Document:

<PAGE>

                                                                  EXHIBIT  10.11

                                                                  EXECUTION COPY

                           FIRST AMENDMENT AND WAIVER

                  FIRST AMENDMENT AND WAIVER, dated as of September 30, 1999
(this "Amendment"), to the Participation Agreement, dated as of June 15, 1999
(as the same may be amended, supplemented or otherwise modified from time to
time, the "Participation Agreement"), among Hanover Compressor Company, a
Delaware corporation ("HCC" and the "Lessee"), Hanover Equipment Trust 1999A
(the "Lessor"), Societe General Financial Corporation and FBTC Leasing Corp.,
Inc. (the "Investors"), the lenders parties thereto (the "Lenders") and The
Chase Manhattan Bank, a New York banking corporation, as the agent for the
Lenders (in such capacity, the "Agent") and certain other Operative Agreements
(as defined in the Participation Agreement).

                              W I T N E S S E T H:

                  WHEREAS, HCC has requested that the Agent and the Required
Lenders amend and waive certain covenants in the Participation Agreement and
Guarantee so as to extend certain lease filing deadlines and to permit HCC to
enter into the HMS Transactions (as defined below); and

                  WHEREAS, the Agent and the Required Lenders are agreeable to
the requested amendments and waivers, but only on the terms and subject to the
conditions set forth herein;

                  NOW THEREFORE, in consideration of the premises herein
contained and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows:

                  I.    Defined Terms. As used in this Amendment, terms defined
in the preamble hereof and the recitals hereto are used herein as so defined,
terms defined in the Participation Agreement are used herein as therein defined
and the following terms shall have the following meanings:

                  "HMS" shall mean Hanover Measurement Services Company, L.P., a
        Delaware limited partnership formed as described in Annex A hereto, and
        its successors and assigns.

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                                                                               2

                  "HMS Transactions" shall mean the transactions described in
        Annex A hereto.

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

                  "MAC Demand Note Assumption" shall mean the assumption of
        $8,800,000.00 of obligations under the MAC Demand Note (as defined in
        Annex A) by Hanover MAC, LLC as contemplated by the HMS Transactions.

                  "MAC Demand Note Prepayment" shall mean the prepayment of
        $8,800,000.00 of obligations under the MAC Demand Note (as defined in
        Annex A) assumed by Hanover MAC, LLC as contemplated by the HMS
        Transactions.

                  "MAC Term Note Issuance" shall mean the issuance of the
        $8,800,000.00 Hanover MAC/MAC Term Note (as defined in Annex A) to
        Hanover MAC, LLC as contemplated by the HMS Transactions.

                  "MAC Term Note Sale" shall mean the sale of the $8,800,000.00
        Hanover MAC/MAC Term Note (as defined in Annex A) by Hanover MAC, LLC
        for the face amount thereof as contemplated by the HMS Transactions.

                  II.   Amendments to Participation Agreement.

                  1.    Amendment to Subsection 8.8 (Oklahoma Equipment
Subleases). Subsection 8.8 of the Participation Agreement is hereby amended by
deleting the words "within 90 days of the Initial Closing Date" therefrom and
substituting in place thereof the words "by November 15, 1999".

                  2.    Amendment to Annex A (Rules of Usage). Annex A of the
Participation Agreement is hereby amended by inserting the following new
definitions in the appropriate alphabetical order:

                  "HMS" shall mean Hanover Measurement Services Company, L.P., a
        Delaware limited partnership formed as described in Annex A to the First
        Amendment, and its successors and assigns.

                  "HMS Transactions" means the transactions described in Annex A
        to the First Amendment.

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

<PAGE>

                                                                               3

                  "First Amendment" shall mean the First Amendment and Waiver,
        dated as of September 30, 1999 to the Participation Agreement and
        certain other Operative Documents.

                  "MAC" shall mean Meter Acquisition Company LP, LLLP, a
        Delaware registered limited liability limited partnership, and its
        successors and assigns.

                  III.  Amendments to Guarantee.

                  1.    Amendment to Subsection 10.9 (Subsequent Guarantees).
Subsection 10.9 of the Guarantee is hereby amended by adding the phrase "(other
than HMS and MAC)" after the first use of the phrase "Qualified Subsidiary".

                  2.    Amendment to Subsection 11.3 (Limitation on Liens).
Subsection 11.3 of the Guarantee is hereby amended by deleting paragraphs (t)
and (u) in their entirety therefrom and substituting in place thereof the
following:

                  "(t) Lessor Liens;

                   (u) Liens listed on Schedule 11.3(u); and

                   (v) Liens not otherwise permitted in clauses (a)-(u) above
        securing Indebtedness not exceeding $2,500,000 in the aggregate.".

                  3.    Amendment to Subsection 11.4 (Limitation on Guarantor
Obligations). Subsection 11.4 of the Guarantee is hereby amended by deleting
paragraphs (f) and (g) in their entirety therefrom and substituting in place
thereof the following:

                  "(f) guarantees in respect of Indebtedness (other than
        Subordinated Debt) permitted under the Corporate Credit Agreement;

                   (g) the Guarantor Obligations arising pursuant to the
        Operative Agreements and the Other Equipment Lease Operative Agreements;
        and

                   (h) the Guarantor Obligations of HCC in the nature of a
        guarantee or indemnification for, in each case, performance obligations
        (and not Indebtedness) as contemplated by the HMS Transactions.".

