Document:

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                                                                  EXECUTION COPY

                                                                   Exhibit 10.44

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                                   GUARANTEE

                                    made by

                          HANOVER COMPRESSOR COMPANY

                           HANOVER COMPRESSION INC.

                       and certain of their Subsidiaries

                          Dated as of March 13, 2000

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                               TABLE OF CONTENTS

1.   Defined Terms...........................................................  1

2.   Guaranty................................................................  2

     Right of Set-off........................................................  3

4.   No Subrogation..........................................................  3

5.   Amendments, etc. with respect to the Guaranteed Obligations; Waiver
     of Rights...............................................................  4

6.   Guarantee Absolute and Unconditional....................................  4

7.   Reinstatement...........................................................  5

8.   Payments................................................................  5

9.   Representations, Warranties.............................................  5
     9.1   Financial Condition...............................................  5
     9.2   No Change.........................................................  6
     9.3   Corporate Existence; Compliance with Law..........................  6
     9.4   Corporate Power; Authorization; Enforceable Obligations...........  7
     9.5   No Legal Bar......................................................  7
           No Material Litigation............................................  7
     9.7   No Default........................................................  7
     9.8   Ownership of Property; Liens; Leases of Equipment.................  7
     9.9   Intellectual Property.............................................  8
     9.10  Taxes.............................................................  8
     9.11  Federal Regulations...............................................  8
     9.12  ERISA.............................................................  8
     9.13  Investment Company Act; Other Regulations.........................  9
     9.14  Subsidiaries......................................................  9
     9.15  Environmental Matters.............................................  9
     9.16  Accuracy and Completeness of Information.......................... 10
     9.17  Year 2000......................................................... 10
     9.18  Senior Indebtedness............................................... 10
     9.19  Representations and Warranties in Existing Guarantee.............. 11

10.  Affirmative Covenants of the Guarantor.................................. 11
     10.1  Financial Statements.............................................. 11
     10.2  Certificates; Other Information................................... 12
     10.3  Payment of Obligations............................................ 13
     10.4  Conduct of Business and Maintenance of Existence.................. 13
     10.5  Maintenance of Property; Insurance................................ 13

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     10.6  Inspection of Property; Books and Records; Discussions............ 13
     10.7  Notices........................................................... 13
     10.8  Environmental Laws................................................ 14
     10.9  Subsequent Guarantees............................................. 15

11.  Negative Covenants...................................................... 15
     11.1  Financial Condition Covenants..................................... 15
     11.2  Limitation on Indebtedness........................................ 16
     11.3  Limitation on Liens............................................... 17
     11.4  Limitation on Guarantee Obligations............................... 19
     11.5  Limitations on Fundamental Changes................................ 19
     11.6  Limitation on Sale or Lease of Assets............................. 20
     11.7  Limitation on Leases.............................................. 21
     11.8  Limitation on Dividends........................................... 21
     11.9  Limitation on Derivatives......................................... 22
     11.10 Limitation on Investments, Loans and Advances..................... 22
     11.11 Limitation on Optional Payments and Modifications of Debt
           Instruments....................................................... 23
     11.12 Transactions with Affiliates...................................... 23
     11.13 Sale and Leaseback................................................ 23
     11.14 Corporate Documents............................................... 24
     11.15 Fiscal Year....................................................... 24
     11.16 Nature of Business................................................ 24
     11.17 Unqualified Subsidiaries.......................................... 24

12.  Notices................................................................. 24

13.  Severability............................................................ 25

14.  Integration............................................................. 25

     Amendments in Writing; No Waiver; Cumulative Remedies................... 25

16.  Section Headings........................................................ 25

17.  Successors and Assigns.................................................. 25

18.  SUBMISSION TO JURISDICTION; WAIVERS..................................... 25

19.  GOVERNING LAW........................................................... 26

20.  Survival of Representations, Warranties, etc............................ 26

21.  Authority of Agent...................................................... 26

22.  Third Party Beneficiaries............................................... 27

23.  Right of Contribution................................................... 27

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24.  WAIVER OF JURY TRIAL.................................................... 27

Schedules

Schedule   9.2   Material Changes
Schedule   9.4   Required Consents
Schedule   9.14     Subsidiaries
Schedule   9.15     Environmental
Schedule   11.2(c)  Existing Indebtedness
Schedule   11.3(l)  Existing Liens
Schedule   11.3(n)  Additional Existing Liens
Schedule   11.3(t)  Additional Liens
Schedule   11.6(i)  Lease of Assets
Schedule   11.12    Affiliate Transactions
Schedule   11.13    Sale and Leaseback Transactions

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EXECUTION COPY

                                 GUARANTEE

    GUARANTEE dated as of March 13, 2000, made by HANOVER COMPRESSOR COMPANY, a
Delaware corporation, HANOVER COMPRESSION INC., a Delaware corporation, and each
of their Subsidiaries that are signatories hereto (individually, a "Guarantor",
collectively, the "Guarantors"), in favor of the Beneficiaries (as hereinafter
defined).

                                 Preliminary Statement

    The Guarantors wish to induce (i) Hanover Equipment Trust 2000A (the
"Lessor") to enter into the Lease and the other Operative Agreements to which it
is a party; (ii) the Lenders to enter into the Credit Agreement and the other
Operative Agreements to which they are party; and (iii) First Union National
Bank and ScotiaBanc Inc. (the "Investors") to enter into the Participation
Agreement (as hereinafter defined) and the other Operative Agreements to which
they are a party.

    NOW, THEREFORE, in consideration of the premises contained herein and to
induce (i) the Lessor to enter into the Lease and the other Operative Agreements
to which it is a party; (ii) the Lenders to enter into the Credit Agreement and
the other Operative Agreements to which it is a party; and (iii) the Investors
to enter into the Participation Agreement and the other Operative Agreements to
which it is a party, the Guarantors hereby agree for the benefit of the Lessor,
the Agent, for the ratable benefit of the Lenders and the Investors and their
respective successors and assigns (individually a "Beneficiary", collectively,
the "Beneficiaries"), as follows:

    1.  Defined Terms.  (a)  Capitalized terms not otherwise defined herein
(including in the Preliminary Statement) shall have the meanings ascribed to
them in Annex A to the Participation Agreement dated as of the date hereof among
Hanover Compression Inc. ("HCC"), the Lessor, the Investors, The Chase Manhattan
Bank, as agent (the "Agent") and the several banks and financial institutions
from time to time party thereto (the "Lenders"), as the same may from time to
time be amended, supplemented or otherwise modified (the "Participation
Agreement").

    (b) As used herein, the following terms shall have the following meanings:

        "Agreement" means this Guarantee, as the same may be amended,
supplemented or otherwise modified from time to time.

        "Contribution Obligations" means the collective reference to the
outstanding amount of the Investor Contributions and the Investor Yield with
respect thereto and all rights of the Investors to receive distributions under
the Trust Agreement and any of the other Operative Agreements.
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        "Guaranteed Obligations" means the collective reference to (i) the Note
Obligations, (ii) the Contribution Obligations and (iii) the Lease Obligations
and, with respect to each such obligation, interest accruing thereon at the
applicable rate provided in the Operative Agreements after maturity and interest
accruing at the then applicable rate provided in the Operative Agreements after
the filing of any petition in bankruptcy, or the commencement of an insolvency,
reorganization or like proceeding, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding and whether such
obligations are direct or indirect, absolute or contingent, due or to become
due, or now existing or hereinafter incurred, which may arise, under, out of or
in connection with any of the Operative Agreements, any other document made,
delivered or given in connection therewith, in each case whether on account of
principal, interest, Investor Contributions or Investor Yield, reimbursement
obligations, fees, indemnities, costs, expenses, or payment obligations
(including, without limitation, all fees and disbursements of counsel to any of
the Beneficiaries that are required to be paid by HCC pursuant to the terms of
the Operative Agreements).

        "Lease Obligations" means the collective reference to the payment
obligations and undertakings applicable to HCC contained in or arising under the
Lease or any of the other Operative Agreements to which HCC is a party,
including, but not limited to, the full and punctual payment by HCC, when due,
of any and all Rent, the payments required pursuant to Section 17.2 and 17.3 of
the Lease, the Purchase Option Price and the Maximum Residual Guarantee Amount.

        "Note Obligations" means the collective reference to the unpaid
principal of and interest on the Notes and all other payment obligations and
liabilities of the Lessor to the Agent and the Lenders under the Notes, the
Credit Agreement and any of the other Operative Agreements.

        2.  Guaranty.  (a)  Subject to the provisions of paragraph 2(b) and
(c), the Guarantors hereby, jointly and severally, unconditionally and
irrevocably guaranty to the Beneficiaries and their respective successors,
endorsees, transferees and assigns the prompt and complete payment when due
(whether at the stated maturity, by acceleration or otherwise) of the Guaranteed
Obligations.

        (b)  Anything to the contrary notwithstanding, the Guarantors shall not
at anytime be required to make any payment with regard to the Tranche B Loans or
with respect to the Contribution Obligations unless at such time a Lease Event
of Default has occurred and is continuing.

        (c)  Anything herein or in any other Operative Agreement to the contrary
notwithstanding, the maximum liability of each Guarantor (other than HCC)
hereunder and under the other Operative Agreement shall in no event exceed the
amount which can be guaranteed by such Guarantor under applicable federal and
state laws relating to the insolvency of debtors.

        (d)  The Guarantors further agree, jointly and severally, to pay any
and all costs, expenses (including all fees and disbursements of counsel) and
damages which may be paid or incurred in enforcing, or obtaining advice of
counsel in respect of, any rights with respect to, or collecting from the
Guarantors, any or all of the Guaranteed Obligations and/or enforcing any rights
with respect to, or collecting against, the Guarantors under this Guarantee.

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        3.  Right of Set-off.  In addition to any rights now or hereafter
granted under applicable law or otherwise, and not by way of limitation of any
such rights, upon the occurrence and during the continuance of an Event of
Default, each of the Investors, Agent and each Lender is hereby authorized at
any time or from time to time, without presentment, demand, protest or other
notice of any kind to the Borrower, the Guarantors or to any other Person, any
such notice being hereby expressly waived, to set off and to appropriate and
apply any and all deposits (general or special) and any other Indebtedness at
any time held or owing by such Investor, Agent or such Lender (including,
without limitation, by branches and agencies of such Investor, Agent or such
Lender wherever located) to or for the credit or the account of the Guarantors
against and on account of the obligations and liabilities of the Guarantors
hereunder or under any of the other Operative Agreements, and all other claims
of any nature or description arising out of or connected with this Guarantee or
any other Operative Agreement, irrespective of whether such Investor, Agent or
such Lender shall have made any demand hereunder and although said obligations,
liabilities or claims, or any of them, shall be contingent or unmatured. Each of
the Investors, Agent and each Lender shall notify such Guarantor promptly of any
such set-off and the application made by such Investor, Agent or such Lender;
provided, that the failure to give such notice shall not affect the validity of
such set-off and application.

        4.  No Subrogation.  Notwithstanding any payment or payments made by the
Guarantors hereunder or any set-off or application of funds of the Guarantors by
any Lender, the Guarantors shall not be entitled to exercise or enforce any
subrogation rights of the Investors, Agent or any Lender against the Borrower or
any other Person or any collateral security or guarantee or right of offset held
by the Investors, Agent or any Lender for the payment of the Guaranteed
Obligations, nor shall the Guarantors seek or be entitled to seek any
contribution or reimbursement from the Borrower or any other Person in respect
of payments made by the Guarantors hereunder, until all amounts owing to the
Investors, Agent and the Lenders by the Borrower on account of the Guaranteed
Obligations and all amounts owing hereunder are paid in full and the Commitments
are terminated.  If any amount shall be paid to the Guarantors on account of
such subrogation rights at any time when all of the Guaranteed Obligations and
all amounts owing hereunder shall not have been paid in full or the Commitments
shall not have been terminated, such amount shall be held by the Guarantors in
trust for the Investors, Agent and the Lenders, segregated from other funds of
the Guarantors, and shall, forthwith upon receipt by the Guarantors, be turned
over to the Agent in the exact form received by the Guarantors (duly indorsed by
the Guarantors to the Agent, if required), to be applied against the Guaranteed
Obligations, whether matured or unmatured, in such order as the Agent may
determine.

        5.  Amendments, etc. with respect to the Guaranteed Obligations; Waiver
of Rights. The Guarantors shall remain obligated hereunder notwithstanding that,
without any reservation of rights against the Guarantors and without notice to
or further assent by the Guarantors, any demand for payment of any of the
Guaranteed Obligations made by the Investors, Agent or any Lender may be
rescinded by such party and any of the Guaranteed Obligations continued, and the
Guaranteed Obligations, or the liability of any other party upon or for any part
thereof, or any collateral security or guarantee therefor or right of offset
with respect thereto, may, from time to time, in whole or in part, be renewed,
extended, amended, modified, accelerated, compromised, waived, surrendered or
released by the Investors, Agent or any Lender, and the Credit Agreement, the
Participation Agreement and the other Operative Agreements may be amended,
modified, supplemented or terminated, in whole or in part, as the Agent (or the
Required Lenders, as the case may be) may deem advisable from time to time in

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accordance with the terms thereof, and any collateral security, guarantee or
right of offset at any time held by the Investors, Agent or any Lender for the
payment of the Guaranteed Obligations may be sold, exchanged, waived,
surrendered or released.  Neither the Investors, Agent nor any Lender shall have
any obligation to protect, secure, perfect or insure any Lien at any time held
by it as security for the Guaranteed Obligations or for this Guarantee or any
property subject thereto.  When making any demand hereunder against the
Guarantors, the Investors, Agent or any Lender may, but shall be under no
obligation to, make a similar demand on the Borrower or any other guarantor, and
any failure by the Investors, Agent or any Lender to make any such demand or to
collect any payments from the Borrower or any other guarantor or any release of
the Borrower or such other guarantor shall not relieve the Guarantors from their
obligations under this Guarantee, and shall not impair or affect the rights and
remedies, express or implied, or as a matter of law, of the Investors, Agent or
any Lender against the Guarantors.  For the purposes hereof "demand" shall
include the commencement and continuance of any legal proceedings.

        6.  Guarantee Absolute and Unconditional.  Each Guarantor waives any
and all notice of the creation, renewal, extension or accrual of any of the
Guaranteed Obligations and notice of or proof of reliance by the Investors,
Agent or any Lender upon this Guarantee or acceptance of this Guarantee, the
Guaranteed Obligations, and any of them, shall conclusively be deemed to have
been created, contracted or incurred, or renewed, extended, amended or waived,
in reliance upon this Guarantee; and all dealings between the Borrower and such
Guarantor, on the one hand, and the Agent and the Lenders, on the other hand,
likewise shall be conclusively presumed to have been had or consummated in
reliance upon this Guarantee. Each Guarantor waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrower or such Guarantor with respect to the Guaranteed Obligations. Each
Guarantor understands and agrees that this Guarantee shall be construed as a
continuing, absolute and unconditional guarantee and surety of payment without
regard to (a) the validity, regularity or enforceability of the Credit Agreement
or any other Operative Agreement, any of the Guaranteed Obligations or any other
collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Investors, Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower or such Guarantor against the Investors, Agent or any Lender, or
(c) any other circumstance whatsoever (with or without notice to or knowledge of
the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Guaranteed
Obligations, or of such Guarantor under this Guarantee, in bankruptcy or in any
other instance. When pursuing its rights and remedies hereunder against any
Guarantor, the Investors, the Agent and any Lender may, but shall be under no
obligation to, pursue such rights and remedies as it may have against the
Borrower or any other Person or against any collateral security or guarantee for
the Guaranteed Obligations or any right of offset with respect thereto, and any
failure by the Investors, Agent or any Lender to pursue such other rights or
remedies or to collect any payments from the Borrower or any such other Person
or to realize upon any such collateral security or guarantee or to exercise any
such right of offset, or any release of the Borrower or any such other Person or
any such collateral security, guarantee or right of offset, shall not relieve
such Guarantor of any liability hereunder, and shall not impair or affect the
rights and remedies, whether express, implied or available as a matter of law,
of the Investors, the Agent and the Lenders against such Guarantor. This
Guarantee shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon such Guarantor and the successors and
assigns thereof, and shall inure to the benefit of the Investors, the Lessor,
the Agent and the Lenders, and their respective successors, indorsees,
transferees and assigns, until all the

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Guaranteed Obligations and the obligations of such Guarantor under this
Guarantee shall have been satisfied by payment in full and the Commitments shall
be terminated, notwithstanding that from time to time during the term of the
Credit Agreement the Borrower may be free from any Guaranteed Obligations.

        7.  Reinstatement.  This Guarantee shall continue to be effective, or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any of the Guaranteed Obligations is rescinded or must otherwise be restored or
returned by the Investors, Agent or any Lender upon the insolvency, bankruptcy,
dissolution, liquidation or reorganization of the Borrower or the Guarantors, or
upon or as a result of the appointment of a receiver, intervenor or conservator
of, or trustee or similar officer for, the Borrower or the Guarantors or any
substantial part of its property, or otherwise, all as though such payments had
not been made.

        8.  Payments.  The Guarantors hereby guarantee that payments hereunder
will be paid to the Agent without set-off or counterclaim in Dollars at the
office of the Agent located at 270 Park Avenue, New York, New York 10017.

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        9.  Representations, Warranties.  In order to induce the Lenders to
enter into the Credit Agreement and to make the Loans, the Investors to enter
into the Participation Agreement and make the Investor Contribution and the
Lessor to enter into the Lease, Holdings and HCC hereby jointly and severally
represent and warrant to the Beneficiaries as follows, all of which shall
survive the execution and delivery of this Guarantee and the Credit Agreement
and the making of the Loans:

        9.1  Financial Condition.  (a) The unaudited pro forma consolidated
balance sheet of HCC and its consolidated Subsidiaries as at September 30, 1999
(including the notes thereto) (the "Pro Forma Balance Sheet"), copies of which
have heretofore been furnished to each Lender, has been prepared giving effect
(as if such events had occurred on such date) to the consummation of the TIDES
issuance. The Pro Forma Balance Sheet has been prepared based on the best
information available to Holdings and HCC as of the date of delivery thereof,
and presents fairly in all material respects on a pro forma basis the estimated
financial position of HCC and its consolidated Subsidiaries as at September 30,
1999, assuming that the events specified in the preceding sentence had actually
occurred at such date.

        (b)  The audited consolidated balance sheets of HCC as at December 31,
1997 and December 31, 1998, and the related consolidated statements of income
and of cash flows for the fiscal years ended on such dates, reported on by and
accompanied by an unqualified report from PricewaterhouseCoopers LLP, present
fairly in all material respects the consolidated financial condition of HCC as
at such date, and the consolidated results of its operations and its
consolidated cash flows for the respective fiscal years then ended. The
unaudited consolidated balance sheet of HCC as at March 31, 1999 and June 30,
1999, and the related unaudited consolidated statements of income and cash flows
for the three and six-month periods ended on such date, present fairly in all
material respects the consolidated financial condition of HCC as at such date,
and the consolidated results of its operations and its consolidated cash flows
for the three and six-month periods then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules and
notes thereto, have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by the aforementioned firm
of accountants and disclosed therein). Holdings, HCC and its Subsidiaries do not
have any material Guarantee Obligations, contingent liabilities and liabilities
for taxes, or any long-term leases or unusual forward or long-term commitments,
including any interest rate or foreign currency swap or exchange transaction or
other obligation in respect of derivatives, that are not reflected in the most
recent financial statements referred to in this paragraph. During the period
from September 30, 1999 to and including the date hereof there has been no
Disposition by Holdings or any of its Subsidiaries, as applicable, of any
material part of their business or property (other than to Holdings or any of
its Subsidiaries).

        9.2  No Change.  Since September 30, 1999 (a) there has been no
development or event nor any prospective development or event, which has had or
would reasonably be expected to have a Material Adverse Effect and (b) except as
disclosed on Schedule 9.2 to this Agreement, as of the date of this Agreement,
no dividends or other distributions have been declared, paid or made upon the
Capital Stock of Holdings or HCC nor has any of the Capital Stock of Holdings or
HCC (other than in connection with the Restructuring) been redeemed, retired,
purchased or otherwise acquired for value by Holdings or any of its respective
Subsidiaries.

