PRIME SERVICE INC, S-1/A, 1996-10-09

PRIME SERVICE INC
S-1/A, 1996-10-09
EQUIPMENT RENTAL & LEASING, NEC

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON OCTOBER 9, 1996

REGISTRATION NO. 333-11517

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

SECURITIES AND EXCHANGE COMMISSION
---------------

AMENDMENT NO. 1

FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

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PRIME SERVICE, INC.

(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7353 76-0452435
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or Classification Code Number) Identification
organization) No.)
</TABLE>

16225 PARK TEN PLACE, SUITE 200
HOUSTON, TEXAS 77084
(713) 578-5600
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

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

BRIAN FONTANA
CHIEF FINANCIAL OFFICER
PRIME SERVICE, INC.
16225 PARK TEN PLACE, SUITE 200
HOUSTON, TEXAS 77084
(713) 578-5600
(Name, address, including zip code, and telephone number, including area code,
of agent for service)

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WITH COPIES TO:

CHARLES K. MARQUIS, ESQ. D. COLLIER KIRKHAM, ESQ.
STEVEN R. FINLEY, ESQ. CRAVATH, SWAINE & MOORE
GIBSON, DUNN & CRUTCHER LLP 825 EIGHTH AVENUE
200 PARK AVENUE NEW YORK, NEW YORK 10019
NEW YORK, NEW YORK 10166 (212) 474-1000
(212) 351-4000

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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE COMMON STOCK: As
soon as practicable after this Registration Statement becomes effective.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID
SECTION 8(A), MAY DETERMINE.

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<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
<PAGE>

SUBJECT TO COMPLETION, DATED OCTOBER 9, 1996

7,250,000 Shares
Prime Service, Inc.
Common Stock
($0.01 PAR VALUE)

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

ALL OF THE SHARES OF COMMON STOCK, $0.01 PAR VALUE (THE "COMMON STOCK"), OF
PRIME SERVICE, INC. (THE "COMPANY" OR "PRIME") OFFERED HEREBY ARE BEING SOLD BY
THE COMPANY, EXCEPT THAT THE SELLING STOCKHOLDERS NAMED HEREIN UNDER
PRINCIPAL AND SELLING STOCKHOLDERS (THE "SELLING STOCKHOLDERS") HAVE GRANTED
THE U.S. UNDERWRITERS AND THE MANAGERS THE OPTION TO PURCHASE UP TO AN
AGGREGATE OF 1,087,500 SHARES OF THE COMMON STOCK SOLELY TO COVER
OVER-ALLOTMENTS. SEE "PRINCIPAL AND SELLING STOCKHOLDERS" AND
"UNDERWRITING." OF THE 7,250,000 SHARES OF COMMON STOCK BEING OFFERED,
5,800,000 SHARES ARE INITIALLY BEING OFFERED IN THE UNITED STATES
AND CANADA (THE "U.S. SHARES") BY THE U.S. UNDERWRITERS (THE "U.S.
OFFERING") AND 1,450,000 SHARES ARE INITIALLY BEING CONCURRENTLY
OFFERED OUTSIDE THE UNITED STATES AND CANADA (THE "INTERNATIONAL
SHARES") BY THE MANAGERS (THE "INTERNATIONAL OFFERING" AND,
TOGETHER WITH THE U.S. OFFERING, THE "OFFERING"). THE OFFERING
PRICE AND UNDERWRITING DISCOUNTS AND COMMISSIONS OF THE
U.S. OFFERING AND THE INTERNATIONAL OFFERING ARE
IDENTICAL.

OF THE 7,250,000 SHARES BEING OFFERED BY THE U.S. UNDERWRITERS AND THE MANAGERS,
500,000 SHARES WILL BE RESERVED FOR SALE TO OFFICERS AND EMPLOYEES OF
INVESTCORP S.A. AND ITS SUBSIDIARIES AND TO DIRECTORS, OFFICERS AND EMPLOYEES
OF THE COMPANY AND ITS SUBSIDIARIES. SEE "UNDERWRITING." PRIOR TO THIS
OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK. IT IS
ANTICIPATED THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN
$22.00 AND $25.00 PER SHARE. FOR INFORMATION RELATING TO THE FACTORS
CONSIDERED IN DETERMINING THE INITIAL OFFERING PRICE TO THE
PUBLIC, SEE "UNDERWRITING."

THE COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL " ", SUBJECT TO OFFICIAL NOTICE OF ISSUANCE.

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

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 10
HEREIN.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
AD-
EQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION
TO THE CONTRARY IS A
CRIMINAL
OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING
PRICE DISCOUNTS AND PROCEEDS TO
TO PUBLIC COMMISSIONS(1) COMPANY(2)
------------------ ------------------ ------------------
<S> <C> <C> <C>
PER SHARE.......................................... $ $ $
TOTAL(3)........................................... $ $ $
</TABLE>

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(1) SEE "UNDERWRITING" FOR INFORMATION RELATING TO RESERVED SHARES.

(2) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ .

(3) THE SELLING STOCKHOLDERS HAVE GRANTED THE U.S. UNDERWRITERS AND THE MANAGERS
AN OPTION, EXERCISABLE FOR 30 DAYS FROM THE DATE OF THIS PROSPECTUS, TO
PURCHASE A MAXIMUM OF 1,087,500 ADDITIONAL SHARES OF COMMON STOCK TO COVER
OVER-ALLOTMENTS, IF ANY. IF THE OPTION IS EXERCISED IN FULL, THE TOTAL PRICE
TO PUBLIC WILL BE $ , UNDERWRITING DISCOUNTS AND COMMISSIONS WILL BE
$ , PROCEEDS TO COMPANY WILL REMAIN THE SAME, AND PROCEEDS TO
SELLING STOCKHOLDERS WILL BE $ .

THE U.S. SHARES ARE OFFERED BY THE SEVERAL U.S. UNDERWRITERS WHEN, AS AND IF
DELIVERED TO AND ACCEPTED BY THE U.S. UNDERWRITERS AND SUBJECT TO THEIR RIGHT TO
REJECT ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT THE U.S. SHARES WILL BE
READY FOR DELIVERY ON OR ABOUT NOVEMBER , 1996, AGAINST PAYMENT IN IMMEDIATELY
AVAILABLE FUNDS.

CS First Boston
Merrill Lynch & Co.
Salomon Brothers Inc

THE DATE OF THIS PROSPECTUS IS OCTOBER , 1996

<PAGE>
[INSERT MAP]

PRIME INTENDS TO FURNISH ITS STOCKHOLDERS ANNUAL REPORTS CONTAINING AUDITED
CONSOLIDATED FINANCIAL STATEMENTS AND QUARTERLY REPORTS CONTAINING UNAUDITED
INTERIM INFORMATION FOR THE FIRST THREE QUARTERS OF EACH FISCAL YEAR OF PRIME.

IN CONNECTION WITH THIS OFFERING, CS FIRST BOSTON CORPORATION, ON BEHALF OF
THE U.S. UNDERWRITERS AND THE MANAGERS, MAY OVER-ALLOT OR EFFECT TRANSACTIONS
WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE COMMON STOCK OFFERED HEREBY
AT LEVELS ABOVE THOSE WHICH WOULD OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH
TRANSACTIONS MAY BE EFFECTED ON THE NEW YORK STOCK EXCHANGE OR OTHERWISE. SUCH
STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.

DURING THE OFFERING, CERTAIN PERSONS AFFILIATED WITH PERSONS PARTICIPATING
IN THE DISTRIBUTION MAY ENGAGE IN TRANSACTIONS FOR THEIR OWN ACCOUNTS OR FOR THE
ACCOUNTS OF OTHERS IN THE COMMON STOCK PURSUANT TO EXEMPTIONS FROM RULES 10B-6,
10B-7, AND 10B-8 UNDER THE SECURITIES EXCHANGE ACT OF 1934.

2
<PAGE>
PROSPECTUS SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ IN
CONJUNCTION WITH, THE MORE DETAILED INFORMATION AND FINANCIAL STATEMENTS AND
NOTES THERETO APPEARING ELSEWHERE IN THIS PROSPECTUS. UNLESS THE CONTEXT
OTHERWISE REQUIRES, REFERENCES TO THE "COMPANY" OR "PRIME" INCLUDE PRIMECO INC.,
A TEXAS CORPORATION AND A WHOLLY OWNED SUBSIDIARY OF THE COMPANY ("PRIMECO").
UNLESS THE CONTEXT OTHERWISE REQUIRES, THE INFORMATION CONTAINED HEREIN (I)
GIVES EFFECT TO A 18.15 FOR ONE SPLIT OF THE COMMON STOCK EFFECTIVE ON OCTOBER
9, 1996, AND THE CONVERSION OF ALL OUTSTANDING CLASS A COMMON STOCK, CLASS C
COMMON STOCK AND CLASS D COMMON STOCK OF THE COMPANY INTO AN EQUIVALENT NUMBER
OF SHARES OF COMMON STOCK EFFECTIVE AS OF THE CLOSING OF THE OFFERING, AND (II)
ASSUMES THAT THE OVER-ALLOTMENT OPTION IS NOT EXERCISED. SEE "UNDERWRITING."

THE COMPANY

GENERAL

Prime is the second largest rental equipment company in the United States,
based upon 1995 rental equipment revenues, and currently operates 101 rental
equipment yards in 13 states. The Company rents over 100 different types of
equipment, such as aerial manlifts, portable air compressors, forklifts and
light earth moving equipment and small equipment such as lawnmowers, plumbing
equipment and hand tools, to commercial construction, industrial and residential
users. The Company also sells complementary parts and merchandise and used
equipment, and acts as a distributor of new equipment on behalf of nationally
known equipment manufacturers. At September 30, 1996, the Company had an
equipment rental fleet with a book value of $257.1 million ($360.7 million at
original cost) comprised of over 40,000 pieces of equipment. Over the period
from 1991 to 1995, Prime's total revenues increased from $146.2 million to
$242.8 million, a compound annual growth rate of 13.5%. Total 1995 revenues on a
pro forma basis for two acquisitions completed in 1996 would have been $307.2
million, an increase of 45% over the 1994 historical result. Prime reported a
net loss of $8.7 million in 1995 compared to net income of $12.1 million in the
year ended December 31, 1994. See "Management's Discussion and Analysis of
Financial Condition and Operations."

Prime seeks to be the market leader in the regions it services while
maximizing its profitability and cash flow. The Company attributes its success
to its operating strategy which includes, among other things, a focus on
customer service, a modern and diverse rental fleet, and a proprietary
point-of-sale ("POS") system. Management believes that the consistent delivery
of high quality service, including 24 hour on-call maintenance, repair and
support services, differentiates Prime from its competitors. Prime believes it
also offers one of the most comprehensive and well maintained fleets of
equipment in the rental equipment industry. The Company employs an extensive
preventive maintenance program for its rental fleet, increasing the
dependability, useful life and resale value of the equipment. In addition, the
Company's proprietary POS system enables each rental equipment yard manager on a
real-time basis to search the Company's entire rental fleet for needed
equipment, determine its location and arrange for delivery to customers using
the Company's radio-dispatched fleet of trucks and trailers and independent
carriers. The Company believes that its extensive, well maintained rental fleet,
coupled with its ability to redeploy equipment rapidly and efficiently among its
yards, allows it to optimize fleet utilization and return on fleet investment.