<PAGE>

                                                                               4

                  4.    Amendment to Subsection 11.6 (Limitation on Sale or
Lease of Assets). Subsection 11.6 of the Guarantee is hereby amended by
deleting the paragraphs (g) and (h) in their entirety therefrom and substituting
in place thereof the following:

                  "(g) the lease by Hanover Land Company or any other Qualified
        Subsidiary as lessor of real estate properties to HCC or any Qualified
        Subsidiary of HCC for use by HCC or such Qualified Subsidiary as the
        site of its offices and facilities;

                   (h) the sale of natural gas compressors to the Lessor and
        Other Equipment Lessors in connection with the Operative Agreements and
        the Other Equipment Lease Operative Agreements; and

                   (i) the lease of assets as listed on Schedule 11.6(i).".

                  5.    Amendment to Subsection 11.16 (Nature of Business).
Subsection 11.16 of the Guarantee is hereby amended by deleting such subsection
in its entirety therefrom and substituting in place thereof the following:

                  "11.16. Nature of Business. Engage in any business other than
        (a) the leasing, maintenance, purchase, sale and operation of natural
        gas compressor units and oil and gas production equipment, (b) the
        design, engineering and fabrication of natural gas compressor units, (c)
        the design, engineering and fabrication of oil and gas production
        equipment, (d) the provision of contract compression and related
        services, (e) the provision of gas metering services as contemplated
        under the HMS Transactions, and (f) any activities related thereto which
        are consistent with past practice and conducted in the ordinary course
        of business.".

                  6.    Amendments to Schedules. (a) Schedules of the Guarantee
are hereby amended by adding Schedules 11.3(u) and 11.6(i), in the form of
Schedule 11.3(u) and 11.6(i), respectively, to this Amendment.

                  (b)  Schedule 11.3(n) of the Guarantee is hereby amended by
deleting paragraphs 2 and 3 in their entirety and renumbering the remaining
paragraphs accordingly thereto.

                  (c)  Schedule 11.12 of the Guarantee is hereby amended by
deleting said Schedule in its entirety and substituting in lieu thereof new
Schedule 11.12 in the form of Schedule 11.12 to this Amendment.

                  IV.   Waivers.

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                                                                               5

                  In connection with the HMS Transactions, The Required Lenders
hereby waive (a) subsection 11.2 of the Guarantee with respect to the MAC Demand
Note Assumption, (b) subsection 11.6 of the Guarantee with respect to the MAC
Term Note Sale, (c) subsection 11.10 of the Guarantee with respect to the MAC
Term Note Issuance and (d) subsection 11.11 of the Guarantee with respect to the
MAC Demand Note Prepayment; provided, however, that the foregoing waivers (a)
through (d) are conditioned upon the MAC Demand Note Assumption, MAC Term Note
Sale, MAC Term Note Issuance and MAC Demand Note Prepayment occurring
substantially concurrently.

                  V.    General.

                  1.    Effectiveness. This Amendment shall become effective
upon fulfillment of the following conditions precedent: (a) HCC and the Lessor
shall have delivered to the Agent duly executed copies of this Amendment, (b)
the Guarantors shall have delivered to the Agent duly executed copies of this
Amendment, (c) the Agent shall have received duly executed copies of this
Amendment from Required Lenders and (d) no Default or Event of Default shall
have occurred and be continuing on the date hereof after giving effect to this
Amendment.

                  2.    Representations and Warranties. HCC and each of the
Guarantors hereby represents and warrants that the representations and
warranties contained in the Participation Agreement and the Operative Agreements
(except those which expressly speak as of a certain date) will be, after giving
effect to this Amendment, true and correct in all material respects, as if made
on and as of the date hereof.

                  3.    Continuing Effect of Participation Agreement and
Operative Agreements. This Amendment shall not constitute an amendment or waiver
of any other provision of the Participation Agreement or the Operative
Agreements not expressly referred to herein and shall not be construed as a
waiver or consent to any further or future action on the part of HCC, the Lessor
or Guarantors that would require a waiver or consent of the Agent and/or the
Lenders. Except as expressly amended hereby, the provisions of the Participation
Agreement and the Operative Agreements are and shall remain in full force and
effect.

                  4.    Counterparts. This Amendment may be executed in
counterparts and all of the said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed signature page
of this Amendment by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.

                  5.    GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

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                                                                               6

                  6.    Expenses. HCC agrees to pay or reimburse the Agent for
all of its reasonable out-of-pocket costs and expenses incurred in connection
with the preparation, negotiation and execution of this Amendment, including,
without limitation, the fees and disbursements of counsel to the Agent.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.

                                        HANOVER COMPRESSOR COMPANY, as Lessee
                                        and as a Guarantor

                                        By: /s/ Curtis Bedrich
                                           ---------------------------------
                                           Name:  Curtis Bedrich
                                           Title: Treasurer

                                        HANOVER EQUIPMENT TRUST 1999A

                                        By: Wilmington Trust Company, not
                                            individually but solely as Trustee

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

                                        HANOVER/SMITH, INC., as a Guarantor

                                        By: /s/ Curtis Bedrich
                                           -----------------------------------
                                           Name:  Curtis Bedrich
                                           Title: Treasurer

                                        HANOVER MAINTECH, INC., as a Guarantor

                                        By: /s/ Curtis Bedrich
                                           -----------------------------------
                                           Name:  Curtis Bedrich
                                           Title: Treasurer

<PAGE>

                                        HANOVER LAND COMPANY, as a Guarantor

                                        By: /s/ Curtis Bedrich
                                           ---------------------------------
                                           Name:  Curtis Bedrich
                                           Title: Treasurer

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.