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        9.3  Corporate Existence; Compliance with Law.  Each Guarantor
(a) is duly organized, validly existing and in good standing under the laws of
the jurisdiction of its organization, (b) has the corporate power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(c) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification, except where the
failure to be so qualified would not reasonably be expected to have a Material
Adverse Effect, and (d) is in compliance with all Requirements of Law except to
the extent that the failure to comply therewith would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.

        9.4  Corporate Power; Authorization; Enforceable Obligations.  Each
Guarantor has the corporate power and authority, and the legal right, to make,
deliver and perform the Operative Agreements to which it is a party.  HCC has
the corporate power and authority, and the legal right, to perform the Operative
Agreements and has taken all necessary corporate action to authorize the
performing under the Operative Agreements on the terms and conditions of the
Operative Agreements.  Each Guarantor has taken all necessary corporate action
to authorize the execution, delivery and performance of this Guarantee.  No
consent or authorization of, filing with or other act by or in respect of, any
Governmental Authority or any other Person (other than consents that have been
obtained and consents or authorizations the failure to obtain would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect) is required
in connection with the Loans or with the execution, delivery, performance,
validity or enforceability of this Guarantee or any of the other Operative
Agreements, except consents, authorizations, filings and notices described in
Schedule 9.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect.  This Guarantee has been duly
executed and delivered on behalf of the Guarantors party hereto.  This Guarantee
constitutes, each Operative Agreement when executed and delivered will
constitute, a legal, valid and binding obligation of the Guarantors party
thereto enforceable against such Guarantors in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

        9.5  No Legal Bar.  The execution, delivery and performance of this
Guarantee and the other Operative Agreements, the Loans and the use of the
proceeds thereof will not violate any Requirement of Law or Contractual
Obligation of any Guarantor party thereto and will not result in, or require,
the creation or imposition of any Lien on any of their respective properties or
revenues pursuant to any such Requirement of Law or Contractual Obligation,
except as contemplated hereby or thereby and except to the extent any such
violation or creation or imposition of a Lien would not reasonably be expected
to have a Material Adverse Effect.

        9.6  No Material Litigation.  Except as set forth in HCC's Form 10-Q,
filed with respect to the period ending September 30, 1999, no litigation,
investigation or proceeding of or before any arbitrator or Governmental
Authority is pending or, to the knowledge of HCC, threatened by or against any
Guarantor or against any of their respective properties or revenues (a) with
respect to this Guarantee or the other Operative Agreements or any of the
transactions contemplated hereby, or (b) which would reasonably be expected to
have a Material Adverse Effect.

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        9.7  No Default.  None of the Guarantors nor any of their respective
Subsidiaries is in default under or with respect to any of their respective
Contractual Obligations in any respect which if not cured would reasonably be
expected to have a Material Adverse Effect.  No Default or Event of Default has
occurred and is continuing.

        9.8  Ownership of Property; Liens; Leases of Equipment.  Each of the
Guarantors has good record and marketable title in fee simple (except for
exceptions to title as will not in the aggregate materially interfere with the
present or contemplated use of the property affected thereby) to, or a valid
leasehold interest in, all its real property, and good title to all its other
property, and none of such property is subject to any Lien except as permitted
by Section 11.3.  None of the Equipment or Inventory (as defined in the Uniform
Commercial Code) owned by any Guarantor has been leased by such Guarantor as
lessor, except pursuant to operating leases (which do not constitute Financing
Leases).  As used herein, Equipment or Inventory leased by a Guarantor under a
Financing Lease shall be deemed "owned" by such Guarantor.

        9.9  Intellectual Property.  Each Guarantor owns, or is licensed to
use, all trademarks, tradenames, trade secrets, copyrights, technology, know-how
and processes necessary for the conduct of its business as currently conducted
except for those the failure to own or license which would not reasonably be
expected to have a Material Adverse Effect (the "Intellectual Property"). To the
knowledge of each Guarantor, no claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does each
Guarantor know of any valid basis for any such claim, which would reasonably be
expected to have a Material Adverse Effect. The use of such Intellectual
Property by the Guarantors does not infringe on the rights of any Person, except
for such claims and infringements that, in the aggregate, would not reasonably
be expected to have a Material Adverse Effect.

        9.10  Taxes.  Each of the Guarantors has filed or caused to be filed
all tax returns which, to the knowledge of each Guarantor, are required to be
filed and has paid all taxes shown to be due and payable on said returns or on
any assessments made against it or any of its property and all other taxes, fees
or other charges imposed on it or any of its property by any Governmental
Authority (other than any the amount or validity of which are currently being
contested in good faith by appropriate proceedings and with respect to which
reserves in conformity with GAAP have been provided on the books of any of the
Guarantors, as the case may be); no tax Lien has been filed against the property
of any Guarantor, and, to the knowledge of each Guarantor, no claim is being
asserted, with respect to any such tax, fee or other charge.

        9.11  Federal Regulations.  No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Board of
Governors of the Federal Reserve System as now and from time to time hereafter
in effect or for any purpose which violates the provisions of the Regulations of
such Board of Governors. If requested by any Lender or the Agent, HCC will
furnish to the Agent and each Lender a statement to the foregoing effect in
conformity with the requirements of FR Form U-1 referred to in said Regulation
U.

                                                                               8
<PAGE>

        9.12  ERISA.  Neither a Reportable Event nor an "accumulated funding
deficiency" (within the meaning of Section 412 of the Code or Section 302 of
ERISA) has occurred during the five-year period prior to the date on which this
representation is made or deemed made with respect to any Plan, and each Plan
has complied in all material respects with the applicable provisions of ERISA
and the Code.  No termination of a Single Employer Plan has occurred and no lien
in favor of the PBGC or a Plan has arisen during the five-year period prior to
the date as of which this representation is deemed made.  The present value of
all accrued benefits under each Single Employer Plan maintained by HCC, or any
Commonly Controlled Entity (based on those assumptions used to fund the Plans)
did not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits.  Neither HCC nor any Commonly
Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan, and neither HCC nor any Commonly Controlled Entity would
become subject to any liability under ERISA if HCC or any such Commonly
Controlled Entity were to withdraw completely from all Multiemployer Plans as of
the valuation date most closely preceding the date on which this representation
is made or deemed made.  No such Multiemployer Plan is in Reorganization or
Insolvent.  The present value (determined using actuarial and other assumptions
which are reasonable in respect of the benefits provided and the employees
participating) of the liability of HCC and each Commonly Controlled Entity for
post retirement benefits to be provided to their current and former employees
under Plans which are welfare benefit plans (as defined in Section 3(1) of
ERISA) does not, in the aggregate, exceed the assets under all such Plans
allocable to such benefits.

        9.13  Investment Company Act; Other Regulations.  None of the
Guarantors is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. None of the Guarantors is subject to regulation under any Federal or
State statute or regulation which limits its ability to incur Indebtedness or
change rates or change tariffs. None of the Guarantors are "holding companies"
or "subsidiary companies" of a "holding company" or a "subsidiary company" of a
"holding company" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.

        9.14  Subsidiaries.  As of the Initial Closing Date, Holdings has no
Subsidiaries other than as set forth on Schedule 9.14.  Except if a Guarantor,
other than cash or Cash Equivalents located in bank accounts at the Agent, none
of the assets owned by any Unqualified Subsidiary as of the date hereof are
located within the United States of America or any territory thereof.

        9.15  Environmental Matters.  Each of the representations and
warranties set forth in paragraphs (a) through (e) of this subsection is true
and correct with respect to each parcel of real property owned or operated by
any of the Guarantors (the "Properties"), except to the extent that the facts
and circumstances giving rise to any such failure to be so true and correct
would not reasonably be expected to have a Material Adverse Effect:

        (a)  Except as set forth on Schedule 9.15, the Properties do not
     contain, and have not previously contained, in, on, or under, including,
     without limitation, the soil and groundwater thereunder, any Hazardous
     Substances in concentrations which violate Environmental Laws.

                                                                               9
<PAGE>

        (b)  Except as set forth on Schedule 9.15, the Properties and all
     operations and facilities at the Properties are in compliance with all
     Environmental Laws, and there is no Hazardous Substances contamination or
     violation of any Environmental Law which would reasonably be expected to
     interfere with the continued operation of any of the Properties or impair
     the fair saleable value of any thereof.

        (c)  Except as set forth on Schedule 9.15, none of the Guarantors has
     received any complaint, notice of violation, alleged violation,
     investigation or advisory action or of potential liability or of potential
     responsibility regarding environmental protection matters or environmental
     permit compliance with regard to the Properties which have not been
     resolved, nor is HCC aware that any Governmental Authority is contemplating
     delivering to any Guarantor any such notice.

        (d)  Hazardous Substances have not been generated, treated, stored,
     disposed of, at, on or under any of the Properties in concentrations that
     violate Environmental Laws, nor have any Hazardous Substances been
     transferred to any other location, in violation of any Environmental Laws
     from the Properties or as a result of the sale or lease of any equipment or
     inventory of any Guarantor.

        (e)  There are no governmental, administrative actions or judicial
     proceedings pending or contemplated under any Environmental Laws to which
     any Guarantor is or to HCC's knowledge will be named as a party with
     respect to the Properties, nor to HCC's knowledge are there any consent
     decrees or other decrees, consent orders, administrative orders or other
     orders, or other administrative or judicial requirements outstanding under
     any Environmental Law with respect to any of the Properties.

        9.16  Accuracy and Completeness of Information.  The factual statements
contained in the Operative Agreements and each other agreement, instrument,
certificate and document related thereto and any other certificates or documents
furnished or to be furnished to the Investors, the Agent or the Lenders by any
Guarantor from time to time in connection with this Guarantee (in any case
excluding any of the financial statements referred to in Section 9.1(a) and 10.1
hereof), taken as a whole, and taking into consideration all corrections or
substituted documents, do not and will not, as of the date when made, contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein not misleading in
light of the circumstances in which the same were made, all except as otherwise
qualified herein or therein.

        9.17  Year 2000.    The Year 2000 date change has not resulted in
disruption of Holdings' and its Subsidiaries' computer hardware, software,
databases, systems and other equipment containing embedded microchips (including
systems and equipment supplied by others or with which Holdings' or its
Subsidiaries' systems interface), or to Holdings' or its Subsidiaries'
operations or business systems, or to the best of Holdings' and its
Subsidiaries' knowledge, to the operations or business systems of Holdings'
major vendors, customers, suppliers and counterparties. Holdings has no reason
to believe that liabilities and expenditures related to the Year 2000 date-
change (including, without limitation, costs caused by reprogramming errors, the
failure of others' systems or equipment, and the potential liability, if any, of
Holdings or its Subsidiaries for Year 2000 related costs incurred or disruption
experienced by others) will result in a Default or a Material Adverse Effect.

                                                                              10
<PAGE>

        9.18  Senior Indebtedness.  The Guaranteed Obligations constitute
"Senior Indebtedness" of HCC under and as defined in the Shareholder
Subordinated Loan Agreement. The obligations of the Guarantors under the
Agreement constitute "Senior Indebtedness" of such applicable Guarantors under
and as defined in the Shareholder Subordinated Loan Agreement.

        9.19  Representations and Warranties in Existing Guarantee.  The
representations and warranties contained in Section 9 of the Existing Guarantee
and in any amendment, consent or waiver thereto were true and correct in all
material respects on and as of the dates when made pursuant to the Existing
Guarantee.

        10.  Affirmative Covenants of the Guarantor.  Each Guarantor hereby
covenants and agrees that so long as this Guarantee is in effect and until the
Commitments have terminated and the Guaranteed Obligations and all amounts owing
hereunder are paid in full such Guarantor will:

        10.1 Financial Statements.  Furnish to each Lender and each of the
Investors:

        (a)  as soon as available for distribution to shareholders and creditors
     generally, but in any event within 120 days after the end of each fiscal
     year of Holdings, a copy of the consolidated balance sheet of Holdings and
     its consolidated Subsidiaries, as at the end of such year and the related
     consolidated statements of income and retained earnings and of cash flows
     for such year, setting forth in each case in comparative form the figures
     for the previous year, reported on without a "going concern" or like
     qualification or exception, or qualification arising out of the scope of
     the audit, by PricewaterhouseCoopers LLP or other independent certified
     public accountants of nationally recognized standing not unacceptable to
     the Required Lenders;

        (b)  as soon as available for distribution to shareholders and creditors
     generally, but in any event within 90 days after the end of each fiscal
     year of Holdings, a copy of the unaudited consolidated balance sheet of
     Holdings and its consolidated Subsidiaries, as at the end of such year, and
     the related unaudited consolidated statements of income and retained
     earnings and of cash flows for such year, in each case setting forth in
     comparative form the figures for the corresponding period of the previous
     year and the figures for such period as shown on the budgets of Holdings
     for such year; and

        (c)  as soon as available, but in any event not later than 45 days
     after the end of each of the first three quarterly periods of each fiscal
     year of Holdings, the unaudited consolidated balance sheet of Holdings and
     its consolidated Subsidiaries, as at the end of such quarter, and the
     related unaudited consolidated statements of income and retained earnings
     and of cash flows of Holdings and its consolidated Subsidiaries, for such
     quarter and the portion of the fiscal year through the end of such quarter,
     setting forth in each case in comparative form the figures for the
     corresponding period of the previous year, certified by a Responsible
     Officer as being fairly stated in all material respects when considered in
     relation to the consolidated financial statements of Holdings and its
     consolidated Subsidiaries, (subject to normal year-end audit adjustments),
     and in each case setting forth in comparative form the figures for such
     periods as shown on the budgets of such Person for such year;

                                                                              11
<PAGE>

all such financial statements to be complete and correct in all material
respects and to be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with prior
periods (except as approved by such accountants or officer, as the case may be,
and disclosed therein).

        10.2  Certificates; Other Information.  Furnish to each Lender and each
of the Investors:

        (a)  concurrently with the delivery of the financial statements
     referred to in subsection 10.1(a), a certificate of the independent
     certified public accountants reporting on such financial statements stating
     that in making the examination necessary therefor no knowledge was obtained
     of any Default or Event of Default, except as specified in such
     certificate;

        (b)  concurrently with the delivery of the financial statements
     referred to in subsections 10.1(a) and 10.1(c), a certificate of a
     Responsible Officer stating that, to the best of such Responsible Officer's
     knowledge, Holdings during such period has observed or performed all of its
     covenants and other agreements, and satisfied every material condition,
     contained in this Guarantee and the other Operative Agreements to which it
     is a party to be observed, performed or satisfied by it, and that such
     Responsible Officer has obtained no knowledge of any Default or Event of
     Default except as specified in such certificate;

        (c)  not later than 45 days following the end of each fiscal year of
     Holdings, a copy of the projections by Holdings of the operating budget and
     cash flow budget of Holdings and its Subsidiaries for the succeeding fiscal
     year, such projections to be accompanied by a certificate of a Responsible
     Officer to the effect that such projections have been prepared on the basis
     of reasonable assumptions and that such Officer has no reason to believe
     they are incorrect or misleading in any material respect;

        (d)(i) within five days after the same are sent, copies of all financial
     statements and reports which Holdings, if at such time any class of
     Holding's securities are held by the public, sends to its stockholders
     generally, or, if otherwise, such financial statements and reports as are
     made generally available to the public, and (ii) within five days after the
     same are filed, copies of all financial statements and reports which
     Holdings may make to, or file with, the Securities and Exchange Commission
     or any successor or analogous Governmental Authority;

        (e)  concurrently with the delivery of the financial statements
     referred to in subsections 10.1(b) and (c), a management summary describing
     and analyzing the performance of Holdings and its Subsidiaries during the
     periods covered by such financial statements;

        (f)  within 45 days after the end of each quarter in each fiscal year of
     Holdings, a certificate of the principal financial officer of Holdings
     showing both the Applicable Margin for the next quarter and the detailed
     computations necessary to calculate the Applicable Margin (an "Applicable
     Margin Certificate"); and

        (g)  promptly, such additional financial and other information as any
     Lender or

                                                                              12
<PAGE>

     either of the Investors may from time to time reasonably request.

        10.3  Payment of Obligations.  Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature, except where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
Holdings or any Subsidiary of Holdings, as the case may be.

        10.4  Conduct of Business and Maintenance of Existence.  Continue to
engage in business of the same general type as now conducted by it and preserve,
renew and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except as otherwise permitted
pursuant to Section 11.5; comply with all Contractual Obligations and
Requirements of Law except to the extent that failure to comply therewith would
not, in the aggregate, reasonably be expected to have a Material Adverse Effect.

        10.5  Maintenance of Property; Insurance. (a) Keep and maintain all
property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted, and (b) maintain, with financially
sound and reputable insurance companies, insurance in such amounts and against
such risks as are customarily maintained by companies engaged in the same or
similar businesses operating in the same or similar locations.

        10.6  Inspection of Property; Books and Records; Discussions.  Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of either of the Investors or any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of Holdings and Subsidiaries of Holdings with officers and employees of Holdings
and Subsidiaries of Holdings and with its independent certified public
accountants; provided, however, that no such visit, inspection or examination or
discussion shall unreasonably disrupt or interfere with normal operations of
Holdings or any of its Subsidiaries and any such representatives of such
Investor, Agent and the Lenders shall be accompanied by a Responsible Officer of
Holdings. No failure to comply with any request for the exercise of rights
hereunder shall be cause for any Event of Default unless such request is
submitted in writing to Holdings with reference to this Section 10.6.

        10.7  Notices.  Promptly give notice to the Investors, Agent and each
Lender of:

        (a)  the occurrence of any Default or Event of Default of which any
     Guarantor has actual knowledge;

        (b)  any (i) default or event of default by any Guarantor or any of its
     Subsidiaries under or with respect to any of their respective Contractual
     Obligations in any respect which, if not cured, would reasonably be
     expected to have a Material Adverse Effect, or to Guarantor's knowledge any
     default or event of default by any third party under or with respect to any
     Contractual Obligation of said third party with any Guarantor or any of its
     Subsidiaries in a respect which, if not cured, would reasonably be expected
     to have a Material Adverse Effect or (ii) litigation, investigation or
     proceeding of which

                                                                              13
<PAGE>

     any Guarantor has actual knowledge which may exist at any time between any
     Guarantor or any Subsidiary of such Guarantor and any Governmental
     Authority, which in either case, if not cured or if adversely determined,
     as the case may be, would reasonably be expected to have a Material Adverse
     Effect;

        (c)  any litigation or proceeding affecting any Guarantor or any
     Subsidiary of such Guarantor of which such Guarantor has actual knowledge
     in which the amount involved is $5,000,000 or more and not covered by
     insurance or in which injunctive or similar relief is sought and which if
     adversely determined would reasonably be expected to have a Material
     Adverse Effect;

        (d)  the following events, as soon as possible and in any event within
     30 days after any Guarantor has actual knowledge thereof: (i) the
     occurrence or expected occurrence of any Reportable Event with respect to
     any Plan, or any withdrawal from, or the termination, Reorganization or
     Insolvency of any Multiemployer Plan or (ii) the institution of proceedings
     or the taking of any other action by the PBGC or such Guarantor, any
     Commonly Controlled Entity with respect to the termination of any Single
     Employer Plan; and

        (e)  a development or event which has had or would reasonably be
     expected to have a Material Adverse Effect.

Each notice pursuant to this subsection shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the applicable Guarantor proposes to take with respect
thereto.