Prime has a diverse base of over 40,000 active customers, ranging from
"Fortune 500" companies to small contractors and homeowners. Commercial
construction and industrial customers accounted for approximately 50% and 40%,
respectively, of the Company's total revenues in 1995, with subcontractors,
homeowners and other customers generating the remaining 10%.

Primeco was purchased from W.R. Grace & Co. in 1989 by Compagnie Francaise
de l'Afrigue Occidentale, a French company which, in turn, was acquired by an
affiliate of Artemis S.A. ("Artemis") in 1993. In December 1994, affiliates of
Investcorp S.A. ("Investcorp") and a group of international investors formed
Prime Service, Inc. to acquire Primeco from Artemis (the "1994 Acquisition").

3
<PAGE>
INDUSTRY

According to a survey conducted for the Associated Equipment Distributors,
an industry trade association ("AED"), the equipment rental industry grew from
approximately $600 million in 1982 to approximately $13 billion in 1993, the
last period for which such data are available. This increase represents a
compound annual growth rate of 32%. In addition, according to the Rental
Equipment Register, an industry trade publication ("RER"), rental revenues for
the top 100 equipment rental companies increased approximately 25% to $2.5
billion in 1995 from approximately $2.0 billion in 1994. Management believes
that this growth reflects, in part, increased outsourcing trends by industrial
corporations related to an increased emphasis on minimizing capital invested to
purchase low usage equipment as well as reducing the labor costs associated with
maintaining and servicing such equipment. While equipment users traditionally
have rented equipment for specific purposes, such as supplementing capacity
during peak periods in connection with special projects, the convenience and
cost-saving factors of utilizing rental equipment have encouraged customers to
look to suppliers such as the Company as ongoing comprehensive sources of
equipment. Management believes that demand for rental equipment by the
industrial segment will continue to increase as these industrial companies
continue to outsource many non-core operations. According to recent surveys
conducted by the CIT Group, commercial construction contractors intend to
increase the percentage of equipment they rent without a purchase option to an
estimated 8% of their total equipment requirements in 1996 from less than 5% in
1994.

The rental equipment industry is highly fragmented and primarily consists of
a large number of relatively small, independent businesses serving discrete
local markets and a small number of multi-yard regional and multi-regional
operators. Management believes that the rental equipment industry offers
substantial consolidation opportunities for large, well-capitalized rental
businesses such as the Company. Relative to smaller competitors, multi-regional
operators such as the Company benefit from several competitive advantages,
including purchasing power, the ability to service national accounts, the
ability to transfer equipment among rental equipment yards in response to
changing patterns of customer demand and sophisticated management information
systems. In addition, multi-regional operators such as the Company are less
sensitive to localized cyclical downturns.

STRATEGY

Prime's strategy is to become the largest and most profitable rental
equipment company in the United States. Since the 1994 Acquisition, the Company
has pursued an aggressive growth strategy primarily by: (i) increasing the
rental fleet at its existing rental equipment yards to satisfy current and
anticipated demands; (ii) expanding its rental equipment yard network both in
existing and new geographic markets by either acquiring existing yards or, to a
lesser extent, opening new yards; (iii) increasing revenues from industrial
customers; and (iv) maximizing the utilization and profitability of its rental
fleet. The Company plans to continue implementing these strategies, with
increased emphasis on expanding its rental equipment yard network and increasing
its revenues from industrial customers.

4
<PAGE>

from $146.3 million in 1991 to $211.9 million in 1994, management believes that
its capital expenditures program and resulting rental equipment fleet were not
adequate to meet the market demand. Since the 1994 Acquisition, the Company has
significantly increased its rental fleet by purchasing approximately $56.3
million of equipment through December 31, 1995, and $24.7 million during the six
months ended June 30, 1996 (in each case exclusive of amounts required to
replace used equipment sold in the ordinary course of business and recent
acquisitions, but inclusive of rental equipment purchases for new yards).
Management expects its total 1996 rental equipment purchases to be $42.9 million
(exclusive of amounts required to replace used equipment sold in the ordinary
course of business and recent acquisitions, but inclusive of rental equipment
purchases for new yards).

EXPAND RENTAL EQUIPMENT YARD NETWORK. Prime intends to selectively expand
its network of rental equipment yards through a combination of acquisitions of
suitable existing rental equipment yards and to a lesser extent by opening new
rental equipment yards. Management believes that its management information
systems, size and operating expertise provide a competitive advantage in making
acquisitions as these strengths allow Prime to (i) integrate targets quickly
into its information and operating structure, (ii) realize significant synergies
in the form of reduced overhead and lower cost of goods through greater
purchasing power, (iii) enhance revenue by supplying acquired yards with
additional equipment to optimize the rental fleet mix and add new business lines
at those yards and (iv) enhance revenue by expanding coverage of national
accounts. The Company primarily targets acquisitions of stable equipment
businesses in new or existing markets where an existing owner has limited
resources to expand the rental equipment fleet. Pursuant to this strategy, in
February 1996 Prime acquired Vibroplant U.S., Inc. (operating as American
Hi-Lift Corporation, "American Hi-Lift"), adding a net of 12 yards in seven
states, and in July 1996 Prime acquired the assets of Alpine Equipment Rentals &
Supply Company, Inc. ("Alpine"), adding a net six yards in the state of
Washington and expanding Prime's presence in the Northwest (collectively, the
"1996 Acquisitions"). In the case of the 1996 Acquisitions, Prime completed the
integration of the acquired equipment yards and the acquired fleet into the
Company's management information systems on the closing date of each
acquisition. In connection with the integration of the business of American
Hi-Lift, Prime's management reduced, on an annualized basis, the selling,
general, administrative and other expenses associated with American Hi-Lift by
approximately $5 million, from $15.2 million incurred by American Hi-Lift for
the year ended March 31, 1995. Prime is currently considering several potential
acquisitions of equipment rental companies, although Prime does not currently
have any understandings or agreements with respect to potential acquisitions.

INCREASE REVENUES FROM INDUSTRIAL CUSTOMERS. Prime believes that it is one
of the largest suppliers of rental equipment to industrial companies in the
southern United States, based upon revenues from equipment rentals to such
customers. The demand for rental equipment from Prime's industrial customers
generally has been less sensitive to economic cycles than that of its commercial
and residential customers and is, therefore, more stable. Management attributes
this relative stability to the fact that a major part of rental equipment use by
industrial customers is related to ongoing and periodic maintenance work on
existing facilities. Since many of the facilities operate 24 hours a day, such
maintenance is essential to industrial customers in order to avoid costly
shutdowns that result from equipment failures. Prime has taken a number of steps
to increase revenues from industrial customers, including focusing its national
marketing program on the industrial market segment and offering services that
meet the specific needs of industrial customers such as its Integrated Rental
Management-TM- program. Under its Integrated Rental Management-TM- program,
Prime typically enters into exclusive contracts with large industrial customers,
generally "Fortune 500" companies, to supply rental equipment, to provide 24
hours a day maintenance and repair services, and to provide sophisticated
equipment management services required for a particular facility or facilities.
Prime believes that it is well-positioned to take advantage of the trend of
companies outsourcing their rental equipment needs due to its formalized
Integrated Rental Management-TM- program, customized POS system and strong
national account relationships.

5
<PAGE>

MAXIMIZE UTILIZATION AND PROFITABILITY OF RENTAL FLEET. Prime believes that
it maintains customer loyalty by maintaining a diverse modern fleet. As of June
30, 1996, the average age of Prime's rental fleet was 37 months. Prime's
proprietary POS system allows it to monitor the demand for and actual usage of
its equipment on a real-time basis. The Company, taking advantage of the POS
system and its presence in numerous markets, can allocate new equipment and
transfer current equipment to yards with high rental activity. In addition, if
utilization of equipment declines, management is able to quickly react by
decreasing purchases of new equipment or replacement of used rental equipment
sold. The Company believes its comprehensive preventative maintenance program
allows it to increase the useful life of its equipment and obtain premium values
when it is sold.

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company.......... 7,250,000
Common Stock outstanding immediately after
the Offering............................... 27,991,544(1)
Use of proceeds to the Company............... The net proceeds to the Company from the
Offering will be used to reduce outstanding
indebtedness of the Company. Prime will not
receive any proceeds from the sale by the
Selling Stockholders.
Dividend policy.............................. The Company does not anticipate paying any
dividends.
Proposed NYSE Symbol......................... " "
</TABLE>

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(1) Excludes (i) 606,392 shares subject to options to be outstanding upon the
consummation of the Offering and (ii) 1,153,335 additional shares reserved
for issuance pursuant to options available for grant under the Company's
Management Stock Incentive Plan (the "Old Stock Plan") and the 1996
Management Stock Incentive Plan (the "New Stock Plan," together with the Old
Stock Plan, the "Stock Plans"). See "Management--Management Stock Incentive
Plans."

RISK FACTORS

Prospective purchasers of the Common Stock offered hereby should consider
carefully the information set forth under "Risk Factors," in addition to the
other information set forth in this Prospectus, before purchasing any of the
shares of Common Stock. Such risk factors include, among others, the effect of
general economic conditions, the ability of Prime to implement and manage its
growth strategy, Prime's dependence on key personnel, and the impact of
competition.

6
<PAGE>
SUMMARY FINANCIAL AND OTHER DATA

The following table sets forth summary financial and other data of the
Company as of and for the five years ended December 31, 1995 and as of and for
the six months ended June 30, 1995 and 1996. The adjusted pro forma statement of
operations data assume that the 1996 Acquisitions and the Offering occurred at
January 1, 1995. The adjusted pro forma balance sheet data reflect the June 30,
1996 balance sheet data as adjusted for the Alpine acquisition and the Offering
as if they occurred on that date. The pro forma financial data does not purport
to represent what the Company's financial position or results of operations
would actually have been had the 1996 Acquisitions and the Offering in fact
occurred on such dates or to project the Company's financial position or results
of operations for any future date or period. For additional information, see the
Consolidated Financial Statements and Pro Forma Consolidated Financial
Statements included elsewhere in this Prospectus. The following table should
also be read in conjunction with "Selected Consolidated Historical, Pro Forma
Financial and Other Data" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

BALANCE SHEET DATA (END OF PERIOD):
Net book value of rental
equipment.............. $ 90,594 $ 87,358 $ 99,093 $ 153,818 $ 181,798 $ 173,392 $ 246,412 $ 254,163
Total assets............. 288,331 278,314 280,072 369,403 391,979 386,989 493,979 501,995(4)
Total debt............... 163,000 146,000 133,000 235,000 265,000 255,500 344,000 201,550
Stockholders' equity..... 99,524 105,727 110,275 69,633 60,976 73,461 73,513 226,689(4)

OTHER DATA:
Gross equipment capital
expenditures........... $ 21,557 $ 31,061 $ 38,088 $ 52,814 $ 89,372 $ 47,978 $ 50,513
Net equipment capital
expenditures (5)....... 11,142 18,943 30,089 39,871 66,520 35,759 37,298
Gross rental revenue
(6).................... 86,405 93,516 102,802 120,388 141,138 65,371 88,390
Average original cost of
rental equipment (7)... 172,940 169,954 174,210 191,241 228,406 215,972 325,490
Gross rental
revenue/average
original cost of rental
equipment ("ROI")...... 50.0% 55.0% 59.0% 63.0% 61.8% 60.5%(8) 54.3%(8)
Non-rental rate.......... 7.0% 5.9% 4.1% 3.4% 3.6% 3.6% 3.5%
Number of rental
equipment yards (end of
period)................ 64 64 70 74 81 78 96
</TABLE>

7
<PAGE>
NOTES TO SUMMARY FINANCIAL AND OTHER DATA

(1) As a result of the 1994 Acquisition, the Company's assets and liabilities
were adjusted to their estimated fair values as of December 2, 1994. In
addition, the Company entered into new financing arrangements and had a
change in its capital structure. Rental equipment acquired subsequent to
January 1, 1995 is being depreciated over a longer useful life. See Note 2
to the Consolidated Financial Statements. Accordingly, the combined results
of the 1994 period and subsequent periods are not comparable to prior
periods. The period from December 2, 1994 to December 31, 1994 reflects:
increased cost of sales due to higher depreciation expense for rental
equipment and cost of rental equipment sales; increased interest expense;
and lower other depreciation and amortization. The combined period for 1994
represents the mathematical addition of the historical amounts for the
Predecessor period (January 1, 1994 to December 1, 1994) and the Successor
period (December 2, 1994 to December 31, 1994). Such results may not be
indicative of results that would have been obtained had the 1994 Acquisition
occurred on January 1, 1994. For information regarding the periods
separately, see the Consolidated Financial Statements included elsewhere in
this Prospectus.

