and all other amounts due to the Certificate Holders, and (iii) all amounts
owing by the Lessee to the Issuer or to any other Person under the Operative
Agreements, all remaining moneys in the Account shall be paid out to the Lessee.
<PAGE>

                                                                              63

         SECTION 11.3.  Release of Collateral. (a) The Trustee, in its capacity
as Collateral Agent under the Security Documents, shall not at any time release
Collateral from the security interest created by this Indenture and the Security
Documents unless such release is in accordance with the provisions of this
Indenture and the Security Documents.

         (b)  At any time when an Event of Default shall have occurred and be
continuing, no release of Collateral pursuant to the provisions of this
Indenture and the Security Documents shall be effective as against the Holders
of the Securities of any series.

         (c)  The release of any Collateral from the terms of the Security
Documents shall not be deemed to impair the security under this Indenture in
contravention of the provisions hereof if and to the extent the Collateral is
released in accordance with this Indenture and the Security Documents. To the
extent applicable, the Issuer shall cause Section 314(d) of the TIA relating to
the release of property from the Lien of the Security Documents and relating to
the substitution therefor of any property to be subjected to the Lien of the
Security Documents to be complied with. Any certificate or opinion required by
Section 314(d) of the TIA may be made by a Responsible Officer of the Issuer,
except in cases where Section 314(d) of the TIA requires that such certificate
or opinion be made by an Independent Person, which Person shall be an
independent engineer, or other expert selected or approved by the Trustee in the
exercise of reasonable care.

         SECTION 11.4.  Possession and Use of Collateral. Subject to and in
accordance with the provisions of this Indenture and the Security Documents, so
long as no Event of Default shall have occurred and be continuing the Issuer
shall have the right to remain in possession and retain control of the
Collateral other than Trust Moneys held by the Trustee, to operate, manage,
develop, lease, use, consume and enjoy the Collateral (other than Trust Moneys
and other personal property held by, or required to be deposited or pledged
with, the Trustee in its capacity as Collateral Agent under the Indenture or any
Security Document), to alter or repair any Collateral consisting of vehicles,
machinery or equipment so long as such alterations and repairs do not diminish
the value thereof or impair the Lien of the Security Documents thereon and to
collect, receive, use, invest and dispose of the reversions, remainders,
interest, rents, lease payments, issues, profits, revenues, proceeds and other
income thereof.

         SECTION 11.5.  Specified Releases of Collateral. The Issuer shall be
entitled to obtain a full release of all of the Collateral from the Liens of
this Indenture and of the Security Documents upon compliance with the conditions
precedent set forth in Article VIII for satisfaction and discharge of this
Indenture or for legal defeasance of the outstanding Securities of all series
pursuant to Section 8.2. Upon delivery by the Issuer to the Trustee of an
Officers' Certificate and Opinion of Counsel, each to the effect that such
conditions precedent have been complied with (and which may be the same
Officers' Certificate and Opinion of Counsel required by Section 8.2), the
Trustee, in its capacity as Collateral Agent, shall forthwith take all necessary
action (at the request of and the expense of the Issuer) to release and reconvey
to the Issuer all the Collateral, and shall deliver such Collateral in its
possession to the Issuer including, without limitation, the execution and
delivery of releases and satisfactions whenever required.

         SECTION 11.6.  Purchaser Protected. No purchaser or grantee of any
property or rights purporting to be released herefrom shall be bound to
ascertain the authority of the
<PAGE>

                                                                              64

Trustee to execute the release or to inquire as to the existence of any
conditions herein prescribed for the exercise of such authority; nor shall any
purchaser or grantee of any property or rights permitted by this Indenture to be
sold or otherwise disposed of by the Issuer be under any obligation to ascertain
or inquire into the authority of the Issuer to make such sale or other
disposition.

         SECTION 11.7.  Authorization of Actions To Be Taken by The Trustee
Under the Security Documents. Subject to the provisions of the Security
Documents, (a) the Trustee may, in its sole discretion and without the consent
of the Holders or the Certificate Holders, take all actions it deems necessary
or appropriate in order to (i) enforce any of the terms of the Security
Documents and (ii) to collect and receive any and all amounts payable in respect
of the obligations of the Issuer hereunder or of the Hanover Guarantors under
their respective Hanover Guarantees and (b) the Trustee shall have power to
institute and to maintain such suits and proceedings as it may deem expedient to
prevent any impairment of the Collateral by any acts that may be unlawful or in
violation of the Security Documents or this Indenture, and such suits and
proceedings as the Trustee may deem expedient to preserve or protect its
interests and the interests of the Holders and the Certificate Holders in the
Collateral (including the power to institute and maintain suits or proceedings
to restrain the enforcement of or compliance with any legislative or other
governmental enactment, rule or order that may be unconstitutional or otherwise
invalid if the enforcement of, or compliance with, such enactment, rule or order
would impair the security interest thereunder or be prejudicial to the interests
of the Holders or the Certificate Holders of the Trustee).

         SECTION 11.8.  Authorization of Receipt of Funds by the Trustee Under
the Security Documents. The Trustee is authorized to receive any funds for the
benefit of Holders and the Certificate Holders distributed under the Security
Documents, and to make further distributions of such funds to the Holders and to
the Issuer, for distribution to the Certificate Holders, in accordance with the
provisions of Article VIII and the other provisions of this Indenture.

                                  ARTICLE XII

                                Collateral Agent

         SECTION 12.1.  Appointment of Collateral Agent.

         (a)  The Trustee is hereby irrevocably designated and appointed as
Collateral Agent for the Holders and the Certificate Holders under this
Indenture and the Security Documents and is irrevocably authorized to take such
action on behalf of the Holders and the Certificate Holders under the provisions
of the Security Documents and the other Operative Agreements and to exercise
such powers and perform such duties as are expressly delegated to the Collateral
Agent by the terms of the Security Documents and the other Operative Agreements,
together with such other powers as are reasonably incidental thereto.
<PAGE>

                                                                              65

         (b)  Notwithstanding any provision to the contrary elsewhere in this
Indenture, the Trustee, in its capacity as Collateral Agent, shall not have any
duties or responsibilities to the Holders or the Certificate Holders, except
those expressly set forth herein or in any other Security Document or Operative
Agreement, or any fiduciary relationship with any Holder or Certificate Holder,
and no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into the Security Documents or any other Operative
Agreements or otherwise exist against the Trustee, in its capacity as Collateral
Agent.

         SECTION 12.2.  Delegation of Duties. The Trustee, as Collateral Agent,
may execute any of its duties or powers under this Indenture and each of the
other Security Documents and Operative Agreements by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties and powers. The Trustee, as Collateral Agent,
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care, except as otherwise
provided in subsection 12.3.

         SECTION 12.3.  Exculpatory Provisions. Neither the Trustee, as
Collateral Agent, nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (a) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
the Security Documents or any other Operative Agreements (except for its or such
Person's own gross negligence or willful misconduct or any breach of any
representation or covenant made by it in its individual capacity in the
Operating Agreements) of its representations or covenants in the Operating
Agreements), or (b) responsible in any manner to any of the Holders or
Certificate Holders for any recitals, statements, representations or warranties
made by the Trustee, as Collateral Agent, or any officer of it contained in the
Security Documents, any other Operative Agreements or in any certificate,
report, statement or other document referred to or provided for in, or received
by the Trustee, as Collateral Agent, under or in connection with, the Security
Documents or any other Operative Agreements or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of the Security
Documents or any other Operative Agreements. The Trustee, as Collateral Agent,
shall not be under any obligation to any Holder or Certificate Holder to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, any Security Document or any other
Operative Agreements, or to inspect the properties, books or records of the
Issuer.

         SECTION 12.4.  Reliance by Collateral Agent. The Trustee, as Collateral
Agent, shall be entitled to rely, and shall be fully protected in relying, upon
any writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Issuer), independent accountants and other experts selected by the Trustee, as
Collateral Agent.
<PAGE>

                                                                              66

         IN WITNESS WHEREOF, the parties have caused this Indenture to be duly
executed as of the date first written above.

                                       HANOVER EQUIPMENT TRUST 2001A

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

                                           By
                                              -------------------------------
                                           Name:
                                           Title:

                                       WILMINGTON TRUST FSB

                                       By
                                          ----------------------------------
                                       Name:
                                       Title:

                                       HANOVER GUARANTORS (signing solely for
                                       the purposes of Section 2.9, Article IV,
                                       Article IX, Article X and Article XI
                                       hereof)

                                       HANOVER COMPRESSOR COMPANY

                                       By
                                          ----------------------------------
                                       Name:
                                       Title:

                                       HANOVER COMPRESSION LIMITED
                                       PARTNERSHIP

                                       By
                                          ----------------------------------
                                       Name:
                                       Title:
<PAGE>

                                                                              67

                                       HANOVER COMPRESSOR LIMITED HOLDINGS, LLC

                                       By
                                          ----------------------------------
                                       Name:
                                       Title:

                                       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
<PAGE>

                                                                              68

                                       By
                                          ----------------------------------
                                       Name:
                                       Title:

                                       HANOVER APPLIED PROCESS SOLUTIONS, INC.

                                       By
                                          ----------------------------------
                                       Name:
                                       Title:

                                       HANOVER OEC COMPRESSION CORPORATION

                                       By
                                          ----------------------------------
                                       Name:
                                       Title:
<PAGE>

                                                                              69

                                    EXHIBIT A

                       [FORM OF FACE OF INITIAL SECURITY]

                    [Applicable Restricted Securities Legend]
                       [Depository Legend, if applicable]

No. [___]                           Principal Amount $300,000,000, as
                                    revised by the Schedule of Increases and
                                    Decreases in Global Security attached hereto

                       8.50% Senior Secured Notes due 2008

         Hanover Equipment Trust 2001A, a Delaware business trust, promises to
pay to [__________], or registered assigns, the principal sum of $300,000,000
Dollars, as revised by the Schedule of Increases and Decreases in Global
Security attached hereto, on September 1, 2008.

         Interest Payment Dates:       March 1 and September 1
         Record Dates:                 February 15 and August 15

         Additional provisions of this Security are set forth on the other side
of this Security.

                                       HANOVER EQUIPMENT TRUST 2001A

                                       By:
                                          --------------------------------------
                                          Name:
                                          Title:

TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

WILMINGTON TRUST FSB,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.

By:
   --------------------------------------
   Authorized Signatory                          Date: _______ __, 2001

<PAGE>

                   [FORM OF REVERSE SIDE OF INITIAL SECURITY]

                       8.50% Senior Secured Note due 2008

1.    Interest

         Hanover Equipment Trust 2001A, a Delaware business trust (such business
trust, and its successors and assigns under the Indenture hereinafter referred
to, being herein called the "Issuer"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.

         The Issuer will pay interest semiannually in arrears on March 1 and
September 1 of each year commencing March 1, 2002. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Securities or, if no interest has been paid, from September 1, 2001. The Issuer
shall pay interest on overdue principal or premium, if any (plus interest on
such interest to the extent lawful), at the rate borne by the Securities to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

2.    Method of Payment

         By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Issuer shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Issuer will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the February 15 or August 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Issuer will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of Securities represented by a Global
Security (including principal, premium, if any, and interest) will be made by
the transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Issuer will make all payments in respect of a
Definitive Security (including principal, premium, if any, and interest) by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on the Securities may also be made, in the case of a
Holder of a least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 15 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).

3.    Paying Agent and Registrar

         Initially, Wilmington Trust FSB (the "Trustee"), will act as Trustee,
Paying Agent and Registrar. The Issuer may appoint and change any Paying Agent,
Registrar or co-registrar without notice to any Securityholder. The Issuer or
any of its Restricted Subsidiaries may act as Paying Agent, Registrar or
co-registrar.

                                       1
<PAGE>

                                                                               2

4.    Indenture

         The Issuer issued the Securities under an Indenture dated as of
August 30, 2001 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Issuer, the
Hanover Guarantors and the Trustee, and a Participation Agreement dated as of
August 30, 2001 (the "Participation Agreement") among the Issuer, the Lessee,
the Certificate Holders named therein, the Hanover Guarantors, the Trustee and
Wilmington Trust Company. The terms of the Securities include those stated in
the Indenture and the Participation Agreement and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. (S)(S)
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized
terms used herein and not defined herein have the meanings ascribed thereto in
the Indenture. The Securities are subject to all such terms, and Securityholders
are referred to the Indenture and the Act for a statement of those terms.

         The Securities are secured senior obligations of the Issuer limited to
$300 million aggregate principal amount (subject to Section 2.2 of the
Indenture). This Security is one of the Original Securities (also referred to as
Initial Securities) referred to in the Indenture. The Initial Securities and the
Exchange Securities will be treated as a single class of securities under the
Indenture. The Indenture and the Participation Agreement impose certain
limitations on, among other things: the Incurrence of Indebtedness by the Issuer
or Hanover or its Restricted Subsidiaries, the purchase or redemption of Capital
Stock of Hanover, the Incurrence of Liens by the Issuer or Hanover or its
Restricted Subsidiaries, the sale or transfer of assets and Capital Stock of
Restricted Subsidiaries of Hanover, the issuance or sale of Capital Stock of
Restricted Subsidiaries of Hanover, the business activities and investments of
the Issuer, mergers and consolidation of Hanover, and transactions with
Affiliates of Hanover and its Restricted Subsidiaries. In addition, the
Participation Agreement limits the ability of Hanover and its Restricted
Subsidiaries to restrict distributions and dividends from Restricted
Subsidiaries.

         To guarantee the due and punctual payment of the principal, premium, if
any, and interest on the Securities and all other amounts payable by the Issuer
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Hanover Guarantors will have
unconditionally guaranteed, upon the release of escrowed funds pursuant to an
Escrow Agreement, dated as of August 30, 2001 (the "Escrow Agreement"), among
the Issuer, Hanover Equipment Trust 2001B and Wilmington Trust Company, as
escrow agent, (and future Hanover Guarantors, together with the Hanover
Guarantors, will unconditionally guarantee) jointly and severally, upon the
occurrence of and during a Lease Event of Default, such obligations on a senior
subordinated basis pursuant to the terms of a Guarantee, to be dated as of the
date the escrowed funds are released pursuant to the Escrow Agreement, by the
Hanover Guarantors.

5.    Redemption

         Except as set forth below, the Securities will not be redeemable at the
option of the Issuer prior to September 1, 2005. On and after such date, the
Issuer may redeem all or, from time to time, a part of the Securities upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's registered address and in accordance with the provisions of
Section 20.1 of the Lease, at the following redemption prices (expressed in

                                       2
<PAGE>

                                                                               3

percentages of principal amount), plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on September 1 of the years set
forth below:

                                                                      Redemption
Period                                                                Price
----------                                                            ----------
2005                                                                  104.250%
2006                                                                  102.125%
2007 and thereafter                                                   100.000%

         Prior to September 1, 2004, to the extent that Hanover raises Net Cash
Proceeds from one or more Public Equity Offerings and such Net Cash Proceeds are
contributed toward an Equipment Purchase (as defined below), the Issuer may on
any one or more occasions redeem up to 35% of the original principal amount of
the Securities with the proceeds from an Equipment Purchase in accordance with
the provisions of Section 20.1(b) of the Lease at a redemption price (expressed
as a percentage of principal amount) of 108.50% plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that at least 65% of the original
principal amount of the Securities must remain outstanding after each such
redemption; provided further, that each such redemption occurs within 60 days of
the date of closing of such Public Equity Offering.

         In each case, the Issuer will redeem the Securities with the proceeds
from the Lessee's purchase of the Issuer's Equipment (the "Equipment Purchase"),
in accordance with Sections 20.1(a) or 20.1(b), as applicable, of the Lease.

         In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed, then on a pro rata basis, by lot or
by such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Securities of $1,000 in original principal amount
or less will be redeemed in part. If any Security is to be redeemed in part
only, the notice of redemption relating to such Security shall state the portion
of the principal amount thereof to be redeemed. A new Security in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption as long as the Issuer has deposited with the Paying Agent
funds in satisfaction of the applicable redemption price pursuant to the
Indenture.

         If, in the sole judgment of the trustee of the Issuer prior to the POI
Acquisition (defined below), the acquisition by the Lessee and its affiliates of
Production Operators Corporation and certain other assets of Schlumberger
Limited ("Schlumberger") and its affiliates, pursuant to that certain Purchase
Agreement dated as of June 28, 2001 by and among Hanover Compression Limited
Partnership, Schlumberger and the other parties named therein (the "POI
Acquisition"), will not be consummated by November 15, 2001, the Issuer may at
its option at any time before November 1, 2001 redeem all, but not less than
all, of the Securities

                                       3
<PAGE>

                                                                               4

then Outstanding at a redemption price (expressed as a percentage of principal
amount) of 101%, plus accrued and unpaid interest to the redemption date
("Special Optional Redemption").

         In the event that there has been no Special Optional Redemption and the
POI Acquisition has not been consummated by November 15, 2001, on November 30,
2001 the Issuer shall redeem all Securities then Outstanding at a redemption
price (expressed as a percentage of principal amount ) of 101%, plus accrued and
unpaid interest to the redemption date ("Special Mandatory Redemption", and
together with Special Optional Redemption, "Special Redemption").

         If a redemption date is on or after an interest record date and on or
before the related interest payment date, the accrued and unpaid interest, if
any, will be paid to the Person in whose name the Security is registered at the
close of business on such record date, and no additional interest will be
payable to Holders whose Securities will be subject to redemption by the Issuer.

6.    Repurchase Provisions

         (a)  Upon a Change of Control with respect to Hanover, any Holder of
Securities will have the right to cause the Issuer to repurchase all or any part
of the Securities of such Holder at a purchase price in cash equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) as
provided in, and subject to the terms of, the Indenture. The Issuer will
repurchase the Securities with the proceeds from an Equipment Purchase in
accordance with Section 20.1(c) of the Lease.

         (b)  In the event of an Asset Disposition that requires the purchase of
Securities pursuant to Section 9.6 of the Participation Agreement and Section
3.3 of the Indenture, the Issuer will be required to apply such Excess Proceeds
to the repayment of the Securities in accordance with the procedures set forth
in Section 3.3 of the Indenture. The Issuer will repurchase the Securities with
the proceeds from an Equipment Purchase in accordance with Section 20.1(d) of
the Lease.

7.    Denominations; Transfer; Exchange

         The Securities are in registered form without coupons in denominations
of principal amount of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before the mailing of a notice of Securities to be redeemed
and ending on the date of such mailing or (ii) any Securities for a period
beginning 15 days before an interest payment date and ending on such interest
payment date.

8.    Persons Deemed Owners

                                       4
<PAGE>

                                                                               5
         The registered Holder of this Security may be treated as the owner of
it for all purposes.

9.    Unclaimed Money

         If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Issuer at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Issuer and
not to the Trustee for payment.

10.   Defeasance

         Subject to certain conditions set forth in the Indenture, the Issuer at
any time may terminate some or all of its obligations under the Securities and
the Indenture if the Issuer deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.

11.   Amendment, Waiver

         Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment or in
respect to a provision that cannot be amended without the written consent of
each Securityholder affected) or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in principal amount of the
then outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Issuer and the Trustee
may amend the Indenture or the Securities to cure any ambiguity, omission,
defect or inconsistency, or to provide for uncertificated Securities in addition
to or in place of certificated Securities, or to add guarantees with respect to
the Securities or to secure the Securities, or to add additional covenants of
the Issuer and the Hanover Guarantors, or surrender rights and powers conferred
on the Issuer, or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Securities.