                                        HANOVER COMPRESSOR COMPANY, as Lessee
                                        and as a Guarantor

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

                                        HANOVER EQUIPMENT TRUST 1999A

                                        By: Wilmington Trust Company, not
                                            individually but solely as Trustee

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

                                        HANOVER/SMITH, INC., as a Guarantor

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

                                        HANOVER MAINTECH, INC., as a Guarantor

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

<PAGE>

                                        THE CHASE MANHATTAN BANK, as Agent and
                                        as a Lender

                                        By: /s/ Peter M. Ling
                                           -----------------------------------
                                           Name:  Peter M. Ling
                                           Title: Vice President

<PAGE>

                                        ABN AMRO BANK, N.V., as a Managing
                                        Agent and a Lender

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

<PAGE>

                                        SOCIETE GENERALE FINANCIAL CORPORATION
                                        as an Investor

                                        By: /s/ Richard W. Crannell, Jr.
                                           -------------------------------
                                           Name:  Richard W. Crannell, Jr.
                                           Title: Vice President

<PAGE>

                                        FBTC LEASING CORP., as an Investor
                                        and as a Lender

                                        By: /s/ Masatoshi Kaishita
                                           ------------------------------------
                                           Name:  Masatoshi Kaishita
                                           Title: Treasurer

<PAGE>

                                        THE BANK OF NOVA SCOTIA, as a Managing
                                        Agent and a Lender

                                        By: /s/ F.C.H. Ashby
                                           ------------------------------
                                           Name:  F.C.H. Ashby
                                           Title: Senior Manager Loan Operations

<PAGE>

                                        BANK OF SCOTLAND, as a Lender

                                        By: /s/ Annie Glynn
                                           ----------------------------
                                           Name:  Annie Glynn
                                           Title: Senior Vice President

<PAGE>

                                        PARIBAS, as a Lender

                                        By: /s/ Marian Livingston
                                           -------------------------------
                                           Name:  Marian Livingston
                                           Title: Vice President

                                        By: /s/ Betsy Jocher
                                           -------------------------------
                                           Name:  Betsy Jocher
                                           Title: Vice President

<PAGE>

                                        FUJI BANK LIMITED, as a Managing Agent
                                        and a Lender

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

<PAGE>

                                        BANKERS TRUST COMPANY, as a Lender

                                        By: /s/ Calli S. Hayes
                                           -----------------------------
                                           Name:  Calli S. Hayes
                                           Title: Managing Director

<PAGE>

                                        COMERICA BANK, as a Lender

                                        By: /s/ [ILLEGIBLE]
                                           ---------------------------------
                                           Name:  [ILLEGIBLE]
                                           Title: First Vice President

<PAGE>

                                        CREDIT LYONNAIS NEW YORK BRANCH,
                                        as a Lender

                                        By: /s/ Phillippe Soustra
                                           ----------------------------------
                                           Name:  Phillippe Soustra
                                           Title: Senior Vice President

<PAGE>

                                        DG BANK DEUTSCHE GENOSSENSCHAFTSBANK AG,
                                        as a Lender

                                        By: /s/ Mark K. Connelly
                                           ----------------------------
                                           Name:  Mark K. Connelly
                                           Title: Vice President

                                        By: /s/ Richard W. Wilbert
                                           ----------------------------
                                           Name:  Richard W. Wilbert
                                           Title: Vice President

<PAGE>

                                        BANK ONE, N.A., Formerly known as
                                        THE FIRST NATIONAL BANK OF CHICAGO,
                                        as a Managing Agent and a Lender

                                        By: /s/ Karen A. Patterson
                                           ---------------------------------
                                           Name:  Karen A. Patterson
                                           Title: First Vice President

<PAGE>

                                        FUJI BANK, LIMITED, as a Lender

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

<PAGE>

                                        THE INDUSTRIAL BANK OF JAPAN, LTD.,
                                        NEW YORK BRANCH, as a Lender

                                        By: /s/ Michael N. Oakes
                                           -------------------------------
                                           Name:  Michael N. Oakes
                                           Title: Senior Vice President,
                                                  Houston Office

<PAGE>

                                        SUNTRUST BANK, ATLANTA, as a Lender

                                        By: /s/ John A. Fields, Jr.
                                           ----------------------------------
                                           Name:  John A. Fields, Jr.
                                           Title: Managing Director

<PAGE>

                                        SOCIETE GENERALE, SOUTHWEST AGENCY, as
                                        a Managing Agent and a Lender

                                        By: /s/ Mark A. Cox
                                           -----------------------------
                                           Name:  Mark A. Cox
                                           Title: Director
                                                  Head of Houston Office

<PAGE>

                                        WELLS FARGO BANK (TEXAS) N.A., as
                                        a Lender

                                        By: /s/ Joseph P. Maxwell
                                           --------------------------------
                                           Name:  Joseph P. Maxwell
                                           Title: Vice President

<PAGE>

                                        WILMINGTON TRUST COMPANY, in its
                                        individual capacity, only to the extent
                                        expressly set forth herein

                                        By: /s/ Robert P. Hines, Jr.
                                           -----------------------------------
                                           Name:  Robert P. Hines, Jr.
                                           Title: Financial Services Officer<PAGE>