        10.8  Environmental Laws.

        (a)  Comply in all material respects with, and undertake all reasonable
     efforts to ensure compliance by all tenants and subtenants, if any, with,
     all Environmental Laws and obtain and comply in all material respects with
     and maintain, and undertake all reasonable efforts to ensure that all
     tenants and subtenants obtain and comply with and maintain, any and all
     licenses, approvals, registrations or permits required by Environmental
     Laws, and upon discovery of any non-compliance or suspected non-compliance,
     undertake all reasonable efforts to attain full compliance;

        (b)  Conduct and complete all investigations, studies, sampling and
     testing, and all remedial, removal and other actions required under
     Environmental Laws and promptly comply in all material respects with all
     lawful orders and directives of all Governmental Authorities respecting
     Environmental Laws, except to the extent that the failure to so conduct,
     complete or take such actions, or to comply with such orders and
     directives, would not in the aggregate reasonably be expected to have a
     Material Adverse Effect; and

        (c)  Defend, indemnify and hold harmless the Investors, the Lessor,
     the Agent and the Lenders, and their respective employees, agents, officers
     and directors, from and against any claims, demands, penalties, fines,
     liabilities, settlements, damages, costs and expenses of whatever kind or
     nature known or unknown, contingent or otherwise, arising out of, or in any
     way relating to the violation of or noncompliance with any

                                                                              14
<PAGE>

     Environmental Laws applicable to the real property owned or operated by any
     Guarantor or any Subsidiary of such Guarantor, or any orders, requirements
     or demands of Governmental Authorities related thereto, including, without
     limitation, reasonable attorney's and consultant's fees, investigation and
     laboratory fees, court costs and litigation expenses, except to the extent
     that any of the foregoing arise out of the gross negligence or willful
     misconduct of the party seeking indemnification therefor.

        (d)  Maintain a program to identify and promote substantial compliance
     with and to minimize prudently any liabilities or potential liabilities
     under any Environmental Law that may affect any Guarantor or any of its
     Qualified Subsidiaries.

        10.9  Subsequent Guarantees.  Each Guarantor shall cause each Qualified
Subsidiary (other than the TIDES Trust, HMS, MAC and Collicut) of such Guarantor
for which the aggregate value of all assets owned by such Qualified Subsidiary
is or becomes greater than $20,000,000, to execute an amendment to this
Guarantee, substantially in the form of Exhibit A hereto within one-year after
the later of (i) the date on which such Qualified Subsidiary becomes a
Subsidiary of such Guarantor and (ii) the date on which such Qualified
Subsidiary's assets attain an aggregate value in excess of $20,000,000;
provided, however, that if during such one-year period the aggregate value of
such Qualified Subsidiary's assets is or becomes $20,000,000 or less, such
Qualified Subsidiary shall not be required to become a party to this Guarantee.

        11.  Negative Covenants.  Each Guarantor hereby agrees that so long as
this Guarantee is in effect and until the Commitments have terminated and the
Guaranteed Obligations and all amounts owing hereunder are paid in full, the
Guarantor shall not, directly or indirectly:

        11.1  Financial Condition Covenants.  (a)  Maintenance of Consolidated
Indebtedness to Consolidated Capitalization.  Permit the ratio (expressed as a
percentage) of Consolidated Indebtedness to Consolidated Capitalization of
Holdings 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 numerator of 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 at the end
of any of Holdings' fiscal quarters to be less than 1.0 to 1.0.

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

                                                                              15
<PAGE>

        (e)  Interest Coverage Ratio.  Permit the ratio of Consolidated EBITDA
to Consolidated Interest Expense of Holdings 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 of Holdings shall exclude any accrued but unpaid interest to
the TIDES or TIDES Debentures.

        11.2  Limitation on Indebtedness.  Create, incur, assume or suffer to
exist any Indebtedness, except:

        (a)  Indebtedness in respect of the loans, and other obligations of the
     Guarantors under the Corporate Credit Agreement and the other Loan
     Documents as defined in the Corporate Credit Agreement;

        (b)  Indebtedness of HCC to any of its Subsidiaries and of any such
     Subsidiary which is a Guarantor to HCC or any other Subsidiary of HCC;

        (c)  Indebtedness outstanding on the Initial Closing Date and listed on,
     Schedule 11.2 and all extensions, renewals, replacements, refinancings and
     modifications thereof permitted hereunder;

        (d)  Indebtedness of Holdings and any of its Subsidiaries in an
     aggregate amount not to exceed $10,000,000 at any time outstanding which is
     recourse only to the assets of HCC or any Subsidiaries acquired or financed
     with the proceeds of such Indebtedness;

        (e)  Indebtedness in respect of Financing Leases provided that, after
     giving effect thereto, subsection 11.7 is not contravened;

        (f)  Indebtedness in respect of Subordinated Debt, the terms and
     conditions of which have been approved in writing by the Required Lenders
     and Investors and all extensions, renewals, replacements, refinancings and
     modifications thereof permitted hereunder;

        (g)  Indebtedness of Unqualified Subsidiaries of Holdings; provided
     that any such Indebtedness is Non-Recourse Indebtedness;

        (h)  Indebtedness of a Person which becomes a Subsidiary after the date
     hereof in an aggregate principal amount not exceeding as to Holdings and
     its Subsidiaries $10,000,000 at any time outstanding, provided that (i)
     such indebtedness existed at the time such Person became a Subsidiary and
     was not created in anticipation thereof and (ii) immediately after giving
     effect to the acquisition of such Person by Holdings or any of its
     Subsidiaries no Default or Event of Default shall have occurred and be
     continuing;

        (i)  Indebtedness in respect of Equipment Lease Tranche A Loans; and

        (j)  Indebtedness not contemplated by clauses (a)-(i) above not
     exceeding $5,000,000 in the aggregate at any time outstanding.

        11.3  Limitation on Liens.  Create, incur, assume or suffer to exist
any Lien upon

                                                                              16
<PAGE>

any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:

        (a)  Liens for taxes not yet due or which are being contested in good
     faith by appropriate proceedings, provided that adequate reserves with
     respect thereto are maintained on the books of Holdings or any Subsidiary
     of Holdings, as the case may be, in conformity with GAAP;

        (b)  carriers', warehousemen's, mechanics', materialmen's, repairmen's
     or other like Liens arising in the ordinary course of business which are
     not overdue for a period of more than 60 days or which are being contested
     in good faith by appropriate proceedings;

        (c)  pledges or deposits in connection with workers' compensation,
     unemployment insurance and other social security legislation and deposits
     securing liability to insurance carriers under insurance or self insurance
     arrangements;

        (d)  deposits to secure the performance of bids, trade contracts
     (other than for borrowed money), leases, statutory obligations, surety and
     appeal bonds, performance bonds and other obligations of a like nature
     incurred in the ordinary course of business;

        (e)  easements, rights-of-way, restrictions and other similar
     encumbrances incurred in the ordinary course of business which, in the
     aggregate, are not substantial in amount and which do not in any case
     materially detract from the value of the property subject thereto or
     materially interfere with the ordinary conduct of the business of Holdings
     or any of its Subsidiaries;

        (f)  leases or subleases granted to third Persons not interfering in any
     material respect with the business of Holdings or any of its Subsidiaries;

        (g)  Liens arising from UCC financing statements regarding leases
     permitted by this Agreement or the Equipment Leases;

        (h)  any interest or title of a lessor or sublessor under any lease
     permitted by the Corporate Credit Agreement or the Equipment Leases;

        (i)  Liens in favor of customs and revenue authorities arising as a
     matter of law to secure payment of custom duties in connection with the
     importation of goods so long as such Liens attach only to the imported
     goods;

        (j)  Liens arising out of consignment or similar arrangements for the
     sale of goods entered into by Holdings or any of its Subsidiaries in the
     ordinary course of business;

        (k)  Liens created pursuant to Financing Leases permitted pursuant to
     Section 11.2(e);

        (l)  Liens in existence on the Initial Closing Date listed on, Schedule
     11.3(l), securing Indebtedness permitted by subsection 11.2(c), provided
     that no such Lien is spread to cover any additional property after the
     Initial Closing Date and that the amount of Indebtedness secured thereby is
     not increased;

                                                                              17
<PAGE>

        (m)  Liens on (i) natural gas compressors and related equipment, and
     usual accessories and improvements and proceeds thereof (other than the
     Equipment), and (ii) oil and gas production equipment, in each case, the
     acquisition of which were financed with the proceeds of the Indebtedness
     permitted by subsection 11.2(e) and which secures only such Indebtedness,
     provided that any such Lien is placed upon such natural gas compressor or
     related equipment or such oil and gas production equipment at the time of
     the acquisition of such natural gas compressors or related equipment or
     such oil and gas production equipment by Holdings or any of its
     Subsidiaries and the Lien extends to no other property, and provided,
     further, that no such Lien is spread to cover any additional property after
     the date such Lien attaches and that the amount of Indebtedness secured
     thereby is not increased;

        (n)  Liens on assets of the Guarantors listed on Schedule 11.3(n),
     provided that no such Lien is spread to cover any additional property after
     the Initial Closing Date and that the amount of Indebtedness secured
     thereby is not increased;

        (o)  Liens on the assets of Unqualified Subsidiaries of Holdings
     securing Indebtedness of such Unqualified Subsidiaries permitted under
     Section 11.2(g);

        (p)  Liens securing Derivatives entered into by Holdings and its
     Subsidiaries which are permitted hereunder;

        (q)  Liens securing Indebtedness of Holdings or any Subsidiary
     permitted under subsection 11.2(d) so long as such Liens attach only to the
     assets acquired or financed pursuant to such subsection;

        (r)  Liens on the property or assets of a Person which becomes a
     Subsidiary after the date hereof securing Indebtedness permitted by
     subsection 11.2(h), provided that (i) such Liens existed at the time such
     Person became a Subsidiary and were not created in anticipation thereof,
     (ii) any such Lien is not spread to cover any property or assets of such
     Person after the time such Person becomes a Subsidiary, and (iii) the
     amount of Indebtedness secured thereby is not increased;

        (s)  Liens that arise in connection with the Equipment Lease
     Transactions;

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

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

        11.4  Limitation on Guarantee Obligations.  Create, incur, assume or
suffer to exist any Guarantee Obligation except:

        (a)  the Corporate Guarantees and the Equipment Lease Guarantees;

        (b)  up to $5,000,000 in the aggregate of Guarantee Obligations of HCC
     or any of its Subsidiaries in connection with indebtedness incurred by
     customers of HCC or any of its Subsidiaries; provided, that the proceeds of
     any such indebtedness shall be used by such customers to purchase natural
     gas compressors or oil and gas production equipment

                                                                              18
<PAGE>

     from HCC or any of its Subsidiaries;

        (c)  Guarantee Obligations (in respect of obligations not constituting
     Indebtedness) arising under agreements entered into by HCC or any of its
     Subsidiaries in the ordinary course of business;

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

        (f)  Guarantee Obligations of Holdings and any of its Subsidiaries
     arising pursuant to the Equipment Lease Transactions;

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

        (h)  the Subordinated Guarantee Obligations of Holdings arising under
     the TIDES Guarantees.

        11.5  Limitations on Fundamental Changes.  Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except:

        (a)  any Qualified Subsidiary may be merged or consolidated with or
     into any other Qualified Subsidiary; provided, that a Qualified Subsidiary
     shall be the continuing or surviving corporation;

        (b)  Holdings or any Qualified Subsidiary may be merged or consolidated
     with any other Person organized under a jurisdiction of the United States
     with assets held primarily in the United States; provided, that Holdings or
     such Qualified Subsidiary shall be the continuing or surviving corporation;
     the Agent is provided with written notice, and after giving effect thereto
     no Default or Event of Default would exist or reasonably be expected to be
     caused thereby;

        (c)  any Qualified Subsidiary may sell, lease, assign, transfer or
     otherwise dispose of any or all of its assets to Holdings or any Qualified
     Subsidiary;

        (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 Equipment Lease Transactions;

        (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

                                                                              19
<PAGE>

     its property, business or assets, as contemplated by the TIDES Declaration
     of Trust;

        (g)  any of the HMS Entities may wind up, dissolve (or suffer a
     liquidation or dissolution), or convey, assign, transfer or otherwise
     dispose of, all or substantially all of its property, business or assets;
     and

        (h)  HCC may merge with another Subsidiary of Holdings in connection
     with the Restructuring.

        11.6  Limitation on Sale or Lease of Assets.  Convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, except:

        (a)  obsolete or worn out property disposed of in the ordinary course of
     business, provided that the aggregate value of obsolete or worn out natural
     gas compressors and oil and gas production equipment disposed of in the
     ordinary course of business does not exceed $5,000,000 during any fiscal
     year of Holdings;

        (b)  the sale of inventory in the ordinary course of business, provided
     that if such inventory is comprised of natural gas compressors or oil and
     gas production equipment, such natural gas compressors or oil and gas
     production equipment were never part of the natural gas compressors or oil
     and gas production equipment leased or held for lease by HCC or any of its
     Subsidiaries;

        (c)  the lease or sublease by HCC or any of its Subsidiaries as lessor
     of natural gas compressors and oil and gas production equipment in the
     ordinary course of business under operating leases (which do not constitute
     Financing Leases);

        (d)  the sale or discount without recourse of defaulted accounts
     receivable arising in the ordinary course of business in connection with
     the compromise or collection thereof;

        (e)  as permitted by subsection 11.5;

        (f)  the sale of natural gas compressors and oil and gas production
     equipment, other than disposals and sales covered by clauses (a) and (b)
     above, provided that the fair market value of natural gas compressors and
     oil and gas production equipment sold during the term of this Agreement
     does not exceed ten percent of the aggregate fair market value of all
     natural gas compressors and oil and gas production equipment owned by HCC
     and its Qualified Subsidiaries; provided further that if the proceeds are
     reinvested in natural gas compressors or oil and gas production equipment
     to be owned by HCC or its Qualified Subsidiaries within nine months after
     the sale of the assets which produced such proceeds, such proceeds shall
     not be included for purposes of this covenant;

        (g)  the lease by the Real Estate Subsidiary 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;

                                                                              20
<PAGE>

        (h)  the sale of natural gas compressors to the Lessor in connection
     with the Equipment Lease Transactions; and

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

        11.7  Limitation on Leases.  Permit Consolidated Lease Expense for any
fiscal year of Holdings to exceed $10,000,000.

        11.8  Limitation on Dividends.  Declare or pay any dividend (other than
dividends payable solely in common stock of such Person) on, or make any payment
on account of, or set apart assets for a sinking or other analogous fund for,
the purchase, redemption, defeasance, retirement or other acquisition of, any
shares of any class of Capital Stock of such Person or any warrants or options
to purchase any such Stock, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of Holdings or any Subsidiary of Holdings,
except that if no Default or Event of Default exists or would reasonably be
expected to be caused thereby (i) Subsidiaries of Holdings may declare and pay
dividends to Holdings (to the extent necessary to pay interest on, or redeem,
the TIDES Debentures or to cover operating expenses of Holdings) and other
shareholders of such Subsidiaries and the TIDES Trust may redeem the TIDES as
contemplated by the TIDES Declaration of Trust, (ii) Holdings may repurchase or
redeem shares of Holdings common stock from its employees and former employees
so long as the aggregate amount of all such repurchases since the Closing Date
does not exceed $7,500,000, (iii) Holdings may make open market repurchases of
shares of Holdings common stock so long as the aggregate amount of all such
repurchases since the Closing Date does not exceed $25,000,000, (iv) Holdings
may declare or pay dividends on and make mandatory stock repurchases (pursuant
to the terms of the applicable certificate of designation) of its preferred
stock, if any, and (v) Holdings may declare or pay dividends on shares of
Holdings common stock, provided that the aggregate amount of such declarations
or payments pursuant to this clause (v) above does not exceed 25% of the
Consolidated Net Income of Holdings for the period (taken as one accounting
period) from the beginning of the first fiscal quarter commencing after the
Closing Date to the end of Holdings' most recently ended fiscal quarter for
which financial statements have been delivered to the Agent and the Lenders
pursuant to subsection 10.1 at or prior to the time of such declaration or
payment.

        11.9  Limitation on Derivatives.  Enter into or assume any obligations
with respect to any Derivatives except for Derivatives used by Holdings or any
of its Subsidiaries in reducing the interest rate risk exposure or foreign
currency risk exposure of Holdings and its Subsidiaries which have been provided
by a lender under the Corporate Credit Agreement or the Equipment Lease
Transactions; provided, that the aggregate notional amounts of such Derivatives
shall not exceed the aggregate amount of loans outstanding under the Corporate
Credit Agreement and the Equipment Lease Transactions.

        11.10  Limitation on Investments, Loans and Advances.  Make any
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in (all of the
foregoing being herein collectively referred to as "Investments"), any Person,
except:

        (a)  extensions of trade credit in the ordinary course of business;

                                                                              21
<PAGE>

        (b)  Investments in Cash Equivalents;

        (c)  loans and advances to employees of such Person or its Subsidiaries
     for travel, entertainment and relocation expenses in the ordinary course of
     business in an aggregate amount for Holdings and its Subsidiaries not to
     exceed $250,000 at any one time outstanding;

        (d)  Investments by Holdings in its Subsidiaries which are or become
     Guarantors and investments by such Subsidiaries which are or become
     Guarantors in Holdings and in other Subsidiaries of Holdings which are or
     become Guarantors;

        (e)  Investments by Holdings in the Real Estate Subsidiary in an
     aggregate amount not to exceed $5,000,000 plus amounts necessary to
     maintain and operate the real property and improvements thereon owned by
     the Real Estate Subsidiary;

        (f)  Investments in Unqualified Subsidiaries of Holdings not to exceed
     $20,000,000 in the aggregate;

        (g)  Investments constituting Permitted Business Acquisitions so long
     as, after giving effect to the consummation of the transactions
     contemplated by each Permitted Business Acquisition and the Loans, and the
     loans to be made and the Letters of Credit to be issued in connection with
     the Corporate Credit Agreement, the sum of (i) the cash and Cash
     Equivalents then held by Holdings and (ii) an amount equal to the
     difference between (A) the aggregate Commitments under the Corporate Credit
     Agreement, the aggregate Commitments and the aggregate Investor Commitments
     under the Equipment Lease Participation Agreements in effect at such time
     and (B) the Aggregate Outstanding Extensions of Credit under the Corporate
     Credit Agreement, the Available Commitments and the Available Investor
     Commitments under the Equipment Lease Participation Agreements at such
     time, equals at least $20,000,000;

        (h)  Investments or acquisitions by Holdings or its Subsidiaries in
     (i) 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), or (ii) loans or
     advances to a Person (other than a Subsidiary), provided that the aggregate
     amount of all such loans, advances, 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

        (j)  the purchase by the TIDES Trust of the TIDES Debentures, as
     contemplated under the TIDES Declaration of Trust.

        11.11  Limitation on Optional Payments and Modifications of Debt
Instruments.
(i) Make any optional payment or prepayment on or redemption, purchase or
defeasance of any portion of the Shareholder Subordinated Debt,  (ii) make any
optional payment or 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 pursuant to the TIDES Indenture or redemptions of any
portion of the TIDES pursuant to the TIDES Declaration of Trust or (b) any

                                                                              22
<PAGE>

optional payment, prepayment or redemption of any Indebtedness pursuant to the
Corporate Credit Agreement, the Equipment Lease Credit 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 Equipment Lease Credit
Agreements 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.

        11.12  Transactions with Affiliates.  Except for transactions of a type
set forth on Schedule 11.12, enter into any transaction, including, without
limitation, any purchase, sale, lease or exchange of property or the rendering
of any service, with any Affiliate unless such transaction is otherwise
permitted under this Agreement, is in the ordinary course of Holdings' or such
Subsidiary's business and is upon fair and reasonable terms no less favorable to
Holdings or such Subsidiary, as the case may be, than it would obtain in a
comparable arm's length transaction with a Person not an Affiliate.

        11.13  Sale and Leaseback.  Except for the transactions of a type set
forth on Schedule 11.13, enter into any arrangement with any Person where
Holdings or any of the Subsidiaries of Holdings is the lessee of real or
personal property which has been or is to be sold or transferred by Holdings or
such Subsidiary to such Person or to any other Person to whom funds have been or
are to be advanced by such Person on the security of such property or rental
obligations of Holdings or such Subsidiary (any of such arrangements, a "Sale
and Leaseback Transaction"), except that (i) HCC and its Subsidiaries may enter
into Financing Leases as lessee for natural gas compressors and oil and gas
production equipment if after giving effect thereto subsection 11.2 is not
contravened and (ii) HCC may enter into Sale and Leaseback Transactions as
lessee for natural gas compressors in connection with the Equipment Lease
Transactions.