12.   Defaults and Remedies

         Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest when due on the Securities; (ii) default in payment of
principal or premium, if any, on the Securities at Stated Maturity, upon
required repurchase or upon optional redemption pursuant to paragraphs 5 and 6
of the Securities, upon declaration or otherwise; (iii) the failure by Hanover
or any Hanover Guarantor to comply with its obligations under (x) Section 9.10
of the Participation Agreement or (y) prior to the execution and delivery of the
Participation Agreement, Article IV of the Indenture, which default shall
continue unremedied for a period of 30 days after receipt of notice thereof;
(iv) failure by the Issuer to comply for 30 days after notice with any of its
obligations under the covenants described under Sections 3.2 through 3.27
inclusive of the Indenture (in each case, other than a failure to purchase
Securities when required pursuant to Section 3.3 or 3.4, which failure shall
constitute an Event of Default under clause (ii)

                                       5
<PAGE>

                                                                               6

above); (v) the failure by the Issuer to comply for 60 days after notice with
its other agreements contained in the Indenture or under the Securities (other
than those referred to in (i), (ii), (iii) or (iv) above) or any covenant,
representation or warranty under any of the Operative Agreements; (vi) the
occurrence and continuation of a Lease Event of Default; (vii) the Operative
Agreements no longer create a first priority lien on all the Collateral for the
benefit of the Trustee, in its capacity as Collateral Agent; (viii) default
under any mortgage, indenture or instrument under which there may be issued or
by which there may be secured or evidenced any Indebtedness for money borrowed
by Hanover or any of its Restricted Subsidiaries (or the payment of which is
guaranteed by Hanover or any of its Restricted Subsidiaries), other than
Indebtedness owed to Hanover or a Restricted Subsidiary, whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of, or
interest or premium, if any, on such Indebtedness before the expiration of the
grace period provided in such Indebtedness ("Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its maturity (the "cross
acceleration provision") and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $20.0 million or more; (ix) certain events of
bankruptcy, insolvency or reorganization of the Issuer, Hanover or a Significant
Subsidiary or group of Restricted Subsidiaries that, taken together (as of the
latest audited consolidated financial statements for Hanover and its Restricted
Subsidiaries), would constitute a Significant Subsidiary (the "bankruptcy
provisions"); (x) failure by the Issuer, Hanover or any Restricted Subsidiary to
pay final judgments aggregating in excess of $20.0 million or its foreign
currency equivalent at the time (net of any amounts with respect to which a
reputable and creditworthy insurance company has acknowledged liability in
writing), which judgments are not paid, discharged or stayed for a period of 60
days (the "judgment default provision") or (xi) any respective Guarantee of any
of the Hanover Guarantors ceases to be in full force and effect (except as
contemplated by the terms of the Indenture) or is declared null and void in a
judicial proceeding or any Hanover Guarantor denies or disaffirms its
obligations under the Indenture, the Participation Agreement or its Hanover
Guarantee. However, a default under clauses (iv) and (v) will not constitute an
Event of Default until the Trustee or the Holders of at least 25% in principal
amount of the outstanding Securities notify the Issuer of the default and the
Issuer does not cure such default within the time specified in clauses (iv) and
(v) hereof after receipt of such notice.

         If an Event of Default (other than an Event of Default described in
clause (ix) above) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Events of Default described in clause (ix)
above will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.

         Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.

                                       6
<PAGE>

                                                                               7

13.   Trustee Dealings with the Issuer

         Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Issuer or its Affiliates and may otherwise deal
with the Issuer or its affiliates with the same rights it would have if it were
not Trustee.

14.   No Recourse Against Others

         An incorporator, director, officer, employee, stockholder or
controlling person, as such, of each of the Issuer, or any Hanover Guarantor
shall not have any liability for any obligations of the Issuer under the
Securities, the Indenture, the Participation Agreement or any Hanover Guarantees
or for any claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Securityholder waives and releases
all such liability. The waiver and release are part of the consideration for the
issue of the Securities.

15.   Authentication

         This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.

16.   Abbreviations

         Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

17.   CUSIP Numbers

         Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Issuer has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

18.   Governing Law

         This Security shall be governed by, and construed in accordance with,
the laws of the State of New York.

         The Issuer will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to:

                                       7
<PAGE>

                                                                               8

                        Hanover Equipment Trust 2001A
                        c/o Wilmington Trust Company
                        Rodney Square North
                        1100 North Market Street
                        Wilmington, Delaware 19890
                        Attention: Corporate Trust Administration
                        Telecopy No.: 302-651-8882

                        with a copy to:

                        Hanover Compressor Company
                        Hanover Compression Limited Partnership
                        12001 North Houston Rossyln
                        Houston, Texas  77806
                        Attention: Chief Financial Officer

                                       8
<PAGE>

                                                                               9

                                 ASSIGNMENT FORM

                To assign this Security, fill in the form below:

                  I or we assign and transfer this Security to

          ____________________________________________________________
              (Print or type assignee's name, address and zip code)

          ____________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. No.)

         and irrevocably appoint ___________ agent to transfer this Security on
         the books of the Issuer. The agent may substitute another to act for
         him.

________________________________________________________________________________

Date:____________________                    Your signature:____________________

Signature Guarantee:____________________________________________________________
                                  (Signature must be guaranteed)

________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

In connection with any transfer or exchange of any of the Securities evidenced
by this certificate occurring prior to the date that is two years after the
later of the date of original issuance of such Securities and the last date, if
any, on which such Securities were owned by the Issuer or any Affiliate of the
Issuer, the undersigned confirms that such Securities are being:

CHECK ONE BOX BELOW:

1 [ ]    acquired for the undersigned's own account, without transfer; or

2 [ ]    transferred to the Issuer; or

3 [ ]    transferred pursuant to and in compliance with Rule 144A under the
         Securities Act of 1933, as amended (the "Securities Act"); or

4 [ ]    transferred pursuant to an effective registration statement under the
         Securities Act; or

5 [ ]    transferred pursuant to and in compliance with Regulation S under the
         Securities Act; or

                                       9
<PAGE>

                                                                              10

6 [ ]    transferred to an institutional "accredited investor" (as defined in
         Rule 501(a)(1), (2), (3) or (7) under the Securities Act), that has
         furnished to the Trustee a signed letter containing certain
         representations and agreements (the form of which letter appears as
         Section 2.7 of the Indenture); or

7 [ ]    transferred pursuant to another available exemption from the
         registration requirements of the Securities Act of 1933.

Unless one of the boxes is checked, the Trustee will refuse to register any of
the Securities evidenced by this certificate in the name of any person other
than the registered Holder thereof; provided, however, that if box (5), (6) or
(7) is checked, the Trustee or the Issuer may require, prior to registering any
such transfer of the Securities, in their sole discretion, such legal opinions,
certifications and other information as the Trustee or the Issuer may reasonably
request to confirm that such transfer is being made pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act of 1933, such as the exemption provided by Rule 144 under such
Act.

                                       ------------------------------
                                       Signature

Signature Guarantee:

------------------------------         ------------------------------
(Signature must be guaranteed)         Signature

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

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

TO BE COMPLETED BY PURCHASER IF (1) OR (3) ABOVE IS CHECKED.

         The undersigned represents and warrants that it is purchasing this
Security for its own account or an account with respect to which it exercises
sole investment discretion and that it and any such account is a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act of
1933, as amended, and is aware that the sale to it is being made in reliance on
Rule 144A and acknowledges that it has received such information regarding the
Issuer as the undersigned has requested pursuant to Rule 144A or has determined
not to request such information and that it is aware that the transferor is
relying upon the undersigned's foregoing representations in order to claim the
exemption from registration provided by Rule 144A.

--------------------
Dated:

                                       10
<PAGE>

                                                                              11

                      [TO BE ATTACHED TO GLOBAL SECURITIES]
              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

         The following increases or decreases in this Global Security have been
made:

<TABLE>
<CAPTION>
            Amount of decrease in       Amount of increase in       Principal Amount of this          Signature of authorized
Date of     Principal Amount of this    Principal Amount of this    Global Security following such    signatory of Trustee or
Exchange    Global Security             Global Security             decrease or increase              Securities Custodian
--------    ------------------------    ------------------------    ------------------------------    -----------------------
<S>         <C>                         <C>                         <C>                               <C>

</TABLE>

                                       11
<PAGE>

                                                                              12

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Security purchased by the Issuer
pursuant to Section 3.3 or 3.4 of the Indenture, check either box:

                                [ ]           [ ]
                                3.3           3.4

         If you want to elect to have only part of this Security purchased by
the Issuer pursuant to Section 3.3 or 3.4 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $

Date:                          Your Signature
      ------------------------                ----------------------------------
                                              (Sign exactly as your name appears
                                              on the other side of the Security)

Signature Guarantee:
                     -----------------------------------------------------------
                            (Signature must be guaranteed)

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                       12
<PAGE>

                                   EXHIBIT B

                      [FORM OF FACE OF EXCHANGE SECURITY]

                      [Depository Legend, if applicable]

No. [_____]                                    Principal Amount $300,000,000,
                                               as revised by the Schedule of
                                               Increases and Decreases in Global
                                               Security attached hereto

                                                         CUSIP NO. _____________
                                                             ISIN: _____________

                       8.50% Senior Secured Notes due 2008

         Hanover Equipment Trust 2001A, a Delaware business trust, promises to
pay to [______________], or registered assigns, the principal sum of 300,000,000
Dollars, as revised by the Schedule of Increases and Decreases in Global
Security attached hereto, on September 1, 2008.

         Interest Payment Dates:      March 1 and September 1
         Record Dates:                February 15 and August 15

         Additional provisions of this Security are set forth on the other side
of this Security.

                                       HANOVER EQUIPMENT TRUST 2001A

                                       By:
                                          --------------------------------------

TRUSTEE'S CERTIFICATE OF
  AUTHENTICATION

WILMINGTON TRUST FSB,
as Trustee, certifies
that this is one of
the Securities referred
to in the Indenture.

By:
   -----------------------------------
   Authorized Signatory                     Date: _______ __, 2001

                                       1
<PAGE>

                                                                               2

                   [FORM OF REVERSE SIDE OF EXCHANGE SECURITY]

                       8.50% Senior Secured Note due 2008

1.    Interest

         Hanover Equipment Trust 2001A, a Delaware business trust (such business
trust, and its successors and assigns under the Indenture hereinafter referred
to, being herein called the "Issuer"), promises to pay interest on the principal
amount of this Security at the rate per annum shown above.

         The Issuer will pay interest semiannually in arrears on March 1 and
September 1 of each year commencing March 1, 2002. Interest on the Securities
will accrue from the most recent date to which interest has been paid on the
Securities or, if no interest has been paid, from September 1, 2001. The Issuer
shall pay interest on overdue principal or premium, if any (plus interest on
such interest to the extent lawful), at the rate borne by the Securities to the
extent lawful. Interest will be computed on the basis of a 360-day year of
twelve 30-day months.

2.    Method of Payment

         By at least 10:00 a.m. (New York City time) on the date on which any
principal of or interest on any Security is due and payable, the Issuer shall
irrevocably deposit with the Trustee or the Paying Agent money sufficient to pay
such principal, premium, if any, and/or interest. The Issuer will pay interest
(except Defaulted Interest) to the Persons who are registered Holders of
Securities at the close of business on the February 15 or August 15 next
preceding the interest payment date even if Securities are cancelled,
repurchased or redeemed after the record date and on or before the interest
payment date. Holders must surrender Securities to a Paying Agent to collect
principal payments. The Issuer will pay principal and interest in money of the
United States that at the time of payment is legal tender for payment of public
and private debts. Payments in respect of Securities represented by a Global
Security (including principal, premium, if any, and interest) will be made by
the transfer of immediately available funds to the accounts specified by The
Depository Trust Company. The Issuer will make all payments in respect of a
Definitive Security (including principal, premium, if any, and interest) by
mailing a check to the registered address of each Holder thereof; provided,
however, that payments on the Securities may also be made, in the case of a
Holder of a least $1,000,000 aggregate principal amount of Securities, by wire
transfer to a U.S. dollar account maintained by the payee with a bank in the
United States if such Holder elects payment by wire transfer by giving written
notice to the Trustee or the Paying Agent to such effect designating such
account no later than 15 days immediately preceding the relevant due date for
payment (or such other date as the Trustee may accept in its discretion).

3.    Paying Agent and Registrar

         Initially, Wilmington Trust FSB (the "Trustee"), will act as Trustee,
Paying Agent and Registrar. The Issuer may appoint and change any Paying Agent,
Registrar or co-registrar without notice to any Securityholder. The Issuer or
any of its Restricted Subsidiaries may act as Paying Agent, Registrar or
co-registrar.

                                       2
<PAGE>

                                                                               3

4.    Indenture

         The Issuer issued the Securities under an Indenture dated as of
August 30, 2001 (as it may be amended or supplemented from time to time in
accordance with the terms thereof, the "Indenture"), among the Issuer, the
Hanover Guarantors and the Trustee, and a Participation Agreement dated as of
August 30, 2001 (the "Participation Agreement") among the Issuer, the Lessee,
the Certificate Holders named therein, the Hanover Guarantors, the Trustee and
Wilmington Trust Company. The terms of the Securities include those stated in
the Indenture and the Participation Agreement and those made part of the
Indenture by reference to the Trust Indenture Act of 1939 (15 U.S.C. ss.ss.
77aaa-77bbbb) as in effect on the date of the Indenture (the "Act"). Capitalized
terms used herein and not defined herein have the meanings ascribed thereto in
the Indenture. The Securities are subject to all such terms, and Securityholders
are referred to the Indenture and the Act for a statement of those terms.

         The Securities are secured senior obligations of the Issuer limited to
$300 million aggregate principal amount (subject to Section 2.2 of the
Indenture). This Security is one of the Original Securities (also referred to as
Initial Securities) referred to in the Indenture. The Initial Securities and the
Exchange Securities will be treated as a single class of securities under the
Indenture. The Indenture and the Participation Agreement impose certain
limitations on, among other things: the Incurrence of Indebtedness by the Issuer
or Hanover or its Restricted Subsidiaries, the purchase or redemption of Capital
Stock of Hanover, the Incurrence of Liens by the Issuer or Hanover or its
Restricted Subsidiaries, the sale or transfer of assets and Capital Stock of
Restricted Subsidiaries of Hanover, the issuance or sale of Capital Stock of
Restricted Subsidiaries of Hanover, the business activities and investments of
the Issuer, mergers and consolidation of Hanover, and transactions with
Affiliates of Hanover and its Restricted Subsidiaries. In addition, the
Participation Agreement limits the ability of Hanover and its Restricted
Subsidiaries to restrict distributions and dividends from Restricted
Subsidiaries.

         To guarantee the due and punctual payment of the principal, premium, if
any, and interest on the Securities and all other amounts payable by the Issuer
under the Indenture and the Securities when and as the same shall be due and
payable, whether at maturity, by acceleration or otherwise, according to the
terms of the Securities and the Indenture, the Hanover Guarantors will have
unconditionally guaranteed, upon the release of escrowed funds pursuant to an
Escrow Agreement, dated as of August 30, 2001 (the "Escrow Agreement"), among
the Issuer, Hanover Equipment Trust 2001B and Wilmington Trust Company, as
escrow agent, (and future Hanover Guarantors, together with the Hanover
Guarantors, will unconditionally guarantee) jointly and severally, upon the
occurrence of and during a Lease Event of Default, such obligations on a senior
subordinated basis pursuant to the terms of a Guarantee, to be dated as of the
date the escrowed funds are released pursuant to the Escrow Agreement, by the
Hanover Guarantors.

5.    Redemption

         Except as set forth below, the Securities will not be redeemable at the
option of the Issuer prior to September 1, 2005. On and after such date, the
Issuer may redeem all or, from time to time, a part of the Securities upon not
less than 30 nor more than 60 days' prior notice mailed by first-class mail to
each Holder's registered address and in accordance with the provisions of
Section 20.1 of the Lease, at the following redemption prices (expressed in

                                       3
<PAGE>

                                                                               4

percentages of principal amount), plus accrued and unpaid interest, if any, to
the redemption date (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date), if
redeemed during the 12-month period commencing on September 1 of the years set
forth below:

                                                                      Redemption
Period                                                                Price
----------                                                            ----------
2005                                                                  104.250%
2006                                                                  102.125%
2007 and thereafter                                                   100.000%

         Prior to September 1, 2004, to the extent that Hanover raises Net Cash
Proceeds from one or more Public Equity Offerings and such Net Cash Proceeds are
contributed toward an Equipment Purchase (as defined below), the Issuer may on
any one or more occasions redeem up to 35% of the original principal amount of
the Securities with the proceeds from an Equipment Purchase in accordance with
the provisions of Section 20.1(b) of the Lease at a redemption price (expressed
as a percentage of principal amount) of 108.50% plus accrued and unpaid
interest, if any, to the redemption date (subject to the right of Holders of
record on the relevant record date to receive interest due on the relevant
interest payment date); provided, however, that at least 65% of the original
principal amount of the Securities must remain outstanding after each such
redemption; provided further, that each such redemption occurs within 60 days of
the date of closing of such Public Equity Offering.

         In each case, the Issuer will redeem the Securities with the proceeds
from the Lessee's purchase of the Issuer's Equipment (the "Equipment Purchase"),
in accordance with Sections 20.1(a) or 20.1(b), as applicable, of the Lease.

         In the case of any partial redemption, selection of the Securities for
redemption will be made by the Trustee in compliance with the requirements of
the principal national securities exchange, if any, on which the Securities are
listed or, if the Securities are not listed, then on a pro rata basis, by lot or
by such other method as the Trustee in its sole discretion shall deem to be fair
and appropriate, although no Securities of $1,000 in original principal amount
or less will be redeemed in part. If any Security is to be redeemed in part
only, the notice of redemption relating to such Security shall state the portion
of the principal amount thereof to be redeemed. A new Security in principal
amount equal to the unredeemed portion thereof will be issued in the name of the
Holder thereof upon cancellation of the original Security. On and after the
redemption date, interest will cease to accrue on Securities or portions thereof
called for redemption as long as the Issuer has deposited with the Paying Agent
funds in satisfaction of the applicable redemption price pursuant to the
Indenture.

         If a redemption date is on or after an interest record date and on or
before the related interest payment date, the accrued and unpaid interest, if
any, will be paid to the Person in whose name the Security is registered at the
close of business on such record date, and no additional interest will be
payable to Holders whose Securities will be subject to redemption by the Issuer.

                                       4
<PAGE>

                                                                               5

6.    Repurchase Provisions

         (a)  Upon a Change of Control with respect to Hanover, any Holder of
Securities will have the right to cause the Issuer to repurchase all or any part
of the Securities of such Holder at a purchase price in cash equal to 101% of
the principal amount thereof, plus accrued and unpaid interest, if any, to the
date of repurchase (subject to the right of Holders of record on the relevant
record date to receive interest due on the relevant interest payment date) as
provided in, and subject to the terms of, the Indenture. The Issuer will
repurchase the Securities with the proceeds from an Equipment Purchase in
accordance with Section 20.1(c) of the Lease.

         (b)  In the event of an Asset Disposition that requires the purchase of
Securities pursuant to Section 9.6 of the Participation Agreement and Section
3.3 of the Indenture, the Issuer will be required to apply such Excess Proceeds
to the repayment of the Securities in accordance with the procedures set forth
in Section 3.3 of the Indenture. The Issuer will repurchase the Securities with
the proceeds from an Equipment Purchase in accordance with Section 20.1(d) of
the Lease.

7.    Denominations; Transfer; Exchange

         The Securities are in registered form without coupons in denominations
of principal amount of $1,000 and whole multiples of $1,000. A Holder may
transfer or exchange Securities in accordance with the Indenture. The Registrar
may require a Holder, among other things, to furnish appropriate endorsements or
transfer documents and to pay any taxes and fees required by law or permitted by
the Indenture. The Registrar need not register the transfer of or exchange (i)
any Securities selected for redemption (except, in the case of a Security to be
redeemed in part, the portion of the Security not to be redeemed) for a period
beginning 15 days before the mailing of a notice of Securities to be redeemed
and ending on the date of such mailing or (ii) any Securities for a period
beginning 15 days before an interest payment date and ending on such interest
payment date.

8.    Persons Deemed Owners

         The registered Holder of this Security may be treated as the owner of
it for all purposes.

9.    Unclaimed Money

         If money for the payment of principal or interest remains unclaimed for
two years, the Trustee or Paying Agent shall pay the money back to the Issuer at
its request unless an abandoned property law designates another Person. After
any such payment, Holders entitled to the money must look only to the Issuer and
not to the Trustee for payment.

10.   Defeasance

         Subject to certain conditions set forth in the Indenture, the Issuer at
any time may terminate some or all of its obligations under the Securities and
the Indenture if the Issuer deposits with the Trustee money or U.S. Government
Obligations for the payment of principal and interest on the Securities to
redemption or maturity, as the case may be.