                                                                   EXHIBIT 10.12

                                                                  EXECUTION COPY

                      TIDES AMENDMENT, CONSENT AND JOINDER

                  TIDES AMENDMENT, CONSENT AND JOINDER, dated as of December 9,
1999 (this "Amendment"), to (i) the Participation Agreement, dated as of June
15, 1999 (as the same may be amended, supplemented or otherwise modified from
time to time, the "1999 Participation Agreement"), among Hanover Compression
Inc. (formerly known as Hanover Compressor Company), a Delaware corporation
("HCC" and the "Lessee"), Hanover Equipment Trust 1999A (the "1999 Lessor"),
Societe Generale Financial Corporation and FBTC Leasing Corp., Inc. (the "1999
Investors"), the lenders parties thereto (the "1999 Lenders") and The Chase
Manhattan Bank, a New York banking corporation, as the agent for the 1999
Lenders (the "Agent"), and the Guarantee, as defined in the 1999 Participation
Agreement (the "1999 Guarantee"), (ii) the Participation Agreement, dated as of
July 22, 1998 (as the same may be amended, supplemented or otherwise modified
from time to time, the "1998 Participation Agreement") (the 1999 Participation
Agreement and the 1998 Participation Agreement, together the "Participation
Agreements"), among HCC, Hanover Equipment Trust 1998A (the "1998 Lessor"),
Societe Generale Financial Corporation (the "1998 Investor"), the lenders
parties thereto (the "1998 Lenders") and the Agent, as agent for the 1998
Lenders, and the Guarantee, as defined in the 1998 Participation Agreement
(the "1998 Guarantee") (the 1999 Guarantee and the 1998 Guarantee, together the
"Guarantees") and (iii) the other Operative Documents (as defined in either
Participation Agreement).

                              W I T N E S S E T H:

                  WHEREAS, HCC has requested that the Agent and the Required
Lenders under each of the Participation Agreements amend certain covenants in
each of the Participation Agreements and Guarantees so as to permit Holdings (as
defined below) and the TIDES Trust (as defined below) to enter into the TIDES
Transaction (as defined below); and

                  WHEREAS, HCC has requested that each of the Agent, the
Required Lenders and the Investors, as party to each Participation Agreement and
each other Operative Document as applicable, consent to the proposed
Restructuring Transactions (as defined below); and

                  WHEREAS, upon the effectiveness of the Amendment, Holdings, a
newly formed subsidiary of HCC, will become the parent company of HCC; and

                  WHEREAS, Holdings (as defined below) has agreed to execute and
deliver this Amendment in order to become a party to each of the Guarantees; and

                  WHEREAS, the Agent and the Required Lenders under each of the
Participation Agreements are agreeable to the requested amendments, but only on
the terms and subject to the conditions set forth herein;

<PAGE>

                                                                               2

                  NOW THEREFORE, in consideration of the premises herein
contained and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties hereto hereby agree as follows:

                  I.    Defined Terms. As used in this Amendment, terms defined
in the preamble hereof and the recitals hereto are used herein as so defined,
terms defined in either Participation Agreement are used herein as therein
defined and the following terms shall have the following meanings:

                  "Holdings" shall mean Hanover Compressor Company, a Delaware
        corporation and a newly formed subsidiary of HCC, which, upon the
        effectiveness of the Amendment, will become the parent company of HCC as
        described in paragraph A of Annex B.

                  "Restructuring Transactions" shall mean the restructuring
        transactions by HCC of its domestic legal structure to align its
        operations and to produce certain tax efficiencies, as further described
        in Annex B hereto.

                  "TIDES Trust" shall mean Hanover Compressor Capital Trust, a
        Delaware business trust formed as described in Annex A hereto, and its
        successors and assigns.

                  "TIDES Transactions" shall mean the transactions described in
        Annex A hereto.

                  II.   Amendments to all Operative Documents.

                  1.    Change of Name. All Operative Documents are hereby
amended by deleting therefrom any existing reference to "Hanover Compressor
Company" in its entirety and substituting in place thereof "Hanover Compression
Inc. (formerly known as Hanover Compressor Company)".

                  III.  Amendments to the Participation Agreements.

                  1.    Amendment to Section 8. Section 8 of each of the
Participation Agreements is hereby amended by deleting Subsection 8.8 in its
entirety therefrom and substituting in place thereof the following:

                  "8.8  Oklahoma Equipment Subleases. With respect to any leases
        or other agreement entered into by Lessee with respect to Equipment
        located in the State of Oklahoma ("Oklahoma Subleases"), Lessee shall,
        no later than May 15, 2000 (or, for any Oklahoma Sublease entered into
        after February 15, 2000, 90 days after the date such Oklahoma Sublease
        is entered into), undertake to file, in accordance with 60 Okla. Stat.
        1991 Section 319 et. seq., the original Oklahoma Sublease instrument or
        a true copy thereof in the chattel mortgage records of the office of the
        county clerk in the county where the Equipment is located and provide
        Agent with reasonably satisfactory evidence of Lessee's compliance with
        this Section 8.8.".

<PAGE>

                                                                               3

                  2.    Amendment to Annex A (Rules of Usage). (a) Annex A to
each of the Participation Agreements is hereby amended by deleting therefrom any
existing reference to "HCC" (other than the definitions of "Commonly Controlled
Entity", "Fee Letter", "HCC", "Shareholder Subordinated Debt" and "Wartsilla
Guaranty Obligation") in its entirety and substituting in place thereof
"Holdings".

                  (b)   Annex A to each of the Participation Agreements is
hereby amended by deleting therefrom the definitions of the following defined
terms in their respective entireties and substituting in place thereof the
following new definitions:

                  "Corporate Guarantees" shall mean, collectively, that certain
        Subsidiaries' Guarantee and that certain Holdings Guarantee made by the
        Guarantors pursuant to the Corporate Credit Agreement and such other
        guarantees of the loans and the other obligations of HCC under the
        Corporate Credit Agreement.

                  "Guarantors" shall mean collectively, Holdings, the Lessee,
        Hanover/Smith, Inc., a Delaware corporation, Hanover Maintech, Inc., a
        Texas corporation and Hanover Land Company, a Texas corporation.

                  "HCC" shall mean Hanover Compression Inc. (formerly known as
        Hanover Compressor Company), a Delaware corporation.

                  "Lessee" shall mean Hanover Compression Inc. (formerly known
        as Hanover Compressor Company), a Delaware corporation.