        11.14  Corporate Documents.  Amend its Certificate of Incorporation in
any way adverse to the interests of the Agent and the Lenders.

        11.15  Fiscal Year.  Permit the fiscal year of Holdings to end on a day
other than December 31.

        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.

        11.17  Unqualified Subsidiaries.  Permit any Unqualified Subsidiary to
directly or indirectly own any assets (other than cash or Cash Equivalents
located in bank accounts at Chase) which are located in the United States of
America or any territory thereof.

        12.  Notices.  All notices, requests and demands to or upon the
respective
parties hereto to be effective shall be in writing (including by facsimile
transmission), and, unless

                                                                              23
<PAGE>

otherwise expressly provided herein, shall be deemed to have been duly given or
made (a) when delivered by hand, (b) one Business Day after delivery to a
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 sent and receipt
has been confirmed, addressed as follows:

        (a)  if to the Agent or any Lender, at its address or transmission
     number for notices provided in Section 9.2 of the Credit Agreement; and

        (b)  if to any Guarantor, at its address or transmission number for
     notices set forth on the signature page below.

        (c)  if to the Investors, at their address or transmission number for
     notices provided in Section 13.3 of the Participation Agreement.

        The Investors, Agent, each Lender and each Guarantor may change its
address and transmission numbers for notices by notice in the manner provided in
this Section 12.

        13.  Severability.  Any provision of this Guarantee which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

        14.  Integration.  This Guarantee and the other Operative Agreements
represents the agreement of the Guarantors with respect to the subject matter
hereof and there are no promises or representations by the Investors, Agent, any
Lender or any Guarantor relative to the subject matter hereof not reflected
herein or in the other Operative Agreements.

        15.  Amendments in Writing; No Waiver; Cumulative Remedies (a) None of
the terms or provisions of this Guarantee may be waived, amended, supplemented
or otherwise modified except as provided in Section 9.1 of the Credit Agreement.

        (b)  Neither the Investors, Agent nor any Lender shall not by any act
(except by a written instrument pursuant to Section 15(a) hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Investors, Agent or any Lender, any
right, power or privilege hereunder shall operate as a waiver thereof. No single
or partial exercise of any right, power or privilege hereunder shall preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. A waiver by both Investors, Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Investors, Agent or such Lender would otherwise have
on any future occasion.

        (c)  The rights and remedies herein provided are cumulative, may be
exercised singly or concurrently and are not exclusive of any other rights or
remedies provided by law.

        16.  Section Headings.  The section headings used in this Guarantee are
for

                                                                              24
<PAGE>

convenience of reference only and are not to affect the construction hereof or
be taken into consideration in the interpretation hereof.

        17.  Successors and Assigns.  This Guarantee shall be binding upon the
successors and assigns of the Guarantors and shall inure to the benefit of the
Investors, Agent and the Lenders and their successors and assigns.

        18.  SUBMISSION TO JURISDICTION; WAIVERS.  (a)  EACH GUARANTOR HEREBY
IRREVOCABLY AND UNCONDITIONALLY:

               (i)   SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
     PROCEEDING RELATING TO THIS GUARANTEE AND THE OTHER OPERATIVE AGREEMENTS TO
     WHICH IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGEMENT IN
     RESPECT THEREOF, TO THE NON-EXCLUSIVE GENERAL JURISDICTION OF THE COURTS OF
     THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
     SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;

               (ii)  CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT
     IN SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE
     TO THE VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT
     SUCH ACTION OR PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES
     NOT TO PLEAD OR CLAIM THE SAME;

               (iii) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
     PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR
     CERTIFIED MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE
     PREPAID, TO SUCH PERSON AT ITS ADDRESS SET FORTH IN SECTION 12 OR AT SUCH
     OTHER ADDRESS OF WHICH THE AGENT SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;

               (iv)  AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
     SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
     RIGHT TO SUE IN ANY OTHER JURISDICTION; AND

               (v)   WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
     RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING
     REFERRED TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE, INDIRECT
     OR CONSEQUENTIAL DAMAGES.

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

        20.  Survival of Representations, Warranties, etc.  All representations,

                                                                              25
<PAGE>

warranties, covenants and agreements made herein and in statements or
certificates delivered pursuant hereto shall survive any investigation or
inspection made by or on behalf of the Lessor and shall continue in full force
and effect until all of the obligations of the Guarantors under this Guaranty
shall be fully performed in accordance with the terms hereof, and until the
payment in full of all the Guaranteed Obligations, and until performance in full
of all obligations of HCC in accordance with the terms and provisions of such
agreements.

        21.  Authority of Agent.  Each Guarantor acknowledges that the rights
and responsibilities of the Agent under this Guarantee with respect to any
action taken by the Agent or the exercise or non-exercise by the Agent of any
option, right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Guarantee shall, as between the Investors,
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Agent and each Guarantor, the Agent shall be conclusively
presumed to be acting as agent for the Lenders with full and valid authority so
to act or refrain from acting, and no Guarantor shall be under any obligation,
or entitlement, to make any inquiry respecting such authority.

        22.  Third Party Beneficiaries.  Each Guarantor expressly acknowledges
and agrees that each Indemnified Person shall be a third party beneficiary of
this Guaranty.

        23.  Right of Contribution.  Each Guarantor hereby agrees that to the
extent that a Guarantor shall have paid more than its proportionate share of any
payment made hereunder, such Guarantor shall be entitled to seek and receive
contribution from and against any other Guarantor hereunder who has not paid its
proportionate share of such payment. Each Guarantor's right of contribution
shall be subject to the terms and conditions of Section 4 hereof. The provisions
of this Section shall in no respect limit the obligations and liabilities of any
Guarantor to Beneficiaries and each Guarantor shall remain liable to the
Beneficiaries for the full amount guaranteed by such Guarantor hereunder.

        24.  WAIVER OF JURY TRIAL.  THE GUARANTORS EACH HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS GUARANTY AND FOR ANY COUNTERCLAIM THEREIN.

                                                                              26
<PAGE>

  IN WITNESS WHEREOF, the undersigned has caused this Guarantee to be duly
executed and delivered by its duly authorized officer as of the day and year
first above written.

                                    HANOVER COMPRESSOR COMPANY

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

                                    HANOVER COMPRESSION INC.

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

                                                                              27
<PAGE>

                                    HANOVER COMPRESSOR LIMITED
                                    HOLDINGS, LLC

                                    by Hanover General Holdings, Inc.,
                                    as sole member

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

                                    HANOVER MAINTECH LIMITED
                                    PARTNERSHIP

                                    by Hanover General Holdings, Inc.,
                                    as sole member

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

                                    HANOVER/SMITH LIMITED
                                    PARTNERSHIP

                                    by Hanover General Holdings, Inc.,
                                    as general partner

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

                                    HANOVER LAND LIMITED PARTNERSHIP

                                    by Hanover General Holdings, Inc.,
                                    general partner

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

Address for Notices for all Guarantors:

12001 North Houston Rosslyn
Houston, Texas 77806
Attention: Chief Financial Officer
Telecopy: 281-477-0821

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<PAGE>

                                                                  EXECUTION COPY

                                                                   Exhibit 10.45

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

                            PARTICIPATION AGREEMENT

                                     among

                           HANOVER COMPRESSION INC.,
                                   as Lessee,

                         HANOVER EQUIPMENT TRUST 2000A,
                           a Delaware business trust,
                                   as Lessor,

                 FIRST UNION NATIONAL BANK and SCOTIABANC INC.,
                                 as Investors,

                      THE INDUSTRIAL BANK OF JAPAN, LTD.,
                             as Syndication Agent,

                            THE BANK OF NOVA SCOTIA,
                            as Documentation Agent,

                           THE CHASE MANHATTAN BANK,
                                    as Agent

                                      and

                           THE LENDERS PARTIES HERETO

                         ______________________________

                          Dated as of  March 13, 2000
                         ______________________________

==============================================================================
<PAGE>

                               TABLE OF CONTENTS

                                                                            Page
                                                                            ----

SECTION 1.  THE LOANS........................................................  1
     1.1   Loans.............................................................  1
     1.2   Credit Agreement..................................................  1
     1.3   Collateral For Loans..............................................  1
     1.4   Guarantee.........................................................  1

SECTION 2.  INVESTOR CONTRIBUTION............................................  2
     2.1   Investor Contribution.............................................  2

SECTION 3.  SUMMARY OF THE TRANSACTIONS......................................  2
     3.1   Operative Agreements..............................................  2
     3.2   Equipment Purchase and Lease......................................  2
     3.3   Aggregate Tranche A Percentage; Tranche A Percentage..............  2

SECTION 4.  THE CLOSINGS.....................................................  3
     4.1   Initial Closing Date..............................................  3
     4.2   Subsequent Closing Dates..........................................  3
     4.3   Trust Company Authorization.......................................  3

SECTION 5.  FUNDING OF ADVANCES..............................................  3
     5.1   General...........................................................  3
     5.2   Procedures for Funding............................................  3

SECTION 6.  CONDITIONS OF THE CLOSING........................................  4
     6.1   General Conditions to the Investors' and the Lenders' Obligations
            to Make Loans and Investor Contributions.........................  4
     6.2   Conditions to the Investors' and the Lenders' Obligations to Make
            Advances to pay Equipment Acquisition Costs......................  8

SECTION 7.  REPRESENTATIONS AND WARRANTIES...................................  9
     7.1   Representations and Warranties of the Investors on the Initial
            Closing Date.....................................................  9
     7.2   Representations and Warranties of Lessor on the Initial Closing
            Date............................................................. 11
     7.3   Representations and Warranties of the Lessee on the Initial
            Closing Date..................................................... 13
     7.4   Representations and Warranties of the Trust Company on the
            Initial Closing Date............................................. 13
     7.5   Representations and Warranties of the Lessee on Equipment
            Closing Dates.................................................... 14
     7.6   Representations and Warranties of the Lessor on Equipment
            Closing Dates.................................................... 17

SECTION 8.  PAYMENT OF CERTAIN EXPENSES...................................... 18

                                      -i-
<PAGE>

     8.1   Transaction Expenses.............................................. 18
     8.2   Brokers' Fees and Stamp Taxes..................................... 18
     8.3   Certain Fees and Expenses......................................... 19
     8.4   Credit Agreement and Related Obligations.......................... 19
     8.5   Commitment Fees................................................... 19
     8.6   Overdue Rate...................................................... 20
     8.7   Continuous Perfection of Security Interests....................... 20
     8.8   Oklahoma Equipment Subleases...................................... 20

SECTION 9. OTHER COVENANTS AND AGREEMENTS.................................... 20
     9.1   Covenants of the Trust and the Investors and the Trust Company.... 20
     9.2   Repayment of Certain Amounts on Maturity Date..................... 22
     9.3   Amendment of Certain Documents.................................... 22
     9.4   Proceeds of Casualty.............................................. 23

SECTION 10.  CREDIT AGREEMENT................................................ 23
     10.1  Lessee's Credit Agreement Rights.................................. 23

SECTION 11.  TRANSFER OF INTEREST............................................ 25
     11.1  Restrictions on Transfer.......................................... 25
     11.2  Effect of Transfer................................................ 25

SECTION 12.  INDEMNIFICATION................................................. 25
     12.1  General Indemnity................................................. 25
     12.2  General Tax Indemnity............................................. 26

SECTION 13.  MISCELLANEOUS................................................... 30
     13.1  Survival of Agreements............................................ 30
     13.2  No Broker, etc.................................................... 31
     13.3  Notices........................................................... 31
     13.4  Counterparts...................................................... 32
     13.5  Amendments and Termination........................................ 32
     13.6  Headings, etc..................................................... 33
     13.7  Parties in Interest............................................... 33
     13.8  GOVERNING LAW..................................................... 33
     13.9  Severability...................................................... 33
     13.10 Liability Limited................................................. 33
     13.11 Rights of Lessee.................................................. 33
     13.12 Further Assurances................................................ 33
     13.13 Successors and Assigns............................................ 34
     13.14 No Representation or Warranty..................................... 34
     13.15 Highest Lawful Rate............................................... 34
     13.16 Waiver............................................................ 35

                                      -ii-
<PAGE>

                                                                            Page
                                                                            ----

                                     -iii-
<PAGE>

                                                                            Page
                                                                            ----
Annex A    Rules of Usage and Definitions
Annex B    Pricing Grid

Exhibits

Exhibit A  Form of Assignment of Leases and Consent to Assignment
Exhibit B  Form of Security Agreement
Exhibit C  Form of Guarantee
Exhibit D  Form of Requisition
Exhibit E  Equipment Closing Certificate

                                      -iv-
<PAGE>

                                                                  EXECUTION COPY

          PARTICIPATION AGREEMENT dated as of March 13, 2000 (this "Agreement"),
among HANOVER COMPRESSION INC., a Delaware corporation (the "Lessee"); HANOVER
EQUIPMENT TRUST 2000A, a Delaware business trust (the "Trust" or the "Lessor");
THE CHASE MANHATTAN BANK, a New York banking corporation, as agent (in such
capacity, the "Agent"); THE INDUSTRIAL BANK OF JAPAN, LTD., New York branch, as
syndication agent (the "Syndication Agent"); THE BANK OF NOVA SCOTIA, a Canadian
chartered bank, as documentation agent (the "Document Agent"); FIRST UNION
NATIONAL BANK and SCOTIABANC INC., a Delaware corporation, as Investors (the
"Investors"); WILMINGTON TRUST COMPANY, in its individual capacity, and each of
the financial institutions listed on the signature pages hereof (each, a
"Lender"; collectively, the "Lenders").  Capitalized terms used but not
otherwise defined in this Agreement shall have the meanings set forth in Annex A
hereto.

                                 Preliminary Statement

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

                                 SECTION 1.  THE LOANS

          1.1  Loans.    The Lenders have agreed to make loans to the Lessor in
an aggregate principal amount of up to $[194,000,000] in order for the Lessor to
acquire the Equipment and to pay other Equipment Acquisition Costs.

          1.2  Credit Agreement.    The Loans shall be made pursuant to the
Credit Agreement.  Pursuant to this Agreement and the Credit Agreement, the
Loans will be made to the Lessor from time to time at the request of the Lessee.

          1.3  Collateral For Loans.    The Loans and the obligations of the
Lessor under the Credit Agreement shall be secured by, inter alia, (i) a first
priority assignment of the Lease, granted pursuant to the Assignment of Lease
and consented to by the Lessee pursuant to the Consent to Assignment (in each
case in the respective forms set forth on Exhibit A hereto), and (ii) a first
priority security interest in each piece of Equipment pursuant to a Security
Agreement in the form set forth on Exhibit B hereto.
<PAGE>

          1.4  Guarantee.    The obligations of the Lessor under the Credit
Agreement shall be guaranteed by the Guarantors to the extent provided in the
Guarantee (in the form attached hereto as Exhibit C).

                       SECTION 2.  INVESTOR CONTRIBUTION

          2.1  Investor Contribution.  Subject to the terms and conditions of
this Agreement, and in reliance on the representations and warranties of each of
the parties hereto contained herein or made pursuant hereto, on the first
Equipment Closing Date, the Investors shall make an investment in the Lessor (an
"Investor Contribution") in an amount equal to the Investor Commitment.  The
Lessor shall use the Investor Contributions to pay a portion of the Equipment
Acquisition Costs simultaneously and pro rata with the Loans advanced by the
Lenders.  The Lessee shall have the right to prepay the Investor Contribution,
in connection with the exercise by the Lessee of its right to direct the Lessor
to prepay the Loans in accordance with Section 10.1(e).

                    SECTION 3.  SUMMARY OF THE TRANSACTIONS

          3.1  Operative Agreements.  On the Initial Closing Date, each of the
respective parties thereto shall execute and deliver this Agreement, the Lease,
the Security Agreement, the Notes, the Guarantee, the Credit Agreement, the
Assignment of Lease, the Consent to Assignment, and such other documents,
instruments, certificates and opinions of counsel as agreed to by the parties
hereto.

          3.2  Equipment Purchase and Lease.    (a) On each Equipment Closing
Date and subject to the terms and conditions of this Agreement and the Credit
Agreement (i) the Lenders will make Loans in accordance with Section 5 hereof
and the terms and provisions of the Credit Agreement, which Loans will be
secured by the Security Agreement executed and delivered by the Lessor and
joined in by the Lessee, (iii) the Lessor will purchase all right, title and
interest of Lessee in and to each piece of Equipment to be purchased on such
Equipment Closing Date and (iv) the Lessor will simultaneously lease all of its
right, title and interest in such Equipment to the Lessee by executing and
delivering a Lease Supplement.

          (b) On each Equipment Closing Date, the Lessee shall certify to the
Agent on the Equipment Closing Certificate the Tranche A Percentage for each
piece of Equipment being acquired on such Equipment Closing Date.  The Tranche A
Percentage so certified shall be the Tranche A Percentage for such piece of
Equipment for the duration of the Term.

          3.3  Aggregate Tranche A Percentage; Tranche A Percentage. (a)
Notwithstanding any other provision of this Agreement or the other Operative
Agreements, the Lessee agrees that in no event shall the Lessee specify a piece
of Equipment for the Lessor to acquire and lease pursuant to the execution and
delivery of a Lease Supplement if the Aggregate Tranche
<PAGE>

                                                                               3

A Percentage after giving effect to the acquisition and lease pursuant to the
execution and delivery of a Lease Supplement of such Equipment would be less
than 85%.

          (b) Notwithstanding any other provision of this Agreement or the other
Operative Agreements, the Lessee agrees that in no event shall the Lessee
specify a piece of  Equipment for the Lessor to acquire and lease pursuant to
the execution and delivery of a Lease Supplement if the Tranche A Percentage
with respect to such Equipment would be less than 85%.

                                 SECTION 4.  THE CLOSINGS

          4.1  Initial Closing Date.   All documents and instruments required
to be delivered on the Initial Closing Date shall be delivered at the offices of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, New York, or at such
other location as may be determined by the Agent and the Lessee.

          4.2  Subsequent Closing Dates.  The Lessee shall deliver to the
Lessor, the Investors and the Agent a Requisition appropriately completed, in
connection with each Closing Date.

          4.3  Trust Company Authorization.  The Investors agree that, with
respect to  each Closing Date, the satisfaction or waiver of the conditions
contained in Section 6 hereof shall constitute, without further act,
authorization and direction by both Investors to the Trustee to take on behalf
of the Lessor the actions specified in Section 2.1 of the Trust Agreement.

                        SECTION 5.  FUNDING OF ADVANCES

          5.1  General.  To the extent funds have been made available to the
Lessor as Loans and Investor Contributions, the Lessor will:  (i) acquire the
Equipment in accordance with the terms of this Agreement and the other Operative
Agreements; (ii) on behalf of the Lessee, pay Transaction Expenses; and (iii)
pay all other Equipment Acquisition Costs.

          5.2  Procedures for Funding.  (a)  Not less than three Business Days
prior to each proposed Closing Date (other than the Initial Closing Date), the
Lessee shall deliver to the Investors and the Agent, a requisition (a
"Requisition"), appropriately completed, in the form of Exhibit D hereto.

          (b) Each Requisition shall: (i) be irrevocable; and (ii) request funds
in an amount of at least $200,000 (or such lesser amounts as shall be equal to
the total aggregate of the Available
<PAGE>

                                                                               4

Commitments plus the Available Investor Commitment at such time) for the payment
of Equipment Acquisition Costs or other Equipment Acquisition Costs which have
previously been incurred and were not the subject of and funded pursuant to a
prior Requisition, in each case as specified in the Requisition.

          (c) So long as no Default or Event of Default has occurred and is
continuing and subject to the Lessor and the Agent having each received the
materials required by Section 6.1 and/or 6.2, as applicable, on each Equipment
Closing Date (i) the Lenders shall make Loans to the Lessor in an aggregate
amount not to exceed 97% of the aggregate funds specified in any Requisition, up
to an aggregate principal amount equal to the Available Commitments; (ii) with
respect to the first Equipment Closing Date, the Investors shall have made an
Investor Contribution in an amount equal to the Investor Commitment; and (iii)
the total amount of such Loans made on such date and Investor Contribution made
on the first Equipment Closing Date shall be used to fully cover the aggregate
Equipment Cost (after giving effect to amounts to be paid in connection with the
Equipment Acquisition Cost for such Equipment Closing Date).