                                       5
<PAGE>

                                                                               6

11.   Amendment, Waiver

         Subject to certain exceptions set forth in the Indenture, (i) the
Indenture or the Securities may be amended with the written consent of the
Holders of at least a majority in principal amount of the then outstanding
Securities and (ii) any default (other than with respect to nonpayment or in
respect of a provision that cannot be amended without the written consent of
each Securityholder affected) or noncompliance with any provision may be waived
with the written consent of the Holders of a majority in principal amount of the
then outstanding Securities. Subject to certain exceptions set forth in the
Indenture, without the consent of any Securityholder, the Issuer and the Trustee
may amend the Indenture or the Securities to cure any ambiguity, omission,
defect or inconsistency, or to provide for uncertificated Securities in addition
to or in place of certificated Securities, or to add guarantees with respect to
the Securities or to secure the Securities, or to add additional covenants of
the Issuer and the Hanover Guarantors, or surrender rights and powers conferred
on the Issuer, or to comply with any request of the SEC in connection with
qualifying the Indenture under the Act, or to make any change that does not
adversely affect the rights of any Securityholder, or to provide for the
issuance of Exchange Securities.

12.   Defaults and Remedies

         Under the Indenture, Events of Default include (i) default for 30 days
in payment of interest when due on the Securities; (ii) default in payment of
principal or premium, if any, on the Securities at Stated Maturity, upon
required repurchase or upon optional redemption pursuant to paragraphs 5 and 6
of the Securities, upon declaration or otherwise; (iii) the failure by Hanover
or any Hanover Guarantor to comply with its obligations under Section 9.10 of
the Participation Agreement which default shall continue unremedied for a period
of 30 days after receipt of notice thereof; (iv) failure by the Issuer to comply
for 30 days after notice with any of its obligations under the covenants
described under Sections 3.2 through 3.27 inclusive of the Indenture (in each
case, other than a failure to purchase Securities when required pursuant to
Section 3.3 or 3.4, which failure shall constitute an Event of Default under
clause (ii) above; (v) the failure by the Issuer to comply for 60 days after
notice with its other agreements contained in the Indenture or under the
Securities (other than those referred to in (i), (ii), (iii) or (iv) above) or
any covenant, representation or warranty under any of the Operative Agreements;
(vi) the occurrence and continuation of a Lease Event of Default; (vii) the
Operative Agreements no longer create a first priority lien on all the
Collateral for the benefit of the Trustee, in its capacity as Collateral Agent;
(viii) default under any mortgage, indenture or instrument under which there may
be issued or by which there may be secured or evidenced any Indebtedness for
money borrowed by Hanover or any of its Restricted Subsidiaries (or the payment
of which is guaranteed by Hanover or any of its Restricted Subsidiaries), other
than Indebtedness owed to Hanover or a Restricted Subsidiary, whether such
Indebtedness or guarantee now exists, or is created after the date of the
Indenture, which default (a) is caused by a failure to pay principal of, or
interest or premium, if any, on such Indebtedness before the expiration of the
grace period provided in such Indebtedness ("Payment Default") or (b) results in
the acceleration of such Indebtedness prior to its maturity (the "cross
acceleration provision") and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $20.0 million or more; (ix) certain events of
bankruptcy, insolvency or

                                       6
<PAGE>

                                                                               7

reorganization of the Issuer, Hanover or a Significant Subsidiary or group of
Restricted Subsidiaries that, taken together (as of the latest audited
consolidated financial statements for Hanover and its Restricted Subsidiaries),
would constitute a Significant Subsidiary (the "bankruptcy provisions"); (x)
failure by the Issuer, Hanover or any Restricted Subsidiary to pay final
judgments aggregating in excess of $20.0 million or its foreign currency
equivalent at the time (net of any amounts with respect to which a reputable and
creditworthy insurance company has acknowledged liability in writing), which
judgments are not paid, discharged or stayed for a period of 60 days (the
"judgment default provision") or (xi) any respective Guarantee of any of the
Hanover Guarantors ceases to be in full force and effect (except as contemplated
by the terms of the Indenture) or is declared null and void in a judicial
proceeding or any Hanover Guarantor denies or disaffirms its obligations under
the Indenture, the Participation Agreement or its Hanover Guarantee. However, a
default under clauses (iv) and (v) will not constitute an Event of Default until
the Trustee or the Holders of at least 25% in principal amount of the
outstanding Securities notify the Issuer of the default and the Issuer does not
cure such default within the time specified in clauses (iv) and (v) hereof after
receipt of such notice.

         If an Event of Default (other than an Event of Default described in
clause (ix) above) occurs and is continuing, the Trustee or the Holders of at
least 25% in principal amount of the Securities may declare all the Securities
to be due and payable immediately. Events of Default described in clause (ix)
above will result in the Securities being due and payable immediately upon the
occurrence of such Events of Default.

         Securityholders may not enforce the Indenture or the Securities except
as provided in the Indenture. The Trustee may refuse to enforce the Indenture or
the Securities unless it receives reasonable indemnity or security. Subject to
certain limitations, Holders of a majority in principal amount of the Securities
may direct the Trustee in its exercise of any trust or power. The Trustee may
withhold from Securityholders notice of any continuing Default or Event of
Default (except a Default or Event of Default in payment of principal or
interest) if it determines that withholding notice is in their interest.

13.   Trustee Dealings with the Issuer

         Subject to certain limitations set forth in the Indenture, the Trustee
under the Indenture, in its individual or any other capacity, may become the
owner or pledgee of Securities and may otherwise deal with and collect
obligations owed to it by the Issuer or its Affiliates and may otherwise deal
with the Issuer or its affiliates with the same rights it would have if it were
not Trustee.

14.   No Recourse Against Others

         An incorporator, director, officer, employee, stockholder or
controlling person, as such, of each of the Issuer, or any Hanover Guarantor
shall not have any liability for any obligations of the Issuer under the
Securities, the Indenture, the Participation Agreement or any Hanover Guarantees
or for any claim based on, in respect of or by reason of such obligations or
their creation. By accepting a Security, each Securityholder waives and releases
all such liability. The waiver and release are part of the consideration for the
issue of the Securities.

                                       7
<PAGE>

                                                                               8

15.   Authentication

         This Security shall not be valid until an authorized signatory of the
Trustee (or an authenticating agent acting on its behalf) manually signs the
certificate of authentication on the other side of this Security.

16.   Abbreviations

         Customary abbreviations may be used in the name of a Securityholder or
an assignee, such as TEN COM (=tenants in common), TEN ENT (=tenants by the
entirety), JT TEN (=joint tenants with rights of survivorship and not as tenants
in common), CUST (=custodian) and U/G/M/A (=Uniform Gift to Minors Act).

17.   CUSIP Numbers

         Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures the Issuer has caused CUSIP numbers to be
printed on the Securities and has directed the Trustee to use CUSIP numbers in
notices of redemption as a convenience to Securityholders. No representation is
made as to the accuracy of such numbers either as printed on the Securities or
as contained in any notice of redemption and reliance may be placed only on the
other identification numbers placed thereon.

18.   Governing Law

         This Security shall be governed by, and construed in accordance with,
the laws of the State of New York.

         The Issuer will furnish to any Securityholder upon written request and
without charge to the Securityholder a copy of the Indenture which has in it the
text of this Security in larger type. Requests may be made to:

                        Hanover Equipment Trust 2001A
                        c/o Wilmington Trust Company
                        Rodney Square North
                        1100 North Market Street
                        Wilmington, Delaware 19890
                        Attention: Corporate Trust Administration
                        Telecopy No.: 302-651-8882

                        with a copy to:

                        Hanover Compressor Company
                        Hanover Compression Limited Partnership
                        12001 North Houston Rossyln
                        Houston, Texas 77806
                        Attention: Chief Financial Officer

                                       8
<PAGE>

                                                                               9

                                 ASSIGNMENT FORM

To assign this Security, fill in the form below:

I or we assign and transfer this Security to

          ____________________________________________________________
              (Print or type assignee's name, address and zip code)

          ____________________________________________________________
                  (Insert assignee's soc. sec. or tax I.D. No.)

and irrevocably appoint ___________ agent to transfer this Security on the books
of the Issuer. The agent may substitute another to act for him.

________________________________________________________________________________

Date:____________________         Your signature:____________________

Signature Guarantee:____________________________________________________________
                                  (Signature must be guaranteed)

________________________________________________________________________________
Sign exactly as your name appears on the other side of this Security.

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                       9
<PAGE>

                                                                              10

                      [TO BE ATTACHED TO GLOBAL SECURITIES]
              SCHEDULE OF INCREASES OR DECREASES IN GLOBAL SECURITY

         The following increases or decreases in this Global Security have been
made:

<TABLE>
<CAPTION>
            Amount of decrease in       Amount of increase in       Principal Amount of this          Signature of authorized
Date of     Principal Amount of this    Principal Amount of this    Global Security following such    signatory of Trustee or
Exchange    Global Security             Global Security             decrease or increase              Securities Custodian
--------    ------------------------    ------------------------    ------------------------------    -----------------------
<S>         <C>                         <C>                         <C>                               <C>

</TABLE>

                                       10
<PAGE>

                                                                              11

                       OPTION OF HOLDER TO ELECT PURCHASE

         If you want to elect to have this Security purchased by the Issuer
pursuant to Section 3.3 or 3.4 of the Indenture, check either box:

                                [ ]           [ ]
                                3.3           3.4

         If you want to elect to have only part of this Security purchased by
the Issuer pursuant to Section 3.3 or 3.4 of the Indenture, state the amount in
principal amount (must be integral multiple of $1,000): $

Date:                          Your Signature
      ------------------------                ----------------------------------
                                              (Sign exactly as your name appears
                                              on the other side of the Security)

The signature(s) should be guaranteed by an eligible guarantor institution
(banks, stockbrokers, savings and loan associations and credit unions with
membership in an approved signature guarantee medallion program), pursuant to
S.E.C. Rule 17Ad-15.

                                       11
<PAGE>

                                                                              12

                                    ANNEX A

                       [FORM OF PARTICIPATION AGREEMENT]

                                       12<PAGE>

                                                                   Exhibit 10.70

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

                                      LEASE

                                     between

                          HANOVER EQUIPMENT TRUST 2001B

                                   as Lessor,

                                       and

                     HANOVER COMPRESSION LIMITED PARTNERSHIP

                                    as Lessee

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

                           Dated as of August 31, 2001

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

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

THIS LEASE IS SUBJECT TO A SECURITY INTEREST IN FAVOR OF WILMINGTON TRUST FSB,
AS COLLATERAL AGENT (THE "COLLATERAL AGENT") UNDER AN INDENTURE, DATED AS OF
AUGUST 30, 2001 AMONG HANOVER EQUIPMENT TRUST 2001B AND THE INDENTURE TRUSTEE,
AS AMENDED OR SUPPLEMENTED. THIS LEASE HAS BEEN EXECUTED IN SEVERAL
COUNTERPARTS. TO THE EXTENT, IF ANY, THAT THIS LEASE CONSTITUTES CHATTEL PAPER
(AS SUCH TERM IS DEFINED IN THE UNIFORM COMMERCIAL CODE AS IN EFFECT IN ANY
APPLICABLE JURISDICTION), NO SECURITY INTEREST IN THIS LEASE MAY BE CREATED
THROUGH THE TRANSFER OR POSSESSION OF ANY COUNTERPART OTHER THAN THE ORIGINAL
COUNTERPART CONTAINING THE RECEIPT THEREFOR EXECUTED BY THE COLLATERAL AGENT ON
THE SIGNATURE PAGE HEREOF.

<PAGE>

<TABLE>
<CAPTION>
                                       TABLE OF CONTENTS

                                                                                          Page
                                                                                          ----

                                    SECTION 1. DEFINITIONS

<S>     <C>                                                                                 <C>
1.1     Defined Terms........................................................................1

                                 SECTION 2. EQUIPMENT AND TERM

2.1     Equipment............................................................................1
2.2     Lease Term...........................................................................1
2.3     Title................................................................................1

                                        SECTION 3. RENT

3.1     Rent.................................................................................2
3.2     Supplemental Rent....................................................................2

                                     SECTION 4. WARRANTIES

4.1     Warranties...........................................................................2

                                  SECTION 5. QUIET ENJOYMENT

5.1     Quiet Enjoyment......................................................................3

                                     SECTION 6. NET LEASE

6.1     Net Lease; No Setoff; Etc............................................................3
6.2     No Termination or Abatement..........................................................4

                               SECTION 7. OWNERSHIP OF EQUIPMENT

7.1     Ownership of the Equipment...........................................................4

                               SECTION 8. CONDITION OF EQUIPMENT

8.1     Disclaimer of Warranties.............................................................6
8.2     Possession and Use of the Equipment..................................................7

                                     SECTION 9. COMPLIANCE

9.1     Compliance with Legal Requirements and Insurance Requirements........................7
9.2     Environmental Matters................................................................7

                    SECTION 10. MAINTENANCE, REPAIR AND RETURN REQUIREMENTS

                                              i
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

<S>     <C>                                                                                 <C>
10.1    Maintenance and Repair...............................................................8
10.2    Return Requirements..................................................................9
10.3    Right of Inspection and Location....................................................10

                                   SECTION 11. MODIFICATIONS

11.1    Modifications.......................................................................10

                                       SECTION 12. TITLE

12.1    Warranty of Title...................................................................11
12.2    Identification......................................................................11

                                SECTION 13. PERMITTED CONTESTS

13.1    Permitted Contests Other Than in Respect of Impositions.............................12

                                     SECTION 14. INSURANCE

14.1    Public Liability and Workers' Compensation Insurance................................12
14.2    Hazard and Other Insurance..........................................................12
14.3    Coverage............................................................................13

                             SECTION 15. CONDEMNATION AND CASUALTY

15.1    Casualty and Condemnation...........................................................14

                                 SECTION 16. LEASE TERMINATION

16.1    Termination upon Certain Events.....................................................15
16.2    Procedures..........................................................................15

                                      SECTION 17. DEFAULT

17.1    Lease Events of Default.............................................................16
17.2    Final Liquidated Damages............................................................17
17.3    Remedies............................................................................17
17.4    Additional Remedies.................................................................19
17.5    Proceeds of Sale; Deficiency........................................................19
17.6    Waiver of Certain Rights............................................................19
17.7    Assignment of Rights Under Contracts................................................19

                              SECTION 18. LESSOR'S RIGHT TO CURE

18.1    Lessor's Right to Cure Lessee's Lease Defaults......................................20

                                 SECTION 19. LEASE TERMINATION

19.1    Provisions Relating to Lessee's Termination of this
        Lease or Exercise of Purchase Option................................................20

                                              ii
</TABLE>
<PAGE>

<TABLE>
<CAPTION>

<S>     <C>                                                                                 <C>

                                  SECTION 20. PURCHASE OPTION

20.1    Purchase Option.....................................................................20
20.2    Expiration Date Purchase Option.....................................................22
20.3    Obligation to Purchase All Equipment................................................22

                                 SECTION 21. SALE OF EQUIPMENT

21.1    Sale Procedure......................................................................23
21.2    Application of Proceeds of Sale.....................................................23
21.3    Indemnity for Excessive Wear........................................................24
21.4    Appraisal Procedure.................................................................24
21.5    Certain Obligations Continue........................................................24

                                   SECTION 22. HOLDING OVER

22.1    Holding Over........................................................................24

                                   SECTION 23. RISK OF LOSS

23.1    Risk of Loss........................................................................25

                             SECTION 24. SUBLETTING AND ASSIGNMENT

24.1    Subletting and Assignment...........................................................25
24.2    Subleases or Licenses...............................................................25

                               SECTION 25. ESTOPPEL CERTIFICATES

25.1    Estoppel Certificates...............................................................25

                                     SECTION 26. NO WAIVER

26.1    No Waiver...........................................................................26

                              SECTION 27. ACCEPTANCE OF SURRENDER

27.1    Acceptance of Surrender.............................................................26

                       SECTION 28. OWNERSHIP, GRANT OF SECURITY INTEREST
                                    AND FURTHER ASSURANCES

28.1    Grant of Security Interest..........................................................26
28.2    UCC Remedies........................................................................27
28.3    Deficiency..........................................................................28
28.4    Trustee's Appointment as Attorney-in-Fact; Trustee's
        Performance of Lessee's Obligations.................................................28

                                             iii
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                                                          Page
                                                                                          ----

<S>     <C>                                                                                 <C>
                                      SECTION 29. NOTICES

29.1    Notices.............................................................................29

                                   SECTION 30. SUBSTITUTION

30.1    Substitution........................................................................31

                                   SECTION 31. SUBORDINATION

31.1    Agreement to Subordinate............................................................33
31.2    Liquidation, Dissolution, Bankruptcy................................................33
31.3    Default on Guarantor Senior Indebtedness of Lessee..................................34
31.4    Acceleration of Payment of Rent.....................................................34
31.5    When Rents Must be Paid Over........................................................34
31.6    Subrogation.........................................................................35
31.7    Relative Rights.....................................................................35
31.8    Subordination May Not Be Impaired by Lessee.........................................35
31.9    Distribution or Notice to Representative............................................35
31.10   Section 31 Not to Prevent Events of Default or Limit Right to Accelerate............35
31.11   Reliance by Holders of Guarantor Senior Indebtedness on Subordination
        Provisions..........................................................................35

                                   SECTION 32. MISCELLANEOUS

32.1    Miscellaneous.......................................................................36
32.2    Amendments and Modifications........................................................36
32.3    Successors and Assigns..............................................................36
32.4    Headings and Table of Contents......................................................36
32.5    Counterparts........................................................................36
32.6    GOVERNING LAW.......................................................................36
32.7    Limitations on Recourse.............................................................36
32.8    Priority............................................................................37

Description of Equipment............................................................Schedule A

Form of Lease Supplement.............................................................Exhibit A

                                              iv
</TABLE>
<PAGE>

               LEASE (this "Lease"), dated as of August 31, 2001, between
HANOVER EQUIPMENT TRUST 2001B, a Delaware business trust, having its principal
office at c/o Wilmington Trust Company, Rodney Square North, 1100 North Market
Street, Wilmington, Delaware 19890-0001, as lessor (the "Lessor"), and HANOVER
COMPRESSION LIMITED PARTNERSHIP, a Delaware limited partnership, having its
principal office at 12001 North Houston Rosslyn, Houston, Texas 77806, as lessee
(the "Lessee").

               In consideration of the mutual agreements herein contained, and
of other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:

                             Section 1. DEFINITIONS

               1.1. Defined Terms. Capitalized terms used herein but not
otherwise defined in this Lease shall have the respective meanings specified in
Annex A to the Participation Agreement dated as of the date hereof among Lessee,
Lessor, Wilmington Trust FSB, the Indenture Trustee, the Collateral Agent, the
Trust Company, the Certificate Holders, and the Guarantors, as such
Participation Agreement may be amended, supplemented or otherwise modified from
time to time.

                         Section 2. EQUIPMENT AND TERM

               2.1 Equipment. Subject to the terms and conditions hereinafter
set forth, Lessor hereby leases to Lessee, and Lessee hereby leases from Lessor,
each Unit described on Schedule A attached hereto. Schedule A shall be revised
from time to time to add each Replacement Equipment and delete each Unit
released from this Lease.

               2.2 Lease Term. The Equipment is leased for the Term, unless
earlier terminated in accordance with the provisions of this Lease.

               2.3 Title. Except as otherwise expressly set forth in the
Operative Agreements, the Equipment is leased to Lessee without any
representation or warranty, express or implied, by Lessor and subject to the
rights of parties in possession, the existing state of title (including, without
limitation, the Permitted Exceptions) and all applicable Legal Requirements.
Lessee shall in no event have any recourse against Lessor for any defect in
title to the Equipment unless such defect was the result of an act or omission
of Lessor or its Affiliates giving rise to a Lessor Lien. Lessor and Lessee
hereby declare that it is their mutual intent that the Equipment is to be
considered movable (personal) property, severable from the improvements in which
it may be located, and not immovables or components of immovables, for all
purposes of this Lease.

                                       1
<PAGE>

                                Section 3. RENT

               3.1 Rent. (a) On each applicable Scheduled Interest Payment Date
after the Release Date, Lessee shall pay the Basic Rent.

               (b) Basic Rent shall be due and payable in Dollars and shall be
paid by wire transfer of immediately available funds on the due date therefor to
such account or accounts at such bank or banks or to such other Person or in
such other manner as Lessor shall from time to time direct.

               (c) Lessee's inability or failure to take possession of all, or
any Unit, of the Equipment when delivered by Lessor shall not delay or otherwise
affect Lessee's obligation to pay Rent in accordance with the terms of this
Lease.