                  (c)   Annex A to each of the Participation Agreements is
hereby amended by inserting the following new definitions in the appropriate
alphabetical order:

                  "Holdings" shall mean Hanover Compressor Company, a Delaware
        corporation and a newly formed subsidiary of HCC, which, upon the
        effectiveness of the TIDES Amendment, will become the parent company of
        HCC as described in paragraph A of Annex B to the TIDES Amendment.

                  "Qualified Subsidiary" shall mean each Subsidiary of Holdings
        organized under a jurisdiction of the United States and having assets
        located primarily in the United States.

                  "Subordinated Debt" shall mean, with respect to Holdings and
        each Subsidiary, the Shareholder Subordinated Debt, the TIDES Debentures
        and any other unsecured Indebtedness the terms of which provide that
        such Indebtedness is subordinate and junior in right of payment to the
        payment of all obligations and liabilities of HCC to the Administrative
        Agent and the Lenders hereunder; provided that prior to an Event of
        Default, Holdings and any Subsidiaries may make regularly scheduled
        interest payments in respect of such Indebtedness.

                  "Subordinated Guarantor Obligation" shall mean, with respect
        to Holdings and each Subsidiary, any unsecured Guarantor Obligation the
        terms of which provide that

<PAGE>

                                                                               4

        such Guarantor Obligation is subordinate and junior in right
        to the payment of all the obligations and liabilities of HCC to the
        Agent and the Lenders.

                  "TIDES" shall mean the Term Income Deferrable Equity
        Securities (TIDES)(SM) as further described in Annex A to the TIDES
        Amendment.

                  "TIDES Amendment" shall mean the TIDES Amendment, Consent and
        Joinder, dated as of December 9, 1999, to the Participation Agreement
        and certain other Operative Documents.

                  "TIDES Debentures" shall mean the unsecured debentures junior
        and subordinate in right of payment of all the obligations and
        liabilities of Holdings to be issued by Holdings in connection with the
        issuance of TIDES as further described in Annex A to the TIDES
        Amendment.

                  "TIDES Trust" shall mean Hanover Compressor Capital Trust, a
        Delaware business trust formed as described in Annex A to the TIDES
        Amendment, and its successors and assigns.

                  "TIDES Transactions" shall mean the transactions described in
        Annex A to the TIDES Amendment.

                  "Unqualified Subsidiary" shall mean any Subsidiary of Holdings
        other than a Qualified Subsidiary.

                  (d)   Annex A to each of the Participation Agreements is
hereby amended by inserting new paragraph (j) after paragraph (i) in the rules
and usage portion thereof:

                  "(e)  After the effective date of the TIDES Amendment, for
        purposes of determining compliance with the covenants contained in
        Subsections 10.1 and 11.1 of the Guarantee, the term 'Holdings' shall be
        deemed a reference to HCC for any period which is prior to the effective
        date of the TIDES Amendment, covered by such covenants.".

                  IV.   Amendments to Guarantees.

                  2.    Amendment to Section 10 (Affirmative Covenants of the
Guarantor). (a) Section 10 of each of the Guarantees is hereby amended by adding
the phrase "and such Guarantor (except in the case of delivery of financial
information, reports, certificates and notices) shall cause each of its
Subsidiaries to" after the first use of the phrase "such Guarantor will".

                  (b)   Section 10 of each of the Guarantees is hereby amended
by deleting therefrom any existing reference to "HCC" in its entirety and
substituting in place thereof "Holdings".

                  3.    Amendment to Subsection 10.9 (Subsequent Guarantees).
Subsection 10.9 of each of the Guarantees is hereby amended by replacing the
phrase "(other than HMS and

<PAGE>

                                                                               5

MAC)" after the first use of the phrase "Qualified Subsidiary" with the phrase
"(other than the TIDES Trust, HMS and MAC)".

                  4.    Amendment to Section 11 (Negative Covenants). Section
11 of each of the Guarantees is hereby amended by deleting therefrom any
existing reference to "HCC" (other than in subsection 8.3(n)) in its entirety
and substituting in place thereof "Holdings".

                  5.    Amendment to Subsection 11.1 (Financial Condition
Covenants). Subsection 11.1 of each of the Guarantees is hereby amended by
deleting paragraphs (a), (b), (c), (d) and (e) in their entirety therefrom and
substituting in place thereof the following:

                  "(a)  Maintenance of Consolidated Indebtedness to Consolidated
        Capitalization. Permit the ratio (expressed as a percentage) of
        Consolidated Indebtedness to Consolidated Capitalization of Holdings and
        its Subsidiaries as at the end of any of Holdings' fiscal quarters to be
        greater than .65 to 1.0; provided that for purposes of calculating the
        foregoing ratio, Consolidated Indebtedness shall exclude seventy percent
        (70%) of the Indebtedness in respect of the TIDES Debentures.

                  (b)   Current Ratio. Permit the Current Ratio of Holdings and
        its Subsidiaries at the end of any of Holdings' fiscal quarters to be
        less than 1.0 to 1.0.

                  (c)   Consolidated Indebtedness to Consolidated U.S. EBITDA.
        Permit the ratio of Consolidated Indebtedness to Consolidated U.S.
        EBITDA for the four consecutive fiscal quarters of Holdings most
        recently ended to be greater than 5.25 to 1.0; provided that for
        purposes of calculating the foregoing ratio, Consolidated Indebtedness
        shall exclude seventy percent (70%) of the Indebtedness in respect of
        the TIDES Debentures.

                  (d)   Consolidated Indebtedness to Consolidated EBITDA. Permit
        the ratio of Consolidated Indebtedness to Consolidated EBITDA for the
        four consecutive fiscal quarters of Holdings most recently ended to be
        greater than 4.0 to 1.0; provided that for purposes of calculating the
        foregoing ratio, Consolidated Indebtedness shall exclude seventy percent
        (70%) of the Indebtedness in respect of the TIDES Debentures.