(2) Reflects costs of $22.6 million, $9.4 million and $6.2 million for the year
ended December 31, 1995 and the six month periods ended June 30, 1995 and
1996, respectively, related to the step-up in carrying value of the rental
fleet that existed at the date of the 1994 Acquisition. Of these costs,
approximately $9.0 million, $4.9 million, and $3.4 million, for the year
ended December 31, 1995 and the six month periods ended June 30, 1995 and
1996, respectively, is included within cost of goods sold, and approximately
$13.6 million, $4.5 million, and $2.8 million, for the year ended December
31, 1995 and the six month periods ended June 30, 1995 and 1996,
respectively, is included within depreciation and amortization.

(3) Excludes the write-off of the historical unamortized prepaid management fee
paid to Investcorp International, Inc., the write-off of the historical
unamortized deferred financing costs directly related to the debt retired
with the proceeds from the Offering and the early redemption penalties
resulting from the retirement of approximately $33.3 million of the Senior
Notes and the $10 million Subordinated Notes.

(4) Reflects the write-off of the historical unamortized prepaid management fee
paid to Investcorp International, Inc. ($1,296, net of related income tax
benefit of $829), the write-off of the historical unamortized deferred
financing costs directly related to the debt retired with the proceeds from
the Offering ($753, net of related income tax benefit of $472) and the early
redemption penalties resulting from the retirement of approximately $33.3
million of the Senior Notes and the $10 million Subordinated Notes ($2,775,
net of related income tax benefit of $1,775).

(5) Net equipment capital expenditures represent gross rental equipment capital
expenditures reduced by the net book value of rental equipment sold.

(6) Gross rental revenue equals rental revenue less income from equipment that
the Company rents from third parties and subsequently re-rents to its
customers plus reclassified rental income due to sales of used rental
equipment through rent-to-own and rental purchase option programs.

(7) Average original cost of rental equipment represents the average of the
monthly original cost of rental equipment. Original cost represents the
original price paid by the Company or its acquirees, as the case may be, for
the equipment, excluding effects of purchase accounting adjustments.

(8) ROI for interim periods is calculated on an annualized basis. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

8
<PAGE>

RECENT OPERATING RESULTS

Based on preliminary operating results for the third quarter of 1996,
management estimates that total revenues for the nine months ended September 30,
1996 increased 34.5% to approximately $239.6 million (compared to $178.2 million
for the comparable period of the prior year), operating income increased 104.6%
to approximately $39.7 million (compared to $19.4 million for the comparable
period of the prior year) and net income was approximately $6.0 million
(compared to a $2.9 million net loss for the comparable period of the prior
year). The increase in total revenues was primarily the result of the
acquisition of American Hi-Lift on February 26, 1996, which did not contribute
to revenues in the nine months ended September 30, 1995. Management estimates
that approximately 52% of the increase in total revenues for the nine months
ended September 30, 1996 compared to the comparable period of the prior year was
attributable to the 1996 Acquisitions, and the remaining approximately 48% of
the increase was attributable to growth in the existing business. Thus, of the
34.5% increase in revenues described above, approximately 18% was due to the
1996 Acquisitions and the remaining 16.9% was due to growth in the existing
business.

9
<PAGE>
RISK FACTORS

PROSPECTIVE PURCHASERS OF SHARES OF COMMON STOCK SHOULD CONSIDER CAREFULLY
THE FOLLOWING RISK FACTORS RELATING TO THE OFFERING AND THE BUSINESS OF THE
COMPANY, TOGETHER WITH INFORMATION AND FINANCIAL DATA SET FORTH ELSEWHERE IN
THIS PROSPECTUS, PRIOR TO MAKING AN INVESTMENT DECISION.

GENERAL ECONOMIC CONDITIONS

The rental equipment industry is affected by changes in economic conditions,
including national, regional and local slowdowns in construction and industrial
activity. In addition, most of Prime's revenues are derived from customers who
are in industries and businesses that are cyclical in nature and subject to
changes in general economic conditions. Prime's operating results may also be
adversely affected by events or conditions in a particular region, such as
regional economic slowdowns, adverse weather and other factors. Prime's
operating results may be adversely affected by increases in interest rates that
may lead to a decline in economic activity, while simultaneously resulting in
higher interest payments by Prime under its credit facility. There can be no
assurance that economic slowdowns or adverse economic conditions will not have a
material adverse effect on the Company's operating results and financial
condition.

ABILITY TO IMPLEMENT AND MANAGE GROWTH STRATEGY

A principal component of the Company's strategy is to continue to expand
through additional acquisitions and start-up locations that complement the
Company's business in new or existing markets. The results achieved to date by
the Company in its expansion efforts are not necessarily indicative of its
prospects or ability to penetrate new markets, many of which will have different
competitive conditions and demographic characteristics than the Company's
current markets. Implementation of the Company's growth strategy may impose
significant strain on the Company's management, operating systems and financial
resources. Failure by the Company to manage its growth, or unexpected
difficulties encountered during expansion, could have a material adverse impact
on the Company's results of operations or financial condition.

The Company's ability to acquire or open and operate profitably new rental
equipment yards depends upon a number of factors, including (i) identifying
businesses or assets that meet the Company's investment criteria or identifying
and obtaining attractive sites for new yards, (ii) generating sufficient funds
from existing operations or obtaining third-party financing to acquire or open
and develop new yards, (iii) the Company's executive management team and its
financial and accounting controls and (iv) staffing, training and retaining
skilled on-site management personnel. Certain of these factors are beyond the
Company's control and may be affected by the economy or actions taken by
competing companies. The inability of the Company to successfully integrate
acquired businesses into its operations could have an adverse effect on the
Company's results of operations.

The primary source of capital to fund the Company's growth will be debt
financing, principally amounts borrowed under the Company's credit facility,
which will be amended and restated effective contemporaneously with the
consummation of this Offering. As of June 30, 1996, after giving pro forma
effect to the amended and restated credit facility and the sale of the Common
Stock hereby and the application of the proceeds therefrom, the Company would
have had $134.8 million of indebtedness outstanding and would have had $163.6
million of availability under the credit facility. To the extent the Company
succeeds in acquiring new businesses or opening start-up locations, the amount
of the Company's outstanding indebtedness can be expected to increase. As such
indebtedness increases, the level of indebtedness of the Company could have
important consequences to the holders of the Common Stock, including: (i) an
increasing portion of the Company's cash flow from operations will be dedicated
to the payment of principal and interest on its indebtedness and will not be
available for other purposes; (ii) the ability of the Company to obtain
financing thereafter for working capital needs and general corporate purposes
may be impaired; and (iii) the Company's level of indebtedness may reduce its
flexibility to respond to changing business and economic conditions.

10
<PAGE>

DEPENDENCE ON KEY PERSONNEL

Certain of the executive officers of the Company, particularly Thomas E.
Bennett, the President and Chief Executive Officer, are of significant
importance to the direction and management of the Company. The Company uses
several methods to retain key employees, including employment agreements and
incentive compensation arrangements, such as the Stock Plans. See "Management."
The loss of the services of such persons could have a material adverse effect on
the Company's business and future operations, and there can be no assurance that
the Company would be able to find replacements for such persons with comparable
business experience. The Company does not maintain key-man or similar insurance
policies.

IMPACT OF SIGNIFICANT COMPETITION

The equipment rental industry is highly fragmented and competitive. The
Company's competitors include: large national companies; regional competitors
which operate in one or two states; small, independent businesses with one or
two rental locations; and equipment vendors and dealers who both sell and rent
equipment to customers. Some of the Company's competitors have greater financial
resources, are more geographically diverse and have greater name recognition
than the Company. There can be no assurance that the Company will not encounter
increased competition from existing competitors or new market entrants that may
be significantly larger and have greater financial and marketing resources. In
addition, to the extent existing or future competitors seek to gain or retain
market share by reducing prices, the Company may be required to lower its
prices, thereby adversely affecting operating results. Existing or future
competitors also may seek to compete with the Company for acquisitions, which
could have the effect of increasing the price for acquisitions or reducing the
number of suitable acquisitions. In addition, such competitors also may compete
with the Company for start-up locations, thereby limiting the number of
attractive locations for expansion. See "Business--Competition."

ENVIRONMENTAL LIABILITIES

The Company is subject to various evolving Federal, state and local
environmental laws and regulations governing, among other things, emissions to
air, discharge to waters and the generation, handling, storage, transportation,
treatment and disposal of hazardous substances and wastes. These laws and
regulations provide for substantial penalties for violations, and, in many
cases, could require the Company to remediate a site to meet applicable legal
requirements. Certain limited environmental investigations of the Company's
properties have revealed releases or possible releases of hazardous materials
that may require remediation. These include discharges of petroleum-based
materials from underground storage tanks, disposals of solvents, and groundwater
contamination at certain of the Company's sites. If the extent of environmental
conditions requiring remediation, or the cost of remediation, exceeds the
Company's current estimates and the Company is unable to obtain indemnification
from various sellers of such sites or is unsuccessful in collecting recoveries
from state trust funds, such additional costs could adversely affect the
Company's financial condition, results of operations and cash flows. See
"Business--Environmental Regulation."