          (d) Notwithstanding anything to the contrary in this Agreement, (i)
the Lenders shall not be required to make Loans in an aggregate amount with
respect to all the Equipment in excess of 97% of the amount allocated to all
such Equipment (after giving effect to the Equipment purchased in connection
with the Requisition).

              SECTION 6.  CONDITIONS OF THE CLOSINGS AND ADVANCES

          6.1  General Conditions to the Investors' and the Lenders' Obligations
to Make Loans and Investor Contributions.  The agreement of each Lender to
make Loans, and the Investors to make Investor Contributions, is subject to the
satisfaction or waiver, immediately prior to or concurrently with the making of
such Loans and Investor Contribution, of the following conditions precedent:

          (a) Operative Agreements.  Each of the Operative Agreements entered
     into on the Initial Closing Date or subsequently on an Equipment Closing
     Date shall have been duly authorized, executed, acknowledged and delivered
     by the parties thereto and shall be in full force and effect, and no event
     of default thereunder or default under Section 17.1(a) or (b) of the Lease
     shall exist (both before and after giving effect to the transactions
     contemplated by the Operative Agreements), and the Agent and the Investors
     shall have received a fully executed copy of each of the Operative
     Agreements (other than the Notes of which the Agent shall have received the
     originals thereof);
<PAGE>

                                                                               5

          (b) Taxes.  All taxes, fees and other charges in connection with the
     execution, delivery, and, where applicable, recording, filing and
     registration of the Operative Agreements shall have been paid or provisions
     for such payment shall have been made to the reasonable satisfaction of the
     Agent and both Investors;

          (c) Governmental Approvals.  All necessary (or, in the reasonable
     opinion of the Agent, the Investors and their respective counsel,
     advisable) Governmental Actions, in each case required by any law or
     regulation enacted, imposed or adopted on or after the date hereof or by
     any change in fact or circumstances since the date hereof, shall have been
     obtained or made and be in full force and effect;

          (d) Insurance.  The Agent and the Investors shall have received
     evidence in form and substance reasonably satisfactory to them that all of
     the requirements of Section 14 of the Lease shall have been satisfied
     (which evidence shall include a report from a reputable insurance broker
     certifying that all such requirements have been satisfied and otherwise in
     form and substance satisfactory to Agent and both Investors);

          (e) Legal Requirements.  The transactions contemplated by the
     Operative Agreements do not and will not violate in any respect any Legal
     Requirements that would reasonably be expected to have a Material Adverse
     Effect and do not and will not subject the Agent, any Lender or the
     Investors to any adverse regulatory prohibitions or constraints;

          (f) Corporate Proceedings of the Lessee and Each Guarantor.  On the
     Initial Closing Date, the Agent and the Investors shall have received a
     copy of the resolutions or minutes, in form and substance satisfactory to
     the Agent and both Investors, of the Board of Directors of the Lessee and
     each Guarantor authorizing the execution, delivery and performance of this
     Agreement, the Guarantee and the other Operative Agreements to which it is
     a party, certified by the Secretary or an Assistant Secretary of the Lessee
     or of such Guarantor as of the Initial Closing Date, which certificate
     shall be in form and substance reasonably satisfactory to the Agent and
     both Investors and shall state that the resolutions or minutes thereby
     certified have not been amended, modified, revoked or rescinded;

          (g) Lessee and Guarantor Incumbency Certificate.  On the Initial
     Closing Date, the Agent and the Investors shall have received a certificate
     of the Lessee and each Guarantor, dated the Initial Closing Date, as to the
     incumbency and signature of the officers of the Lessee and each Guarantor
     executing any Operative Agreement reasonably satisfactory in form and
     substance to the Agent and both Investors, executed by the President or any
     Vice President and the Secretary or any Assistant Secretary of the Lessee
     or of such Guarantor;
<PAGE>

                                                                               6

          (h)  [Reserved]

          (i) Corporate Proceedings of the Trust Company.  On the Initial
     Closing Date, the Agent, the Investors and the Lessee shall have received a
     copy of the resolutions, in form and substance reasonably satisfactory to
     the Agent, both Investors and the Lessee, of the Board of Directors of the
     Trust Company authorizing the execution, delivery and performance of the
     Operative Agreements to which it is a party, certified by the Secretary or
     an Assistant Secretary of the Trust Company as of the Initial Closing Date,
     which certificate shall be in form and substance satisfactory to the Agent,
     both Investors and the Lessee and shall state that the resolutions thereby
     certified have not been amended, modified, revoked or rescinded;

          (j) Trust Company Incumbency Certificate.  On the Initial Closing
     Date, the Agent, both Investors and the Lessee shall have received a
     certificate of the Trust Company, dated the Initial Closing Date, as to the
     incumbency and signature of the officers of the Trust Company executing any
     Operative Agreement, satisfactory in form and substance to the Agent, both
     Investors and the Lessee, executed by the President or any Vice President,
     Assistant Vice President, or a duly authorized Trust Officer and the
     Secretary or any Assistant Secretary of the Trust Company;

          (k) Corporate Documents.  (i) The Agent and both Investors shall have
     received true and complete copies of the certificate of incorporation and
     by-laws of the Lessee, certified as of the Initial Closing Date as complete
     and correct copies thereof by the Secretary or an Assistant Secretary of
     the Lessee;

          (ii) The Agent and the Lessee shall have received true and complete
     copies of the articles of incorporation and by-laws of each of the
     Investors, certified as of the Initial Closing Date as complete and correct
     copies thereof by the Secretary or an Assistant Secretary of each of the
     Investors;

          (l) Consents, Licenses and Approvals.  All consents, authorizations
     and filings required in order to allow Lessee to consummate the transaction
     contemplated by this Agreement shall have been obtained and be in full
     force and effect, except to the extent the failure to obtain or maintain
     any such consent, authorization or filing would not individually or in the
     aggregate have a Material Adverse Effect;
<PAGE>

                                                                               7

          (m) Fees.  The Agent and the Arranger shall have received the fees to
     be paid on the Initial Closing Date pursuant to the Fee Letter which fees
     shall not be paid using the proceeds of the Loans or Investor
     Contributions;

          (n) Legal Opinions.  (i) On the Initial closing Date, the  Agent and
     the Investors shall have received the executed legal opinion of Latham &
     Watkins, in form and substance reasonably acceptable to the Agent;

               (ii) On the Initial Closing Date, the Agent, the Lessee and the
     Investors shall have received the executed legal opinion of Morris, James,
     Hitchens & Williams LLP, counsel to the Lessor and the Trust Company, in
     form and substance reasonably acceptable to the Agent; and

               (iii)    By the First Equipment Closing Date Agent, the Lessee,
     and the Investors shall have received the executed legal opinions of (a)
     Jackson Walker L.L.P. and (b) Holland & Hart, local counsel to the Lessee
     and the Guarantors in (a) Texas and Louisiana and (b) Wyoming,
     respectively, in form and substance reasonably acceptable to the Agent;

          (o) Actions to Perfect Liens.  The Agent shall have received evidence
     in form and substance satisfactory to it that all filings, recordings,
     registrations and other actions, including the filing of duly executed
     Lender Financing Statements and Lessor Financing Statements, necessary or,
     in the opinion of the Agent or the Investors, desirable to perfect the
     Liens created by the Security Documents shall have been completed;

          (p) Lien Searches.  By the First Equipment Closing Date the Agent and
     the Investors shall have received the results of recent search by a Person
     reasonably satisfactory to the Agent, of the Uniform Commercial Code,
     judgement and tax lien filings which may have been filed in each State in
     which any Equipment is located with respect to personal property of the
     Lessee, and the results of such search shall be satisfactory to the Agent
     and both Investors;

          (q) Representations and Warranties.  The representations and
     warranties of the Lessor, the Lessee, the Investors and the Guarantor
     contained herein and in each of the other Operative Agreements shall be
     true and correct in all material respects on and as of each Closing Date as
     if made on and as of each Closing Date (unless such representations and
     warranties specifically refer to another date);
<PAGE>

                                                                               8

          (r) Performance of Operative Agreements.  The parties hereto (other
     than the Investors or the Lenders) shall have performed in all material
     respects their respective agreements contained herein and in the other
     Operative Agreements on or prior to each such Closing Date; and

          (s) Default.  There shall not have occurred and be continuing any
     Default or Event of Default and no Default or Event of Default will have
     occurred after giving effect to the Advance requested by such Requisition.

          6.2  Conditions to the Investors' and the Lenders' Obligations to Make
Advances to pay Equipment Acquisition Costs.

          The obligations of the Investors to make the Investor Contribution, on
the first Equipment  Closing Date, and of the Lenders to make Loans to the
Lessor, on an Equipment Closing Date, for the purpose of providing funds to the
Lessor necessary to acquire a piece of Equipment are subject to the satisfaction
or waiver of the following conditions precedent:

          (a) Requisition.  The Agent and the Investors shall have received a
     fully executed counterpart of the Requisition dated as of the Equipment
     Closing Date (but delivered at least three Business Days prior to the
     Equipment Closing Date other than on the Initial Closing Date),
     appropriately completed;

          (b) Bill of Sale.  There shall have been delivered to the Lessor, a
     bill of sale (the "Bill of Sale"), in form and substance reasonably
     acceptable to the Agent, with respect to each piece of Equipment being
     purchased on such Equipment Closing Date, conveying title to such piece of
     Equipment to the Lessor, subject only to the Permitted Exceptions;

          (c) Title.  The Lessor shall have good and valid title to the
     Equipment being acquired on such 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 Equipment.

          (d) Lease Supplement.  The Lessee shall have delivered a Lease
     Supplement executed by the Lessee and the Lessor with respect to all
     Equipment being acquired on such Equipment Closing Date to the Agent;

          (e) Security Agreement Supplement.  The Lessee shall have delivered a
     supplement to the Security Agreement executed by the Lessor and Lessee with
     respect to each piece of Equipment being acquired on such Equipment Closing
     Date to the Agent that
<PAGE>

                                                                               9

     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 7.5(f);

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

          (g) Appraisal.  The Agent and the Investors shall have received an
     Appraisal of the Equipment being acquired on such Equipment Closing Date
     and such Appraisal shall be in form and substance acceptable to the Agent,
     both Investors and the Lessor;

          (h) Default.  There shall not have occurred and be continuing any
     Default or Event of Default and no Default or Event of Default will have
     occurred after giving effect to the Advance requested by such Requisition;

          (i) Local Opinions.  With respect to each piece of Equipment being
     acquired on such Equipment Closing Date:

               (i) the Agent and the Investors shall have received the executed
     legal opinion of local counsel to the Lessee and the Guarantors in the
     state in which such Equipment is located, in form and substance reasonably
     acceptable to the Agent;

               (ii) the Agent, the Lessee and the Investors shall have received
     the executed legal opinion of counsel to Lessor and the Trust Company, in
     form and substance reasonably acceptable to the Agent; and

               (iii)    the Agent and the Investors shall have received the
     executed legal opinion of counsel to Lessee and the Guarantors,
     substantially in form and substance reasonably acceptable to the Agent.

                  SECTION 7.  REPRESENTATIONS AND WARRANTIES

          7.1  Representations and Warranties of the Investors on the Initial
Closing Date  .  Each of the Investors represents and warrants to each of the
other parties hereto as of the Initial Closing Date as follows:
<PAGE>

                                                                              10

          (a)  Due Organization, etc.  It is a duly organized and validly
     existing corporation in good standing under the laws of its state of
     incorporation and has the power and authority to carry on its business as
     now conducted and to enter into and perform its obligations under this
     Agreement, each Operative Agreement to which it is a party and each other
     agreement, instrument and document executed and delivered by it on the
     Closing Date in connection with or as contemplated by each such Operative
     Agreement to which it is or will be a party.

          (b) Authorization; No Conflict.  The execution, delivery and
     performance of each Operative Agreement to which it is a party has been
     duly authorized by all necessary action on its part and neither the
     execution and delivery thereof by the Investor, nor the consummation of the
     transactions contemplated thereby by the Investor, nor compliance by it
     with any of the terms and provisions thereof (i) requires or will require
     any approval of (which approval has not been obtained) the shareholders of,
     or approval or consent of any Person, (ii) contravenes or will contravene
     any Legal Requirement applicable to or binding on it as of the date hereof,
     (iii) does or will contravene or result in any breach of or constitute any
     default under, or result in the creation of any Lessor Lien upon the
     Equipment, its articles of incorporation or by-laws, any indenture,
     mortgage, chattel mortgage, deed of trust, conditional sales contract, bank
     loan or credit agreement or other agreement or instrument to which it or
     its properties may be bound or (iv) does or will require any Governmental
     Action by any Governmental Authority other than any Governmental Action
     required solely due to the nature of the Equipment.

          (c) Enforceability, etc.  Each Operative Agreement to which it is a
     party has been duly executed and delivered by it and constitutes, or upon
     execution and delivery will constitute, a legal, valid and binding
     obligation enforceable against it in accordance with the terms thereof
     except as enforceability may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or similar laws affecting the
     enforcement of creditors' rights generally and by general equitable
     principles (whether enforcement is sought by proceedings in equity or at
     law).

          (d)  ERISA.    The Investor is making the Investor Contribution
     contemplated to be made by it hereunder for its own account and with its
     general corporate assets in the ordinary course of its business, and no
     part of such amount constitutes (i) "plan assets" under 29 CFR 2510.3-101
     or (ii) assets of a "governmental plan" as defined under Section 3(32) of
     ERISA.

          (e) Litigation.  To its knowledge, no litigation, investigation or
     proceeding of or before any arbitrator or Governmental Authority is pending
     or threatened by or against the Investor (a) with respect to any of the
     Operative Agreements or any of the transactions
<PAGE>

                                                                              11

     contemplated hereby or thereby, or (b) which would reasonably be expected
     to have a material adverse effect on the assets, liabilities, operations,
     business or financial condition of the Investor.

          (f) Lessor Liens.  The Equipment is free and clear of Lessor Liens
     attributable to the Investors.

          7.2  Representations and Warranties of Lessor on the Initial Closing
Date.  Lessor represents and warrants to each of the other parties hereto as
of the Initial Closing Date as follows:

          (a) Due Organization, etc.  Lessor is a duly organized and validly
     existing business trust in good standing under the laws of the State of
     Delaware and has the power and authority to carry on its business as now
     conducted and to enter into and perform its obligations under this
     Agreement, each Operative Agreement to which it is a party and each other
     agreement, instrument and document executed and delivered by it on the
     Closing Date in connection with or as contemplated by each such Operative
     Agreement.

          (b) Authorization; No Conflict.  The execution, delivery and
     performance of each Operative Agreement to which it is a party has been
     duly authorized by all necessary action on its part and neither the
     execution and delivery thereof by the Lessor, nor the consummation of the
     transactions contemplated thereby by the Lessor, nor compliance by it with
     any of the terms and provisions thereof (i) requires or will require any
     approval of (which approval has not been obtained) any party or approval or
     consent of any Person, (ii) contravenes or will contravene any Legal
     Requirement applicable to or binding on it as of the date hereof, (iii)
     does or will contravene or result in any breach of or constitute any
     default under, or result in the creation of any Lessor Lien upon the
     Equipment or the Trust Agreement, any indenture, mortgage, chattel
     mortgage, deed of trust, conditional sales contract, bank loan or credit
     agreement or other agreement or instrument to which it or its properties
     may be bound or (iv) does or will require any Governmental Action by any
     Governmental Authority.

          (c)  Enforceability, etc.  Each Operative Agreement to which it is a
     party has been duly executed and delivered by it and constitutes, or upon
     execution and delivery will constitute, a legal, valid and binding
     obligation enforceable against it in accordance with the terms thereof
     except as enforceability may be limited by applicable bankruptcy,
     insolvency, reorganization, moratorium or similar laws affecting the
     enforcement of creditors' rights generally and by general equitable
     principles (whether enforcement is sought by proceedings in equity or at
     law).
<PAGE>

                                                                              12

          (d) Litigation.  No litigation, investigation or proceeding of or
     before any arbitrator or Governmental Authority is pending or threatened by
     or against the Lessor (a) with respect to any of the Operative Agreements
     or any of the transactions contemplated hereby or thereby, or (b) which
     would reasonably be expected to have a material adverse effect on the
     assets, liabilities, operations, business or financial condition of the
     Lessor.

          (e) Assignment.  Lessor has not assigned or transferred any of its
     right, title or interest in or under the Lease, any other Operative
     Agreement or any Equipment, except in accordance with the other Operative
     Agreements.

          (f) No Default.  The Lessor is not in default under or with respect to
     any of its Contractual Obligations in any respect which would  reasonably
     be expected to have a material adverse effect on the assets, liabilities,
     operations, business or financial condition of the Lessor.  No Default or
     Event of Default attributable to it has occurred and is continuing.

          (g) Use of Proceeds.  The proceeds of the Loans and the Investor
     Contribution shall be applied by the Lessor solely in accordance with the
     provisions of the Operative Agreements.

          (h) Chief Place of Business.  The Lessor's chief place of business,
     chief executive office and office where the documents, accounts and records
     relating to the transactions contemplated by this Agreement and each other
     Operative Agreement are kept are located at 1100 North Market Street,
     Wilmington, Delaware 19890-0001.

          (i) Federal Reserve Regulations.  The Lessor is not engaged
     principally in, and does not have as one of its most important activities,
     the business of extending credit for the purpose of purchasing or carrying
     any margin stock (within the meaning of Regulation U of the Board), and no
     part of the proceeds of the Loans will be used by it, directly or
     indirectly, to purchase or carry any margin stock or to extend credit to
     others for the purpose of purchasing or carrying any such margin stock or
     for any purpose that violates, or is inconsistent with, the provisions of
     Regulations of the Board, including but not limited to,  T, U or X of the
     Board.

          (j) Investment and Holding Company Status.  The Lessor is not (i) an
     "investment company" as defined in, or subject to regulation under the
     Investment Company Act of 1940 or (ii) a "holding company" as defined in,
     or subject to regulation under, the Public Utility Holding Company Act of
     1935.
<PAGE>

                                                                              13

          (k) Securities Act.  Neither the Lessor nor any Person authorized by
     the Lessor to act on its behalf has offered or sold any interest in the
     Equipment or the Notes, or in any similar security or interest relating to
     the Equipment, or in any security the offering of which for the purposes of
     the Securities Act would be deemed to be part of the same offering as the
     offering of the aforementioned securities to, or solicited any offer to
     acquire any of the same from, any Person other than, in the case of the
     Notes, the Agent, and neither the Lessor nor any Person authorized by the
     Lessor to act on its behalf will take any action which would subject the
     issuance or sale of any interest in the Equipment or the Notes to the
     provisions of Section 5 of the Securities Act or require the qualification
     of any Operative Agreement under the Trust Indenture Act of 1939, as
     amended.

          (l) ERISA.  The Lessor is making the Lessor Contribution contemplated
     to be made by it hereunder in the ordinary course of its business, and no
     part of such amount constitutes (i) "plan assets" under 29 CFR 2510.3-101
     or (ii) assets of a "governmental plan" as defined under Section 3(32) of
     ERISA.

          (m) Lessor Liens.  The Equipment is free and clear of all Lessor
     Liens.

          7.3  Representations and Warranties of the Lessee on the Initial
Closing Date.  Each of the representations and warranties of the Lessee set
forth in Section 9 of the Guaranty are hereby incorporated by reference as if
made by Lessee pursuant to the terms of this Agreement and shall for all
purposes be deemed to have been made by Lessee hereunder on the Initial Closing
Date.

          7.4  Representations and Warranties of the Trust Company on the
Initial Closing Date.  The Trust Company represents and warrants to each of
the other parties hereto that:

          (a) Due Organization, etc.  It is a banking corporation duly organized
     and validly existing and in good standing under the laws of the State of
     Delaware and has the power and authority to enter into and perform its
     obligations under the Trust Agreement and has the corporate power and
     authority to act as the trustee under the Trust Agreement and to enter into
     and perform the obligations under each of the other Operative Agreements to
     which Trust Company or the Trust, as the case may be, is or will be a party
     and each other agreement, instrument and document to be executed and
     delivered by it on or before the Initial Closing Date in connection with or
     as contemplated by each such Operative Agreement to which the Trust Company
     or the Trust, as the case may be, is or will be a party.