                  (e)   Interest Coverage Ratio. Permit the ratio of
        Consolidated EBITDA to Consolidated Interest Expense for the period of
        four consecutive fiscal quarters of Holdings most recently ended to be
        less than 2.5 to 1.0; provided that for purposes of calculating the
        foregoing ratio, Consolidated Interest Expense shall exclude any accrued
        but unpaid interest relating to the TIDES or TIDES Debentures.".

                  6.    Amendment to Subsection 11.4 (Limitation on Guarantor
Obligations). Subsection 11.4 of each of the Guarantees is hereby amended by
deleting paragraphs (g) and (h) in their entirety therefrom and substituting in
place thereof the following:

                  "(g)  the Guarantor Obligations arising pursuant to the
        Operative Agreements and the Other Equipment Lease Operative Agreements;

<PAGE>

                                                                               6

                  (h)   the Guarantor Obligations of HCC in the nature of a
        guarantee or indemnification for, in each case, performance obligations
        (and not Indebtedness) as contemplated by the HMS Transactions; and

                  (i)   the Subordinated Guarantor Obligations of Holdings
        arising under agreements entered into by Holdings as contemplated by the
        TIDES Transactions.".

                  7.    Amendment to Subsection 11.5 (Limitations on Fundamental
Changes). Subsection 11.5 of each of the Guarantees is hereby amended by
deleting paragraphs (d) and (e) in their entirety therefrom and substituting in
place thereof the following:

                  "(d)  any Unqualified Subsidiary may be merged or consolidated
        with or into any other Person and/or may sell, lease, assign, transfer
        or otherwise dispose of any of its assets (upon voluntary liquidation or
        otherwise) to any other Person provided that, if merged or consolidated
        with or into a Qualified Subsidiary, the Qualified Subsidiary will
        remain as a 'Qualified Subsidiary' after the merger;

                  (e)   pursuant to the Operative Agreements and Other Equipment
        Lease Operative Agreements; and

                  (f)   the TIDES Trust may wind up or dissolve itself (or
        suffer a liquidation or dissolution), or convey, assign, transfer or
        otherwise dispose of, all or substantially all of its property, business
        or assets, as contemplated by the TIDES Transactions.".

                  8.    Amendment to Subsection 11.8 (Limitation on Dividends).
Subsection 11.8 of each of the Guarantees is hereby amended by deleting
sub-clause (i) in its entirety and substituting in place thereof the following:

                  "(i)  Subsidiaries of Holdings may declare and pay dividends
        to Holdings (to the extent necessary to pay interest on, or redeem, the
        TIDES Debentures) and other shareholders of such Subsidiaries and the
        TIDES Trust may redeem the TIDES as contemplated by the TIDES
        Transactions".

                        Amendment to Subsection 11.10 (Limitation on
Investments, Loans and Advances). Subsection 11.10 of each of the Guarantees is
hereby amended by deleting the paragraphs (h) and (i) in their entirety and
substituting in place thereof the following:

                  "(h)  Investments or acquisitions by Holdings or its
        Subsidiaries in up to 50% of the shares of capital stock, partnership
        interests, joint venture interests, limited liability company interests
        or other similar equity interests in, a Person (other than a
        Subsidiary), provided that the aggregate amount of all such investments
        or acquisitions does not exceed $25,000,000 in any fiscal year;

                  (i)   Loans to employees, officers and directors of Holdings
        and its Subsidiaries to acquire shares of capital stock of Holdings not
        to exceed $20,000,000; and

<PAGE>

                                                                               7

                  (j)   the purchase by the TIDES Trust of debentures issued by
        Holdings as contemplated by the TIDES Transactions.".

                  9.    Amendment to Subsection 11.11 (Limitation on Optional
Payments and Modifications of Debt Instruments). Subsection 11.11 of each of the
Guarantees is hereby amended by deleting such subsection in its entirety
therefrom and substituting in place thereof the following:

                  "11.11 Limitation on Optional Payments and Modifications of
        Debt Instruments. (i) Make any optional payment or prepayment on or
        redemption of any portion of the Shareholder Subordinated Debt, (ii)
        make any optional payment, prepayment in excess of $10,000,000 during
        any calendar year on or redemption of any Indebtedness other than (a)
        redemptions of any portion of the TIDES Debentures or TIDES as
        contemplated by the TIDES Transactions or (b) any optional payment,
        prepayment or redemption of any Indebtedness pursuant to the Corporate
        Credit Agreement, the Operative Agreements or the Other Equipment Lease
        Operative Agreements or (iii) amend, modify or change, or consent or
        agree to any amendment, modification or change to any of the terms of
        any Indebtedness other than (a) any Indebtedness pursuant to the
        Corporate Credit Agreement, the Operative Agreements or the Other
        Equipment Lease Operative Agreement or (b) any amendment, modification
        or change which would extend the maturity or reduce the amount of any
        payment of principal thereof or which would reduce the rate or extend
        the date for payment of interest thereon, or any amendment or waiver
        which would render the terms of such Indebtedness less restrictive.".

                  V.    Joinder to the Guarantees.

                  By executing and delivering this Amendment, Holdings hereby
becomes a party to each of the Guarantees as a Guarantor thereunder with the
same force and effect as if originally named therein as a Guarantor and, without
limiting the generality of the foregoing, hereby expressly assumes all
obligations and liabilities of a Guarantor thereunder.