CONTROL BY PRINCIPAL STOCKHOLDERS

Upon consummation of the Offering, the non-management stockholders listed in
"Principal and Selling Stockholders," who are affiliates of Investcorp, or
others who frequently co-invest with Investcorp, may be deemed to be the
beneficial owners of approximately 66.4% of the outstanding shares of Common
Stock. Until such time, if ever, that there is a significant decrease in the
percentage of outstanding shares held by such stockholders, these stockholders
will be able to control the Company through their ability to determine the
outcome of votes of stockholders regarding, among other things, election of
directors and approval of significant transactions. In particular, Investcorp,
as the beneficial owner of 24.6% of the

11
<PAGE>

Common Stock after the Offering and with representatives on the board of
directors of the Company, may be able to exert influence over the operations of
the Company and Primeco. In addition, executive officers, directors and senior
management of the Company and Primeco will own an aggregate of approximately
866,153 shares, or 3.0%, of the Common Stock after the Offering on a fully
diluted basis, after giving effect to the exercise of all outstanding options
held by such officers, directors and management. See "Principal and Selling
Stockholders."

LIABILITY AND INSURANCE

The Company's business exposes it to possible claims for personal injury or
death resulting from the use of equipment rented or sold by the Company and from
injuries caused in motor vehicle accidents in which Company delivery and service
personnel are involved. The Company carries comprehensive insurance subject to a
large deductible per claim, with no aggregate deductible limit. There can be no
assurance that existing or future claims will not exceed the level of the
Company's insurance, or that such insurance will continue to be available on
economically reasonable terms, if at all.

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of Common Stock in the Offering will experience immediate and
substantial dilution in the net tangible book value of their Common Stock. As of
June 30, 1996, the net tangible book value per share was a deficit of $3.38. As
of such date, current stockholders would experience an increase in net tangible
book value per share of $6.36 and purchasers of shares in the Offering would
experience dilution in net tangible book value of $20.52 per share (based on an
assumed initial public offering price of $23.50 per share). See "Dilution."

NO DIVIDENDS

The Company currently does not intend to pay any cash dividends on the
Common Stock. The Company is a holding company with no business operations of
its own. The Company therefore is dependent upon payments, dividends and
distributions from Primeco for funds to pay its expenses and to pay future cash
dividends or distributions, if any, to holders of the Common Stock. Primeco
currently intends to retain any earnings for support of its working capital,
repayment of indebtedness, capital expenditures and general corporate purposes.
Primeco has no current intention of paying dividends or making other
distributions to the Company in excess of amounts necessary to pay the Company's
operating expenses and taxes. Primeco's credit facility and subordinated debt
contain restrictions on Primeco's ability to pay dividends or make other
distributions to the Company. See "Dividend Policy" and "Description of Certain
Indebtedness."

EFFECT OF CERTAIN CHARTER, CHANGE OF CONTROL AND STATUTORY PROVISIONS

The Company's Board of Directors is authorized, subject to certain
limitations prescribed by law, to issue up to ten million shares of preferred
stock in one or more classes or series and to fix the designations, powers,
preferences, rights, qualifications, limitations or restrictions, including
voting rights, of those shares without any further vote or action by
stockholders. The rights of the holders of Common Stock will be subject to, and
may be adversely affected by, the rights of the holders of any preferred stock
that may be issued in the future. The issuance of preferred stock, while
providing flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of the
Company. The Company has no current plans to issue shares of preferred stock.
See "Description of Capital Stock--Preferred Stock."

Primeco's credit facility and subordinated indebtedness contain provisions
that, under certain circumstances, will cause such indebtedness to become due
upon the occurrence of a change of control of

12
<PAGE>

Primeco or the Company. See "Description of Certain Indebtedness." These
provisions could have the effect of making it more difficult for a third party
to acquire control of the Company.

The Company is subject to the anti-takeover provisions of Section 203 of the
Delaware General Corporation Law. In general, the statute prohibits a publicly
held Delaware corporation from engaging in a "business combination" with an
"interested stockholder" for a period of three years after the date of the
transaction in which the person became an interested stockholder, unless the
business combination is approved in a prescribed manner. See "Description of
Capital Stock--Certain Provisions of Delaware Law."

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY IN PRICE OF COMMON STOCK

Prior to the Offering, there has been no public market for the Common Stock.
The Company plans to list the Common Stock on the New York Stock Exchange. Even
if the Common Stock is listed on the New York Stock Exchange, there can be no
assurance that an active public market for the Common Stock will develop or be
sustained after the Offering. The initial public offering price was determined
by negotiations between the Company, the Managers and the representatives of the
U.S. Underwriters, and may bear no relationship to the market price of the
Common Stock after the Offering. See "Underwriting." Subsequent to the Offering,
prices for the Common Stock will be determined by the market and may be
influenced by a number of factors, including the depth and liquidity of the
market for the Common Stock, investor perceptions of the Company and other
equipment rental companies and general economic and other conditions. In
addition, the stock market may experience volatility that affects the market
prices of companies in ways unrelated to the operating performance of such
companies, and such volatility could adversely affect the market price of the
Common Stock.

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, 27,991,544 shares of Common Stock will be
outstanding. The 7,250,000 shares (8,337,500 if the over-allotment is exercised
in full) sold in the Offering will be freely transferable without restriction
under the Securities Act of 1933, as amended (the "Securities Act"), except for
shares acquired by "affiliates" of the Company as that term is defined under the
Securities Act. Of the remaining 20,741,544 outstanding shares of Common Stock
(assuming exercise of the over-allotment), 1,287,371 were sold in offshore
distributions under Regulation S within the past year, 13,824,887 were sold in
offshore distributions under Regulation S more than one year ago and 5,629,286
are deemed to be restricted securities. Pursuant to Rule 701 under the
Securities Act, 115,836 of the restricted securities will be available for
resale in the public market without restriction commencing 90 days after the
date of this Prospectus. Commencing 90 days after the date of this Prospectus,
all of the remaining restricted securities are eligible for sale in the public
market in compliance with Rule 144 under the Securities Act. Subject to certain
exceptions, the Company and all of the present stockholders of the Company have
agreed that they will not offer, issue, pledge, sell, transfer or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for shares of Common Stock for a period of 180 days
after the date of this Prospectus without the prior written consent of CS First
Boston Corporation. See "Principal and Selling Stockholders" and "Underwriting."

At the expiration of the 180-day period described above, or earlier with the
written consent of CS First Boston Corporation, the holders of 5,745,122 shares
of Common Stock will have the right to sell shares of Common Stock without
regard to the volume or the other limitations of Rule 144 under the Securities
Act.

The Company intends to file a registration statement on Form S-8 under the
Securities Act to register the sale of the 1,759,727 shares of Common Stock
reserved for issuance under its Stock Plans. As a result, any shares issued upon
exercise of stock options granted under such plan will be available, subject to
special rules for affiliates, for resale in the public market after the
effective date of such registration

13
<PAGE>

statement, subject to applicable lock-up arrangements. See
"Management--Management Stock Incentive Plans."

No prediction can be made as to the effect, if any, that future sales of
shares of Common Stock or the availability of shares of Common Stock for future
sale would have on the market price of the Common Stock prevailing from time to
time. Sales of substantial amounts of Common Stock in the public market
following the Offering, or the perception that such sales could occur, could
have an adverse effect on prevailing market prices for the Common Stock. See
"Shares Eligible for Future Sale" and "Underwriting."

14
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the Offering are expected to be $158.0
million (assuming an initial public offering price of $23.50 per share, and
after deducting estimated offering expenses and underwriting discounts and
commissions). The Company intends to use the net proceeds to (i) reduce
outstanding borrowings under Primeco's credit facility by $110.2 million, (ii)
redeem approximately $33.3 million in principal amount of Primeco's 12.75%
Senior Subordinated Notes Due 2005 (the "Senior Notes") for $37.5 million (which
includes the premium on such principal as provided in the indenture in respect
of the Senior Notes), and (iii) repay $10 million of subordinated notes held by
an affiliate of Investcorp and other international investors (the "Subordinated
Notes") at a redemption price of $10.35 million. See "Certain Transactions."
Although the application of the net proceeds will result in a reduction of the
principal amount outstanding under Primeco's credit facility, it will not reduce
the maximum amount that Primeco can borrow under its credit facility. The
revolving credit facility permits Primeco to borrow funds for working capital
and capital expenditure purposes, including acquisitions. Prime currently is
considering several potential acquisitions, although Prime does not currently
have any understandings or agreements with respect to potential acquisitions.
For further information on the interest rates, maturity and other terms of the
credit facility, the Senior Notes and the Subordinated Notes, see "Description
of Certain Indebtedness" and Note 8 to the Consolidated Financial Statements.

DIVIDEND POLICY

The Company currently does not intend to pay any cash dividends on the
Common Stock.

The Company is a holding company with no business operations of its own. The
Company therefore is dependent upon payments, dividends and distributions from
Primeco for funds to pay dividends to stockholders of the Company. Primeco
currently intends to retain any earnings for support of its working capital,
repayment of indebtedness, capital expenditures and other general corporate
purposes. Primeco has no current intention of paying dividends or making other
distributions to the Company in excess of amounts necessary to pay the Company's
operating expenses and taxes. Primeco's credit facility and its indenture in
respect of the Senior Notes contain restrictions on Primeco's ability to pay
dividends or make payments or other distributions to the Company. See "Risk
Factors--No Dividends," and "Description of Certain Indebtedness."

15
<PAGE>
CAPITALIZATION

The following table sets forth the capitalization of the Company as of June
30, 1996 (i) on a historical basis, (ii) on a pro forma basis to reflect the
Alpine acquisition, and (iii) on an adjusted pro forma basis to reflect the
Alpine acquisition and the Offering (assuming an initial public offering price
of $23.50 per share, and after deducting estimated offering expenses and
underwriting discounts and commissions). This table should be read in
conjunction with the "Use of Proceeds," "Selected Consolidated Historical and
Pro Forma Financial Data," "Management's Discussion and Analysis of Financial
Condition and Results of Operations," and the Consolidated Financial Statements
included elsewhere in this Prospectus.

<TABLE>
<CAPTION>
JUNE 30, 1996
------------------------------------
<S> <C> <C> <C>
ADJUSTED
HISTORICAL PRO FORMA PRO FORMA
---------- ----------- -----------

<CAPTION>
(IN THOUSANDS)
<S> <C> <C> <C>
Debt:
Senior credit facility(1).................................................. $ 234,000 $ 245,000 $134,850
12.75% Senior Subordinated Notes due 2005.................................. 100,000 100,000 66,700
Subordinated Notes......................................................... 10,000 10,000 --
---------- ----------- -----------
Total debt............................................................. 344,000 355,000 201,550
---------- ----------- -----------
Stockholders' equity:
Preferred stock, par value $.01 per share; 10 million shares authorized, no
shares issued and outstanding............................................ -- --
Common Stock, par value $.01 per share; 100 million shares authorized,
20,743 shares issued and 20,742 shares outstanding (27,992 shares
outstanding as adjusted)(2).............................................. 208 208 208
Additional paid-in capital................................................. 79,192 79,192 237,192
Accumulated deficit........................................................ (5,882) (5,882 ) (10,706 )(3)
Treasury Stock............................................................. (5) (5 ) (5 )
---------- ----------- -----------
Total stockholders' equity............................................... 73,513 73,513 226,689
---------- ----------- -----------
Total capitalization..................................................... $ 417,513 $ 428,513 $428,239
---------- ----------- -----------
---------- ----------- -----------
</TABLE>

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

(1) As of September 30, 1996 the amount outstanding under the senior credit
facility was $244.0 million. The credit facility is collateralized by
substantially all of the assets of the Company. See Note 8 to the
Consolidated Financial Statements.