               3.2 Supplemental Rent. Lessee shall pay to Lessor or the Person
entitled thereto any and all Supplemental Rent timely (subject to Section 13
hereof) as the same shall become due and payable, and if Lessee fails to pay any
Supplemental Rent, Lessor shall have all rights, powers and remedies provided
for herein or by law or equity or otherwise in the case of nonpayment of Basic
Rent. The expiration or other termination of Lessee's obligations to pay Basic
Rent hereunder shall not limit or modify the obligations of Lessee with respect
to Supplemental Rent. Unless expressly provided otherwise in this Lease or any
other Operative Agreement, in the event of any failure on the part of Lessee to
pay and discharge any Supplemental Rent as and when due, Lessee shall also
promptly pay and discharge any fine, penalty, interest or cost which may be
assessed or added for nonpayment or late payment of such Supplemental Rent, all
of which shall also constitute Supplemental Rent.

               3.3 Legal Holiday. A "Legal Holiday" is a Saturday, a Sunday, or
other day on which commercial banking institutions are authorized or required to
be closed in New York City. If any payment is required hereunder to be made on a
Legal Holiday, payment shall be made on the next succeeding day that is not a
Legal Holiday.

                             Section 4. WARRANTIES

               4.1 Warranties. So long as no Lease Event of Default shall have
occurred and be continuing (or if a Lease Event of Default shall have occurred
and is continuing, if Lessee has timely delivered a Purchase Notice or
Substitution Notice and the purchase or substitution thereby would cure such
Lease Event of Default), Lessor agrees to take all such actions as may be
reasonably necessary to insure that Lessee is the beneficiary of any and all
warranties with respect to the Equipment, provided, however, the reasonable
costs of any such actions shall be borne by Lessee.

                                       2
<PAGE>

                           Section 5. QUIET ENJOYMENT

               5.1 Quiet Enjoyment. So long as no Lease Event of Default shall
have occurred and be continuing, Lessee shall peaceably and quietly have, hold
and enjoy the Equipment for the Term, free of any claim or other action by
Lessor or anyone claiming by, through or under Lessor.

                              Section 6. NET LEASE

               6.1 Net Lease; No Setoff; Etc. This Lease shall constitute a net
lease and, except as otherwise provided herein or in the other Operative
Agreements, it is intended that Basic Rent and Supplemental Rent shall be paid
without counterclaim, setoff, deduction or defense of any kind and without
abatement, suspension, deferment, diminution or reduction of any kind, and
Lessee's obligation to pay all such amounts is absolute and unconditional,
provided that if at any time the Lessee is required to make a payment of (i)
Termination Value or (ii) an indemnity payment pursuant to Section 13 of the
Participation Agreement to the Certificate Holders, and there shall exist any
Lessor Liens attributable to the Certificate Holders (and the Lessee shall have
previously incurred a charge to discharge any Lessor Liens attributable to the
Certificate Holders), then the Lessee shall be entitled to deduct from the
portion required to be paid to the Certificate Holders of Termination Value or
payment of indemnity, as the case may be, an amount sufficient to so reimburse
the Lessee for the cost of discharging such Lessor Liens, as the case may be.
The obligations and liabilities of Lessee hereunder shall in no way be released,
discharged or otherwise affected for any reason, including, without limitation,
to the maximum extent permitted by law: (a) any defect in the condition,
merchantability, design, quality or fitness for use of any portion of any
Equipment, or any failure of any Equipment to comply with all Legal
Requirements, including any inability to use any Equipment by reason of such
non-compliance; (b) any damage to, abandonment, loss, contamination of or
Release from or destruction of or any requisition or taking of any Equipment or
any part thereof; (c) any restriction, prevention or curtailment of or
interference with any use of any Equipment or any part thereof; (d) any defect
in title to or rights to any Equipment or any Lien on such title or rights or on
any Equipment; (e) any change, waiver, extension, indulgence or other action or
omission or breach in respect of any obligation or liability of or by Lessor,
Certificate Holders, Trustee, Indenture Trustee or any Securityholder; (f) any
bankruptcy, insolvency, reorganization, composition, adjustment, dissolution,
liquidation or other like proceedings relating to Lessee, Lessor, Certificate
Holders, the Trust Company, Trustee, Indenture Trustee, any Securityholder or
any other Person, or any action taken with respect to this Lease by any trustee
or receiver of Lessee, Lessor, Certificate Holders, the Trust Company, Trustee,
Indenture Trustee, any Securityholder or any other Person, or by any court, in
any such proceeding; (g) any claim that Lessee has or might have against any
Person, including, without limitation, Lessor, Certificate Holders, the Trust
Company, Trustee, Indenture Trustee or any Securityholder; (h) any failure on
the part of Lessor to perform or comply with any of the terms of this Lease, any
other Operative Agreement or of any other agreement; (i) any invalidity or
unenforceability or disaffirmance against or by Lessee of this Lease or any
provision hereof or any of the other Operative Agreements or any provision of
any thereof; (j) the impossibility of performance by Lessee, Lessor or both; (k)
any action by any court, administrative agency or

                                       3
<PAGE>

other Governmental Authority; any restriction, prevention or curtailment of or
any interference with the construction on or any use of any Equipment or any
part thereof; or (m) any other occurrence whatsoever, whether similar or
dissimilar to the foregoing, whether or not Lessee shall have notice or
knowledge of any of the foregoing. This Lease shall be noncancellable by Lessee
for any reason whatsoever except as expressly provided herein or in the other
Operative Agreements, and Lessee, to the extent permitted by Legal Requirements,
waives all rights now or hereafter conferred by statute or otherwise to quit,
terminate or surrender this Lease, or to any diminution, abatement or reduction
of Rent payable by Lessee hereunder. If for any reason whatsoever this Lease
shall be terminated in whole or in part by operation of law or otherwise, except
as otherwise expressly provided herein or in the other Operative Agreements,
Lessee shall, unless prohibited by Legal Requirements, nonetheless pay to Lessor
(or, in the case of Supplemental Rent, to whomever shall be entitled thereto) an
amount equal to each Rent payment at the time and in the manner that such
payment would have become due and payable under the terms of this Lease if it
had not been terminated in whole or in part, and in such case, so long as such
payments are made and no Lease Event of Default shall have occurred and be
continuing, Lessor will deem this Lease to have remained in effect. Each payment
of Rent made by Lessee hereunder shall be final and, absent manifest error in
the computation of the amount thereof, Lessee shall not seek or have any right
to recover all or any part of such payment from Lessor, Certificate Holders,
Indenture Trustee, Trustee, or any party to any agreements related thereto for
any reason whatsoever. Lessee assumes the sole responsibility for the condition,
use, operation, maintenance, and management of the Equipment and Lessor shall
have no responsibility in respect thereof and shall have no liability for damage
to the property of Lessee or any subtenant of Lessee on any account or for any
reason whatsoever other than resulting from Lessor's gross negligence or willful
misconduct.

               6.2 No Termination or Abatement. Lessee shall remain obligated
under this Lease in accordance with its terms and shall not take any action to
terminate, rescind or avoid this Lease, notwithstanding any action for
bankruptcy, insolvency, reorganization, liquidation, dissolution, or other
proceeding affecting Lessor, or any action with respect to this Lease which may
be taken by any trustee, receiver or liquidator of Lessor or by any court with
respect to Lessor, except as otherwise expressly provided herein. Lessee hereby
waives all right (i) to terminate or surrender this Lease, except as otherwise
expressly provided herein or in the other Operative Agreements, or (ii) to avail
itself of any abatement, suspension, deferment, reduction, setoff, counterclaim
or defense with respect to any Rent. Lessee shall remain obligated under this
Lease in accordance with its terms and, to the extent permitted by law, Lessee
hereby waives any and all rights now or hereafter conferred by statute or
otherwise to modify or to avoid strict compliance with its obligations under
this Lease. Notwithstanding any such statute or otherwise, to the extent
permitted by law, Lessee shall be bound by all of the terms and conditions
contained in this Lease.

                       Section 7. OWNERSHIP OF EQUIPMENT

               7.1 Ownership of the Equipment. (a) Lessor and Lessee intend that
(i) for financial accounting purposes with respect to Lessee (A) this Lease will
be treated as an "operating lease" pursuant to Statement of Financial Accounting
Standards (SFAS) No. 13, as

                                       4
<PAGE>

amended, (B) Lessor will be treated as the owner and lessor of the Equipment and
(C) Lessee will be treated as the lessee of the Equipment but (ii) for federal,
state and local income tax and state law purposes (A) this Lease will be treated
as a financing arrangement, (B) the Securityholders will be treated as senior
lenders making loans to Lessee in an amount equal to the principal amount of the
Securities, which Securities will be secured by the Equipment, (C) the
Certificate Holders will be treated as subordinated lenders making loans to
Lessee in an aggregate amount equal to the Certificate Holder Contribution,
which loans are secured by the Equipment, and (D) Lessee will be treated as the
owner of the Equipment and will be entitled to all tax benefits ordinarily
available to an owner of property like the Equipment for such tax purposes.

               (b) Lessor and Lessee further intend and agree that, for the
purpose of securing Lessee's obligations for the repayment of the
above-described loans, (i) this Lease shall also be a security agreement (as
defined in Section 1-201(37) of the Uniform Commercial Code) and financing
statement within the meaning of Article 9 of the Uniform Commercial Code; (ii)
the conveyance provided for in Section 2 shall be deemed a grant of, and Lessee
hereby grants to Lessor, a security interest in Lessee's right, title and
interest in the Equipment and all proceeds of the conversion, voluntary or
involuntary, of the foregoing into cash, investments, securities or other
property, whether in the form of cash, investments, securities or other
property, for the benefit of the Lessor to secure the Lessee's payment of all
amounts owed by, and the performance of all obligations of, the Lessee under
this Lease and the other Operative Agreements and Lessor holds title to the
Equipment so as to create and grant a first lien and prior security interest in
the Equipment (A) pursuant to this Lease for the benefit of the Collateral Agent
under the Assignment of Lease, to secure to the Collateral Agent the obligations
of the Lessee under the Lease for the benefit of the Securityholders and the
Certificate Holders and (B) pursuant to the Security Agreement to secure to the
Collateral Agent the obligations of the Lessor under the Indenture and the Notes
for the benefit of the Securityholders and the Certificate Holders; (iii) the
possession by Lessor or any of its agents of notes and such other items of
property as constitute instruments, money, negotiable documents or chattel paper
shall be deemed to be "possession by the secured party" for purposes of
perfecting the security interest pursuant to Section 9-313 of the Uniform
Commercial Code; and (iv) notifications to Persons holding such property, and
acknowledgments, receipts or confirmations from financial intermediaries,
bankers or agents (as applicable) of Lessee shall be deemed to have been given
for the purpose of perfecting such security interest under applicable law.
Lessor and Lessee shall take such actions as may be necessary to ensure that
such security interest is a perfected security interest of first priority under
applicable law and will be maintained as such throughout the Term. Nevertheless,
Lessee acknowledges and agrees that none of Lessor, Certificate Holders,
Trustee, the Trust Company, Indenture Trustee, or any Securityholder has
provided or will provide tax, accounting or legal advice to Lessee regarding
this Lease, the Operative Agreements or the transactions contemplated hereby and
thereby, or made any representations or warranties concerning the tax,
accounting or legal characteristics of the Operative Agreements, and that Lessee
has obtained and relied upon such tax, accounting and legal advice concerning
the Operative Agreements as it deems appropriate.

               (c) Lessor and Lessee further intend and agree that in the event
of any insolvency or receivership proceedings or a petition under the United
States bankruptcy laws or any other applicable insolvency laws or statute of the
United States of America or any State or

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<PAGE>

Commonwealth thereof affecting Lessee or Lessor, the transactions evidenced by
this Lease shall be regarded as loans made by an unrelated third party lender to
Lessee.

                       Section 8. CONDITION OF EQUIPMENT

               8.1 Disclaimer of Warranties. WITHOUT LIMITING ANY CLAIM LESSEE
MAY HAVE AGAINST ANY CONTRACTOR, SUBCONTRACTOR, SUPPLIER OR MANUFACTURER, LESSEE
EXPRESSLY ACKNOWLEDGES THAT IT HAS SELECTED THE EQUIPMENT WITHOUT ANY ASSISTANCE
FROM THE LESSOR, THE TRUSTEE OR THE CERTIFICATE HOLDERS OR THEIR RESPECTIVE
AGENTS OR EMPLOYEES, AND LESSEE AGREES THAT (I) EACH UNIT IS OF A SIZE, DESIGN,
AND CAPACITY SELECTED BY AND ACCEPTABLE TO LESSEE, (II) LESSEE IS SATISFIED THAT
EACH ITEM OF EQUIPMENT IS SUITABLE FOR ITS PURPOSES, (III) THE EQUIPMENT IS
LEASED HEREUNDER SUBJECT TO ALL APPLICABLE LAWS AND GOVERNMENTAL REGULATIONS NOW
IN EFFECT OR HEREAFTER ADOPTED, (IV) IT IS LEASING THE EQUIPMENT FROM LESSOR IN
AN "AS IS", "WHERE IS" AND "WITH ALL FAULTS" CONDITION AND (V) NEITHER LESSOR
NOR THE CERTIFICATE HOLDERS IS A MANUFACTURER OR DEALER IN EQUIPMENT OF SUCH
KIND. EXCEPT AS OTHERWISE EXPRESSLY SET FORTH IN THE OPERATIVE AGREEMENTS,
NEITHER LESSOR NOR THE CERTIFICATE HOLDERS SHALL BE DEEMED TO HAVE MADE, AND
LESSEE HEREBY EXPRESSLY ACKNOWLEDGES AND AGREES THAT NEITHER LESSOR NOR THE
CERTIFICATE HOLDERS HAVE MADE, ANY REPRESENTATION OR WARRANTY, EITHER EXPRESS OR
IMPLIED, AS TO THE EQUIPMENT, ANY PART THEREOF, OR ANY RECORDS OR ANY OTHER
MATTER WHATSOEVER WITH RESPECT THERETO, INCLUDING, WITHOUT LIMITATION, THE
DESIGN, CONDITION OR CAPACITY OF THE EQUIPMENT, THEIR MERCHANTABILITY OR THEIR
FITNESS FOR ANY PARTICULAR PURPOSE, THE QUALITY OF THE MATERIALS OR WORKMANSHIP
OF THE EQUIPMENT, THEIR VALUE, TITLE OR SAFETY, THE ABSENCE OF ANY PATENT,
TRADEMARK OR COPYRIGHT INFRINGEMENT OR LATENT DEFECT (WHETHER OR NOT
DISCOVERABLE), COMPLIANCE OF THE EQUIPMENT WITH THE REQUIREMENTS OF ANY
APPLICABLE LAWS (INCLUDING ENVIRONMENTAL LAWS) PERTAINING THERETO, OR THE
CONFORMITY OF THE EQUIPMENT TO THE PROVISIONS AND SPECIFICATIONS OF ANY
CONSTRUCTION OR PURCHASE DOCUMENT RELATING THERETO OR ANY COURSE OF PERFORMANCE,
COURSE OF DEALING OR USAGE OF TRADE, NOR SHALL LESSOR OR THE CERTIFICATE HOLDERS
BE LIABLE TO LESSEE FOR ANY DEFECTS, EITHER PATENT OR LATENT (WHETHER OR NOT
DISCOVERABLE ( IN THE EQUIPMENT OR ANY PART THEREOF OR ANY DIRECT OR INDIRECT
DAMAGE TO PERSONS OR PROPERTY RESULTING THEREFROM OR FOR ANY DIRECT, INDIRECT,
INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES OR FOR STRICT OR ABSOLUTE LIABILITY
IN TORT. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, LESSEE HEREBY WAIVES
ANY CLAIM (INCLUDING ANY CLAIM BASED ON STRICT OR ABSOLUTE LIABILITY IN TORT OR
INFRINGEMENT) IT MIGHT HAVE AGAINST LESSOR OR THE CERTIFICATE HOLDERS FOR ANY
LOSS, DAMAGE (INCLUDING, WITHOUT LIMITATION, DIRECT,

                                       6
<PAGE>

INDIRECT, INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGE) OR EXPENSE CAUSED BY THE
EQUIPMENT OR BY LESSEE'S LOSS OF USE THEREOF FOR ANY REASON WHATSOEVER OTHER
THAN WITH RESPECT TO THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF LESSOR OR
CERTIFICATE HOLDERS. LESSEE AND ANYONE CLAIMING BY, THROUGH OR UNDER LESSEE
HEREBY FULLY AND IRREVOCABLY RELEASES LESSOR, THE CERTIFICATE HOLDERS AND EACH
OTHER PERSON PARTY TO THE OPERATIVE AGREEMENTS, AND EACH OF THEIR EMPLOYEES,
OFFICERS, DIRECTORS, REPRESENTATIVES, AGENTS, SERVANTS, ATTORNEYS, AFFILIATES,
PARENT COMPANIES, SUBSIDIARIES, SUCCESSORS AND ASSIGNS, AND ALL PERSONS ACTING
ON THEIR BEHALF, FROM ANY AND ALL CLAIMS THAT IT MAY NOW HAVE OR HEREAFTER
ACQUIRE AGAINST THE CERTIFICATE HOLDERS, LESSOR OR ANY OTHER SUCH PERSON, FOR
ANY COSTS, LOSS, LIABILITY, DAMAGE, EXPENSES, DEMAND, ACTION OR CAUSE OF ACTION
ARISING FROM OR RELATED TO THE RELEASE OR DISCHARGE FROM THE EQUIPMENT AT ANY
TIME OF ANY HAZARDOUS MATERIALS OTHER THAN A RELEASE OR DISCHARGE OCCURRING
AFTER LESSEE IS NO LONGER IN POSSESSION OF THE EQUIPMENT AND RESULTING SOLELY
FROM ACTS OR OMISSIONS OF LESSOR, THE CERTIFICATE HOLDERS OR ANY OTHER SUCH
PERSON. THIS RELEASE INCLUDES CLAIMS OF WHICH LESSEE IS PRESENTLY UNAWARE OR
WHICH LESSEE DOES NOT PRESENTLY SUSPECT TO EXIST WHICH, IF KNOWN BY LESSEE,
WOULD MATERIALLY AFFECT LESSEE'S RELEASE OF LESSOR AND THE OTHER PERSONS
RELEASED HEREBY.

               8.2 Possession and Use of the Equipment. Lessee shall use the
Equipment solely in the United States and in the conduct of its business, and
shall not permanently discontinue the use of the Equipment. Each Unit shall be
used by Lessee in a manner consistent with its intended purpose and in
accordance with its specification. Subject to the terms of Section 13 relating
to permitted contests, Lessee shall pay, or cause to be paid, all charges and
costs required in connection with the use of the Equipment. Lessee shall not
commit or permit any waste of any Equipment or any part thereof.

                             Section 9. COMPLIANCE

               9.1 Compliance with Legal Requirements and Insurance
Requirements. Subject to the terms of Section 13 relating to permitted contests,
Lessee, at its sole cost and expense, shall, in all material respects, (a)
comply with all Legal Requirements (including all Environmental Laws) and
Insurance Requirements relating to each Unit, including the use, construction,
operation, maintenance, repair and restoration thereof, whether or not
compliance therewith shall require extraordinary changes in the Equipment or
interfere with the use and enjoyment of the Equipment, and (b) procure, maintain
and comply with all licenses, permits, orders, approvals, consents and other
authorizations required for the construction, renovation, use, repair,
maintenance and operation of each Unit.