          (b) Authorization; No Conflict.  The execution, delivery and
     performance of each Operative Agreement to which it is a party, either in
     its individual capacity or (assuming due
<PAGE>

                                                                              14

     authorization, execution and delivery of the Trust Agreement by both
     Investors) as the Trust, as the case may be, has been duly authorized by
     all necessary action on its part and neither the execution and delivery
     thereof, nor the consummation of the transactions contemplated thereby, nor
     compliance by it with any of the terms and provisions thereof (i) does or
     will require any approval or consent of any Person (ii) does or will
     contravene any current United States federal law, governmental rule or
     regulation relating to its banking or trust powers, (iii) does or will
     contravene or result in any breach of or constitute any default under, or
     result in the creation of any Lien upon any of its property under, its
     charter or by-laws, or any indenture, mortgage, chattel mortgage, deed of
     trust, conditional sales contract, bank loan or credit agreement or other
     agreement or instrument to which it is a party or by which it or its
     properties may be bound or affected or (iv) does or will require any
     Governmental Action by any Governmental Authority of the State of Delaware
     or the United States governing its banking or trust powers.

          (c) Trust Agreement Enforceability, etc.  The Trust Agreement and,
     assuming the Trust Agreement is the legal, valid and binding obligation of
     both Investors, each other Operative Agreement to which Trust Company or
     the Trust, as the case may be, is a party have been, or on or before the
     Closing Date will be, duly executed and delivered by Trust Company or the
     Trust, as the case may be, and the Trust Agreement and each such other
     Operative Agreement to the extent entered into by the Trust Company
     constitutes, or upon execution and delivery will constitute, a legal, valid
     and binding obligation enforceable against Trust Company in accordance with
     the terms thereof except as enforceability may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or similar laws
     affecting the enforcement of creditors' rights generally and by general
     equitable principles (whether enforcement is sought by proceedings in
     equity or at law).

          (d) Litigation.  No litigation, investigation or proceeding of or
     before any arbitrator or Governmental Authority is pending or threatened by
     or against the Trust Company with respect to any of the Operative
     Agreements or any of the transactions contemplated hereby or thereby.

          (e) Liens.  The Trust Estate is free and clear of Lessor Liens
     attributable to the Trust Company, and there are no Liens affecting the
     title of the Trust to the Equipment or resulting from any act or claim
     against the Trust Company arising out of any event or condition not related
     to the ownership, leasing use or operation of the Equipment or any other
     transaction contemplated by this Agreement or any of the other Operative
     Agreements, including any Lien resulting from the nonpayment by the Trust
     Company of any Taxes imposed or measured by its net income.
<PAGE>

                                                                              15

          7.5  Representations and Warranties of the Lessee on Equipment Closing
Dates.  The Lessee hereby represents and warrants as of each Equipment Closing
Date as follows:

          (a) Representations and Warranties.  The representations and
warranties of the Lessee and the Guarantors set forth herein and in each of the
other Operative Agreements are true and correct in all material respects on and
as of such Equipment Closing Date as if made on and as of such Equipment Closing
Date (unless such representations and warranties specifically refer to another
date).  The Lessee and each Guarantor are in compliance in all material respects
with their respective obligations under the Operative Agreements and there
exists no Lease Default or Lease Event of Default.

          (b) No Default.  No Default or Event of Default attributable to Lessee
will occur as a result of, or after giving effect to, the Advance requested by
the Requisition on such Equipment Closing Date.

          (c) Authorization by the Lessee.  The execution and delivery of each
Lease Supplement and other Operative Agreement delivered by the Lessee on such
Equipment Closing Date and the performance of the obligations of the Lessee
under each such Lease Supplement and other Operative Agreements have been duly
authorized by all requisite corporate action of the Lessee.

          (d) Execution and Delivery by the Lessee.  Each Lease Supplement and
other Operative Agreement delivered on such Equipment Closing Date by the Lessee
have been duly executed and delivered by the Lessee.

          (e) Valid and Binding Obligations.  Each Lease Supplement and other
Operative Agreement delivered by the Lessee on such Equipment Closing Date is a
legal, valid and binding obligation of the Lessee, enforceable against the
Lessee in accordance with its respective terms except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).

          (f) Filing of UCC Financing Statements and Priority of Liens.  The UCC
Financing Statements with respect to the Equipment being acquired on such
Equipment Closing Date have been fully executed and delivered to the Agent on
the Equipment Closing Date or have been filed with the appropriate Governmental
Authorities so that the liens created pursuant to each of the Security Agreement
and the Lease (together with the Assignment of Lease) constitutes a valid and
perfected security interest on each applicable piece of Equipment located
thereon in an amount not less than the Equipment Cost with respect to such
Equipment subject, in all cases, to the Lessee's right to relocate the
Equipment.
<PAGE>

                                                                              16

          (g) Insurance Coverage.  The Lessee maintains insurance coverage for
each piece of Equipment being acquired by the Lessor on such Equipment Closing
Date which meets the requirements of Section 14.1 of the Lease and all of such
coverage is in full force and effect.

          (h) Legal Requirements.  Each piece of Equipment being acquired by the
Lessor on such Equipment Closing Date complies in all material respects with all
Legal Requirements (including all zoning and land use laws and Environmental
Laws).

          (i) Consents, etc.  All material consents, licenses and permits
required by all Legal Requirements for operation of each piece of Equipment
being acquired on such Equipment Closing Date have been obtained and are in full
force and effect.

          (j)  Environmental Matters.

               (1)  The Equipment being acquired on such Equipment Closing Date
          does not contain any Hazardous Substances in amounts or concentrations
          which (i) constitute a material violation of, or (ii) would reasonably
          be expected to give rise to material liability under, any
          Environmental Law.

               (2)  The Equipment being acquired on such Equipment Closing Date
          is in compliance in all material respects with all applicable
          Environmental Laws.

               (3)  Neither the Lessee nor any of its Subsidiaries has received
          any notice of violation, alleged violation, non-compliance, liability
          or potential liability regarding any material non-compliance with
          Environmental Laws with regard to the Equipment being acquired on such
          Equipment Closing Date, nor does the Lessee have knowledge that any
          such notice will be received or is being threatened.

               (4)   Hazardous Substances have not been transported or
          discharged from the Equipment being acquired on such Equipment Closing
          Date so as to create a material violation of any Environmental Law,
          nor have any Hazardous Substances been generated, treated, or used
          with respect to the Equipment being acquired on such Equipment Closing
          Date so as to create a material violation of any applicable
          Environmental Law.

               (5)  No judicial proceeding or governmental or administrative
          action is pending or, to the best knowledge of the Lessee, threatened,
          under any Environmental Law to which the Lessee or any Subsidiary is
          or, to Lessee's
<PAGE>

                                                                              17

          knowledge, will be named as a party with respect to the Equipment
          being acquired on such Equipment Closing Date, nor are there any
          consent decrees or other decrees, consent orders, administrative
          orders or other orders, or other administrative or judicial
          requirements outstanding under any Environmental Law with respect to
          the Equipment being acquired on such Equipment Closing Date.

               (6)  There has been no release or threat of release of Hazardous
          Substances at or from the Equipment being acquired on such Equipment
          Closing Date, or arising from or related to the operations of the
          Lessee or any Subsidiary in connection with the Equipment being
          acquired on such Equipment Closing Date, in violation of or in amounts
          or in a manner that would reasonably be expected to give rise to any
          material liability under any Environmental Laws.

          (k) Location of the Equipment.  Each piece of Equipment being acquired
on such Equipment Closing Date is located within the United States or on lands
covered by leases under the exclusive jurisdiction of the United States of
America pursuant to the Outer Continental Shelf Lands Act, as amended, 43 U.S.C.
' ' 1331, et seq. (1986).

          (l) Conditions Precedent in Operative Agreements.  All conditions
precedent  contained in this Agreement and in the other Operative Agreements
required to be satisfied by Lessee relating to the acquisition of a piece of
Equipment by the Lessor have been satisfied in full or waived by the Agent and
the Lessee.

          (m) Hart-Scott-Rodino. The acquisition of the Equipment being acquired
on such Equipment Closing Date does not conflict with, violate or require the
consent of, any Governmental Authority under the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended.

          7.6  Representations and Warranties of the Lessor on Equipment Closing
Dates.  The Lessor hereby represents and warrants as of each Equipment Closing
Date as follows:

          (a) Representations and Warranties; No Default.  The representations
and warranties of the Lessor set forth herein and in each of the other Operative
Agreements are true and correct in all material respects on and as of such
Equipment Closing Date as if made on and as of such Equipment Closing Date
(unless such representations and warranties specifically refer to another date).
The Lessor is in compliance with its respective obligations under the Operative
Agreements and there exists no Default or Event of Default under any of the
Operative Agreements.  No Default or Event of Default attributable to the Lessor
will occur as a result of, or after giving effect to, the Advance requested by
the Requisition on such Equipment Closing Date.
<PAGE>

                                                                              18

          (b) Authorization by the Lessor.  The execution and delivery of each
Lease Supplement, Security Agreement, Supplement to Assignment of Lease and
other Operative Agreement delivered by the Lessor on such Equipment Closing Date
and the performance of the obligations of the Lessor under each such Lease
Supplement, Security Agreement Supplement to the Assignment of Lease and other
Operative Agreement have been duly authorized by all requisite action of the
Lessor.

          (c) Execution and Delivery by the Lessor.  Each Lease Supplement,
Security Agreement, Supplement to the Assignment of Lease and other Operative
Agreement delivered by the Lessor on such Equipment Closing Date have been duly
executed and delivered by the Lessor.

          (d) Valid and Binding Obligations.  Each Lease Supplement, Security
Agreement, Supplement to the Assignment of Lease and other Operative Agreement
delivered by the Lessor on such Equipment Closing Date is a legal, valid and
binding obligation of the Lessor, enforceable against the Lessor in accordance
with its terms except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement
of creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).

          (e) Conditions Precedent in Operative Agreements.  All conditions
precedent  contained in this Agreement and in the other Operative Agreements to
be satisfied by the Lessor relating to the acquisition of a piece of Equipment
by the Lessor have been satisfied in full.

                    SECTION 8.  PAYMENT OF CERTAIN EXPENSES

          Lessee agrees, for the benefit of the Investors, the Trust Company,
the Lessor, the Agent and each of the Lenders, to:

          8.1  Transaction Expenses.  (a) On the Initial Closing Date, pay, or
cause to be paid, all reasonable fees, expenses and disbursements of one counsel
to each of the Lessor, the Trust Company, the Agent, and the Investors in
connection with the transactions contemplated by the Operative Agreements and
incurred in connection with such Initial Closing Date, including all Transaction
Expenses, and all other reasonable expenses in connection with such Initial
Closing Date, including all expenses relating to all fees, taxes and expenses
for the recording, registration and filing of documents.

          (b) On each Equipment Closing Date, pay, or cause to be paid, all
reasonable fees, expenses and disbursements of each of the Lessor's, the Trust
Company's, the Agent's and the
<PAGE>

                                                                              19

Investors' counsel in connection with the transactions contemplated by the
Operative Agreements and incurred in connection with such Equipment Closing
Date, including all Transaction Expenses arising from such Equipment Closing
Date, and all other reasonable expenses in connection with such Equipment
Closing Date, including all expenses relating to each Appraisal, and all fees,
taxes and expenses for the recording, registration and filing of documents.

          8.2  Brokers' Fees and Stamp Taxes.  Pay or cause to be paid
brokers' fees with respect to brokers retained by or with the prior written
consent of Lessee and any and all stamp, transfer and other similar taxes, fees
and excises, if any, including any interest and penalties, which are payable in
connection with the transactions contemplated by this Agreement and the other
Operative Agreements.

          8.3  Certain Fees and Expenses  .  Pay or cause to be paid (i) the
initial and annual Trust Company's fee and all expenses of the Trust Company and
any necessary co-trustees (including reasonable counsel fees and expenses) or
any successor owner trustee, for acting as trustee under the Trust Agreement,
(ii) all costs and expenses incurred by the Lessee, the Agent, the Investors,
the Trust Company or the Lessor in entering into any future amendments or
supplements with respect to any of the Operative Agreements, whether or not such
amendments or supplements are ultimately entered into, or giving or withholding
of waivers of consents hereto or thereto, which have been requested by the
Lessee, and (iii) all costs and expenses incurred by the Lessor, the Lessee, the
Investors, the Trust Company or the Agent in connection with any purchase of any
Equipment by the Lessee pursuant to Section 20 of the Lease.

          8.4  Credit Agreement and Related Obligations.  (a)  Pay, on or
prior to the due date thereof, all costs, fees, indemnities, expenses and other
amounts (other than principal and interest on the Loans, but including breakage
costs and interest on overdue amounts pursuant to Section 2.14 of the Credit
Agreement or otherwise) required to be paid by the Lessor under any Operative
Agreement.

          (b) Pay to the Agent all fees specified in the Fee Letter at the time
and in the manner required by the Fee Letter, which fees may not be paid by
using the proceeds of the Loans or the Investor Contribution.

          (c) Pay to the Lessor promptly after receipt of notice therefor any
additional amounts payable to the Investors in respect of the Investor
Contribution under Sections 2.13, 2.14 and 2.15 of the Credit Agreement (it
being agreed that the Investors are, for purposes of this Agreement,
beneficiaries of the provisions of Sections 2.13, 2.14 and 2.15 of the Credit
Agreement).
<PAGE>

                                                                              20

          8.5  Commitment Fees  .  (a) Pay to the Agent for the account of each
Lender the Commitment Fee on each Commitment Fee Payment Date.

          (b) Pay to the Investors the Investor Commitment Fee on each
Commitment Fee Payment Date in accordance with each investor's pro rata portion
of the Available Investor Commitment.

          (c) The Commitment Fee and the Investor Commitment Fee shall be
calculated on the basis of a 365- (or 366-, as the case may be) day year for the
actual days elapsed.  If all or a portion of the Commitment Fee or the Investor
Commitment Fee shall not be paid when due, such overdue amount shall bear
interest, payable by the Lessee on demand, at a rate per annum equal to the
applicable Overdue Rate, from the date of such non-payment until such amount is
paid in full (as well after as before judgment).

          8.6  Overdue Rate.  If all or a portion of the Investor Yield, the
Investor Contribution or any other amount owed to the Investors shall not be
paid when due, such overdue amount shall bear interest, payable on demand, at a
rate per annum equal to the applicable Overdue Rate, from the date of such non-
payment until such amount is paid in full (as well after as before judgment).

          8.7  Continuous Perfection of Security Interests.    If the Officer's
Certificate required to be delivered by Lessee pursuant to Section 10.3(b) of
the Lease shall indicate that any of the Equipment has been relocated, then
Lessee will provide to the Agent, together with the Officer's Certificate,
evidence in form and substance satisfactory to Agent that all filings,
recordings, registrations and other actions, including the filing of duly
executed Lender Financing Statements and Lessor Financing Statements, necessary
or, in the reasonable opinion of the Agent, desirable to perfect the Liens
granted by the Security Documents shall have been completed.

          8.8  Oklahoma Equipment Subleases.    With respect to any leases or
other agreements entered into by Lessee with respect to Equipment located in the
State of Oklahoma ("Oklahoma Subleases"), Lessee shall, by May 15, 2000 (or
within 90 days of the date any Oklahoma Sublease is subsequently entered into),
undertake to file, in accordance with 60 Okla. Stat. 1991 ' 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.

                  SECTION 9.  OTHER COVENANTS AND AGREEMENTS
<PAGE>

                                                                              21

          9.1  Covenants of the Trust and the Investors and the Trust Company.
Each of the parties hereby agrees that so long as this Agreement is in effect:

          (a) Discharge of Liens.  Each of the Investors, the Trust and the
Trust Company, in its individual capacity, will not create or permit to exist at
any time, and will, at its own cost and expense, promptly take such action as
may be necessary duly to discharge, or to cause to be discharged, all Lessor
Liens on the Equipment attributable to it or any of its Affiliates; provided,
however, that the Investor, the Trust and the Trust Company shall not be
required to so discharge any such Lessor Lien while the same is being contested
in good faith by appropriate proceedings diligently prosecuted so long as such
proceedings shall not cause Lessee or any other party hereto to be in default
under any of the Operative Documents and shall not involve any material danger
of impairment of the Liens of the Security Documents or of the sale, forfeiture
or loss of, and shall not materially interfere with the use or disposition of,
the Equipment or title thereto or any interest therein or the payment of Rent.

          (b) Trust Agreement.  Without prejudice to any right under the Trust
Agreement of the Trust Company to resign, or the Investors= right under the
Trust Agreement to remove the institution acting as Trustee, each of the
Investors and the Trust Company hereby agrees with the Lessee and the Agent (i)
not to terminate or revoke the trust created by the Trust Agreement except as
permitted by the Trust Agreement, (ii) not to amend, supplement, terminate or
revoke or otherwise modify any provision of the Trust Agreement without the
prior written consent of any party adversely affected by such amendment and in
any event with prior notice to the Lessee and (iii) to comply with all of the
terms of the Trust Agreement, the nonperformance of which would adversely affect
such party.  The Trust Company will provide each party hereto with a copy of any
amendment to the Trust Agreement within thirty (30) days after such amendment is
effective.

          (c) Successor Trust Company.  The Trust Company or any successor may
resign or be removed by both Investors as owner trustee, a successor owner
trustee may be appointed, and a corporation may become the owner trustee under
the Trust Agreement, only in accordance with the provisions of Section 8 of the
Trust Agreement and with the consent of the Lessee, which consent shall not be
unreasonably withheld or delayed.

          (d) Indebtedness; Other Business.  The Trust shall not contract for,
create, incur or assume any indebtedness, or enter into any business or other
activity, or hold title to any assets other than pursuant to or under the
Operative Agreements.

          (e) No Violation.  Neither the Investors nor the Trust Company will
instruct the Trust to take any action in violation of the terms of any Operative
Agreement.
<PAGE>

                                                                              22

          (f) No Voluntary Bankruptcy.  Neither the Investors nor the Trust
shall (i) commence, consent to, approve of or acquiesce to any case, proceeding
or other action under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, insolvency, reorganization, arrangement,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (ii) seek appointment of a receiver, trustee, custodian
or other similar official for it or for all or any substantial part of its
assets, or make a general assignment for the benefit of its creditors; and
neither the Investors nor the Trust shall take any action in furtherance of, or
indicating its consent to, approval of, or acquiescence in, any of the acts set
forth in this paragraph.

          (g) Change of Chief Place of Business.  The Trust shall give prompt
prior notice to the Lessee and the Agent if the Trust's chief place of business
or chief executive office, or the office where the records concerning the
accounts or contract rights relating to the Equipment are kept, shall cease to
be located at the address set forth in Section 7.2(h) or if it shall change its
name.

          (h) Loan Documents.  Provided that no Lease Event of Default is
continuing, none of the Lenders, the Trust Company, the Lessor, the Agent nor
the Investors shall consent to or permit any material amendment, supplement,
waiver or other modification of the terms and provisions of the Credit
Agreement, the Notes or the Security Documents which would reasonably be
expected to adversely impact the Lessee, in each case without the prior written
consent of the Lessee.

          (i) Disposition of Assets.  The Trust shall not convey, sell, lease,
assign, transfer or otherwise dispose of any of its property, business or
assets, whether now owned or hereafter acquired, except to the extent expressly
authorized by the Operative Agreements.

          (j) Compliance with Operative Agreements.  It shall at all times
observe and perform all of the covenants, conditions and obligations required to
be performed by it under each Operative Agreement to which it is a party.

          (k) Tax Reporting.  No party hereto other than the Lessee will file
(or permit to be filed) any tax return taking the position that such party (or
its affiliates) is the owner of the Equipment for federal, state or local tax
purposes.