(2) Excludes (i) 259,727 shares subject to options outstanding on the date
hereof under the Stock Plans and (ii) 1.5 million shares reserved for
issuance pursuant to options available for grant under the Company's Stock
Plans. See "Management--Management Stock Incentive Plan."

(3) Includes the write-off of the historical prepaid management fee paid to
Investcorp International, Inc. ($1,296, net of related tax benefit of $829),
the write-off of the historical unamortized deferred financing costs
directly related to the debt retired with the proceeds from the Offering
($753, net of related income tax benefit of $472) and the early redemption
penalties resulting from the retirement of approximately $33.3 million of
the Senior Notes and the $10 million Subordinated Notes ($2,775, net of
related income tax benefit of $1,775).

16
<PAGE>
DILUTION

The net tangible book value of the Company at June 30, 1996 (adjusted for
the Alpine acquisition), was a deficit of $70.2 million, or $3.38 per share of
Common Stock. Net tangible book value per share represents the amount of
tangible assets of the Company, less total liabilities, divided by the number of
outstanding shares of Common Stock. Without taking into account any other
changes in net tangible book value after June 30, 1996, other than to give
effect to the sale by the Company of 7,250,000 shares of Common Stock offered
hereby (based on an assumed initial public offering price of $23.50 per share
and after deducting estimated offering expenses and underwriting discounts and
commissions), and the application of the estimated net proceeds therefrom, the
pro forma net tangible book value of the Company at June 30, 1996, would have
been $84.2 million, or $2.98 per share. This represents an immediate increase in
net tangible book value of $6.36 per share of Common Stock to existing
stockholders and an immediate dilution of $20.52 per share to new investors
purchasing shares in the Offering. The following table illustrates the per share
book value dilution to new investors:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $ 23.50
Net tangible book value per share before the
Offering............................................ $ (3.38)
Increase per share attributable to the Offering....... 6.36
---------
Pro forma net tangible book value per share after the
Offering.............................................. 2.98
---------
Net tangible book value dilution per share to new
investors............................................. $ 20.52
---------
---------
</TABLE>

The following table summarizes, as of June 30, 1996, the differences between
existing stockholders and new investors with respect to the number of shares of
Common Stock purchased from the Company, the total consideration paid and the
average price paid per share (based on an assumed initial public offering price
of $23.50 per share and before deducting estimated offering expenses and
underwriting discount and commissions):

<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
--------------------------- ------------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
------------ ------------- ---------- ------------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders*.......... 20,743,000 74% $ 73,513 30% $ 3.54
New investors................... 7,250,000 26% 170,375 70% 23.50
------------ --- ---------- ---
Total..................... 27,993,000 100% $ 243,888 100%
</TABLE>

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

* Total consideration paid by existing stockholders represents consolidated
stockholders' equity before the Offering.

As of June 30, 1996 there were options outstanding to purchase a total of
259,727 shares of Common Stock at a weighted average exercise price of $3.86 per
share. To the extent that any of these options are exercised, there will be
further dilution to new investors. See "Capitalization" and "Management--
Management Stock Incentive Plan."

17
<PAGE>

PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

The following pro forma consolidated balance sheet as of June 30, 1996
presents the financial position of the Company as if the following transactions
had occurred on June 30, 1996: (i) the consummation of the acquisition of Alpine
on July 29, 1996 and (ii) the consummation of the Offering (based on an assumed
initial public offering price of $23.50 per share and after deducting estimated
offering expenses and underwriting discounts and commissions). The pro forma
consolidated balance sheet as of June 30, 1996 combines, with appropriate
adjustments, the Company's unaudited consolidated balance sheet as of June 30,
1996 and the unaudited balance sheet of Alpine as of June 30, 1996. Certain
reclassifications were made to conform Alpine's historical financial statements
with the Company's historical financial statements.

The pro forma consolidated statements of income for the fiscal year ended
December 31, 1995 and the six months ended June 30, 1996 set forth below present
the results of operations of the Company for such year and such period as if the
following transactions had occurred on January 1, 1995: (i) the acquisition of
American Hi-Lift on February 26, 1996; (ii) the acquisition of Alpine on July
29, 1996; and (iii) the consummation of the Offering and application of the
estimated net proceeds therefrom. The pro forma consolidated statement of
operations for the fiscal year ended December 31, 1995, combines, with
appropriate adjustments, the Company's audited consolidated results of
operations for its fiscal year ended December 31, 1995, the audited results of
operations of Alpine for its fiscal year ended December 31, 1995 and the audited
results of operations of American Hi-Lift for the period from April 1, 1995
through February 25, 1996 combined with the unaudited one month period ended
April 30, 1995 (the one month period ended April 30, 1995 is included twice
because the Company believes it is representative of normal operations, while
the one month period ended March 31, 1995 includes adjustments relating to prior
months). The pro forma consolidated statement of operations for the six months
ended June 30, 1996 combines, with appropriate adjustments, the Company's
unaudited consolidated results of operations for its six months ended June 30,
1996, the unaudited results of operations of Alpine for the same six month
period and the unaudited results of operations of American Hi-Lift for the
period from January 1, 1996 through February 25, 1996. Certain reclassifications
were made to conform American Hi-Lift's historical financial statements with the
Company's historical financial statements.

The pro forma consolidated financial information for Alpine has been
prepared on the basis of preliminary assumptions and estimates. The pro forma
consolidated financial statements may not be indicative of the results of
operations that would have been achieved if the acquisition of Alpine and
American Hi-Lift and the application of the net proceeds from the Offering had
been effected on the dates indicated or which may be achieved in the future. The
pro forma consolidated financial statements and notes thereto should be read in
conjunction with "Selected Consolidated Historical, Pro Forma Financial and
Other Data," "Management's Discussion and Analysis of Financial Condition and
Results of Operations," and the Consolidated Financial Statements of the
Company, Alpine and American Hi-Lift appearing elsewhere herein.

18
<PAGE>

Pro Forma Consolidated Balance Sheet
as of June 30, 1996
(in thousands)

<TABLE>
<CAPTION>
ACQUISITION OFFERING ADJUSTED
PRIME ALPINE ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
---------- --------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents................ $ 120 $ 360 $ (350)(2) $ 130 $ $ 130
(11,000)(2)
11,000(3)
Accounts receivables, net................ 46,305 1,516 47,821 47,821
Inventories.............................. 23,376 22 23,398 23,398
Rental equipment, net.................... 246,412 7,576 175(2) 254,163 254,163
Property, plant and equipment, net....... 28,929 1,434 (196)(2) 30,167 30,167
Cost in excess of fair value of net
assets acquired, net................... 130,301 479(2) 130,780 130,780
Other assets............................. 18,536 72 350(2) 18,886 (3,350)(5) 15,536
(72)(1)
---------- --------- ----------- ----------- ----------- -----------
Total assets......................... $ 493,979 $ 10,980 $ 386 $ 505,345 $ (3,350) $ 501,995
---------- --------- ----------- ----------- ----------- -----------
---------- --------- ----------- ----------- ----------- -----------
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable......................... $ 8,330 $ 170 $ (170)(1) $ 8,330 $ $ 8,330
Accrued expenses......................... 28,680 356 (356)(1) 28,680 28,680
Debt..................................... 344,000 2,958 11,000(3) 355,000 (153,450)(6) 201,550
(2,958)(1)
Deferred income taxes.................... 30,415 30,415 (3,076)(5) 27,339
Other liabilities........................ 9,041 90 366(2) 9,407 9,407
(90)(1)
Stockholders' equity..................... 73,513 7,406 (7,406)(4) 73,513 153,176 226,689
---------- --------- ----------- ----------- ----------- -----------
Total liabilities and stockholder's
equity............................. $ 493,979 $ 10,980 $ 386 $ 505,345 $ (3,350) $ 501,995
---------- --------- ----------- ----------- ----------- -----------
---------- --------- ----------- ----------- ----------- -----------
</TABLE>

See accompanying notes to Pro Forma Consolidated Balance Sheet.

19
<PAGE>

NOTES TO PRO FORMA CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1996

Pro forma adjustments related to the Alpine acquisition and the Offering
include the following:

<TABLE>
<C> <S> <C>
(1) Elimination of the Alpine assets and liabilities not assumed.

(2) The purchase price for the Alpine acquisition consists of the following:
Cash paid for the assets of Alpine $ 11,000
Cash paid for noncompetes (other assets) 350
Cost incurred by the Company directly related to the Alpine acquisition 366
---------
$ 11,716
---------
---------
Allocation of the Alpine purchase price to the acquired assets:
Cash $ 360
Accounts receivables, net 1,516
Inventories 22
Rental equipment, net 7,751
Property, plant and equipment, net 1,238
Noncompete agreements (other assets) 350
Costs in excess of fair value of net assets acquired 479
---------
$ 11,716
---------
---------

(3) Debt incurred to finance the Alpine acquisition $ 11,000

(4) Elimination of Alpine's stockholders equity.
</TABLE>

<TABLE>
<CAPTION>
BOOK VALUE DEFERRED
AT JUNE 30, INCOME TAX
1996 BENEFIT
--------------- -----------
<C> <S> <C> <C>
(5) Write-off of deferred financing costs related to debt extinguished
with Offering proceeds. See "Use of Proceeds."................................ $(1,225) $(472 )
Write-off of historical unamortized prepaid management fee paid to (2,125 ) (829 )
Investcorp International Inc. See "Certain Transactions.".....................
Early redemption penalties of $4.6 million. See "Use of Proceeds."............ -- (1,775 )
------- -----------
($3,350) $ (3,076 )
-------
------- -----------
-----------

(6) Gross proceeds from the Offering, $ 170,375
less estimated offering expenses and underwriting discounts and commissions (12,375 )
less early redemption penalties. See "Use of Proceeds." (4,550 )
-----------
$ 153,450
-----------
-----------
</TABLE>

20
<PAGE>
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
AMERICAN ACQUISITION OFFERING ADJUSTED
PRIME HI-LIFT ALPINE ADJUSTMENTS PRO FORMA ADJUSTMENTS PRO FORMA
------------- ----------- ------------- ------------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental revenue............. $ 138,983 $ 37,439 $ 10,127 $ $ 186,549 $ $ 186,549
New equipment sales........ 34,601 3,778 38,379 38,379
Rental equipment sales..... 23,144 5,882 412 29,438 29,438
Parts and merchandise
sales.................... 32,223 2,599 34,822 34,822
Service revenue and other
income................... 13,836 3,966 202 18,004 18,004
------------- ----------- ------------- ------------- ----------- ----------- -----------
242,787 53,664 10,741 307,192 307,192
Cost of sales:
Depreciation--rental
equipment................ 37,427 7,048 615 (1,703)(1) 43,387 43,387
Cost of new equipment
sales.................... 28,960 3,097 32,057 32,057
Cost of rental equipment
sales, net of accumulated
depreciation............. 22,853 3,141 372 2,781(2) 29,147 29,147
Cost of parts and
merchandise sales........ 24,157 1,497 25,654 25,654
1,862(3)
Direct operating 60,553 16,577 2,520 79,908 79,908
expenses.................
(1,604)(4)
------------- ----------- ------------- ------------- ----------- ----------- -----------
173,950 31,360 3,507 1,336 210,153 210,153
------------- ----------- ------------- ------------- ----------- ----------- -----------