                  VI.   Consent.

                  In connection with the proposed Restructuring Transactions,
each of the Required Lenders and the Investors, as party to each Participation
Agreement and each other Operative Document, as applicable, consent to the
proposed Restructuring Transactions; provided, however, that the foregoing
consent with respect to the Restructuring Transactions (other than the portion
thereof described in paragraph A of Annex B) is conditioned upon receipt by the
Investors and the Administrative Agent, with a copy for each 1999 Lender and
1998 Lender, of (i) executed amendments to certain Operative Documents in form
and substance as are satisfactory to the Administrative Agent and the Investors,
(ii) executed joinders to each of the Guarantees pursuant to Subsection 10.9 of
each such Guarantee, and (iii) legal opinions, certificates, resolutions and all
other documents that are reasonably requested by the Administrative Agent or the
Investors.

<PAGE>

                                                                               8

                  VII.  General.

                  1.    Effectiveness. This Amendment shall become effective
upon fulfillment of the following conditions precedent: (a) Holdings, HCC, the
1999 Lessor and the 1998 Lessor shall have delivered to the Agent duly executed
copies of this Amendment, (b) the Guarantors shall have delivered to the Agent
duly executed copies of this Amendment, (c) the Agent shall have received duly
executed copies of this Amendment from the Required Lenders and the Investors
under each of the Participation Agreements, (d) no Default or Event of Default
shall have occurred and be continuing on the date hereof after giving effect to
this Amendment, and (e) the Agent shall have received, for the account of each
1999 Lender and 1998 Lender that has delivered an executed counterpart of this
Amendment to the Agent by December 8, 1999, payment by HCC of an amendment fee
in the amount of $25,000.

                  2.    Representations and Warranties. Holdings, HCC and each
of the Guarantors hereby represents and warrants that the representations and
warranties contained in each of the Participation Agreements (other than Section
8.8 of each Participation Agreement) and the Operative Agreements (as defined in
each of the Participation Agreements) (except those which expressly speak as of
a certain date) will be, after giving effect to this Amendment, true and correct
in all material respects, as if made on and as of the date hereof.

                  3.    Continuing Effect of Participation Agreements and
Operative Agreements. This Amendment shall not constitute an amendment or waiver
of any other provision of either of the Participation Agreements or the
Operative Agreements (as defined in either Participation Agreement) not
expressly referred to herein and shall not be construed as a waiver or consent
to any further or future action on the part of HCC, the 1999 Lessor, the 1998
Lessor or Guarantors that would require a waiver or consent of the Agent and/or
the 1999 Lenders or 1998 Lenders. Except as expressly amended hereby, the
provisions of each of the Participation Agreements and the Operative Agreements
(as defined in either Participation Agreement) are and shall remain in full
force and effect.

                  4.    Counterparts. This Amendment may be executed in
counterparts and all of the said counterparts taken together shall be deemed to
constitute one and the same instrument. Delivery of an executed signature page
of this Amendment by facsimile transmission shall be effective as delivery of a
manually executed counterpart hereof.

                  5.    GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

                  6.    Expenses. Holdings and HCC agree to pay or reimburse the
Agent for all of its reasonable out-of-pocket costs and expenses incurred in
connection with the preparation, negotiation and execution of this Amendment,
including, without limitation, the fees and disbursements of counsel to the
Agent.

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.

                                   HANOVER COMPRESSOR COMPANY, as a Guarantor

                                   By:   /s/ [ILLEGIBLE]
                                      ------------------------------------
                                      Name:  [ILLEGIBLE]
                                      Title: Vice President

                                   HANOVER COMPRESSOR INC. (formerly known as
                                   Hanover Compressor Company), as Lessee and
                                   as a Guarantor

                                   By:   /s/ [ILLEGIBLE]
                                      ------------------------------------
                                      Name:  [ILLEGIBLE]
                                      Title: Vice President

                                   HANOVER EQUIPMENT TRUST 1999A

                                   By: Wilmington Trust Company, not
                                       individually but solely as Trustee

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

                                   HANOVER EQUIPMENT TRUST 1998A

                                   By: Wilmington Trust Company, not
                                       individually but solely as Trustee

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

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.

                                   HANOVER COMPRESSOR COMPANY, as a Guarantor

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

                                   HANOVER COMPRESSION INC. (formerly known as
                                   Hanover Compressor Company), as Lessee and
                                   as a Guarantor

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

                                   HANOVER EQUIPMENT TRUST 1999A

                                   By: Wilmington Trust Company, not
                                       individually but solely as Trustee

                                   By:  /s/ Robert P. Hines, Jr.
                                      ------------------------------------
                                      Name:  Robert P. Hines, Jr.
                                      Title:

                                   HANOVER EQUIPMENT TRUST 1998A

                                   By: Wilmington Trust Company, not
                                       individually but solely as Trustee

                                   By:  /s/ Robert P. Hines, Jr.
                                      ------------------------------------
                                      Name:  Robert P. Hines, Jr.
                                      Title:

<PAGE>

                                        THE CHASE MANHATTAN BANK, as Agent,
                                        a 1999 Lender and 1998 Lender

                                        By: /s/ Peter M. Ling
                                           -----------------------------
                                           Name:  Peter M. Ling
                                           Title: Vice President

<PAGE>

                                        SOCIETE GENERALE FINANCIAL CORPORATION
                                        as a 1999 Investor

                                        By: /s/ Richard W. Crannell, Jr.
                                           --------------------------------
                                           Name:  Richard W. Crannell, Jr.
                                           Title: Vice President

<PAGE>

                                        FBTC LEASING CORP., as a 1999 Investor
                                        and as a Lender

                                        By: /s/ Kazuaki Kitabatake
                                           ---------------------------------
                                           Name:  Kazuaki Kitabatake
                                           Title: Vice President