          9.2  Repayment of Certain Amounts on Maturity Date.  The Investors,
the Lessor and the Agent hereby agree that if (i) on the Maturity Date (after
giving effect to all payments made by the Lessee under the Lease and the
application of all sales proceeds pursuant to Section 8 of the Credit Agreement)
there remains any outstanding principal or accrued and unpaid interest under the
Tranche B Notes (the aggregate amount of such outstanding principal, the
"Tranche B Deficit") and
<PAGE>

                                                                              23

(ii) during the Marketing Period the Lessor or the Investors have received any
Marketing Period Equity Return, then on the Maturity Date the Investors shall
ratably pay to the Agent an amount up to the amount of the Tranche B Deficit to
be applied pursuant to Section 8 of the Credit Agreement, but in no event
greater than the Marketing Period Equity Return received by both Investors.

          9.3  Amendment of Certain Documents.  The Agent, for itself and on
behalf of the Lenders, hereby agrees for the benefit of the Trust and the
Investors that it will not amend, alter or otherwise modify, or consent to any
amendment, alteration or modification of, the Lease (including the definitions
of any terms used in such document) without the prior written consent of the
Trust and both Investors, as the case may be, if such amendment, alteration or
modification would adversely affect the interests of the Trust or the Investors.
Provisions requiring consent, include any amendment, alteration or modification
that would release the Lessee from any of its obligations in respect of the
payment of Basic Rent, Supplemental Rent, Termination Value, Maximum Residual
Guarantee Amount or the Purchase Option Price or any other payments in respect
of the Equipment as set forth in the Lease, or amend the provisions of Section 8
of the Credit Agreement, or reduce the amount of, or change the time or manner
of payment of, obligations of the Lessee as set forth in the Lease, or create or
impose any obligation on the part of the Trust or the Investors under the Lease,
or extend or shorten the duration of the Term, or modify the provisions of this
Section 9.3.

          9.4  Proceeds of Casualty.  Subject to Section 15 of the Lease, the
Lessor and the Investors agree, for the benefit of the Agent and the Lenders,
that if at any time either the Lessor or the either of the Investors receives
any proceeds as a result, directly or indirectly, of any Casualty or
Condemnation with respect to the Equipment which the Lessor is entitled to
retain and hold in accordance with the terms of the Lease, the Lessor and both
Investors agree that they will promptly deposit such amounts in an account with
the Agent.  The Lessor and the Investors also agree that they will execute and
deliver such documents and instruments as the Agent may request in order to
grant the Agent, for the benefit of the Lenders, a valid and perfected, first
priority security interest in such proceeds.

          9.5  Intercreditor Agreement.  The Lessee, the Agent, the Lenders, the
Investors and the Lessor hereby agree and confirm that the provisions of Section
8 of the Credit Agreement are intended to constitute an intercreditor agreement
and a subordination agreement under Section 510 of the Bankruptcy Code or any
similar provision therein.

          9.6  Appraisal.  The Lessee agrees that on or prior to any Replacement
Equipment Closing Date, and upon the written request of the Required Lenders or
both Investors, the Lessee shall provide to the Agent and the Investors an
Appraisal of the Replacement Equipment, such Appraisal in form and substance
satisfactory to the Agent and both Investors; provided, the Lessee is not
required to provide more than one such Appraisal in any twelve month period.
<PAGE>

                                                                              24

                                 SECTION 10.  CREDIT AGREEMENT

          10.1  Lessee's Credit Agreement Rights.  Notwithstanding anything to
the contrary contained in the Credit Agreement, the Agent, the Lenders, the
Lessee, the Investors and the Trust hereby agree that:

          (a) the Lessee shall have the right to give the notices referred to in
Section 2.3 of the Credit Agreement;

          (b) the Lessee shall have the right to convert or continue Loans in
accordance with Section 2.6 of the Credit Agreement;

          (c) the Lessee shall receive copies of all notices delivered to the
Lessor under the Credit Agreement and the other Operative Agreements and such
notices shall not be effective until received by Lessee;

          (d) the Lessee shall have the right to select Interest Periods in
accordance with the terms of the Credit Agreement;

          (e) the Lessee shall have the right to give notice of prepayment of
the Loans in accordance with the Credit Agreement, provided that if the Lessee
shall give notice of prepayment of the Loans, the Lessee shall prepay a pro rata
portion of the Investor Contribution;

          (f) the Lessee shall have the right to cure, to the extent susceptible
to a cure, any Credit Agreement Default or Credit Agreement Event of Default of
the Lessor;

          (g) the Lessee shall have the right to approve any successor Agent
pursuant to Section 7.9 of the Credit Agreement;

          (h) the Lessee shall have the right, on behalf of the Lessor, to
select any Person or Persons (including the Lessee) to whom funds may be paid at
the discretion of the Lessor in accordance with Sections 8.1 and 8.2 of the
Credit Agreement;

          (i) the Lessee shall have the right to consent to any assignment by a
Lender, if required pursuant to Section 9.7 of the Credit Agreement;

          (j) the Lessee shall have the right to request that another lending
office be designated pursuant to Section 2.15(a) of the Credit Agreement;
<PAGE>

                                                                              25

          (k) Lessee shall have the right to cause a Lender to assign its rights
and delegate its obligation under the Credit Agreement pursuant to Section 2.16
of the Credit Agreement;

          (l) the Lessee shall have the obligation to notify the Agent of the
amounts or information specified in Section 5.8 of the Credit Agreement; and

          (m) without limiting the foregoing clauses (a) through (l), and in
addition thereto, (x) the Trust shall not exercise any right under the Credit
Agreement without giving the Lessee at least fifteen (15) Business Days' prior
written notice (or such shorter period as may be required but in no case less
than five (5) Business Days) and, following such notice, the Trust shall take
such action, or forbear from taking such action, as the Lessee shall direct and
(y) the Lessee shall have the right to exercise any other right of the Trust
under the Credit Agreement upon not less than two (2) Business Days' prior
written notice from the Lessee to the Trust.  Notwithstanding the foregoing,
both Investors shall retain the exclusive right to direct the Trust with respect
to the exercise of the Excepted Rights.

                                 SECTION 11.  TRANSFER OF INTEREST

          11.1  Restrictions on Transfer.  Neither of the Investors may,
directly or indirectly, assign, convey or otherwise transfer any of its right,
title or interest in or to the Trust Estate or the Trust Agreement nor shall
there be any change in control of either of the Investors without the consent of
the Agent and the Lessee, which consent shall not be unreasonably withheld or
delayed.  Any transfer by either of the Investors as above provided, shall be
effected pursuant to an agreement in form and substance reasonably satisfactory
to the Agent, the Investors, the Trust Company, the Lessee and their respective
counsel.

          11.2  Effect of Transfer.  From and after any transfer effected in
accordance with this Section 11, the transferor shall be released, to the extent
of such transfer, from its liability hereunder and under the other documents to
which it is a party in respect of obligations to be performed on or after the
date of such transfer; provided, however, that any transferor Investor shall
remain liable under the Trust Agreement to the extent that the transferee
Investor shall not have assumed the obligations of the transferor Investor
thereunder.  Upon any transfer by either of the Investors as above provided, any
such transferee shall assume the obligations of the same entity, and the Lessor
or Investor, as the case may be, and shall be deemed the "same entity", as the
case may be, for all purposes of such documents and each reference herein to the
transferor shall thereafter be deemed a reference to such transferee for all
purposes, except as provided in the preceding sentence.  Notwithstanding any
transfer of all or a portion of the transferor's interest as provided in this
Section
<PAGE>

                                                                              26

11, the transferor shall be entitled to all benefits accrued and all
rights vested prior to such transfer including rights to indemnification under
any such document.

                                 SECTION 12.  INDEMNIFICATION

          12.1  General Indemnity  .  The Lessee, hereby assumes liability for
and agrees to defend, indemnify and hold harmless each Indemnified Person on an
After Tax Basis from and against any Claims which may be imposed on, incurred by
or asserted against an Indemnified Person in any way relating to or arising out
of (a) the financing, refinancing, purchase, acceptance, rejection, ownership,
design, delivery, acceptance, nondelivery, leasing, subleasing, possession, use,
operation, repair, modification, transportation, condition, sale, return,
repossession (whether by summary proceedings or otherwise), or any other
disposition of the Equipment or any part thereof; (b) any latent or other
defects in any piece of Equipment whether or not discoverable by an Indemnified
Person or the Lessee; (c) a violation of Environmental Laws, Environmental
Claims or other loss of or damage relating to the Equipment; (d) the Operative
Agreements, or any transaction contemplated thereby; (e) any breach by the
Lessee of any of its representations or warranties under the Operative
Agreements or failure by the Lessee to perform or observe any covenant or
agreement to be performed by it under any of the Operative Agreements; and (f)
personal injury, death or property damage relating to the Equipment, including
Claims based on strict liability in tort; but in any event excluding (v) Claims
to the extent such Claims arise solely out of the gross negligence or willful
misconduct of such Indemnified Person, (w) Claims to the extent such Claims
arise solely out of events occurring after Lessee's discharge of all its
obligations under the Lease or (x) any Taxes including any Claim (or any portion
of a Claim) made upon an Indemnified Person by a third party that at its origin
is based upon a Tax (other than amounts necessary to make any payments hereunder
on an After Tax Basis, where the Lessee is otherwise specifically required to
make such payments on an After Tax Basis), (y) legal proceedings commenced
against an Indemnified Person by any security holder or creditor solely in its
capacity as such, or (z) legal proceedings commenced against an Indemnified
Person by any other Indemnified Person or by any transferee of an Indemnified
Person.  The Lessee shall be entitled to control, and shall assume full
responsibility for the defense of any Claim; provided, however, that the Trust,
the Trust Company, the Agent and the Investors named in such Claim, may each
retain separate counsel at the expense of the Lessee in the event of and to the
extent of an actual conflict or a potential conflict.  The Lessee and each
Indemnified Person agree to give each other prompt written notice of any Claim
hereby indemnified against but the giving of any such notice by an Indemnified
Person shall not be a condition to the Lessee's obligations under this Section
12.1, except to the extent failure to give such notice materially prejudices
Lessee's rights hereunder or with respect to the defense or settlement of such
Claim.  After an Indemnified Person has been fully indemnified for a Claim
pursuant to this Section 12.1, and so long as no Lease Event of Default shall
have occurred and be continuing, the Lessee shall be
<PAGE>

                                                                              27

subrogated to any right of such Indemnified Person with respect to such Claim.
None of the Indemnified Persons shall settle a Claim without the prior written
consent of the Lessee, which consent shall not be unreasonably withheld or
delayed.

          12.2  General Tax Indemnity.  (a)  The Lessee shall pay and assume
liability for, and does hereby agree to indemnify, protect and defend the
Equipment and all Tax Indemnitees, and hold them harmless against, all
Impositions on an After Tax Basis.

          (b) Provided that no Default or Event of Default has occurred and is
continuing, if any Tax Indemnitee obtains a refund or a reduction in a liability
(but only if such reduction relates to a Tax not otherwise indemnifiable
hereunder and has not been taken into account in determining the amount of a
payment on an After Tax Basis) as a result of any Imposition paid or reimbursed
by the Lessee (in whole or in part), such Tax Indemnitee shall promptly pay to
the Lessee the lesser of (x) the amount of such refund or reduction in liability
and (y) the amount previously so paid or advanced by the Lessee, in each case
net of reasonable expenses not already paid or reimbursed by the Lessee.

          (c)(i)  Subject to the terms of Section 12.2(g), the Lessee shall pay
or cause to be paid all Impositions directly to the taxing authorities where
feasible and otherwise to the Tax Indemnitee, as appropriate, and the Lessee
shall at its own expense, upon such Tax Indemnitee's reasonable request, furnish
to such Tax Indemnitee copies of official receipts or other satisfactory proof
evidencing such payment.

          (ii) In the case of Impositions for which no contest is conducted
pursuant to Section 12.2(g) and which the Lessee pays directly to the taxing
authorities, the Lessee shall pay such Impositions prior to the latest time
permitted by the relevant taxing authority for timely payment.  In the case of
Impositions for which the Lessee reimburses a Tax Indemnitee, the Lessee shall
do so within twenty (20) days after receipt by the Lessee of demand by such Tax
Indemnitee describing in reasonable detail the nature of the Imposition and the
basis for the demand (including the computation of the amount payable), but in
no event shall the Lessee be required to pay such reimbursement prior to 15 days
before the latest time permitted by the relevant taxing authority for timely
payment.  In the case of Impositions for which a contest is conducted pursuant
to Section 12.2(g), the Lessee shall pay such Impositions or reimburse such Tax
Indemnitee for such Impositions, to the extent not previously paid or reimbursed
pursuant to subsection (a), prior to the latest time permitted by the relevant
taxing authority for timely payment after conclusion of all contests under
Section 12.2(g).

         (iii)  Impositions imposed with respect to a piece of Equipment for a
billing period during which the Lease expires or terminates with respect to such
Equipment (unless the Lessee has
<PAGE>

                                                                              28

exercised the Purchase Option with respect to the Equipment) shall be adjusted
and prorated on a daily basis between the Lessee and the Lessor, whether or not
such Imposition is imposed before or after such expiration or termination and
each party shall pay or reimburse the other for each party's pro rata share
thereof.

          (iv) At the Lessee's request, the amount of any indemnification
payment by the Lessee pursuant to subsection (a) shall be verified and certified
by an independent public accounting firm mutually acceptable to the Lessee and
the Tax Indemnitee.  The fees and expenses of such independent public accounting
firm shall be paid by the Lessee unless such verification shall result in an
adjustment in the Lessee's favor of 10% or more of the payment as computed by
such Tax Indemnitee, in which case such fee shall be paid by such Tax
Indemnitee.

          (d)(i)  The Lessee shall be responsible for preparing and filing any
real and personal property or ad valorem tax returns in respect of the
Equipment.  In case any other report or tax return shall be required to be made
with respect to any obligations of the Lessee under or arising out of subsection
(a) and of which the Lessee has knowledge, the Lessee, at its sole cost and
expense, shall notify the relevant Tax Indemnitee of such requirement and
(except if such Tax Indemnitee notifies the Lessee that such Person intends to
file such report or return) (A) to the extent required or permitted by and
consistent with Legal Requirements, make and file in its own name such return,
statement or report; and (B) in the case of any other such return, statement or
report required to be made in the name of such Tax Indemnitee, advise such Tax
Indemnitee of such fact and prepare such return, statement or report for filing
by such Tax Indemnitee or, where such return, statement or report shall be
required to reflect items in addition to any obligations of the Lessee under or
arising out of subsection (a), provide such Tax Indemnitee at the Lessee's
expense with information sufficient to permit such return, statement or report
to be properly made with respect to any obligations of the Lessee under or
arising out of subsection (a).  Such Tax Indemnitee shall, upon the Lessee's
request and at the Lessee's expense, provide any data maintained by such Tax
Indemnitee (and not otherwise within the control of the Lessee) with respect to
the Equipment which the Lessee may reasonably require to prepare any required
tax returns or reports;

          (e) If as a result of the payment or reimbursement by the Lessee of
any expenses of a Tax Indemnitee or the payment of any Transaction Expenses
incurred in connection with the transactions contemplated by the Operative
Agreements, any Tax Indemnitee, shall suffer a net increase in any federal,
state or local income tax liability, the Lessee shall indemnify such Tax
Indemnitees (without duplication of any indemnification required by subsection
(a)) on an After Tax Basis for the amount of such increase.  The calculation of
any such net increase shall take into account any current or future tax savings
realized or reasonably expected to be realized by such Tax Indemnitees, in
respect thereof, as well as any interest, penalties and additions to tax payable
by such Tax Indemnitees, in respect thereof;
<PAGE>

                                                                              29

          (f) As between the Lessee and the Lessor, the Lessee shall be
responsible for, and the Lessee shall indemnify and hold harmless the Trust
Company in its individual capacity and as the Lessor (without duplication of any
indemnification required by subsection (a)) on an After Tax Basis against, any
obligation for United States withholding taxes imposed in respect of the
interest payable on the Notes or the Certificates to the extent, but only to the
extent, Lessor has actually paid funds to a taxing authority with respect to
such withholding taxes (and, if the Lessor receives a demand for such payment
from any taxing authority, the Lessee shall discharge such demand on behalf of
the Lessor);

          (g)(i) If a written claim is made against any Tax Indemnitee or if any
proceeding shall be commenced against such Tax Indemnitee (including a written
notice of such proceeding), for any Impositions, such Tax Indemnitee shall
promptly notify Lessee in writing and shall not take action with respect to such
claim or proceeding without the consent of Lessee for thirty (30) days after the
receipt of such notice by Lessee; provided, that, in the case of any such claim
or proceeding, if action shall be required by law or regulation to be taken
prior to the end of such 30-day period, such Tax Indemnitee shall, in such
notice to Lessee, inform Lessee, and no action shall be taken with respect to
such claim or proceeding without the consent of Lessee before the end of such
shorter period; provided, further, that the failure of such Tax Indemnitee to
give the notices referred to this sentence shall not diminish Lessee's
obligation hereunder except to the extent such failure materially adversely
affects Lessee in contesting all or part of such claim.

          (ii) If, within thirty (30) days of receipt of such notice from the
Tax Indemnitee (or such shorter period as the Tax Indemnitee has noticed Lessee
is required by law or regulation for the Tax Indemnitee to commence such
contest), Lessee shall request in writing that such Tax Indemnitee contest such
Imposition, the Tax Indemnitee shall, at the expense of Lessee, in good faith
conduct and control such contest (including, without limitation, by pursuit of
appeals) relating to the validity, applicability or amount of such Impositions
(provided, however, that (A) if such contest can be pursued independently from
any other proceeding involving a tax liability of such Tax Indemnitee, the Tax
Indemnitee, at Lessee's request, shall allow Lessee to conduct and control such
contest and (B) in the case of any contest that Lessee is not entitled to
control, the Tax Indemnitee may request Lessee to conduct and control such
contest if possible or permissible under applicable law or regulation) by, in
the sole discretion of the Person conducting and controlling such contest, (1)
resisting payment thereof, (2) not paying the same except under protest, if
protest is necessary and proper, (3) if the payment be made, using reasonable
efforts to obtain a refund thereof in appropriate administrative and judicial
proceedings, or (4) taking such other action as is reasonably requested by
Lessee from time to time.
<PAGE>

                                                                              30

          (iii)  The party controlling any contest shall consult in good faith
with the non-controlling party and shall keep the non-controlling party
reasonably informed as to the conduct of such contest; provided that all
decisions ultimately shall be made in the sole discretion of the controlling
party.  The parties agree that an Tax Indemnitee may at any time decline to take
further action with respect to the contest of any Imposition and may settle such
contest if such Tax Indemnitee shall waive its rights to any indemnity from
Lessee that otherwise would be payable in respect of such claim (and any future
claim by any taxing authority with respect to other taxable periods that are
based, in whole or in part, upon the resolution of such claim) and shall pay to
Lessee any amount previously paid or advanced by Lessee pursuant to this Section
12.2 by way of indemnification or advance for the payment of an Imposition, and
no other then future liability of the Lessee is likely with respect to such
Imposition.