Gross profit........... 68,837 22,304 7,234 (1,336) 97,039 97,039
------------- ----------- ------------- ------------- ----------- ----------- -----------
Selling, general, (1,862)(3)
administrative and other... 36,821 14,742 5,680 (3,695)(4) 51,686 51,686
Depreciation and
amortization:
Noncompete agreements...... 5,877 117(5) 5,994 5,994
Cost in excess of fair
value of assets
acquired................. 2,955 429(6) 3,384 3,384
Property, plant and
equipment................ 2,395 950 298 3,643 3,643
Interest expense, net........ 30,546 1,680 270 3,838(7) 36,334 (15,248)(9) 21,086
------------- ----------- ------------- ------------- ----------- ----------- -----------
78,594 17,372 6,248 (1,173) 101,041 (15,248) 85,793
------------- ----------- ------------- ------------- ----------- ----------- -----------
(Loss) income before
income taxes......... (9,757) 4,932 986 (163) (4,002) 15,248 11,246
Income tax (benefit)
expense.................... (2,368) 2,241 37 (152)(8) (242) 5,873(8) 5,631
------------- ----------- ------------- ------------- ----------- ----------- -----------
Net (loss) income before
extraordinary item......... $ (7,389) $ 2,691 $ 949 $ (11) $ (3,760) $ 9,375 $ 5,615(10)
------------- ----------- ------------- ------------- ----------- ----------- -----------
------------- ----------- ------------- ------------- ----------- ----------- -----------
Net income per share
before
extraordinary
item............... $ .31
-----------
-----------
Shares outstanding... 18,367(11)
-----------
-----------
</TABLE>

See accompanying notes to Pro Forma Consolidated Statement of Operations.

21
<PAGE>

NOTES TO UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1995

The pro forma adjustments include the following (in thousands):

<TABLE>
<C> <S> <C>
(1) Adjust depreciation expense for adjusted carrying values of assets acquired
from American Hi-Lift and the Company's depreciation method. $ (1,863)
Adjust depreciation expense for adjusted carrying values of assets acquired
from Alpine. 160
---------
$ (1,703)
---------
---------
(2) Adjust cost of sales for American Hi-Lift rental equipment sold to reflect new
carrying values and depreciation method. $ 2,741
Adjust cost of sales for Alpine rental equipment sold to reflect new carrying
values. 40
---------
$ 2,781
---------
---------
(3) Reclassify certain Alpine SG&A expenses to direct operating expenses to
conform with the Company's presentation.
(4) Reflects estimated cost savings from a reduction in the workforce of American
Hi-Lift and Alpine that were effected immediately after their respective
acquisitions and estimated reductions in overhead costs due to the
consolidation of certain general and administrative functions as follows:
Direct operating expenses (27 employees) $ 1,604
---------
---------
Selling, general, administrative and other:
Marketing salaries (6 employees) $ 155
Corporate office salaries (29 employees) 1,955
Corporate office expenses 1,385
Management fee 200
---------
$ 3,695
---------
---------
(5) Amortization of Alpine covenants not to compete (three years)
(6) Amortization of American Hi-Lift goodwill (40 year life). $ 417
Amortization of Alpine goodwill (40 year life). 12
---------
$ 429
---------
---------
(7) Adjust interest expense for debt incurred to finance the acquisitions at the
Company's then current rate of 8.5%.
American Hi-Lift $ 3,172
Alpine 666
---------
$ 3,838
---------
---------
(8) Adjust income tax expense to the Company's effective blended rate.
(9) Eliminate interest expense incurred on debt that will be retired with the
proceeds from the Offering. (credit facility at 8.5%, Senior Notes at 12.75%
and Subordinated Notes at 14%). See "Use of Proceeds."
(10) Excludes the write-off of the historical unamortized deferred financing costs
directly related to the debt retired with the proceeds from the Offering, the
early redemption penalties resulting from the retirement of approximately
$33.3 million of the Senior Notes and the $10 million Subordinated Notes and
the write-off of the historical unamortized prepaid management fee paid to
Investcorp-International, Inc. See "Use of Proceeds" and "Certain
Transactions".
(11) The earnings per share calculation is based upon the weighted average number
of common shares and stock options outstanding during the period for all
classes of common stock. In the event of an initial public offering or sale of
the Company, as defined in the Certificate, all issued and outstanding shares
of Class A, Class C and Class D Stock not otherwise redeemed by the Company
shall automatically convert into shares of Common Stock on a one-for-one
basis.
</TABLE>

22
<PAGE>

PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
PRIME AMERICAN ALPINE
FOR THE HI-LIFT FOR FOR THE
SIX MONTHS THE PERIOD SIX MONTHS
ENDED FROM JAN. 1, 1996 ENDED ACQUISITION OFFERING ADJUSTED
JUNE 30, 1996 TO FEB. 25, 1996 JUNE 30, 1996 ADJUSTMENTS PRO FORMA ADJUSTMENT PRO FORMA
------------- ----------------- ------------- ----------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Rental revenue......... $ 87,678 $6,239 $4,553 $ $ 98,470 $ $ 98,470
New equipment sales.... 21,303 630 21,933 21,933
Rental equipment
sales................ 17,148 980 185 18,313 18,313
Parts and merchandise
sales................ 18,730 433 19,163 19,163
Service revenue and
other income......... 8,597 661 92 9,350 9,350
------------- ------ ------ ----------- --------- ---------- ---------
153,456 8,943 4,830 167,229 167,229
Cost of sales:
Depreciation--rental
equipment............ 18,097 1,175 299 (222)(1) 19,349 19,349
Cost of new equipment
sales................ 17,867 516 18,383 18,383
Cost of rental
equipment sales, net
of accumulated
depreciation......... 14,215 524 174 467(2) 15,380 15,380
Cost of parts and
merchandise sales.... 13,622 250 13,872 13,872
Direct operating
expenses............. 38,723 2,763 968 822(3) 42,990 42,990
(286)(4)
------------- ------ ------ ----------- --------- ---------- ---------
102,524 5,228 1,441 781 109,974 109,974
------------- ------ ------ ----------- --------- ---------- ---------

Gross profit....... 50,932 3,715 3,389 (781) 57,255 57,255
------------- ------ ------ ----------- --------- ---------- ---------
Selling, general,
administrative and (822)(3)
other.................. 23,171 2,457 2,779 (696)(4) 26,889 26,889
Depreciation and
amortization:
Noncompete agreements.. 59(5) 59 59
Cost in excess of fair
value of assets
acquired............. 1,618 76(6) 1,694 1,694
Property, plant and
equipment............ 1,557 158 136 1,851 1,851
Interest expense, net.... 18,239 280 153 764(7) 19,436 (7,340)(9) 12,096
------------- ------ ------ ----------- --------- ---------- ---------
44,585 2,895 3,068 (619) 49,929 (7,340) 42,589
------------- ------ ------ ----------- --------- ---------- ---------
Income before
income taxes..... 6,347 820 321 (162) 7,326 7,340 14,666
Income tax expense..... 3,205 374 2 (110)(8) 3,471 2,825(8) 6,296
------------- ------ ------ ----------- --------- ---------- ---------
Net income......... $ 3,142 $ 446 $ 319 $ (52) $ 3,855 $ 4,515 $ 8,370(10)
------------- ------ ------ ----------- --------- ---------- ---------
------------- ------ ------ ----------- --------- ---------- ---------
Net income per
share............ $ .42
---------
---------
Shares
outstanding...... 20,096(11)
---------
---------
</TABLE>

See accompanying notes to Pro Forma Statement of Operations.

23
<PAGE>

NOTES TO PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 1996

The pro forma adjustments include the following:

<TABLE>
<C> <S> <C>
(1) Adjust depreciation expense for adjusted carrying values of assets acquired
from American Hi-Lift and the Company's depreciation method. $ (311)
Adjust depreciation expense for adjusted carrying values of assets acquired
from Alpine. 89
---------
$ (222)
---------
---------
(2) Adjust cost of sales for American Hi-Lift rental equipment sold to reflect new
carrying values and depreciation method. $ 456
Adjust cost of sales for Alpine rental equipment sold to reflect new carrying
values. 11
---------
$ 467
---------
---------
(3) Reclassify certain Alpine selling, general, administrative and other expenses
("SG&A") to direct operating expenses to conform with the Company's
presentation.
(4) Reflects estimated cost savings from a reduction in the workforce of American
Hi-Lift and Alpine that were effected immediately after their respective
acquisitions and estimated reductions in overhead costs due to the
consolidation of certain general and administrative functions as follows:
Direct operating expenses (27 employees) $ 286
---------
---------
Selling, general, administrative and other:
Marketing salaries (6 employees) $ 26
Corporate office salaries (29 employees) 406
Corporate office expenses 231
Management fee 33
---------
$ 696
---------
---------
(5) Amortization on Alpine covenants not to compete (three years).
(6) Additional two-months of amortization of American Hi-Lift goodwill (40 year
life). $ 70
Amortization of Alpine goodwill (40 year life). 6
---------
$ 76
---------
---------
(7) Adjust interest expense for debt incurred to finance the acquisitions at the
Company's current rate of 8%.
American Hi-Lift $ 479
Alpine 285
---------
$ 764
---------
---------
(8) Adjust income tax expense to the Company's effective blended rate.
(9) Eliminate interest expense incurred on debt that will be retired with the
proceeds from the Offering (credit facility at 8.0%, Senior Notes at 12.75%,
and Subordinated Notes at 14%). See "Use of Proceeds."
(10) Excludes the write-off of the historical unamortized deferred financing costs
directly related to the debt retired with the proceeds from the Offering, the
early redemption penalties resulting from the retirement of approximately
$33.3 million of the Senior Notes and the $10 million Subordinated Notes and
the write-off of the unamortized historical prepaid management fee paid to
Investcorp International Inc. See "Use of Proceeds" and "Certain
Transactions".
(11) The earnings per share calculation is based upon the weighted average number
of common shares and stock options outstanding during the period for all
classes of common stock. In the event of an initial public offering or sale of
the Company, as defined in the Certificate, all issued and outstanding shares
of Class A, Class C and Class D Stock not otherwise redeemed by the Company
shall automatically convert into shares of Common Stock on a one-for-one
basis.
</TABLE>

24
<PAGE>

SELECTED CONSOLIDATED HISTORICAL, PRO FORMA FINANCIAL AND OTHER DATA

The following table sets forth selected financial and other data of the
Company as of and for the five years ended December 31, 1995 and as of and for
the six months ended June 30, 1995 and 1996. As a result of certain adjustments
made in connection with the 1994 Acquisition, the results of operations for the
periods subsequent to such acquisition are not comparable to prior periods. The
adjusted pro forma statement of operations data assume that the 1996
Acquisitions and the Offering occurred at January 1, 1995. The pro forma balance
sheet data reflects the historical June 30, 1996 balance sheet data as adjusted
for the acquisition of Alpine and the Offering.