               9.2 Environmental Matters. (a) Promptly upon Lessee's actual
knowledge of the presence of Hazardous Substances with respect to any Unit in
concentrations and conditions

                                       7
<PAGE>

that constitute an Environmental Violation, Lessee shall notify Lessor in
writing of such condition. In the event of such Environmental Violation, Lessee
shall, not later than thirty (30) days after Lessee has actual knowledge of such
Environmental Violation, either, in Lessee's sole discretion, (i) if permitted
pursuant to Section 20.1(a), exercise the Purchase Option thereunder to purchase
such Unit, (ii) exercise its Expiration Date Purchase Option, (iii) deliver to
Lessor and the Indenture Trustee an Officer's Certificate and a Substitution
Notice with respect to such Unit pursuant to Sections 16.1, or, (iv) at Lessee's
sole cost and expense, promptly and diligently undertake any response, clean up,
remedial or other action necessary to remove, cleanup or remediate the
Environmental Violation in accordance with the terms of Section 9.1. If Lessee
does not either purchase such Unit as permitted under Section 20.1(a), exercise
the Expiration Date Purchase Option or deliver a Substitution Notice with
respect to such Unit pursuant to Sections 16.1, Lessee shall, upon completion of
remedial action by Lessee, so inform Lessor in writing and upon Lessor's written
request therefor cause to be prepared by an environmental consultant reasonably
acceptable to Lessor a report describing the Environmental Violation and the
actions taken by Lessee (or its agents) in response to such Environmental
Violation, and a statement by the consultant that such Environmental Violation
has been remedied in full compliance with applicable Environmental Laws. The
foregoing provisions of this Section 9.2(a) notwithstanding, Lessee shall not be
required to take any of the actions described in clauses (i) - (ii) of this
Section 9.2(a) if such Environmental Violation would not reasonably be expected
to have a material adverse affect on the Equipment.

               (b) In addition, Lessee shall provide to Lessor, within five (5)
Business Days of receipt, copies of all significant written communications with
any Governmental Authority relating to any Environmental Claim in connection
with any Unit. Lessee shall also promptly provide such detailed reports of any
such Environmental Claims to Lessor and the Indenture Trustee.

            Section 10. MAINTENANCE, REPAIR AND RETURN REQUIREMENTS

               10.1 Maintenance and Repair. (a) Lessee shall, at its sole cost
and expense, (i) take good care of the Equipment and keep the same and all parts
thereof in good and safe order and condition, with all mechanical devices,
electronic systems and component parts in good working order, normal wear and
tear excepted, consistent with maintenance practices used by Lessee with respect
to equipment similar in type owned or leased by Lessee and consistent with
customary industry standards, and in any event in a manner so as to preserve the
availability of any manufacturer's or supplier's warranty with respect to the
Equipment, and Lessor's rights under such warranty, and (ii) promptly make all
needed repairs, restorations and replacements of parts in and to the Equipment
or any part thereof, including, without limitation, overhaul of any Unit
requiring overhaul in Lessee's commercially prudent judgment. All such repairs,
restorations and replacements of parts shall be of a standard and quality
consistent with customary industry standards and sufficient for the proper
maintenance and operation of the Equipment and shall be constructed and
installed in a good and workmanlike manner in compliance with Legal Requirements
and Insurance Requirements. In carrying out its obligations under this Section
10.1, Lessee shall not discriminate in any way in the maintenance

                                       8
<PAGE>

of the Equipment as compared with other similar equipment owned or leased by
Lessee and shall use the Equipment in a manner consistent with sound operating
practices thereof.

               (b) Lessor shall under no circumstances be required to furnish
any services or facilities with respect to the Equipment or make any repairs,
replacements, alterations or renewals of any nature or description to any
Equipment, make any expenditure whatsoever in connection with this Lease or
maintain any Equipment in any way except as otherwise provided in the Operative
Agreements. Lessor shall not be required to maintain, repair or rebuild all or
any part of any Equipment, and Lessee waives the right to (i) require Lessor to
maintain, repair, or rebuild all or any part of any Equipment, or (ii) make
repairs at the expense of Lessor pursuant to any Legal Requirement, Insurance
Requirement, contract, agreement, covenants, condition or restriction at any
time in effect.

               10.2 Return Requirements. (a) Unless Lessee shall have sold such
Equipment pursuant to Section 21 or exercised its Purchase Option or Expiration
Date Purchase Option or exercised its right of substitution with respect thereto
pursuant to Section 30, Lessee shall, upon the expiration or earlier termination
of the Term with respect to each Unit, surrender and transfer such Unit to
Lessor, at Lessee's own expense, free and clear of all Liens other than the
following items set forth under the definition of Permitted Exceptions: (i),
(ii), (iv), (v) (provided that Lessee shall pay to Lessor, on or before such
transfer, any portion of such Taxes referred to in clause (v) to the extent
relating to a period prior to the date of such transfer) and (vi), in as good
condition as they were on the Lease Commencement Date with respect to each Unit,
ordinary wear and tear excepted, and in compliance with all Legal Requirements
(including all Environmental Laws) and the other requirements of this Lease,
including, without limitation, Section 10.1 (and in any event without (x) any
asbestos installed or maintained in any part of such Equipment, (y) any
polychlorinated byphenyls (PCBs) in, on or used with respect to such Equipment,
and (z) any other Hazardous Substances). Unless Lessee has exercised the
Purchase Option or the Expiration Date Purchase Option, Lessee shall provide, or
cause to be provided or accomplished, at the sole cost and expense of Lessee, to
or for the benefit of Lessor or a purchaser, at least thirty (30) Business Days
prior to the expiration or earlier termination of the Term with respect to each
Unit, each of the following: (i) a Lien search showing (A) no Liens other than
the type set forth as clauses (A) and (B) in the first sentence of this Section
10.2(a) and (B) the Security Agreement as creating a valid and perfected first
security interest in the Equipment; (ii) an assignment of all of the Lessee's
right, title and interest in and to each agreement executed by Lessee in
connection with the renovation, development, use, maintenance or operation of
the Equipment (including all warranty, performance, service and indemnity
provisions); (iii) an assignment of all permits, licenses, approvals and other
authorizations from all Governmental Authorities in connection with the
operation and use of the Equipment; and (iv) copies of all books and records,
with respect to the renovation, maintenance, repair, operation or use of the
Equipment. Lessee shall cooperate with any independent purchaser of the
Equipment in order to facilitate the ownership and operation by such purchaser
of the Equipment after such expiration or earlier termination of the Term,
including providing all books, reports and records regarding the maintenance,
repair and ownership of the Equipment and all data and technical information
relating thereto, granting or assigning all licenses necessary for the operation
and maintenance of the Equipment and cooperating in seeking and obtaining all
necessary licenses, permits and approvals of Governmental Authorities. Lessee
shall have also paid the total cost for the completion of all Modifications
whether or not commenced prior to

                                       9
<PAGE>

such expiration or earlier termination of the Term if such Modifications are
required to be completed within six months after the expiration or earlier
termination of the Term. The obligation of Lessee under this Section 10.2(a)
shall survive the expiration or termination of this Lease.

               (b) Lessee, on the expiration or earlier termination of the Term,
if requested by Lessor, shall, at Lessee's sole cost and expense (or, to the
extent Lessee can so arrange, at the cost and expense of Lessee's customers)
dismantle and crate each Unit that Lessor shall designate and, at Lessee's sole
cost and expense transport such Equipment to a commercially reasonable location
designated by Lessor, provided that in no event shall the cost of transporting
such Equipment exceed $1,000,000 in the aggregate.

               10.3 Right of Inspection and Location. (a) Lessor or its agents
may, at reasonable times and with reasonable prior notice and without
unreasonably interfering with the operations of Lessee's customers, inspect and
examine at its own cost and expense (unless a Lease Event of Default exists, in
which case the reasonable out-of-pocket costs and expenses of Lessor shall be
paid by Lessee), any Unit. Lessee may accompany Lessor on any such inspections.

               (b) Lessee shall furnish to Lessor and the Collateral Agent, not
less than once every six months during the Term, an Officer's Certificate,
accurate in all material respects, stating the location of each Unit, noting
whether any Equipment has been relocated and if so the correct address of the
relocated Equipment. Lessor shall have no duty to make any such inspection or
inquiry and shall not incur any liability or obligation by reason of not making
any such inspection or inquiry.

                           Section 11. MODIFICATIONS

               11.1 Modifications. (a) Lessee, at its sole cost and expense,
shall from time to time make alterations, renovations, improvements and
additions to a Unit or any part thereof (collectively, "Modifications") which
are required to be made pursuant to a Legal Requirement or an Insurance
Requirement, and may at any time and from time to time make other Modifications;
provided that: (i) except for any Modification required to be made pursuant to a
Legal Requirement or an Insurance Requirement, no Modification, individually, or
when aggregated with any other Modification shall impair the value of such
Equipment or the utility or useful life of such Equipment from that which
existed immediately prior to such Modification; (ii) the Modification shall be
performed in a timely manner and in a good and workmanlike manner; (iii) Lessee
shall comply in all material respects with all Legal Requirements (including all
Environmental Laws) and Insurance Requirements applicable to the Modification,
including the obtaining of all permits, and the structural integrity of such
Equipment shall not be adversely affected in any material respect; (iv) subject
to the terms of Section 13 relating to permitted contests, Lessee shall pay all
costs and expenses and discharge any Liens arising with respect to the
Modification; and (v) such Modifications shall comply with Section 10.1 and
shall not change the primary character of such Equipment or intended use of such
Equipment. All

                                       10
<PAGE>

Modifications shall remain part of the Equipment and shall be subject to this
Lease, and title thereto shall immediately vest in Lessor.

               (b) Lessee shall notify Lessor of the undertaking of any
Modifications the cost of which is anticipated to exceed $500,000.

               (c) Lessee shall not without the consent of Lessor (which consent
will not be unreasonably withheld or delayed) undertake any Modifications to any
Unit (other than Modifications required to be made pursuant to a Legal
Requirement) if such Modifications cannot, in the reasonable judgment of Lessee,
be completed on or prior to the date that is one month prior to the Expiration
Date.

               (d) Lessee, at its sole cost and expense, shall overhaul
substantially all of the Equipment during the Term, consistent with Lessee's
normal business practices.

                               Section 12. TITLE

               12.1 Warranty of Title. (a) Lessee agrees that, except as
otherwise provided herein (i.e. with respect to Lessor Liens) and subject to the
terms of Section 13 relating to permitted contests, Lessee shall not directly or
indirectly create or allow to remain, and shall promptly discharge at its sole
cost and expense, any Lien, defect, attachment, levy, title retention agreement
or claim upon any Unit or any Modifications or any Lien, attachment, levy or
claim with respect to the Rent or with respect to any amounts held by the
Indenture Trustee pursuant to the Indenture, other than Permitted Exceptions
and/or Lessor Liens. Lessee shall promptly notify Lessor in the event it has
actual knowledge that a Lien (other than a Permitted Exception and/or a Lessor
Lien) exists with respect to the Equipment.

               (b) Nothing contained in this Lease shall be construed as
constituting the consent or request of Lessor, expressed or implied, to or for
the performance by any contractor, mechanic, laborer, materialman, supplier or
vendor of any labor or services or for the furnishing of any materials for any
alteration, addition, repair or demolition of or to any Unit or any part
thereof. NOTICE IS HEREBY GIVEN THAT LESSOR IS NOT AND SHALL NOT BE LIABLE FOR
ANY LABOR, SERVICES OR MATERIALS FURNISHED OR TO BE FURNISHED TO LESSEE, OR TO
ANYONE HOLDING ANY EQUIPMENT OR ANY PART THEREOF THROUGH OR UNDER LESSEE, AND
THAT NO MECHANIC'S OR OTHER LIENS FOR ANY SUCH LABOR, SERVICES OR MATERIALS
SHALL ATTACH TO OR AFFECT THE INTEREST OF LESSOR IN AND TO ANY EQUIPMENT.

               12.2 Identification. Lessee shall not allow the name of any
Person to be placed upon any portion of any Unit as a designation that might be
interpreted as indicating a claim of ownership thereof or security interest
therein by any Person other than Lessee.

                                       11
<PAGE>

                         Section 13. PERMITTED CONTESTS

               13.1 Permitted Contests Other Than in Respect of Impositions.
Except to the extent otherwise provided for in Section 13.2(g) of the
Participation Agreement, Lessee, on its own or on Lessor's behalf but at
Lessee's sole cost and expense, may contest, by appropriate administrative or
judicial or other proceedings or processes (such as settlement or mediation)
conducted in good faith and with due diligence, the amount, validity or
application, in whole or in part, of any Legal Requirement, or any Lien,
attachment, levy, encumbrance or encroachment or any Supplemental Rent that is
payable to a third party (and not the Securityholders or any parties to the
Operative Agreements), and Lessor agrees not to pay, settle or otherwise
compromise any such item, provided that (a) the commencement and continuation of
such proceedings shall suspend the collection from, and suspend the enforcement
against the applicable Equipment, Lessor, Trustee, the Indenture Trustee, the
Trust Company, the Certificate Holders and the Securityholders; (b) there shall
be no risk of the imposition of a Lien (other than a Permitted Exception) on any
Unit and no part of any Unit nor any Rent would be in any danger of being sold,
forfeited, lost or deferred; (c) at no time during the permitted contest shall
there be a risk of the imposition of criminal liability or civil liability on
Lessor, Trustee, the Indenture Trustee, Trust Company, any Certificate Holder or
any Securityholder for failure to comply therewith; and (d) in the event that,
at any time, there shall be a material risk of extending the application of such
item beyond the earlier of the Expiration Date, then Lessee shall deliver to
Lessor an Officer's Certificate certifying as to the matters set forth in
clauses (a), (b) and (c) of this Section 13.1. Lessor, at Lessee's sole cost and
expense, shall execute and deliver to Lessee such authorizations and other
documents as may reasonably be required in connection with any such contest and,
if reasonably requested by Lessee, shall join as a party therein at Lessee's
sole cost and expense.

                             Section 14. INSURANCE

               14.1 Public Liability and Workers' Compensation Insurance. During
the Term, Lessee shall procure and carry, at Lessee's sole cost and expense,
commercial general liability insurance for claims for injuries or death
sustained by persons or damage with respect to the use or operation of the
Equipment. Such insurance shall be on terms and in amounts that are no less
favorable than insurance maintained by owners of similar equipment which are in
Lessee's line of business, that are in accordance with normal industry practice.
The policy shall be endorsed to name Lessor, the Trust Company, the Certificate
Holders, the Trustee, the Indenture Trustee and the Collateral Agent as
additional insureds. The policy shall also specifically provide that the policy
shall be considered primary insurance which shall apply to any loss or claim
before any contribution by any insurance which Lessor, the Trust Company, the
Certificate Holders, the Trustee, the Indenture Trustee or the Collateral Agent
may have in force. Lessee shall, in the operation of the Equipment, comply with
the applicable workers' compensation laws and protect Lessor against any
liability under such laws.

               14.2 Hazard and Other Insurance. During the Term, Lessee shall
keep each Unit insured against loss or damage by fire and other risks on terms
and in amounts that are no less favorable than insurance maintained by owners of
similar equipment, that are in accordance

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with normal industry practice and are in amounts equal to the greater of (i)
Termination Value and (ii) the actual replacement cost of the Equipment. So long
as no Lease Event of Default exists, any loss payable under the insurance policy
required by this Section will be paid to and adjusted solely by Lessee, subject
to Section 15.

               14.3 Coverage. (a) Lessee shall furnish Lessor with certificates
showing the insurance required under Sections 14.1 and 14.2 to be in effect and
naming each of the Indenture Trustee, the Collateral Agent, the Lessor, the
Certificate Holders, the Trustee, and the Trust Company as an additional insured
with respect to liability insurance and showing the endorsement required by
Section 14.3(c). All such insurance shall be at the cost and expense of Lessee.
Such certificates shall include a provision in which the insurer agrees to
provide 30 days' advance written notice by the insurer to Lessor and the
Collateral Agent in the event of cancellation or modification of such insurance
that would reasonably be expected to be adverse to the interests of Lessor, the
Trust Company, the Certificate Holders, the Trustee or the Indenture Trustee. If
a Lease Event of Default has occurred and is continuing and Lessor so requests,
Lessee shall deliver to Lessor copies of all insurance policies required by this
Lease.

               (b) Lessee agrees that the insurance policy or policies required
by this Lease shall include an appropriate clause pursuant to which such policy
shall provide that it will not be invalidated should Lessee waive, in writing,
prior to a loss, any or all rights of recovery against any party for losses
covered by such policy. Lessee hereby waives any and all such rights against
Lessor, the Trust Company, the Certificate Holders, the Trustee, the Collateral
Agent, the Indenture Trustee and the Securityholders to the extent of payments
made under such policies.

               (c) All insurance policies required by Section 14.2 shall include
a loss payee endorsement in favor of the Collateral Agent.

               (d) Neither Lessor nor Lessee shall carry separate insurance
concurrent in kind or form or contributing in the event of loss with any
insurance required under this Lease except that Lessor may carry separate
liability insurance so long as (i) Lessee's insurance is designated as primary
and in no event excess or contributory to any insurance Lessor may have in force
which would apply to a loss covered under Lessee's policy and (ii) each such
insurance policy will not cause Lessee's insurance required under this Lease to
be subject to a coinsurance exception of any kind.

               (e) Lessee shall pay as they become due all premiums for the
insurance required by this Lease, shall renew or replace each policy prior to
the expiration date thereof and shall promptly deliver to Lessor and the
Collateral Agent certificates for renewal and replacement policies.

               (f) Lessee shall use commercially reasonable effort to cause all
insurance policies required by this Section 14, to the extent available at
commercially reasonable rates, to (i) insure the interest of Lessor, the
Indenture Trustee, the Collateral Agent, the Certificate Holders, the Trustee
and the Trust Company, as applicable, regardless of any breach or violation by
Lessee of any warranties, declarations or conditions in such policies; (ii)
include a severability of interest clause providing that such policy shall
operate in the same manner as if there were a separate policy covering each
insured (provided, however, that such policies shall

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not operate to increase the insurer's limit of liability); (iii) waive any right
of set-off due to Lessee's actions or inactions (except with respect to unpaid
premiums); (iv) waive any right of subrogation against the Indenture Trustee,
the Collateral Agent, the Lessor, the Certificate Holders, the Trustee and the
Trust Company; and (v) not be subject to any co-insurance clause, provided that
such insurance may contain such reasonable deductibles as Lessee determines are
appropriate in accordance with customary market practice for such insurance.

                     Section 15. CONDEMNATION AND CASUALTY

               15.1 Casualty and Condemnation. (a) Subject to the provisions of
this Section 15 and Section 16 (in the event Lessee delivers, or is obligated to
deliver, a Substitution Notice), and prior to the occurrence and continuation of
a Lease Event of Default, Lessee shall be entitled to receive (and Lessor hereby
irrevocably assigns to Lessee all of Lessor's right, title and interest in) any
award, compensation or insurance proceeds to which Lessee or Lessor may become
entitled by reason of their respective interests in the Equipment (i) if all or
a portion of such Equipment is damaged or destroyed in whole or in part by a
Casualty or (ii) if the use, access, easement rights or title to such Equipment
or any part thereof is the subject of a Condemnation; provided, however, if a
Lease Event of Default shall have occurred and be continuing such award,
compensation or insurance proceeds shall be paid directly to Lessor or, if
received by Lessee, shall be held in trust for Lessor, and shall be paid over by
Lessee to Lessor.

               (b) So long as no Lease Event of Default has occurred and is
continuing, Lessee may appear in any proceeding or action to negotiate,
prosecute, adjust or appeal any claim for any award, compensation or insurance
payment on account of any such Casualty or Condemnation and shall pay all
expenses thereof. At Lessee's reasonable request, and at Lessee's sole cost and
expense, Lessor and the Collateral Agent shall participate in any such
proceeding, action, negotiation, prosecution or adjustment. Lessor and Lessee
agree that this Lease shall control the rights of Lessor and Lessee in and to
any such award, compensation or insurance payment.

               (c) If Lessor or Lessee shall receive notice of a Casualty or a
possible Condemnation of a Unit or any interest therein, Lessor or Lessee, as
the case may be, shall give notice thereof to the other and to the Collateral
Agent promptly after the receipt of such notice.

               (d) In the event of a Casualty or receipt of notice by Lessee or
Lessor of a Condemnation, Lessee shall, not later than thirty (30) days after
such occurrence, deliver to Lessor and the Collateral Agent an Officer's
Certificate stating that either (i) (x) such Casualty is not a Significant
Casualty or (y) such Condemnation is neither a Total Condemnation nor a
Significant Condemnation and that this Lease shall remain in full force and
effect with respect to the applicable Unit and, at Lessee's sole cost and
expense, Lessee shall promptly and diligently restore the applicable Unit in
accordance with the terms of Section 15.1(e) or (ii) this Lease shall terminate
with respect to the applicable Equipment in accordance with Section 16.1.