          (iv) Notwithstanding the foregoing provisions of this Section 12.2, a
Tax Indemnitee shall not be required to take any action and Lessee shall not be
permitted to contest any Impositions in its own name or that of the Tax
Indemnitee unless (A) Lessee shall have agreed to pay and shall pay to such Tax
Indemnitee on demand and on an After Tax Basis all reasonable costs, losses and
expenses that such Tax Indemnitee actually incurs in connection with contesting
such Impositions, including, without limitation, all reasonable legal,
accounting and investigatory fees and disbursements, (B) in the case of a claim
that must be pursued in the name of an Tax Indemnitee (or an Affiliate thereof),
the amount of the potential indemnity (taking into account all similar or
logically related claims that have been or could be raised in any audit
involving such Tax Indemnitee for which Lessee may be liable to pay an indemnity
under this Section 12.2) is more than $25,000, unless the pursuit of such
contest is in a manner mutually satisfactory to the Tax Indemnitee and the
Lessee, but in no event shall such right prevent the Lessee from prosecuting or
continuing such contest, (C) the Tax Indemnitee shall have reasonably determined
that the action to be taken will not result in any material danger of sale,
forfeiture or loss of any piece of Equipment, or any part thereof or interest
therein, will not interfere with the payment of Rent, and will not result in
risk of criminal liability, (D) if such contest shall involve the payment of the
Imposition prior to the contest, Lessee shall provide to the Tax Indemnitee an
interest-free advance in an amount equal to the Imposition that the Tax
Indemnitee is required to pay (with no additional net after-tax cost to such Tax
Indemnitee), (E) in the case of a claim that must be pursued in the name of an
Tax Indemnitee (or an Affiliate thereof), Lessee shall have provided to such Tax
Indemnitee an opinion of independent tax counsel selected by the Lessee and
reasonably satisfactory to such Tax Indemnitee stating that a reasonable basis
exists to contest such claim (or, in the case of an appeal of an adverse
determination, an opinion of such counsel to the effect that there is
substantial authority for the position asserted in such appeal) and (F) no Event
of Default shall have occurred and be continuing.  In no event shall a Tax
Indemnitee be required to appeal an adverse judicial determination to the United
State Supreme Court.  In addition, a Tax Indemnitee shall not be required to
contest any claim in its name (or that of an Affiliate) if the subject matter
thereof shall be of a continuing nature
<PAGE>

                                                                              31

and shall have previously been decided adversely by a court of competent
jurisdiction pursuant to the contest provisions of this Section 12.2, unless
there shall have been a change in law (or interpretation thereof) and the shall
Tax Indemnitee have received, at the Lessee's expense, an opinion of independent
tax counsel selected by the Lessee and reasonably acceptable to the Tax
Indemnitee stating that as a result of such change in law (or interpretation
thereof), it is more likely than not that the Tax Indemnitee will prevail in
such contest.

                          SECTION 13.  MISCELLANEOUS

          13.1  Survival of Agreements.  The representations, warranties,
covenants, indemnities and agreements of the parties provided for in the
Operative Agreements, and the parties' obligations under any and all thereof,
shall survive the execution and delivery of this Agreement, the transfer of the
Equipment to the Trust, any disposition of any interest of the Trust in the
Equipment or any interest of the Investors in the Trust, the payment of the
Notes and any disposition thereof and shall be and continue in effect
notwithstanding any investigation made by any party and the fact that any party
may waive compliance with any of the other terms, provisions or conditions of
any of the Operative Agreements.  Except as otherwise expressly set forth herein
or in other Operative Agreements, the indemnities of the parties provided for in
the Operative Agreements shall survive the expiration or termination of any
thereof.

          13.2  No Broker, etc.    Each of the parties hereto represents to the
others that it has not retained or employed any broker, finder or financial
adviser to act on its behalf in connection with this Agreement, nor has it
authorized any broker, finder or financial adviser retained or employed by any
other Person so to act, except for the Arranger, the fees of which shall be paid
by the Lessee in accordance with the Fee Letter.  Any party who is in breach of
this representation shall indemnify and hold the other parties harmless from and
against any liability arising out of such breach of this representation.

          13.3  Notices.  All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
facsimile transmission), and, unless otherwise expressly provided herein, shall
be deemed to have been duly given or made (a) when delivered by hand, (b) one
Business Day after delivery to a 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 sent and receipt has been confirmed, addressed as follows
in the case of the Lessee, the Trust, the Trust Company and the Agent, and as
set forth in Schedule 1.1 of the Credit Agreement in the case of the Lenders:

     If to the Lessee, to it at:    Hanover Compression Inc.
<PAGE>

                                                                              32

                                    12001 North Houston Rosslyn
                                    Houston, Texas 77806
                                    Attention: Chief Financial Officer
                                    Telecopy No.: 281-447-8781

     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 No.: 312-993-9767

     If to the Trust, to it at:     Hanover Equipment Trust 2000A
                                    c/o Wilmington Trust Company
                                    1100 North Market Street
                                    Wilmington, Delaware 19890
                                    Attention:  Corporate Trust Administration
                                    Telecopy No.:  302-651-8882

    If to the Investors, to them at:

     If to the Trust Company, to it at:  Wilmington Trust Company
                                         1100 North Market Street
                                         Wilmington, Delaware 19890
                                         Attention:  Corporate Trust
                                           Administration
                                         Telecopy No.:  302-651-8882

     If to the Agent, to it at:     The Chase Manhattan Bank
                                    Loan and Agency Services Group
                                    One Chase Manhattan Plaza
                                    New York, New York 10081
                                    Attention:  Agency Service
                                    Telecopy No.:  212-552-5777
<PAGE>

                                                                              33

                                               and

                                    Credit and Lending
                                    The Chase Manhattan Bank
                                    270 Park Avenue
                                    21st Floor
                                    New York, NY  10017
                                    Attention:  Peter Ling
                                    Telecopy No.:  212-270-4676

From time to time any party may designate a new address for purposes of notice
hereunder by notice to each of the other parties hereto.

          13.4  Counterparts.  This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute but
one and the same instrument.

          13.5  Amendments and Termination.  Neither this Agreement nor any of
the terms hereof may be terminated, amended, supplemented, waived or modified
except by an instrument in writing signed by the party against which the
enforcement of the termination, amendment, supplement, waiver or modification
shall be sought.  This Agreement may be terminated by an agreement signed in
writing by the Trust, both Investors, the Lessee, the Agent and the Lenders.
Notwithstanding the foregoing provisions to the contrary, in the case of the
Lenders, the action of the Required Lenders shall control, except as otherwise
provided in Section 9.1 of the Credit Agreement.

          13.6  Headings, etc..  The Table of Contents and headings of the
various Sections and Subsections of this Agreement are for convenience of
reference only and shall not modify, define, expand or limit any of the terms or
provisions hereof.

          13.7  Parties in Interest.  Except as expressly provided herein,
none of the provisions of this Agreement are intended for the benefit of any
Person except the parties hereto.

          13.8  GOVERNING LAW.  THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
<PAGE>

                                                                              34

          13.9  Severability.  Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

          13.10  Liability Limited.  The Lessee, the Agent, the Lenders and
the Investors each acknowledge and agree that the Trust Company is (except as
otherwise expressly provided herein or therein) entering into this Agreement and
the other Operative Agreements to which it is a party (other than the Trust
Agreement), solely in its capacity as trustee under the Trust Agreement and not
in its individual capacity and that Trust Company shall not be liable or
accountable under any circumstances whatsoever in its individual capacity for or
on account of any statements, representations, warranties, covenants or
obligations stated to be those of the Trust, except for its own gross negligence
or willful misconduct and as otherwise expressly provided herein or in the other
Operative Agreements.

          13.11  Rights of Lessee.  Notwithstanding any provision of the
Operative Agreements, if at any time all obligations (i) of the Trust under the
Credit Agreement and the Security Documents and (ii) of the Lessee under the
Operative Agreements have in each case been satisfied or discharged in full,
then the Lessee shall be entitled to (a) terminate the Lease (to the extent not
previously terminated) and (b) receive all amounts then held under the Operative
Agreements and all proceeds with respect to the Equipment.  Upon the fulfillment
of the obligations contained in clauses (i) and (ii) above, the Lessor shall
transfer to the Lessee all of its right, title and interest in and to the
Equipment (to the extent not previously transferred to the Lessee in accordance
with the Lease) and any amounts or proceeds referred to in the foregoing clause
(b) shall be paid over to the Lessee.

          13.12  Further Assurances.  The parties hereto shall promptly cause
to be taken, executed, acknowledged or delivered, at the sole expense of the
Lessee (other than with respect to the removal of Lessor Liens), all such
further acts, conveyances, documents and assurances as the other parties may
from time to time reasonably request in order to carry out and effectuate the
intent and purposes of this Agreement, the other Operative Agreements and the
transactions contemplated hereby and thereby (including, without limitation, the
preparation, execution and filing of any and all Uniform Commercial Code
financing statements and other filings or registrations which the parties hereto
may from time to time request to be filed or effected).  The Lessee, at its own
expense, shall take such action as may be reasonably requested in order to
maintain and protect all security interests provided for hereunder or under any
other Operative Agreement.
<PAGE>

                                                                              35

          13.13  Successors and Assigns.  This Agreement shall be binding upon
and inure to the benefit of the parties hereto and their respective successors
and assigns.

          13.14  No Representation or Warranty.  Nothing contained herein, in
any other Operative Agreement or in any other materials delivered to the Lessee
in connection with the transactions contemplated hereby or thereby shall be
deemed a representation or warranty by the Agent or the Arranger or any of their
Affiliates as to the proper accounting treatment or tax treatment that should be
afforded to the Lease and the Lessor's ownership of the Equipment and the Agent
expressly disclaims any representation or warranty with respect to such matters.

          13.15  Highest Lawful Rate.  It is the intention of the parties
hereto conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Lessee, the Lessor or the
Investors or any other party under any Operative Agreement, shall be subject to
the limitation that payments of interest or of other amounts constituting
interest shall not be required to the extent that receipt thereof would be in
excess of the Highest Lawful Rate, or otherwise contrary to provisions of law
applicable to the recipient limiting rates of interest which may be charged or
collected by the recipient.  Accordingly, if the transactions or the amount paid
or otherwise agreed to be paid for the use, forbearance or detention of money
under this Agreement, the Lease and any other Operative Agreement would exceed
the Highest Lawful Rate or otherwise be usurious with respect to the recipient
of any such amount, then, in that event, notwithstanding anything to the
contrary in this Agreement, the Lease or any other Operative Agreement, it is
agreed as follows as to the recipient of any such amount:

          (a   the provisions of this Section 13.15 shall govern and control
over any other provision in this Agreement, the Lease and any other Operative
Agreement and each provision set forth therein is hereby so limited;

          (b   the aggregate of all consideration which constitutes interest
that is contracted for, charged or received under this Agreement, the Lease, or
any other Operative Agreement shall under no circumstances exceed the maximum
amount of interest allowed by any Requirement of Law (such maximum lawful
interest rate, if any, with respect to such Lender herein called the "Highest
Lawful Rate"), and all amounts owed under this Agreement, the Lease and any
other Operative Agreement shall be held subject to reduction and (i) the amount
of interest which would otherwise be payable to the recipient hereunder and
under the Lease, the Loan Documents and any other Operative Agreement, shall be
automatically reduced to the amount allowed under any Requirement of Law and
(ii) any unearned interest paid in excess of the Highest Lawful Rate shall be
credited to the payor by the recipient (or, if such consideration shall have
been paid in full, refunded to the payee);
<PAGE>

                                                                              36

          (c   all sums paid, or agreed to be paid for the use, forbearance and
detention of the money under this Agreement, the Lease, or any other Operative
Agreement shall, to the extent permitted by any Requirement of Law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and

          (d   if at any time the interest, together with any other fees, late
charges and other sums payable pursuant to or in connection with this Agreement,
the Lease, and any other Operative Agreement executed in connection herewith or
therewith, and deemed interest under any Requirement of Law exceeds that amount
which would have accrued at the Highest Lawful Rate, the amount of interest and
any such fees, charges and sums to accrue to the recipient of such interest,
fees, charges and sums pursuant to the Operative Agreement shall be limited,
notwithstanding anything to the contrary in the Operative Agreement to that
amount which would have accrued at the Highest Lawful Rate for the recipient,
but any subsequent reductions, as applicable, shall not reduce the interest to
accrue pursuant to the Operative Agreement below the recipient's Highest Lawful
Rate until the total amount of interest payable to the recipient (including all
consideration which constitutes interest) equals the amount of interest which
would have been payable to the recipient (including all consideration which
constitutes interest), plus the amount of fees which would have been received
but for the effect of this Section 13.15.

          13.16  Waiver.  EACH PARTY HERETO FOR THE BENEFIT OF THE PARTIES
HERETO AND THE GUARANTORS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY
LEGAL ACTION OR PROCEEDING PURSUANT TO THE OPERATIVE AGREEMENTS ANY SPECIAL,
EXEMPLARY, PUNITIVE, INDIRECT OR CONSEQUENTIAL DAMAGES.
<PAGE>

                                                                              37

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

                              HANOVER COMPRESSION INC., as Lessee

                              By:  ____________________________________
                                    Name:
                                    Title:

                              HANOVER EQUIPMENT TRUST 2000A

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

                              By:  ____________________________________
                                    Name:
                                    Title:

                              THE CHASE MANHATTAN BANK, as Agent and as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:

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

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              38

                              FIRST UNION NATIONAL BANK, as an Investor

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              39

                              SCOTIABANC INC., as an Investor

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              40

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

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              41

                              BANK ONE, N.A., as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              42

                              CREDIT SUISSE FIRST BOSTON, as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              43

                              DG BANK DEUTSCHE
                              GENOSSENSCHAFTSBANK AG, as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              44

                              FIRST UNION NATIONAL BANK, as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              45

                              THE INDUSTRIAL BANK OF JAPAN, LTD., as
                              Syndication Agent and as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              46

                              NATEXIS BANQUE BFCE, as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              47

                              NATIONAL CITY BANK, as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              48

                              PARIBAS, as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              49

                              SUNTRUST BANK, ATLANTA, as a Lender

                              By:  ____________________________________
                                    Name:
                                    Title:

                              By:  ____________________________________
                                    Name:
                                    Title:
<PAGE>

                                                                              50

                                                                         ANNEX B

                                  PRICING GRID

                            Participation Agreement

  Consolidated        Applicable Margin-    Applicable Margin-      Applicable
Indebtedness Ratio   Eurocurrency Loans       Base Rate Loans       Commitment
------------------   ------------------     ------------------       Fee Rate
                                                                     --------

 *4.0 to 1.0                1.75%                 .750%                .375%

***4.0 to 1.0 and           1.75%                 .750%                .375%
*3.0 to 1.0

***3.0 to 1.0 and           1.50%                 .500%                .300%
*2.0 to 1.0

***2.0 to 1.0 and           1.25%                 .500%                .300%
*1.0 to 1.0

***1.0 to 1.0               1.00%                   0%                 .250%

------------------
* greater than
** greater than or equal to
*** less than of equal to

Changes in the Applicable Margin or in the Applicable Commitment Fee Rate
resulting from changes in the Consolidated Indebtedness Ratio shall become
effective on each date which is the start of the succeeding fiscal quarter
(each, an "Adjustment Date") for which an Applicable Margin Certificate of
Holdings is delivered to the Lenders pursuant to Section 10.2(f) of the
Guarantee (but in any event not later than the 45th day after the end of each of
each quarter of each fiscal year) and shall remain in effect until the next
change to be effected pursuant to this paragraph.  If any Applicable Margin
Certificate referred to above is not delivered within the time periods specified
above, then the Consolidated Indebtedness Ratio as at the end of the fiscal
period that would have been covered thereby shall for the purposes of this
definition be deemed to be greater than 4.0 to 1.0.  In addition, at all times
while an Event of Default shall have occurred and be continuing, the highest
rate set forth in each column of the Pricing Grid shall apply.  Each
determination of the Consolidated Indebtedness Ratio pursuant to this Pricing
Grid shall be made for the periods and in the manner contemplated by Section
11.1(d) of the Guarantee.
<PAGE>

                                                                              51

                                                                EXHIBIT D TO THE
                                                         PARTICIPATION AGREEMENT

                                     FORM

                                  REQUISITION

          HANOVER COMPRESSION INC. (the "Lessee"), submits this Requisition and
certifies, represents and warrants to each of the Lessor, Investors, The Chase
Manhattan Bank, as agent (in such capacity, the "Agent"), and each of the
financial institutions from time to time parties to the Credit Agreement (the
"Lenders") dated as of March 13, 2000, as follows (capitalized terms used in
this Requisition and not otherwise defined herein shall have the meaning
assigned to such terms in Annex A to the Participation Agreement dated as of
March 13, 2000 , among the Lessee, the Lessor, the Investor, the Agent and the
Lenders) in each case as of the date hereof:

           1.    Amount.  (a)  The total amount of the Advance requested by this
     Requisition is $[           ].  The Advance will be comprised of Loans
     totalling $[      $[              ] (not to exceed 97% of the aggregate
     amount requested).

           (b) The total amounts of the Available Commitments and the Available
     Investor Commitment (after giving effect to the amount requested by this
     Requisition) are $[             ] and $[             ], respectively.

           (c) With respect to aggregate Equipment Cost, the aggregate amount of
     the Loans outstanding represent [___]% of such Equipment Cost and the
     aggregate amount of the Investment Contribution represents [__]% of such
     Equipment Cost.

           2.  Date of Advance.  The Lessee requests that the Advance be made on
     [              ].

           3.  Type of Loan and Contribution.  The Lessee requests that the
     Loans be made as [Eurodollar Rate] [ABR Rate] Loans.

           4.  Interest Period for Eurodollar Loans.  [   ] months.

           5.  Proceeds.  The Lessee represents and warrants that the proceeds
     of the Advance shall be used solely to pay the Equipment Acquisition Costs
     and Transaction Expenses with respect to the Equipment identified in this
     Requisition.
<PAGE>

                                                                              52

           6.  Representations and Warranties.  The Lessee hereby represents and
     warrants as follows in each case as of the date hereof:

              (a)  The representations and warranties of the Lessee and the
           Guarantors set forth in the Operative Agreements are true and correct
           in all material respects on and as of the date hereof.  The Lessee
           and the Guarantors are in compliance with their respective
           obligations under the Operative Agreements and there exists no
           Default or Event of Default (other than a Borrower Default) under any
           of the Operative Agreements.  No Default or Event of Default (other
           than a Borrower Default) will occur under any of the Operative
           Agreements as a result of the Advance requested by this Requisition.

              (b)  Attached to this Requisition is a schedule identifying the
           Equipment which is the subject of this Requisition.

              (c)  All conditions precedent contained in the Participation
           Agreement and in the other Operative Agreements relating to the
           acquisition of the Equipment by the Lessor have been satisfied in
           full.

           7.  Indemnity.  The Lessee agrees to indemnify and hold harmless each
     of the Trust, the Trust Company, the Investors, the Agent and the Lenders
     and each director, officer, employee, agent, shareholder, partner or holder
     of beneficial interest thereof (each, an "indemnified person") against, and
     to reimburse each indemnified person, upon its demand, for, any losses,
     claims, damages, liabilities or other expenses ("Losses") to which such
     indemnified person may become subject insofar as such Losses arise out of
     or in any way relate to the breach by the Lessee of any representation or
     warranty contained in this Requisition or any untrue statement made in this
     Requisition, including, without limitation, Losses consisting of reasonable
     legal or other expenses incurred in connection with investigating,
     defending or participating in any legal proceeding relating to any of the
     foregoing (whether or not such indemnified person is a party thereto);
     provided, however, that no such indemnification will be required for any
     losses to the extent such losses arise solely out of the gross negligence
     or willful misconduct of such indemnified person.

           8.  Survival.  The agreements, statements, representation and
     warranties contained in this Requisition shall survive and remain effective
     until the Loans and all other obligations under the Credit Agreement and
     the other Operative Agreements are paid or otherwise satisfied in full by
     the Lessee and the Lessee, as applicable.

Date: ___________                          HANOVER COMPRESSION INC.

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

                                                                              53

                                                                    EXHIBIT E TO
                                                         PARTICIPATION AGREEMENT

                     FORM OF EQUIPMENT CLOSING CERTIFICATE

Pursuant to that certain Participation Agreement, dated as of March 13, 2000,
among Hanover Compression Inc., as Lessee (the "Lessee"), Hanover Equipment
Trust 2000A, as Lessor, The Chase Manhattan Bank, as Agent, the Investors, the
Trust Company and the Lenders named therein, the undersigned, a [           ] of
Lessee, does hereby certify on behalf of Lessee as follows (capitalized terms
used herein shall have the meanings ascribed thereto in the Participation
Agreement):

           (a) The Tranche A Percentage for the Equipment being acquired on the
date hereof is [     ]%.

          (b) The Aggregate Tranche A Percentage for all Equipment after giving
effect to the acquisition of the Equipment being acquired on the date hereof is
[     ]%.

           IN WITNESS WHEREOF, I have signed my name this ____ day of ________,
2000.

                                    HANOVER COMPRESSION INC.

                                    By: ______________________________
                                    Name:
                                    Title:

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