The selected historical financial data as of and for the five years ended
December 31, 1995 and the six months ended June 30, 1995 and 1996 were derived
from the Company's Consolidated Financial Statements. The adjusted pro forma
financial data were derived from the Pro Forma Consolidated Financial Statements
included elsewhere in this Prospectus that give effect to the 1996 Acquisitions
and the Offering (based on an assumed initial public offering price of $23.50
per share and after deducting estimated operating expenses and underwriting
discounts and commissions). The pro forma adjustments are based upon available
information and certain assumptions that management believes are reasonable. The
adjusted pro forma financial information does not purport to represent what the
Company's financial position or results of operations actually would have been
had the 1996 Acquisitions and the Offering in fact occurred on such date or to
project the Company's financial position or results of operations for any future
date or period. The pro forma adjustments are based on the purchase method of
accounting and a preliminary allocation of the purchase cost incurred in
connection with the Alpine acquisition.

For additional information, see the Pro Forma Consolidated Financial
Statements included elsewhere in this Prospectus. The following table should be
read in conjunction with "Capitalization" and "Management's Discussion and
Analysis of Financial Condition and Results of Operations." For reports by the
independent accountants with respect to historical financial information, see
"Index to Financial Statements."

<TABLE>
<CAPTION>
SUCCESSOR YEAR ENDED SUCCESSOR SIX MONTHS
DECEMBER 31, ENDED JUNE 30,
PREDECESSOR YEAR ENDED ----------------------------------- --------------------------
DECEMBER 31, ADJUSTED
------------------------------- COMBINED PRO FORMA
1991 1992 1993 1994 (1) 1995 1995 1995 1996
--------- --------- --------- ----------- --------- ----------- ------------ ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
OPERATING DATA:
Revenues:
Rental revenue......... $ 83,645 $ 90,698 $ 100,829 $ 118,593 $ 138,983 $ 186,549 $ 64,198 $ 87,678
New equipment sales.... 20,336 18,878 26,162 32,396 34,601 38,379 16,316 21,303
Rental equipment
sales................ 14,726 17,303 13,498 20,359 23,144 29,438 12,303 17,148
Parts and merchandise
sales................ 20,349 21,317 23,874 28,787 32,223 34,822 15,957 18,730
Service and other
income............... 7,175 8,528 9,886 11,789 13,836 18,004 6,586 8,597
--------- --------- --------- ----------- --------- ----------- ------------ ------------
Total revenue........ 146,231 156,724 174,249 211,924 242,787 307,192 115,360 153,456
Cost of sales (2), (3)... 105,582 107,093 111,856 136,134 173,950 210,153 82,955 102,524
--------- --------- --------- ----------- --------- ----------- ------------ ------------
Gross profit......... 40,649 49,631 62,393 75,790 68,837 97,039 32,405 50,932
Selling, general and
administrative
expenses............... 24,696 26,856 28,248 30,901(4) 36,821(4) 51,686(4) 17,267(4) 23,171(4)
Depreciation and
amortization (5)....... 12,198 12,438 12,494 10,430 11,227 13,021 3,380 3,175
--------- --------- --------- ----------- --------- ----------- ------------ ------------
Operating income......... 3,755 10,337 21,651 34,459 20,789 32,332 11,758 24,586
Interest expense, net.... 16,826 14,299 12,753 13,852 30,546 21,086 14,812 18,239
--------- --------- --------- ----------- --------- ----------- ------------ ------------
(Loss) income before
income taxes........... (13,071) (3,962) 8,898 20,607 (9,757) 11,246 (3,054) 6,347
Income tax (benefit)
expense................ (3,297) (165) 4,350 8,523 (2,368) 5,631 (494) 3,205
--------- --------- --------- ----------- --------- ----------- ------------ ------------
Net (loss) income before
extraordinary item..... (9,774) (3,797) 4,548 12,084 (7,389) $ 5,615(6) (2,560) 3,142
----------- ------------
-----------
Extraordinary (loss) net
of tax benefit......... -- (1,268) (1,268)
--------- --------- --------- ----------- --------- ------------ ------------
--------- --------- --------- ----------- --------- ------------ ------------
Net (loss) income........ $ (9,774) $ (3,797) $ 4,548 $ 12,084 $ (8,657) $ (3,828) $ 3,142
--------- --------- --------- ----------- --------- ------------ ------------
--------- --------- --------- ----------- --------- ------------ ------------
Net income per share
before extraordinary
item................... $ .31
-----------
-----------
Shares outstanding....... 18,367
-----------
-----------

ADJUSTED
PRO FORMA
1996
-----------
<S> <C>

OPERATING DATA:
Revenues:
Rental revenue......... $ 98,470
New equipment sales.... 21,933
Rental equipment
sales................ 18,313
Parts and merchandise
sales................ 19,163
Service and other
income............... 9,350
-----------
Total revenue........ 167,229
Cost of sales (2), (3)... 109,974
-----------
Gross profit......... 57,255
Selling, general and
administrative
expenses............... 26,889(4)
Depreciation and
amortization (5)....... 3,604
-----------
Operating income......... 26,762
Interest expense, net.... 12,096
-----------
(Loss) income before
income taxes........... 14,666
Income tax (benefit)
expense................ 6,296
-----------
Net (loss) income before
extraordinary item..... $ 8,370(6)
-----------
-----------
Extraordinary (loss) net
of tax benefit.........

Net (loss) income........

Net income per share
before extraordinary
item................... $ .42
-----------
-----------
Shares outstanding....... 20,096
-----------
-----------
</TABLE>

25
<PAGE>

OTHER DATA:
Gross equipment capital
expenditure............ $ 21,557 $ 31,061 $ 38,088 $ 52,814 $ 89,372 $ 47,978 $ 50,513
Net equipment capital
expenditures (8)....... 11,142 18,943 30,089 39,871 66,520 35,759 37,298
Gross rental revenue
(9).................... 86,405 93,516 102,802 120,388 141,138 65,371 88,390
Average original cost of
rental equipment
(10)................... 172,940 169,954 174,210 191,241 228,406 215,972 325,490
Gross rental revenue/
average original cost
of rental equipment
("ROI") (10)........... 50.0% 55.0% 59.0% 63.0% 61.8% 60.5%(11) 54.3%(11)
Non-rental rate.......... 7.0% 5.9% 4.1% 3.4% 3.6% 3.6% 3.5%
Number of rental
equipment yards (end of
period)................ 64 64 70 74 81 78 96

<CAPTION>
ADJUSTED
PRO FORMA
1996
-----------
<S> <C>
BALANCE SHEET DATA (END O
Net book value of rental
equipment.............. $ 254,163
Total assets............. 501,995(7)
Total debt............... 201,550
Stockholders' equity..... 226,689(7)
OTHER DATA:
Gross equipment capital
expenditure............
Net equipment capital
expenditures (8).......
Gross rental revenue
(9)....................
Average original cost of
rental equipment
(10)...................
Gross rental revenue/
average original cost
of rental equipment
("ROI") (10)...........
Non-rental rate..........
Number of rental
equipment yards (end of
period)................
</TABLE>

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

(1) As a result of the 1994 Acquisition the Company's assets and liabilities
were adjusted to their estimated fair values as of December 2, 1994. In
addition, the Company entered into new financing arrangements and had a
change in its capital structure. Rental equipment acquired subsequent to
January 1, 1995 is being depreciated over a longer useful life. See Note 2
to the Consolidated Financial Statements. Accordingly, the combined results
of the 1994 period are not comparable to prior periods. The period from
December 2, 1994 to December 31, 1994 reflects: increased cost of sales due
to higher depreciation expense for rental equipment and cost of rental
equipment sales; increased interest expense; and lower other depreciation
and amortization. Accordingly, the combined period for 1994 represents the
mathematical addition of the historical amounts for the Predecessor period
(January 1, 1994 to December 1, 1994) and the Successor period (December 2,
1994 to December 31, 1994) and are not indicative of results that would have
been obtained had the 1994 Acquisition occurred on January 1, 1994. As use
herein, "Predecessor" refers to Primeco prior to the 1994 Acquisition, and
"Successor" refers to the Company after the acquisition.

(2) Reflects rental equipment depreciation.

(3) Reflects costs of $22.6 million, $9.4 million, and $6.2 million for the year
ended December 31, 1995 and the six month periods ended June 30, 1995 and
1996, respectively, related to the increase in carrying value of the rental
fleet that existed at the date of the 1994 Acquisition.

(4) Includes $125, $1,500, $750, and $750 in 1994, 1995, the six month periods
ended June 30, 1995 and 1996, respectively, consisting of amortization of
pre-paid management fees to Investcorp International Inc.

(5) Excludes rental equipment depreciation.

(6) Excludes the write-off of the historical unamortized prepaid management fee
paid to Investcorp International, Inc., the write-off of the historical
unamortized deferred financing costs directly related to the debt retired
with the proceeds of the Offering and the early redemption penalties
resulting from the retirement of approximately $33.3 milllion of the 12.75%
Senior Notes and the $10 million Subordinated Notes.

(7) Reflects the write-off of the historical unamortized prepaid management fee
paid to Investcorp International, Inc. ($1,296 net of related income tax
benefit of $829), the write-off of the historical unamortized deferred
financing costs related to the debt retired with the proceeds from the
Offering ($753 net of related income tax benefit of $472) and the early
redemption penalties resulting from the retirement of approximately $33.3
million of the Senior Notes and the $10 million Subordinated Notes ($2,775
net of related income tax benefit of $1,775).

(8) Net equipment capital expenditures represent gross rental equipment capital
expenditures reduced by the net book value of rental equipment sold.

(9) Gross rental revenue equals rental revenue less income from equipment that
the Company rents from third parties and subsequently re-rents to its
customers plus reclassified rental income due to sales of used rental
equipment through rent-to-own and rental purchase option programs.

(10) Average original cost of rental equipment represents the average of the
monthly original cost of rental equipment. Original cost represents the
original price paid by the Company, its predecessor and its acquirees for
the equipment, excluding effects of purchase accounting adjustments.

(11) ROI for interim periods is calculated on an annualized basis. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations."

26
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the "Selected
Consolidated Historical, Pro Forma Financial and Other Data" and the
Consolidated Financial Statements of the Company and the notes thereto included
elsewhere in this Prospectus.

GENERAL

Prime Service, Inc. is a holding company with no business operations of its
own. The Company's only material asset is the outstanding capital stock of
Primeco. Primeco derives revenue from four sources: (i) rental of equipment,
(ii) sales of new equipment and used rental equipment, (iii) sales of parts and
merchandise and (iv) service and other income. Financial information presented
herein for periods after December 1, 1994 is consolidated financial information
of the Company, and for periods prior to December 2, 1994 is financial
information of Primeco.

The Company's primary source of revenue is the rental of equipment to
commercial construction, industrial and residential users. Growth in rental
revenue is dependent on several factors, including the demand for rental
equipment, the amount of equipment available for rent, rental rates and general
economic conditions. The level of new and used equipment sales is primarily a
function of the supply of and demand for such equipment, price and general
economic conditions. The Company's revenues derived from the sale of used
equipment are also affected by its need to maintain the appropriate age, quality
and mix of its rental equipment. Prime sells parts and merchandise which
generally complement the equipment rented and sold at its rental equipment
yards. Revenues from the sale of parts and merchandise are usually correlated
with rental revenue and the sale of new and used equipment. Service and other
income consists primarily of damage waiver and delivery charges and is
correlated with the level of rental revenue.