               (e) If pursuant to this Section 15.1, this Lease shall continue
in full force and effect following a Casualty or Condemnation with respect to
the affected Unit, Lessee shall, at its sole cost and expense, promptly and
diligently repair any damage to the applicable Unit caused

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<PAGE>

by such Casualty or Condemnation in conformity with the requirements of Sections
10.1 and 11.1 so as to restore the applicable Unit to the same condition,
operation, function and value as existed immediately prior to such Casualty or
Condemnation. In such event, title to the applicable Unit shall remain with
Lessor.

               (f) In no event shall a Casualty or Condemnation with respect to
which this Lease remains in full force and effect under this Section 15.1 affect
Lessee's obligations to pay Rent pursuant to Section 3.1.

               (g) Notwithstanding anything to the contrary set forth in Section
15.1(a) or Section 15.1(e), if during the Term a Casualty occurs with respect to
a Unit or Lessee receives notice of a Condemnation with respect to a Unit, and
following such Casualty or Condemnation, such Unit cannot reasonably be restored
on or before the date which is twelve months after Lessee's collection of the
insurance proceeds or condemnation awards as a result of such Casualty or
Condemnation to substantially the same condition as existed immediately prior to
such Casualty or Condemnation or before such day such Unit is not in fact so
restored, then, on or before such day, Lessee shall either (i) if permitted
pursuant to Section 20.1(a) exercise the Purchase Option thereunder to purchase
such Unit, (ii) exercise its Expiration Date Purchase Option or (iii) deliver to
Lessor and the Collateral Agent an Officer's Certificate and a Substitution
Notice with respect to such Unit pursuant to Sections 16 and 30 and, in any such
event, such remaining Casualty or Condemnation proceeds shall be paid to the
Collateral Agent, which shall pay such funds to Lessee upon the closing of the
purchase of such Unit or the substitution therefor of Replacement Equipment.

                         Section 16. LEASE TERMINATION

               16.1 Termination upon Certain Events. (a) If Lessor or Lessee
shall have received notice of a Total Condemnation, then, subject to the
provisions of Section 30 hereof, Lessee shall be obligated, within thirty (30)
days after Lessee receives notice thereof, to deliver a written notice in the
form described in Section 16.2(a) (a "Substitution Notice") with respect to the
affected Unit.

               (b) If either: (i) Lessee or Lessor shall have received notice of
a Condemnation, and Lessee shall have delivered to Lessor an Officer's
Certificate that such Condemnation is a Significant Condemnation; or (ii) a
Casualty occurs, and Lessee shall have delivered to Lessor an Officer's
Certificate that such Casualty is a Significant Casualty; or (iii) an
Environmental Violation occurs or is discovered and Lessee shall have delivered
to Lessor an Officer's Certificate stating that, in the reasonable, good-faith
judgment of Lessee, the cost to remediate the same will exceed 10% of the
Equipment Cost of such Unit; then, Lessee shall, simultaneously with the
delivery of the Officer's Certificate pursuant to the preceding clause (i), (ii)
or (iii), as applicable, deliver a Substitution Notice with respect to the
affected Unit.

               16.2 Procedures. (a) A Substitution Notice shall contain notice
of Lessee's election (i) if permitted pursuant to Section 20.1(a), and in
accordance with the terms and conditions thereof, to exercise the Purchase
Option with respect to the applicable Unit or Units

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<PAGE>

that are subject to the Total Condemnation, Significant Condemnation,
Significant Casualty or material Environmental Violation described in Section
16.1(b)(iii) (the "Affected Equipment"), or any Units of the Affected Equipment
designated by Lessee, or (ii) to exercise its rights under, and in accordance
with the terms and conditions of, Section 30 to substitute for the Affected
Equipment (other than Units for which the Purchase Option was exercised under
Section 16.2(a)) Replacement Equipment, in each case on a date not more than 30
days after Lessor's receipt of such Substitution Notice (the "Substitution
Date").

               (b) If the Substitution Notice contains notice of Lessee's
election to exercise its right to substitute Replacement Equipment for the
Affected Equipment or any Units thereof, then, on the Substitution Date, Lessee
shall effect such substitution in accordance with Section 30. If the
Substitution Notice contains notice of Lessee's election to exercise the
Purchase Option for the Affected Equipment or any Units thereof, then, on the
Substitution Date, Lessee shall effect such purchase in accordance with Section
20.1(a).

                              Section 17. DEFAULT

               17.1 Lease Events of Default. If any one or more of the following
events (each a "Lease Event of Default") shall occur:

                      (i) Lessee shall fail to make payment of (i) any Basic
         Rent within thirty (30) days after the same has become due and payable
         or (ii) Final Rent Payment, Purchase Option Price, Equity Proceeds
         Purchase Option Price, Control Purchase Price, Excess Proceeds Purchase
         Price or Termination Value after the same has become due and payable;
         or

                      (ii) Lessee shall fail to make payment of any Supplemental
         Rent due and payable to a Securityholder, Certificate Holder, Lessor,
         the Indenture Trustee, the Collateral Agent or the Trust Company within
         thirty (30) days after receipt of notice thereof (other than
         Supplemental Rent that is permitted to be and is actually being
         contested pursuant to Section 13 hereof); or

                      (iii) Lessee shall fail to maintain insurance as required
         by Section 14; or

                      (iv) Lessee or any Guarantor shall default in the
         observance or performance of any term, covenant or condition of Lessee
         or of such Guarantor, respectively, under this Lease, the Participation
         Agreement, the Guarantee or any other Operative Agreement to which it
         is a party (other than those set forth in Section 17.1(a)(i), (ii) or
         (iii) hereof) and such default shall continue unremedied for a period
         of 30 days after receipt of notice thereof from Lessor, Indenture
         Trustee, Collateral Agent or the Trust Company, or any representation
         or warranty by Lessee or any Guarantor, respectively, set forth in this
         Lease, the Guarantee or in any other Operative Agreement or in any
         document entered into in connection herewith or therewith or in any
         document, certificate or financial or other statement delivered in
         connection herewith or therewith shall be false or inaccurate in any
         material respect; or

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<PAGE>

                      (v) an Indenture Event of Default that is caused by, or
         results from, the action or inaction of Lessee or any Guarantor or
         relates to Lessee or any Guarantor (that is, Indenture Sections 6.1(3),
         (7) but only to the extent caused by the actions or inactions of
         Lessee, (8), (9) but only as it relates to Lessee or any Guarantor,
         (10) and (11)) shall have occurred and be continuing.

then, in any such event, Lessor may, in addition to the other rights and
remedies provided for in this Section 17 and in Section 18.1, terminate this
Lease by giving Lessee five (5) days notice of such termination, and this Lease
shall terminate. Lessee shall, to the fullest extent permitted by law, pay as
Supplemental Rent all costs and expenses incurred by or on behalf of Lessor, the
Indenture Trustee, the Collateral Agent, the Certificate Holders, the Trustee
and/or the Trust Company, including fees and expenses of counsel, as a result of
any Lease Event of Default hereunder.

               17.2 Final Payment. If a Lease Event of Default shall have
occurred and be continuing, Lessor shall have the right to recover, by demand to
Lessee and at Lessor's election, and Lessee shall pay to Lessor, as and for a
final payment, but exclusive of the indemnities payable under Section 13 of the
Participation Agreement (to the extent any such liabilities do not constitute
Supplemental Rent), and in lieu of all damages beyond the date of such demand
(i) for any Lease Event of Default that is not a Limited Recourse Event of
Default, the sum of (a) the Termination Value, plus (b) all other amounts owing
in respect of Rent and Supplemental Rent theretofore accruing under this Lease
and (ii) for any Limited Recourse Event of Default (provided no other Lease
Event of Default has occurred and is then continuing), the Final Rent Payment
for all of the Equipment; provided, however, if a Lease Event of Default has
occurred pursuant to Section 17.1(v) as the result of a default under Section
6.1(9) of the Indenture, such final payment shall be immediately due and payable
without demand or notice. Upon payment of the amount specified pursuant to
clause (i) of the first sentence of this Section 17.2, Lessee shall be entitled
to receive from Lessor, at Lessee's request and cost, an assignment of Lessor's
right, title and interest in the Equipment, in each case in conformity with
local custom and free and clear of the Lien of the Security Agreement and any
Lessor Liens. The Equipment shall be quitclaimed to Lessee (or Lessee's
designee) "AS IS" and in its then present physical condition. If any statute or
rule of law shall limit the amount of such final payment to less than the amount
agreed upon, Lessor shall be entitled to the maximum amount allowable under such
statute or rule of law.

               17.3 Remedies. If any Lease Event of Default shall have occurred
and be continuing, Lessor may exercise in any order one or more or all of the
remedies set forth in this Section 17.3 (it being understood that no remedy
herein conferred is intended to be exclusive of any other remedy or remedies,
but each and every remedy shall be cumulative and shall be in addition to every
other remedy given herein or now or hereafter existing at law or in equity or by
statute).

               (a) Lessor may proceed by appropriate court action or actions,
either at law or in equity, to enforce performance by Lessee of the applicable
covenants of this Lease or to recover damages for the breach thereof;

                                       17
<PAGE>

               (b) Lessor may by notice in writing to Lessee terminate this
Lease but Lessee shall remain liable as hereinafter provided; and Lessor may, at
its option, do any one or more of the following: (i) (A) for any Lease Event of
Default that is not a Limited Recourse Event of Default, declare the Termination
Value, plus all other amounts owing in respect of Rent or Supplemental Rent
theretofore accruing under the Lease, all other amounts then payable by Lessee
under this Lease and the other Operative Agreements to be immediately due and
payable, and recover any other damages and expenses in addition thereto which
Lessor shall have sustained by reason of such Lease Event of Default and (B) for
any Limited Recourse Event of Default (provided no other Lease Event of Default
has occurred and is then continuing), declare the Final Rent Payment for all of
the Equipment to be immediately due and payable; (ii) enforce the security
interest given hereunder pursuant to the Uniform Commercial Code as provided in
Section 28 or any other law; (iii) enter upon the premises where the Equipment
is located and take possession of it; and (iv) require Lessee to return the
Equipment as provided in Section 10.2; or

               (c) For any Lease Event of Default which is not a Limited
Recourse Event of Default, Lessor may require Lessee immediately to purchase the
Equipment for a purchase price

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<PAGE>

equal to the sum of the Termination Value, plus all other amounts owing in
respect of Rent or Supplemental Rent theretofore accruing under this Lease and
all other amounts then due and payable under the Operative Agreements.

               17.4 Additional Remedies. In addition to the remedies set forth
in Sections 17.2 and 17.3, if any Lease Event of Default shall have occurred and
be continuing, Lessor may, but is not required to, sell the Equipment in one or
more sales, and Lessor may purchase all or any part of the Equipment at such
sale. Lessee acknowledges that sales for cash or on credit to a wholesaler,
retailer or user of such Equipment, at a public or private auction, are all
commercially reasonable. Any notice required by law of intended disposition by
Lessor shall be deemed reasonable and properly given if given at least ten (10)
Business Days before such disposition.

               17.5 Proceeds of Sale; Deficiency. All payments received and
amounts held or realized by the Lessor at any time when a Lease Event of Default
shall have occurred and be continuing and after the Termination Value shall have
been accelerated pursuant to Section 17.2 or 17.3 as well as all payments or
amounts then held or thereafter received by Lessor shall be conveyed to the
Collateral Agent as required by the Assignment of Lease and distributed pursuant
to Section 6.10 of the Indenture.

               17.6 Waiver of Certain Rights. If this Lease shall be terminated
pursuant to Section 17.1(a), Lessee waives, to the fullest extent permitted by
law, (a) any notice of re-entry or the institution of legal proceedings to
obtain re-entry or possession; (b) any right of redemption, re-entry or
repossession; (c) the benefit of any laws now or hereafter in force exempting
property from liability for rent or for debt; and (d) any other rights which
might otherwise limit or modify any of Lessor's rights or remedies under this
Section 17.

               17.7 Assignment of Rights Under Contracts. If a Lease Event of
Default shall have occurred and be continuing, and whether or not this Lease
shall have been terminated pursuant to Section 17.1(a) and provided that Lessee
shall not have purchased the Equipment pursuant to Section 20, Lessee shall upon
Lessor's demand immediately assign, transfer and set over to Lessor, to the
extent transferable, all of Lessee's right, title and interest in and to each
agreement executed by Lessee in connection with the use or operation of the
Equipment (including all right, title and interest of Lessee with respect to all
warranty, performance, service and indemnity provisions), as and to the extent
that the same relate to the use, maintenance or operation of the Equipment.

               17.8 Lessee's Interest. If pursuant to Section 17.3, Lessee pays
to Lessor the Termination Value plus either, at Lessor's election, (a) all other
amounts Lessor declared to be due and payable pursuant to Section 17.3(b)(i)(A)
and all damages and expenses to which Lessor is entitled to thereunder or (b)
all amounts included in the purchase price for the Equipment pursuant to Section
17.3(c), then Lessor shall transfer the Equipment to Lessee in accordance with
the provisions of Section 19.1.

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<PAGE>

                      Section 18. LESSOR'S RIGHT TO CURE

               18.1 Lessor's Right to Cure Lessee's Lease Defaults. Lessor,
without waiving or releasing any obligation or Lease Event of Default, may (but
shall be under no obligation to) remedy any Lease Event of Default for the
account and at the sole cost and expense of Lessee, including the failure by
Lessee to maintain any insurance required by Section 14, and may, to the fullest
extent permitted by law, and notwithstanding any right of quiet enjoyment in
favor of Lessee, enter upon the premises where the Equipment is located for such
purpose and take all such action thereon as may be necessary or appropriate
therefor. No such entry shall be deemed an eviction of Lessee. All reasonable
out-of-pocket costs and expenses so incurred (including the reasonable fees and
expenses of counsel), together with interest thereon at the Overdue Rate from
the date on which such sums or expenses are paid by Lessor, shall be paid by
Lessee to Lessor on demand as Supplemental Rent.

                         Section 19. LEASE TERMINATION

               19.1 Provisions Relating to Lessee's Termination of this Lease or
Exercise of Purchase Option. (a) In connection with any purchase of Equipment
pursuant to Section 20 or 17.3(c), (b) in connection with any substitution of
Units pursuant to Section 30, and (c) upon the payment of all amounts set forth
in Section 17.3(b)(i), upon the date of purchase, the date of substitution or
the date of payment, as applicable, upon tender by Lessee of the amounts
required under Section 20, 17.3(c) or 17.3(b)(i), as applicable, or the
substitution of the Replacement Equipment pursuant to Section 30, as applicable:

                      (i) Lessor shall execute and deliver to Lessee (or to
         Lessee's designee) at Lessee's cost and expense an assignment of
         Lessor's entire interest in the applicable Unit being purchased or
         replaced, in each case in recordable form and otherwise in conformity
         with local custom and free and clear of the Lien of the Security
         Agreement and any Lessor Liens;

                      (ii) the applicable Unit being purchased replaced shall be
         conveyed to Lessee "AS IS" "WHERE IS" and in then present physical
         condition; and

                      (iii) this Lease shall terminate with respect to the
         applicable Unit being purchased or replaced.

                          Section 20. PURCHASE OPTION

               20.1 Purchase Option. (a) Except as provided in Section 20.1(b),
(c) or (d), Lessee shall not have an option to purchase the Equipment before
September 1, 2006. On or after September 1, 2006, Lessee shall have the option
(exercisable by giving Lessor irrevocable written notice (the "Purchase Notice")
of Lessee's election to exercise such option not less than thirty (30) nor more
than sixty (60) days prior to the date of purchase pursuant to such option) to
purchase one or more Units on the date specified in such Purchase Notice, at a
price equal to the

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<PAGE>

Termination Value (the "Purchase Option Price") (which the parties do not intend
to be a "bargain" purchase price) of such Unit or Units; provided, however, that
Lessee shall only have such option with respect to less than all of the
Equipment if no Lease Default or Lease Event of Default shall have occurred and
be continuing and that during the twelve month period prior to the Expiration
Date the Lessor can only purchase less than all of the Equipment if Lessee has
exercised its Expiration Date Purchase Option, or such purchase cures a Lease
Default or Lease Event of Default. If Lessee exercises its option to purchase
one or more of the Units pursuant to this Section 20.1(a) (the "Purchase
Option"), Lessor shall transfer to Lessee or Lessee's designee all of Lessor's
right, title and interest in and to such Unit as of the date specified in the
Purchase Notice upon receipt of the Purchase Option Price and all Rent and other
amounts then due and payable by Lessee under this Lease and any other Operative
Agreement, in accordance with Section 19.1, and this Lease shall terminate with
respect to such Unit or Units on the date of such transfer of such Unit or
Units.

         (b) Notwithstanding the provisions of Section 20.1(a), if, prior to
September 1, 2004 the Lessee, if no Lease Default or Lease Event of Default
shall have occurred and be continuing, may use Net Cash Proceeds to purchase
(after delivery to Lessor of irrevocable written notice not less than thirty
(30) nor more than sixty (60) days prior to the date of such Equity Proceeds
Purchase) one or more Units of the Equipment at a purchase price equal to the
Termination Value of such Unit or Units (the "Equity Proceeds Purchase Price")
(which the parties do not intend to be a "bargain" purchase price), provided
that in no event shall Lessee be permitted to purchase Equipment having an
aggregate Termination Value in excess of the sum of principal amount of the
Securities being redeemed and the amount of the Certificate Holder Contributions
being repaid from such Net Cash Proceeds (without regard to any premiums being
paid) or that exceeds thirty-five (35%) percent of the aggregate Termination
Value of all the Equipment. If Lessee purchases one or more of the Units
pursuant to this Section 20.1(b) (the "Equity Proceeds Purchase"), Lessor shall
transfer to Lessee or Lessee's designee all of Lessor's right, title and
interest in and to such Unit as of the date specified in the notice upon receipt
of the Equity Proceeds Purchase Price and all Rent and other amounts then due
and payable under this Lease and any other Operative Agreement, in accordance
with Section 19.1. The payment by Lessee of the Equity Proceeds Purchase Price
shall be credited towards Lessee's obligation to pay Supplemental Rent relating
to Lessor's obligations to the Securityholders and the Certificate Holders in
connection with the redemption and repayment referred to above, but Lessee shall
remain liable for any deficiency.

         (c) Notwithstanding the provisions of Section 20.1(a), in the event
that Lessor is required to pay any Change of Control Payment upon the occurrence
of a Change of Control, Lessee shall purchase (after delivery to Lessor of
irrevocable written notice not less than ten (10) days prior to the date of the
Control Purchase) one or more Units of the Equipment on the date of such payment
at a purchase price equal to the Termination Value of such Unit or Units (the
"Control Purchase Price") (which the parties do not intend to be a "bargain"
purchase price), provided that in no event shall Lessee be permitted to purchase
Equipment having an aggregate Termination Value in excess of the applicable
Change of Control Payment. If Lessee purchases one or more of the Units pursuant
to this Section 20.1(c) (the "Control Purchase"), Lessor shall transfer to
Lessee or Lessee's designee all of Lessor's right, title and interest in and to
such Unit as of the date specified in the notice upon receipt of the Control
Purchase Price and all Rent and other amounts then due and payable under this
Lease and any other Operative Agreement, in

                                       21
<PAGE>

accordance with Section 19.1. The payment by Lessee of the Control Purchase
Price shall be credited towards Lessee's obligation to pay Supplemental Rent
relating to Lessor's obligations to the Securityholders and the Certificate
Holders in connection with the applicable Change in Control, but Lessee shall
remain liable for any deficiency.

               (d) Notwithstanding the provisions of Section 20.1(a), in the
event that Lessor is required to pay any Asset Disposition Offer Amount
following the occurrence of an Asset Disposition, Lessee shall purchase on the
Asset Disposition Purchase Date one or more Units of the Equipment at a purchase
price equal to the Termination Value of such Unit or Units (the "Excess Proceeds
Purchase Price") (which the parties do not intend to be a "bargain" purchase
price), provided that in no event shall Lessee be permitted to purchase
Equipment having an aggregate Termination Value in excess of the applicable
Disposition Offer Amount. If Lessee purchases one or more of the Units pursuant
to this Section 20.1(d) (an "Excess Proceeds Purchase"), Lessor shall transfer
to Lessee or Lessee's designee all of Lessor's right, title and interest in and
to such Unit as of the date specified in the notice upon receipt of the Excess
Proceeds Purchase Price and all Rent and other amounts then due and payable
under this Lease and any other Operative Agreement, in accordance with Section
19.1. The payment by Lessee of the Excess Proceeds Purchase Price shall be
credited towards Lessee's obligation to pay Supplemental Rent relating to
Lessor's obligations to the Securityholders and the Certificate Holders in
connection with the applicable Asset Disposition, but Lessee shall remain liable
for any deficiency.