<PAGE>

                                        ABN AMRO BANK N.V., as a 1999 Lender and
                                        1998 Lender

                                        By: /s/ Deanna Breland
                                           --------------------------------
                                           Name:  Deanna Breland
                                           Title: Vice President

                                        By: /s/ Brandi Lippincott
                                           --------------------------------
                                           Name:  Brandi Lippincott
                                           Title: Assistant Vice President

<PAGE>

                                        THE BANK OF NOVA SCOTIA, as a 1999
                                        Lender and 1998 Lender

                                        By: /s/ N. Bell
                                           --------------------------
                                           Name:  N. Bell
                                           title: Assistant Agent

<PAGE>

                                    FIRST UNION NATIONAL BANK, as a 1998 Lender

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

<PAGE>

                                        BANK OF SCOTLAND, as a 1999 Lender

                                        By: /s/ Annie Glynn
                                           -------------------------------
                                           Name:  Annie Glynn
                                           Title: Senior Vice President

<PAGE>

                                        PARIBAS, as a 1999 Lender

                                        By: /s/ Marian Livingston
                                           ---------------------------------
                                           Name:  Marian Livingston
                                           Title: Vice President

                                        By: /s/ Betsy Jocher
                                           ---------------------------------
                                           Name:  Betsy Jocher
                                           Title: Vice President

<PAGE>

                                    THE FUJI BANK LIMITED, as a 1999 Lender

                                    By: /s/ Jacques Azagury
                                       ----------------------------------
                                       Name:  Jacques Azagury
                                       Title: Senior Vice President and Manager

<PAGE>

                                        BANKERS TRUST COMPANY, as a 1999 Lender

                                        By: /s/ Marcus M. Tarkington
                                           -----------------------------------
                                           Name:  Marcus M. Tarkington
                                           Title: Principal

<PAGE>

                                        COMERICA BANK, as a 1999 Lender

                                        By: /s/ T. Bancroft Mattei
                                           -----------------------------------
                                           Name:  T. Bancroft Mattei
                                           Title: Account Officer

<PAGE>

                                     CREDIT LYONNAIS NEW YORK BRANCH, as a 1999
                                     Lender and 1998 Lender

                                     By: /s/ Phillippe Soustra
                                        ---------------------------------
                                        Name:  Phillippe Soustra
                                        Title: Senior Vice President

<PAGE>

                                        DG BANK DEUTSCHE GENOSSENSCHAFTSBANK
                                        AG, as a 1999 Lender

                                        By: /s/ Craig Anderson
                                           -------------------------------
                                           Name:  Craig Anderson
                                           Title: Assistant Vice President

                                        By: /s/ Lynne McCarthy
                                           -------------------------------
                                           Name:  Lynne McCarthy
                                           Title: Asst. Vice President

<PAGE>

                                        DRESDNER BANK AG, NEW YORK AND GRAND
                                        CAYMAN BRANCHES, as a 1998 Lender

                                        By: /s/ B. Craig Erickson
                                           ----------------------------------
                                           Name:  B. Craig Erickson
                                           Title: Vice President

                                        By: /s/ Joanna M. Solowski
                                           ----------------------------------
                                           Name:  Joanna M. Solowski
                                           Title: Vice President

<PAGE>

                                   BANK ONE, N.A. (formerly known as The First
                                   National Bank of Chicago), as a 1998 Lender
                                   and a 1999 Lender

                                   By: /s/ Karen A. Patterson
                                      -----------------------------------
                                      Name:  Karen A. Patterson
                                      Title: First Vice President

<PAGE>

                                        THE INDUSTRIAL BANK OF JAPAN, LTD.,
                                        NEW YORK BRANCH, as a 1999 Lender

                                        By: /s/ Michael N. Oakes
                                           ------------------------------------
                                           Name:  Michael N. Oakes
                                           Title: Senior Vice President
                                                  Houston Office

<PAGE>

                                        SUNTRUST BANK, ATLANTA, as a 1999 Lender
                                        and 1998 Lender

                                        By: /s/ John A. Fields, Jr.
                                           -----------------------------------
                                           Name:  John A. Fields, Jr.
                                           Title: Vice President

<PAGE>

                                        SOCIETE GENERALE, SOUTHWEST AGENCY,
                                        as a 1999 Lender and 1998 Lender

                                        By: /s/ Mark A. Cox
                                           --------------------------------
                                           Name:  Mark A. Cox
                                           Title: Director
                                                  Head of Houston Office

<PAGE>

                                 WELLS FARGO BANK (TEXAS) N.A., as a 1999 Lender

                                      By: /s/ Joseph P. Maxwell
                                         -----------------------------------
                                         Name:  Joseph P. Maxwell
                                         Title: Vice President

<PAGE>

                                        WILMINGTON TRUST COMPANY, in its
                                        individual capacity, only to the extent
                                        expressly set forth herein

                                        By: /s/ Robert P. Hines, Jr.
                                           -------------------------------
                                           Name:  Robert P. Hines, Jr.
                                           Title:

<PAGE>

                                        HANOVER/SMITH, INC., as a Guarantor

                                        By: /s/ [ILLEGIBLE]
                                           --------------------------------
                                           Name:  [ILLEGIBLE]
                                           Title: VICE PRESIDENT

                                        HANOVER MAINTECH, INC. as a Guarantor

                                        By: /s/ [ILLEGIBLE]
                                           --------------------------------
                                           Name:  [ILLEGIBLE]
                                           Title: VICE PRESIDENT

                                        HANOVER LAND COMPANY, as a Guarantor

                                        By: /s/ [ILLEGIBLE]
                                           --------------------------------
                                           Name:  [ILLEGIBLE]
                                           Title:

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