               20.2 Expiration Date Purchase Option. Not less than twelve (12)
months prior to the Expiration Date, Lessee may give Lessor and the Indenture
Trustee irrevocable written notice (the "Expiration Date Election Notice") that
Lessee is electing to exercise the Expiration Date Purchase Option. If Lessee
does not give an Expiration Date Election Notice on or before the date twelve
(12) months prior to the Expiration Date or if Lessee has not exercised the
Purchase Option with respect to all of the Equipment, then Lessee shall be
obligated to remarket the Equipment pursuant to Section 21. If Lessee has
elected to exercise the Expiration Date Purchase Option, then on the Expiration
Date Lessee shall pay to Lessor an amount equal to the Termination Value for all
the Equipment (which the parties do not intend to be a "bargain" purchase price)
and, upon receipt of such amount plus all Rent and other amounts then due and
payable under this Lease and any other Operative Agreement, Lessor shall
transfer to Lessee or Lessee's designee all of Lessor's right, title and
interest in and to the Equipment in accordance with Section 19.1.

               20.3 Obligation to Purchase All Equipment. If twelve (12) months
prior to the Expiration Date, the then Termination Value of all the Equipment is
less than the Maximum Purchase Option Amount, then on the Expiration Date Lessee
shall be required to exercise its Expiration Date Purchase Option on the
Expiration Date with respect to all remaining Equipment.

                                       22
<PAGE>

                         Section 21. SALE OF EQUIPMENT

               21.1 Sale Procedure. (a) With respect to each Unit (unless Lessee
shall have elected to (x) purchase such Equipment and has paid the relevant
purchase price pursuant to Section 20.1 or 20.2 with respect thereto, or (y)
otherwise terminated this Lease and paid the Termination Value with respect
thereto) Lessee shall (i) pay to Lessor the Final Rent Payment for such Unit as
provided for in Section 21.1(c), and (ii) sell such Unit, to one or more third
parties for cash in accordance with Section 21.1(b).

               (b) During the Marketing Period, Lessee, as nonexclusive broker
for Lessor, shall use its best efforts to obtain bids for the cash purchase of
each Unit, being sold for the highest price available in the relevant market,
shall notify Lessor promptly of the name and address of each prospective
purchaser and the cash price which each prospective purchaser shall have offered
to pay for such Unit and shall provide Lessor with such additional information
about the bids and the bid solicitation procedure as Lessor may reasonably
request from time to time. Lessor may reject any and all bids and may assume
sole responsibility for obtaining bids by giving Lessee written notice to that
effect; provided, however, that notwithstanding the foregoing, Lessor may not
reject a bid if such bid, together with any amounts to be paid pursuant to
Section 21.3, is greater than or equal to the sum of the Limited Deficiency
Amount and all costs and expenses referred to in Section 21.2(i) and is a bona
fide offer by a third party purchaser who is not an Affiliate of Lessee. If the
price which a prospective purchaser shall have offered to pay for all or any of
the Equipment is less than the sum of the Limited Deficiency Amount and all
costs and expenses referred to in Section 21.2(i), Lessor may elect to retain
the Equipment by giving Lessee at least two Business Days' prior written notice
of Lessor's election to retain the Equipment, and upon receipt of such notice,
Lessee shall surrender the Equipment to Lessor pursuant to Section 10.2. Unless
Lessor shall have elected to retain the Equipment pursuant to the preceding
sentence, following the Expiration Date Lessor shall sell the Equipment free of
any Lessor Liens attributable to it, without recourse or warranty, for cash to
the purchaser or purchasers identified by Lessee or Lessor, as the case may be.
Lessee shall surrender the Equipment so sold to each purchaser in the condition
specified in Section 10.2 and this Lease shall terminate with respect to such
Equipment.

               (c) On each date during the Marketing Period on which a Unit is
sold pursuant to Section 21.1(b), and on the Expiration Date with respect to any
Equipment remaining unsold, Lessee shall pay to Lessor the Final Rent Payment
for such Equipment.

               21.2 Application of Proceeds of Sale. Lessor shall apply the
proceeds of sale of each Unit and the Final Rent Payment paid by Lessee in
conjunction therewith in the following order of priority:

                      (i) FIRST, to pay or to reimburse Lessor and Lessee for
         the payment of all reasonable costs and expenses incurred by Lessor and
         Lessee in connection with the sale; and

                      (ii) SECOND, the balance shall be paid to the Indenture
         Trustee to be applied pursuant to the provisions of Section 8.4 of the
         Indenture.

                                       23
<PAGE>

               21.3 Indemnity for Excessive Wear. If the proceeds of the sale
described in Section 21.1(b) with respect to any Unit, less all expenses
incurred by Lessor or Lessee in connection with such sale, shall be less than
the Limited Deficiency Amount for such Unit at the time of such sale and if it
shall have been determined (pursuant to the Appraisal Procedure) that the Fair
Market Sales Value of such Unit shall have been impaired by greater than
expected wear and tear during the Term, Lessee shall pay to Lessor within ten
(10) days after receipt of Lessor's written statement (i) the amount of such
excess wear and tear determined by the Appraisal Procedure or (ii) the amount of
the Net Sale Proceeds Shortfall, whichever amount is less.

               21.4 Appraisal Procedure. For determining excessive wear and
tear, if any, or the Fair Market Sales Value of a Unit or any other amount which
may, pursuant to any provision of any Operative Agreement, be determined by an
appraisal procedure but with respect to which no appraisal or valuation method
is specified, Lessor and Lessee shall use the following procedure (the
"Appraisal Procedure"). Lessor and Lessee shall endeavor to reach a mutual
agreement as to such amount for a period of ten (10) days from commencement of
the Appraisal Procedure, and if they cannot agree within ten (10) days, then two
qualified appraisers, one chosen by Lessee and one chosen by Lessor, shall
mutually agree thereupon, but if either party shall fail to choose an appraiser
within twenty (20) days after notice from the other party of the selection of
its appraiser, then the appraisal by such appointed appraiser shall be binding
on Lessee and Lessor. If the two appraisers cannot agree within twenty (20) days
after both shall have been appointed, then a third appraiser from a nationally
recognized independent appraisal firm (with at least 15 years of experience
appraising equipment similar to and used in the same industry as the Equipment)
shall be selected by the two appraisers or, failing agreement as to such third
appraiser within thirty (30) days after both shall have been appointed, by the
American Arbitration Association. The decisions of the three appraisers shall be
given within twenty (20) days of the appointment of the third appraiser and the
decision of the appraiser most different from the average of the other two shall
be discarded and such average shall be binding on Lessor and Lessee; provided
that if the highest appraisal and the lowest appraisal are equidistant from the
third appraisal, the third appraisal shall be binding on Lessor and Lessee. The
fees and expenses of all of the appraisers shall be paid by the Lessee.

               21.5 Certain Obligations Continue. During the Marketing Period,
the obligation of Lessee to pay Rent with respect to each Unit (including the
installment of Basic Rent due on the Expiration Date) shall continue
undiminished until payment in full to Lessor of the sale proceeds, the Final
Rent Payment, if any, the amount due under Section 21.3, if any, and all other
amounts due to Lessor with respect to the Unit. Lessor shall have the right, but
shall be under no duty, to solicit bids, to inquire into the efforts of Lessee
to obtain bids or otherwise to take action in connection with any such sale,
other than as expressly provided in this Section 21.

                            Section 22. HOLDING OVER

               22.1 Holding Over. If Lessee shall for any reason remain in
possession of a Unit after the expiration or earlier termination of this Lease
(unless the Unit is conveyed to Lessee), such possession shall be as a tenancy
at sufferance during which time Lessee shall continue to pay Supplemental Rent
that would be payable by Lessee hereunder were the Lease

                                       24
<PAGE>

then in full force and effect with respect to such Unit and Lessee shall
continue to pay Basic Rent at an annual rate equal to two hundred percent (200%)
of the Basic Rent payable hereunder immediately preceding such expiration or
earlier termination. Such Basic Rent shall be payable from time to time upon
demand by Lessor. During any period of tenancy at sufferance, Lessee shall,
subject to the second preceding sentence, be obligated to perform and observe
all of the terms, covenants and conditions of this Lease, but shall have no
rights hereunder other than the right, to the extent given by law to tenants at
sufferance, to continue its occupancy and use of the Unit. Nothing contained in
this Section 22 shall constitute the consent, express or implied, of Lessor to
the holding over of Lessee after the expiration or earlier termination of this
Lease as to any Unit and nothing contained herein shall be read or construed as
preventing Lessor from maintaining a suit for possession of any Unit or
exercising any other remedy available to Lessor at law or in equity.

                            Section 23. RISK OF LOSS

               23.1 Risk of Loss. The risk of loss of or decrease in the
enjoyment and beneficial use of the Equipment as a result of the damage or
destruction thereof by fire, the elements, casualties, thefts, riots, wars or
otherwise is assumed by Lessee, and Lessor shall in no event be answerable or
accountable therefor (except specifically with respect to its gross negligence
or willful misconduct).

                     Section 24. SUBLETTING AND ASSIGNMENT

               24.1 Subletting and Assignment. Lessee may not assign this Lease
or any of its rights or obligations hereunder in whole or in part other than as
permitted by the Operative Agreements. Lessee may, without the consent of
Lessor, sublease or license the Equipment or any Unit to any Person; provided
that as of the Expiration Date unless Lessee has exercised an option to purchase
pursuant to Section 20 with respect to the Equipment subject to a sublease or
license, no sublease or license shall provide for a purchase option on behalf of
the sublessee or licensee nor have a remaining term. No sublease, license or
other relinquishment of possession of the Equipment shall in any way discharge
or diminish any of Lessee's obligations to Lessor hereunder and Lessee shall
remain directly and primarily liable under this Lease as to the Equipment so
sublet or licensed.

               24.2 Subleases or Licenses. Promptly following the execution and
delivery of any sublease or license permitted by this Section 24, Lessee shall
deliver an executed copy thereof to Lessor and the Indenture Trustee if
requested by either.

                       Section 25. ESTOPPEL CERTIFICATES

               25.1 Estoppel Certificates. At any time and from time to time
upon not less than twenty (20) days' prior request by Lessor, the Lessee shall
furnish to the Lessor a certificate

                                       25
<PAGE>

signed by an individual having the office of vice president or higher with
Lessee certifying, to the extent accurate, that this Lease is in full force and
effect (or that this Lease is in full force and effect as modified and setting
forth the modifications); the dates to which the Basic Rent and Supplemental
Rent have been paid; to the best knowledge of the signer of such certificate,
whether or not the Lessor is in default under any of its obligations hereunder
(and, if so, the nature of such alleged default); and such other matters under
this Lease as the Lessor may reasonably request. Any such certificate furnished
pursuant to this Section 25 may be relied upon by the Lessor, and any existing
or prospective purchaser or lender, and any accountant or auditor, of, from or
to the Lessor (or any Affiliate thereof).

                             Section 26. NO WAIVER

               26.1 No Waiver. No failure by Lessor or Lessee to insist upon the
strict performance of any term hereof or to exercise any right, power or remedy
upon a default hereunder, and no acceptance of full or partial payment of Rent
during the continuance of any such default, shall constitute a waiver of any
such default or of any such term. To the fullest extent permitted by law, no
waiver of any default shall affect or alter this Lease, and this Lease shall
continue in full force and effect with respect to any other then existing or
subsequent default.

                      Section 27. ACCEPTANCE OF SURRENDER

               27.1 Acceptance of Surrender. (a) As of the Expiration Date, if
any Lease Default shall have occurred and be continuing under the Lease, then
Lessee shall be deemed to have irrevocably exercised the Expiration Date
Purchase Option pursuant to Section 20.2.

               (b) Except as otherwise expressly provided in this Lease, no
surrender to Lessor of this Lease or of all or any portion of the Equipment or
of any interest therein shall be valid or effective prior to the payment or
performance of all obligations under the Operative Agreements, the Trustee, and
no act by Lessor, the Indenture Trustee or the Collateral Agent or any
representative or agent of Lessor, the Indenture Trustee or the Collateral
Agent, other than a written acceptance, shall constitute an acceptance of any
such surrender.

                    Section 28. OWNERSHIP, GRANT OF SECURITY
                         INTEREST AND FURTHER ASSURANCES

               28.1 Grant of Security Interest. Other than Equipment purchased
by Lessee pursuant to Section 20 and subject to Section 7.1, title to the
Equipment shall remain in Lessor as security for the obligations of the
Guarantors under the Guarantee and the obligations of Lessee hereunder and under
each of the other Operative Agreements to which it is a party, until such time
as Lessee and the Guarantors have fulfilled all of their obligations hereunder
and under such other Operative Agreements. Lessee hereby assigns, grants and
pledges to Lessor for the benefit

                                       26
<PAGE>

of Lessor a security interest in all of Lessee's right, title and interest,
whether now or hereafter existing or acquired, in the Equipment (other than
Equipment purchased by Lessee pursuant to Section 20 or replaced by Replacement
Equipment pursuant to Section 30), including, without limitation, all subleases
and proceeds thereof, to secure the payment and performance of all obligations
of Lessee now or hereafter existing under this Lease or any other Operative
Agreement and of the Guarantors under the Guarantee (the "Lease Secured
Obligations"). Lessee shall, at its expense, do any further act and execute,
acknowledge, deliver, file, register and record any further documents which
Lessor may reasonably request in order to protect Lessor's title to and
perfected security interest in the Equipment, subject to no Liens other than
Permitted Exceptions, and Lessor's rights and benefits under this Lease. Subject
to the provisions of Section [10.3(b)] of the Lease, Lessee shall promptly and
duly execute and deliver to Lessor such documents and assurances and take such
further action as Lessor may from time to time reasonably request in order to
carry out more effectively the intent and purpose of this Lease and the other
Operative Agreements, to establish and protect the rights and remedies created
or intended to be created in favor of Lessor hereunder and thereunder, and to
establish, perfect and maintain the right, title and interest of Lessor, in and
to the Equipment, subject to no Lien other than Permitted Exceptions and Lessor
Liens, or of such financing statements or fixture filings or other documents
with respect hereto as Lessor may from time to time reasonably request, and
Lessee agrees to execute and deliver promptly such of the foregoing financing
statements and fixture filings or other documents as may require execution by
Lessee.

               28.2 UCC Remedies. If a Lease Event of Default shall occur and be
continuing, Lessor may exercise, in addition to all other rights and remedies
granted to it in this Lease and in any other Operative Agreement, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, Lessor, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon Lessee or any other Person (all
and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Equipment, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Equipment or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of Lessor or elsewhere upon such terms and
conditions as it may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of any credit risk.
Lessor shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Equipment so sold, free of any right or equity of
redemption in which right or equity is hereby waived or released. Lessee further
agrees, at Lessor's request, to assemble the Equipment and make it available to
the Lessor at places which the Lessor shall reasonably select, whether at
Lessee's premises or elsewhere. Lessor shall apply the net proceeds of any
action taken by it pursuant to this subsection, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Equipment or in any way relating to the
Equipment (including, without limitation, costs of transportation, possession,
storage, refurbishing, advertising and brokers' fees) or the rights of Lessor,
including, without limitation, reasonable attorneys' fees and disbursements, to
the payment in whole or in part of the Lease Secured Obligations, in such order
as Lessor may elect, and only after such application and after the payment by
Lessor of any other amount required by any provision of law,

                                       27
<PAGE>

including, without limitation, Section 9-615(a)(3) of the UCC, need Lessor
account for the surplus, if any, to Lessee. If any notice of a proposed sale or
other disposition of the Equipment shall be required by law, such notice shall
be deemed reasonable and proper if given at least 10 Business Days before such
sale or other disposition.

               28.3 Deficiency. Lessee shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Equipment pursuant to this
Section 28 are insufficient to pay the Lease Secured Obligations and the
reasonable fees and disbursements of any attorneys employed by Lessor or the
Collateral Agent to collect such deficiency.

               28.4 Collateral Agent's Appointment as Attorney-in-Fact;
Collateral Agent's Performance of Lessee's Obligations. Lessee hereby
irrevocably constitutes and appoints the Collateral Agent and any officer or
agent thereof, as assignee of all of Lessor right under this Lease pursuant to
the Assignment of Lease, with full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in the place and
stead of Lessee and in the name of Lessee or in its own name, from time to time
in the Collateral Agent's discretion, for the purpose of carrying out the terms
of this Lease, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Lease, and, without limiting the generality of the foregoing,
Lessee hereby gives the Collateral Agent, the power and right, on behalf of
Lessee, without notice to or assent by Lessee, to do any or all of the
following:

               (a) in the name of Lessee or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under or with respect to the
Equipment and file any claim or take any other action or proceeding in any court
of law or equity or otherwise deemed appropriate by the Collateral Agent for the
purpose of collecting any and all such moneys due under or with respect to the
Equipment whenever payable;

               (b) pay or discharge taxes and Liens levied or placed on or
threatened against the Equipment, effect any repairs or any insurance called for
by the terms of this Lease and to pay all or any part of the premiums therefor
and the costs thereof;

               (c) execute, in connection with the sale provided for in Section
28.2 hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Equipment; and

               (d) (1) direct any party liable for any payment under any of the
Equipment to make payment of any and all moneys due or to become due thereunder
directly to the Collateral Agent or as the Collateral Agent shall direct; (2)
ask or demand for, collect, receive payment of and receipt for, any and all
moneys, claims and other amounts due or to become due at any time in respect of
or arising out of any Equipment; (3) sign and indorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in connection
with any of the Equipment; (4) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
enforce any other right in respect of any Equipment; (5) defend any suit, action
or proceeding brought against Lessee with respect to any Equipment; (6) settle,

                                       28
<PAGE>

compromise or adjust any such suit, action or proceeding and, in connection
therewith, to give such discharges or releases as the Collateral Agent may deem
appropriate; and (7) generally, sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Equipment as fully and
completely as though the Collateral Agent were the absolute owner thereof for
all purposes, and do, at the Collateral Agent's option and the Lessee's expense,
at any time, or from time to time, all acts and things which the Trustee
reasonably deems necessary to protect, preserve or realize upon the Equipment
and the Collateral Agent's security interests therein and to effect the intent
of this Lease, all as fully and effectively as the Lease might do.

Anything in this Section 28.4 to the contrary notwithstanding, the Collateral
Agent agrees that it will not exercise any rights under the power of attorney
provided for in this Section 28.4 unless a Lease Event of Default shall have
occurred and be continuing.

               28.5 Execution of Financing Statements. Pursuant to and to the
extent permitted by Section 9-502 of the Code, the Lessee authorizes the Lessor
and the Collateral Agent to file Lessee Financing Statements without signature
of the Lessee in such form and in such filing offices as the Lessor and/or the
Collateral Agent reasonably determine appropriate to perfect the security
interest of the Lessor under this Lease.

                              Section 29. NOTICES

               29.1 Notices. Unless otherwise specifically provided herein, all
notices, consents, directions, approvals, instructions, requests and other
communications required or permitted by the terms hereof to be given to any
Person to be effective shall be in writing (including by facsimile transmission)
and shall be deemed to have been duly given or made (a) when delivered by hand,
(b) one Business Day after delivery to such nationally recognized courier
service specifying overnight delivery, (c) three Business Days after being
deposited in the mail, certified or registered, postage prepaid or (d) in the
case of facsimile notice, when received, addressed to such Person as indicated:

               If to Lessee:         Hanover Compression Limited Partnership
                                     12001 North Houston Rosslyn
                                     Houston, Texas 77806
                                     Attention: Chief Financial Officer
                                     Telecopy: (281) 447-0821

                                       29
<PAGE>

               With a copy to:              Latham & Watkins
                                            Sears Tower, Suite 5800
                                            233 South Wacker Drive
                                            Chicago, Illinois 60606
                                            Attention: Richard S. Meller and
                                              Michael A. Pucker
                                            Telecopy: (312) 993-9767

               If to Lessor:                Hanover Equipment Trust 2001B
                                            c/o Wilmington Trust Company
                                            Rodney Square North
                                            1100 North Market Street
                                            Wilmington, Delaware 19890
                                            Attention:  Corporate Trust
                                               Administration
                                            Telecopy: (302) 651-8882

               With a copy to the
               Indenture Trustee

                                       30
<PAGE>

               and the Collateral Agent:    Wilmington Trust FSB
                                            Rodney Square North
                                            1100 North Market Street
                                            Wilmington, Delaware 19890
                                            Attention:  Corporate Trust
                                              Administration
                                            Telecopy: (302) 651-8882

                                            and

                                            Wilmington Trust FSB
                                            3773 Howard Hughes Parkway
                                            Suite 300N
                                            Las Vegas, Nevada 89109
                                            Telecopy: (702) 866-2244

               with a copy to the Certificate Holders:

                                            General Electric Capital Corporation
                                            401 Merritt Seven, Suite 23
                                            Norwalk, Connecticut 06851-1177
                                            Attention:  Peter DiBiasi
                                            Telecopy:  (203) 229-1989

or such additional parties and/or other address as such party may hereafter
designate.

                            Section 30. SUBSTITUTION

               30.1 Substitution. Lessee shall be entitled to convey to Lessor
one or more Units ("Replacement Equipment") to be leased to Lessee hereunder in
substitution for Equipment then subject to this Lease (i) in the ordinary course
of business or (ii) as substitution for Equipment which is (a) the subject of a
Total Condemnation, Significant Casualty, Significant Condemnation or
Environmental Violation, (b) purchased by the sublessee of such Equipment, or
(c) purchased by or on behalf of Lessee as permitted by Section 20.1(a) hereof;
provided that such Replacement Equipment be free and clear of all Liens (other
than Permitted Exceptions) and have a value, utility and remaining economic
useful life at least equal to the Equipment being replaced (assuming the
Equipment being replaced was in the condition required to be maintained by the
terms of this Lease) as of the applicable Replacement Equipment Closing Date;
and, provided, further, that no Equipment shall be replaced unless the following
conditions are met as of the applicable Replacement Equipment Closing Date:

               (a) no Lease Event of Default shall have occurred and be
continuing unless such Replacement Equipment shall cure such Lease Event of
Default;

                                       31
<PAGE>

               (b) the aggregate Fair Market Sales Value of all Replacement
Equipment since the Lease Commencement Date shall not exceed 25% of the
Termination Value of all of the Equipment at any time leased hereunder;

               (c) the representations and warranties of the Lessee contained in
Subsection 7.4 of the Participation Agreement shall be true and correct in all
material respects as of the date such substitution occurs;

               (d) the following conditions shall have been met with respect to
the Replacement Equipment:

                      (i) There shall have been delivered to the Lessor a Bill
         of Sale in form and substance reasonably acceptable to the Lessor with
         respect to each Unit of Replacement Equipment being conveyed to Lessor
         on the applicable Equipment purchased on such Replacement Equipment
         Closing Date, conveying title to such Unit of Replacement Equipment to
         the Lessor, subject only to the Permitted Exceptions;

                      (ii) The Lessor shall have good and valid title to the
         Replacement Equipment being acquired on such Replacement Equipment
         Closing Date subject only to the Permitted Exceptions, and the Lessor
         shall have granted the security interest pursuant to the Security
         Agreement with respect to the Replacement Equipment.

                      (iii) The Lessee shall have delivered to the Lessor and
         the Collateral Agent, a Lease Supplement executed by the Lessee, which
         Lessor agrees to execute, with respect to all Replacement Equipment
         being acquired on such Replacement Equipment Closing Date;

                      (iv) The Lessee shall have delivered to the Lessor and the
         Collateral Agent a supplement to the Security Agreement, which Lessor
         agrees to execute, with respect to each Unit of Replacement Equipment
         being acquired on such Replacement Equipment Closing Date that is not
         already subject to the Security Agreement. The Lien of the Security
         Agreement, as supplemented, shall conform to the representations and
         warranties set forth in Section 7.4(u) of the Participation Agreement;

                      (v) The Lessee shall have delivered to the Lessor and the
         Collateral Agent an original Supplement to Assignment of Lease executed
         by the Lessor with respect to each piece of Replacement Equipment being
         acquired on such Replacement Equipment Closing Date that is not already
         subject to the Assignment of Lease;

                      (vi) To the extent required by Section 10.7 of the
         Participation Agreement, the Collateral Agent and the Certificate
         Holders shall have received an Appraisal of the Replacement Equipment
         being acquired on such Replacement Equipment Closing Date and such
         Appraisal shall be in form and substance reasonably acceptable to the
         Collateral Agent, the Certificate Holders and the Lessor;

                      (vii) With respect to each piece of Replacement Equipment
         being acquired by Lessor on such Replacement Equipment Closing Date;

                                       32
<PAGE>

                              (A)   the Collateral Agent, the Lessee and the
                                    Certificate Holders shall have received the
                                    executed legal opinion of special Delaware
                                    counsel to Lessor and the Trust Company, in
                                    form and substance reasonably acceptable to
                                    the Collateral Agent; and

                              (B)   the Collateral Agent and the Certificate
                                    Holders shall have received the executed
                                    legal opinion of counsel to Lessee and the
                                    Guarantors, substantially in form and
                                    substance reasonably acceptable to the
                                    Collateral Agent; and

               (e) the Lessee shall have delivered an Officer's Certificate to
the Lessor, Collateral Agent and the Certificate Holders at least five (5) days
prior to the date such substitution shall occur, setting forth the location of
the Replacement Equipment and certifying that the conditions set forth in
paragraphs (a) through (d) above have been satisfied; and

               (f) the Lessee shall be responsible for the reasonable fees and
expenses incurred by the Lessor, the Collateral Agent and/or the Certificate
Holders in connection with each such replacement.

                           Section 31. SUBORDINATION

               31.1 Agreement to Subordinate. Lessor agrees that the obligations
of Lessee under this Lease are subordinated in right of payment to the prior
payment in full in cash or Cash Equivalents of all Guarantor Senior Indebtedness
of Lessee and that the subordination is for the benefit of and enforceable by
the holders of Guarantor Senior Indebtedness of Lessee. This Lease shall in all
respects rank pari passu with all other Guarantor Senior Subordinated
Indebtedness of Lessee and only Indebtedness of Lessee that is Guarantor Senior
Indebtedness of Lessee will rank senior to the Lease in accordance with the
provisions set forth herein.

               31.2 Liquidation, Dissolution, Bankruptcy. Upon any payment or
distribution of the assets of Lessee to creditors upon a total or partial
liquidation or a total or partial dissolution of Lessee or in a reorganization,
bankruptcy, insolvency, receivership or similar proceeding relating to Lessee or
its properties or an assignment for the benefit of creditors or marshalling of
Lessee's assets or liabilities:

               (a) holders of Guarantor Senior Indebtedness of Lessee shall be
        entitled to receive payment in full in cash or Cash Equivalents of all
        Guarantor Senior Indebtedness of Lessee before Lessor shall be entitled
        to receive any payment of Rent or other amounts with respect to this
        Lease; and

               (b) until the Guarantor Senior Indebtedness of Lessee is paid in
        full in cash or Cash Equivalents, any payment or distribution to which
        Lessor would be entitled but for this Section 31 shall be made to
        holders of Guarantor Senior Indebtedness of Lessee, as their respective
        interests may appear.

                                       33
<PAGE>

               31.3 Default on Guarantor Senior Indebtedness of Lessee. Lessee
shall not pay Rent or any other payment obligations in respect of the Lease
(collectively, "pay Rent") if (A) any Guarantor Senior Indebtedness of Lessee is
not paid when due in cash or Cash Equivalents or (B) any other default on
Guarantor Senior Indebtedness of Lessee occurs and the maturity of such
Guarantor Senior Indebtedness of Lessee is accelerated in accordance with its
terms unless, in either case, (x) the default has been cured or waived and any
such acceleration has been rescinded in writing or (y) such Guarantor Senior
Indebtedness of Lessee has been paid in full in cash or Cash Equivalents;
provided, however, that Lessee may pay Rent, without regard to the foregoing, if
Lessee and Lessor receive written notice approving such payment from any
Representative of the Guarantor Senior Indebtedness of Lessee with respect to
which either of the events set forth in clause (A) or (B) of this sentence has
occurred and is continuing. During the continuance of any default (other than a
default described in clause (A) of the preceding sentence or a default resulting
in acceleration described in clause (B) of the preceding sentence) with respect
to any Designated Senior Indebtedness of Lessee pursuant to which the maturity
thereof may be accelerated immediately without further notice (except such
notice as may be required to effect such acceleration) or the expiration of any
applicable grace periods, Lessee may not pay Rent for a period (a "Payment
Blockage Period") commencing upon the receipt by Lessor of written notice (a
"Blockage Notice") of such default from the Representative(s) of the holders of
such Designated Senior Indebtedness of Lessee specifying an election to effect a
Payment Blockage Period and ending 179 days thereafter (or earlier if such
Payment Blockage Period is terminated (i) by written notice to Lessor from the
Person or Persons who gave such Blockage Notice, (ii) because the default giving
rise to such Blockage Notice is no longer continuing or (iii) because such
Designated Senior Indebtedness of Lessee has been repaid in full in cash or Cash
Equivalents). Notwithstanding the provisions of the immediately preceding
sentence, unless (i) the holders of such Designated Senior Indebtedness of
Lessee or the Representative(s) of such holders shall have accelerated the
maturity of such Designated Senior Indebtedness or (ii) any Guarantor Senior
Indebtedness of Lessee is not paid when due in cash or Cash Equivalents, Lessee
may resume Rent payments after the end of such Payment Blockage Period. Not more
than one Blockage Notice may be given, and not more than one Payment Blockage
may occur, in any consecutive 360-day period, irrespective of the number of
defaults with respect to Designated Senior Indebtedness of Lessee during such
period.

               31.4 Acceleration of Payment of Rent. If payment of Rent is
accelerated because of a Lease Event of Default, Lessee shall promptly notify
the holders of the Designated Senior Indebtedness of Lessee (or their
Representatives) of the acceleration; provided, however, that Lessee shall be
obligated to notify such a Representative only if such Representative has
delivered or caused to be delivered to Lessee an address for service of such a
notice (and Lessee shall only be obligated to deliver the notice to the address
so specified). If any Designated Senior Indebtedness of Lessee is outstanding,
Lessee shall not pay Rent until five (5) Business Days after the holders or
Representative(s) of such Designated Senior Indebtedness of Lessee receive
notice of such acceleration and, thereafter, may pay Rent, only if this Section
31 otherwise permits payments at that time.

               31.5 When Rents Must be Paid Over. If Rent is paid (or a
distribution is made in respect thereof) to Lessor or any other Person that
because of this Section 31 should not have been made, Lessor or such other
Person shall hold such payment or distribution in trust for

                                       34
<PAGE>

holders of Guarantor Senior Indebtedness of Lessee and promptly pay it over to
them as their respective interests may appear.

               31.6 Subrogation. After all Guarantor Senior Indebtedness of
Lessee is paid in full in cash or Cash Equivalents and until the Rents under the
Lease are paid in full, Lessor shall be subrogated to the rights of holders of
Guarantor Senior Indebtedness of Lessee to receive payments applicable to
Guarantor Senior Indebtedness of Lessee. Any payment made under this Section 31
to holders of Guarantor Senior Indebtedness of Lessee which otherwise would have
been made to Lessor is not, as between Lessee and Lessor, a payment by Lessee of
its obligations hereunder.

               31.7 Relative Rights. This Section 31 defines the relative rights
of Lessor and holders of Lessee's Guarantor Senior Indebtedness with respect to
payment of obligations of Lessee under this Lease. Nothing in this Section 31
shall:

               (a) impair, as between Lessee and Lessor, the obligation of
        Lessee which is absolute and unconditional, to pay Rent under the Lease
        in accordance with its terms;

               (b) prevent Lessor from exercising its available remedies upon a
        Lease Default or Lease Event of Default, subject to the rights of
        holders of Lessee's Guarantor Senior Indebtedness to receive payments
        and distributions otherwise payable to Lessor; or

               (c) be construed as a subordination of the priority of the
        security interest of the Lessor and/or the Collateral Agent in the
        Equipment, the subleases and the proceeds thereof, or to prevent Lessor
        or the Collateral Agent from exercising its available remedies with
        respect to the Equipment, the subleases or the proceeds thereof upon a
        Lease Default or Lease Event of Default and applying the proceeds of
        disposition thereof to the obligations of Lessee hereunder.

               31.8 Subordination May Not Be Impaired by Lessee. No right of any
holder of Guarantor Senior Indebtedness of Lessee to enforce the subordination
of the obligations under the Lease shall be impaired by any act or failure to
act by Lessee or by the failure to comply with the terms of this Lease.

               31.9 Distribution or Notice to Representative. Whenever a payment
or distribution is to be made or a notice given to holders of Guarantor Senior
Indebtedness of Lessee, the payment or distribution may be made and the notice
given to their Representative (if any).

               31.10 Section 31 Not to Prevent Events of Default or Limit Right
to Accelerate. The failure to make a Rent payment, by reason of any provision in
this Section 31, shall not be construed as preventing the occurrence of a Lease
Default or Lease Event of Default. Nothing in this Section 31 shall have any
effect on the right of Lessor to accelerate the Rents or exercise any other
remedies in connection therewith.

               31.11 Reliance by Holders of Guarantor Senior Indebtedness on
Subordination Provisions. Lessor acknowledges and agrees that the foregoing
subordination provisions are, and

                                       35
<PAGE>

are intended to be, an inducement and a consideration to each holder of any
Guarantor Senior Indebtedness of Lessee, whether such Guarantor Senior
Indebtedness was created or acquired before or after the date hereof, to
acquire, or to continue to hold, such Guarantor Senior Indebtedness and such
holder of Guarantor Senior Indebtedness of Lessee shall be deemed conclusively
to have relied on such subordination provisions in acquiring and continuing to
hold, or in continuing to hold, such Guarantor Senior Indebtedness.

                           Section 32. MISCELLANEOUS

               32.1 Miscellaneous. Anything contained in this Lease to the
contrary notwithstanding, all claims against and liabilities of Lessee or Lessor
arising from events commencing prior to the expiration or earlier termination of
this Lease shall survive such expiration or earlier termination. If any term or
provision of this Lease or any application thereof shall be declared invalid or
unenforceable, the remainder of this Lease and any other application of such
term or provision shall not be affected thereby.

               32.2 Amendments and Modifications. Neither this Lease nor any
provision hereof may be amended, waived, discharged or terminated except by an
instrument in writing signed by Lessor and Lessee.

               32.3 Successors and Assigns. All the terms and provisions of this
Lease shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns. The Lessee shall maintain at its address
referred to in Section 29.1 a register (the "Register") for the recordation of
the names and addresses of the Lessor and the Lessor's assignees (if any). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Lessee, the Lessor and any assignees of the Lessor shall treat each
person whose name is recorded in the Register as the owner of the Lease recorded
therein for all purposes of this Agreement. Any assignment of the Lease shall be
effective only upon appropriate entries with respect thereto being made in the
Register.

               32.4 Headings and Table of Contents. The headings and table of
contents in this Lease are for convenience of reference only and shall not limit
or otherwise affect the meaning hereof.

               32.5 Counterparts. This Lease may be executed in any number of
counterparts, each of which shall be an original, but all of which shall
together constitute one and the same instrument.

               32.6 GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL
IN ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF
THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.

               32.7 Limitations on Recourse. Except as expressly set forth in
the Operative Agreements, Lessee agrees to look solely to Lessor's estate and
interest in the Equipment, the proceeds of sale thereof, any insurance proceeds
or any other award or any third party proceeds

                                       36
<PAGE>

received by Lessor in connection with the Equipment for the collection of any
judgment requiring the payment of money by Lessor in the event of liability by
Lessor, and no other property or assets of Lessor, the Trust Company member,
partner or other owner of an interest, direct or indirect, in Lessor, or any
director, officer, shareholder, employee, beneficiary, Affiliate of any of the
foregoing shall be subject to levy, execution or other enforcement procedure for
the satisfaction of Lessee's remedies under or with respect to this Lease, the
relationship of Lessor and Lessee hereunder or Lessee's use of the Equipment or
any other liability of Lessor to Lessee. Nothing in this Section shall be
interpreted so as to limit the terms of Section 6.1 or 6.2.

               32.8 Priority. On and prior to the Expiration Date, the Security
Agreement shall be subject and subordinate to this Lease and following the
Expiration Date, the Security Agreement, at the sole election of the Collateral
Agent, shall be senior to this Lease without any further act by any Person.

                                       37
<PAGE>

               IN WITNESS WHEREOF, the parties have caused this Lease be duly
executed and delivered as of the date first above written.

                              HANOVER COMPRESSION LIMITED PARTNERSHIP

                              By:    _________________________________
                                     Name:
                                     Title:

                              HANOVER EQUIPMENT TRUST 2001B

                              By:    Wilmington Trust Company, not individually
                                     but solely as Trustee

                              By:    _________________________________
                                     Name:
                                     Title:

               The undersigned agrees to the provisions of Section 28.4 and
acknowledges receipt of this original counterpart of the foregoing Lease on this
31st day of August, 2001.

                              WILMINGTON TRUST FSB, as Collateral Agent

                              By:    _________________________________
                                     Name:
                                     Title:

                                       38
<PAGE>

                                                          Exhibit A to the Lease

                             LEASE SUPPLEMENT NO. __

               THIS LEASE SUPPLEMENT NO. __ (this "Lease Supplement") dated as
of _______________, between HANOVER EQUIPMENT TRUST 2001B, a Delaware business
trust, as lessor (the "Lessor"), and HANOVER COMPRESSION LIMITED PARTNERSHIP, a
[               ], as lessee (the "Lessee").

               WHEREAS, the Lessor is the owner of the Equipment described on
Schedule I hereto (the "Leased Equipment") and wishes to lease the same to the
Lessee;

               NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

               1. Definitions; Rules of Usage. For purposes of this Lease
Supplement, capitalized terms used herein and not otherwise herein shall have
the meanings assigned to them in Annex A to the Participation Agreement, dated
as of August 31, 2001, among the Lessee, the Lessor, the Indenture Trustee, the
Trust Company, the Collateral Agent, the Certificate Holders named therein, and
the Guarantors named therein, as such Partnership Agreement may be amended,
supplemented or otherwise modified from time to time.

               2. The Equipment. Attached hereto as Schedule I is the
description of the Leased Equipment. Effective upon the execution and delivery
of this Lease Supplement by the Lessor and the Lessee, the Leased Equipment
shall be subject to the terms and provisions of the Lease.

               3. Ratification. Except as specifically modified hereby, the
terms and provisions of the Lease are hereby ratified and confirmed and remain
in full force and effect.

               4. Original Lease Supplement. The single executed original of
this Lease Supplement marked "THIS COUNTERPART IS THE ORIGINAL EXECUTED
COUNTERPART" on the signature page thereof and containing the receipt of the
Collateral Agent therefor on or following the signature page thereof shall be
the Original Executed Counterpart of this Lease Supplement (the "Original
Executed Counterpart"). To the extent that this Lease Supplement constitutes
chattel paper, as such term is defined in the Uniform Commercial Code as in
effect in any applicable jurisdiction, no security interest in this Lease
Supplement may be created through the transfer or possession of any counterpart
other than the Original Executed Counterpart.

               5. GOVERNING LAW. THIS LEASE HAS BEEN DELIVERED IN, AND SHALL IN
ALL RESPECTS BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED ENTIRELY
WITHIN SUCH STATE.

                                       1
<PAGE>

               6. Counterpart Execution. This Lease Supplement may be executed
in any number of counterparts and by each of the parties hereto in separate
counterparts, all such counterparts together constituting but one and the same
instrument.

                                       2
<PAGE>

               IN WITNESS WHEREOF, the parties have caused this Lease Supplement
No. __ be duly executed and delivered as of the date first above written.

                               HANOVER COMPRESSION LIMITED PARTNERSHIP

                               By:    ___________________________________
                                      Name:
                                      Title:

                               HANOVER EQUIPMENT TRUST 2001B

                               By:    Wilmington Trust Company, not in its
                                      individual capacity but solely as Trustee

                               By:    _____________________________
                                      Name:
                                      Title:

                                       3
<PAGE>

               Receipt of this original counterpart of the foregoing Lease
Supplement is hereby acknowledged on this ___ day of ______, _____.

                                   WILMINGTON TRUST FSB, as the Collateral Agent

                                   -----------------------------------
                                   Name:
                                   Title:

                                       4

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