A measure used by the Company to determine the appropriate mix and to manage
the utilization of its rental equipment is ROI. ROI is defined as gross rental
revenue as a percentage of average monthly original cost of rental equipment.
See Note 7 to "Summary Financial and Other Data." Prime's ROI improved from
50.0% in 1990 to 61.8% in 1995. During the first six months of 1996, Prime's ROI
declined to 54.3% from 60.5% during the same period of 1995. The decline is
primarily attributable to the integration of American Hi-Lift's rental fleet,
which involved taking substantial amounts of American Hi-Lift's rental fleet
temporarily out of service to be refurbished and upgraded to Prime's quality
standards. Prime's ROI for the first six months of 1996, calculated excluding
gross rental revenue and original equipment cost attributable to former American
Hi-Lift equipment, would have been 58.8%.

Prior to the 1994 Acquisition, the Company's capital expenditure program was
limited by the Company's prior owners. From 1991 to 1994, the Company did not
make any material acquisitions and purchased an aggregate of $33.7 million of
equipment (exclusive of amounts required to replace used equipment sold in the
ordinary course of business and inclusive of rental equipment purchases for new
yards). Despite revenues increasing during this period from $146.3 million in
1991 to $211.9 million in 1994, management believes that its capital
expenditures program and resulting rental equipment fleet were not adequate to
meet the market demand. Since the 1994 Acquisition, the Company has
significantly increased its rental fleet by purchasing approximately $56.3
million of equipment through December 31, 1995, and $24.7 million during the six
months ended June 30, 1996 (in each case exclusive of amounts required to
replace used equipment sold in the ordinary course of business and recent
acquisitions, but inclusive of rental equipment purchases for new yards). Due to
the Company's substantial financial leverage and special charges, Prime reported
a net loss of $8.7 million in 1995 compared to net income of $12.1 million in
the year ended December 31, 1994. Management expects its total 1996 rental
equipment purchases to be $42.9 million (exclusive of amounts required to
replace used equipment sold in the ordinary course of business and recent
acquisitions, but inclusive of rental equipment purchases for new yards).

27
<PAGE>

As a result of the 1994 Acquisition, Prime's assets and liabilities were
adjusted to their estimated fair values as of December 2, 1994. The step-up in
the carrying value of the rental fleet to estimated fair value increased
depreciation expense and the cost of rental used equipment sold in 1994, 1995
and 1996. The effects of the step-up on each period are discussed below. In
addition, in order to better reflect the useful life of the rental equipment and
its estimated salvage value upon disposal, the Company changed its depreciation
method for rental equipment acquired after January 1, 1995. See Note 2 to the
Consolidated Financial Statements.

The 1994 amounts discussed below represent the mathematical addition of the
historical amounts for the Predecessor period (January 1, 1994 to December 1,
1994) and the Successor period (December 2, 1994 to December 31, 1994) for
purposes of the discussion below only and are not indicative of results that
would actually have been obtained if the 1994 Acquisition occurred on January 1,
1994.

RECENT DEVELOPMENTS

AMERICAN HI-LIFT ACQUISITION. On February 26, 1996, Prime completed the
purchase of all of the outstanding stock of American Hi-Lift from Vibroplant plc
and Vibroplant Investments. Prime paid a purchase price of $66.5 million for the
shares of American Hi-Lift, which included repayment of the outstanding bank
debt of American Hi-Lift. American Hi-Lift merged into Primeco after the
closing.

American Hi-Lift operated 17 rental locations in California, Texas, Florida,
Louisiana, Ohio, Alabama, South Carolina and Georgia, and the acquisition
resulted in a net increase to the Company of 12 rental yards. American Hi-Lift,
which specialized in renting and selling aerial lift equipment to industrial and
commercial customers, had gross revenues of $50.4 million for the year ended
March 31, 1995. In connection with the American Hi-Lift acquisition, certain
stockholders of the Company made a capital infusion of $9.4 million into the
Company. Prime used these funds, as well as borrowings under its credit
facility, to fund the transaction.

ALPINE ACQUISITION. On July 29, 1996, Primeco purchased substantially all
of Alpine's assets. Prime paid approximately $11 million for Alpine's assets,
which included repayment of the outstanding debt of Alpine.

Alpine operated six rental yards oriented toward industrial equipment in the
state of Washington, resulting in a net increase of six yards and expanding
Prime's presence in the northwest market.

28
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth the major components of the Company's
statement of operations expressed as a percentage of total revenues:

<TABLE>
<CAPTION>
SIX MONTHS
ENDED
YEAR ENDED DECEMBER 31, JUNE 30,
----------------------------------------------------- --------------------
<S> <C> <C> <C> <C> <C> <C> <C>
1991 1992 1993 1994(4) 1995 1995 1996
--------- --------- --------- --------- --------- --------- ---------
Statement of Operations:
Total revenues........................ 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of sales (1)..................... 72.2 68.3 64.2 64.2 71.6 71.9 66.8
Gross profit (2)...................... 27.8 31.7 35.8 35.8 28.4 28.1 33.2
Selling, general, administrative and
other expenses...................... 16.9 17.1 16.2 14.6 15.2 15.0 15.1
Depreciation and amortization (3)..... 8.3 7.9 7.2 4.9 4.6 2.9 2.1
Operating income...................... 2.6 6.6 12.4 16.3 8.6 10.2 16.0
</TABLE>

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

(1) Includes rental equipment depreciation.

(2) See the "Gross Profit" discussions below for a discussion of the effect of
the step-up to fair value on gross profit.

(3) Excludes rental equipment depreciation.

(4) Combines the Predecessor period ended December 1, 1994, and the Successor
period ended December 31, 1994.

The Company historically has had low rates of customer defaults and bad
debts. The Company controls each account customer through assigned credit limits
based on the customer's financial history. The Company's bad debt expense as a
percentage of total revenues for the year ended December 31, 1995 and the six
months ended June 30, 1995 and 1996 were 0.28%, 0.20% and 0.20%, respectively.

SIX MONTHS ENDED JUNE 30, 1996 COMPARED TO SIX MONTHS ENDED JUNE 30, 1995

On February 26, 1996, Prime acquired American Hi-Lift, a company
specializing in renting and selling aerial lift equipment. The purchase price of
American Hi-Lift was $66.5 million. The American Hi-Lift acquisition was
accounted for under the purchase method of accounting; therefore, the results of
operations of the Company include American Hi-Lift beginning February 26, 1996.
American Hi-Lift had gross revenues of $50.4 million for the year ended March
31, 1995.

TOTAL REVENUES. Total revenues for the six months ended June 30, 1996,
increased 33.0% to $153.5 million, when compared to total revenues of $115.4
million for the same period in the prior year. The increase was primarily the
result of the acquisition of American Hi-Lift, which resulted in increased
rental revenues, and also reflects increases in all of the Company's revenue
components.

RENTAL REVENUES. Rental revenues for the six months ended June 30,
1996, increased 36.6% to $87.7 million, when compared with the corresponding
prior period rental revenues of $64.2 million. This increase was primarily a
result of the American Hi-Lift acquisition.

NEW EQUIPMENT SALES. New equipment sales for the six months ended June
30, 1996, increased 30.6% to $21.3 million, when compared with the
corresponding prior period sales of $16.3 million. The increase is due to
strong general economic conditions, increased demand for equipment as well
as sales associated with the yards purchased in the American Hi-Lift
acquisition.

29
<PAGE>

USED EQUIPMENT SALES. Rental equipment sales for the six months ended
June 30, 1996, increased 39.4% to $17.1 million, when compared with the
corresponding prior period sales of $12.3 million, resulting, primarily,
from continued strong demand for used rental equipment and Prime's efforts
to dispose of older equipment purchased with the American Hi-Lift
acquisition.

PARTS AND MERCHANDISE SALES. Parts and merchandise sales for the six
months ended June 30, 1996, increased 17.4% to $18.7 million, when compared
with the corresponding prior period sales of $16.0 million. This increase
correlates to higher rental revenue and sales of equipment since parts and
merchandise generally complement the equipment the Company rents and sells.

SERVICE AND OTHER INCOME. Service and other income for the six months
ended June 30, 1996, increased 30.3% to $8.6 million, when compared with the
corresponding prior period service and other income of $6.6 million. This
increase related to the increase in rental revenue.

GROSS PROFIT. Gross profit for the six months ended June 30, 1996,
increased 57.2% to $50.9 million, when compared with the corresponding prior
period gross profit of $32.4 million. Gross profit as a percentage of total
revenues was 33.2% for the six months ended June 30, 1996 and 28.1% for the six
months ended 1995. The increase is the result of increased revenues as
previously discussed with the most significant component being the $23.5 million
increase in rental revenue. The effect of the increase to fair value of the
rental equipment as a result of the 1994 Acquisition decreased gross profit for
the first six months of 1996 by $6.2 million, as compared to a $9.4 million
decrease in the first six months of 1995. Gross profit was also impacted by
direct operating expenses, which increased by 33.2% to $38.7 million, when
compared to the prior period expense level of $29.1 million. This increase
primarily reflects increased expenses associated with the repair and maintenance
costs associated with refurbishing and upgrading the former American Hi-Lift
equipment to Prime's standards.

SELLING, GENERAL, ADMINISTRATIVE AND OTHER EXPENSES. Selling, general,
administrative and other expenses for the six months ended June 30, 1996,
increased 34.2% to $23.2 million, when compared to the prior expenses of $17.3
million. The increase reflects higher sales commissions due to increased rental
and sales revenue and continuing expenses associated with the inclusion of the
American Hi-Lift acquisition into the Company's operations. As a percentage of
total revenues, selling, general, adminstrative and other expenses for the first
six months of 1996 was 15.1%, as compared to 15.0% during the same period in
1995.

INTEREST EXPENSE. Interest expense net of interest income for the six
months ended June 30, 1996 increased 23.1% to $18.2 million, when compared with
the corresponding prior period interest expense of $14.8 million. The increase
reflects higher borrowings outstanding. The Company's average outstanding
indebtedness for the six months ended June 30, 1996, totaled $317.8 million,
compared to $237.8 million for the six months ended June 30, 1995. This increase
is due primarily to the American Hi-Lift acquisition on February 26, 1996, and
borrowings to fund capital expenditures.

INCOME TAX EXPENSE (BENEFIT). Income tax expense for the first six months
ended June 30, 1996 increased to $3.2 million from an income tax benefit of $0.5
million for the corresponding prior period in 1995. This increase is due
primarily to the increase in pre-tax income.

NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM. Net income for the six months
ended June 30, 1996 increased to $3.1 million, from a net loss of $2.6 million
for the corresponding prior period in 1995. This increase reflects the factors
discussed above.

1995 COMPARED TO 1994

TOTAL REVENUES. Total revenues for the Company in 1995 increased 14.6% to
$242.8 million from $211.9 million. This increase reflects an increase in all of
Primeco's revenue components with rental revenues producing the largest dollar
increase.

30
<PAGE>

RENTAL REVENUES. Rental revenues in 1995 increased 17.2% to $139.0
million from $118.6 million in 1994. This increase was a result of an
overall improvement in economic conditions, an increase in the average
amount of equipment available for rental and an increase in rental rates in
May 1995. The average amount of equipment available for rental in 1995
increased as evidenced by an increase in the monthly average original cost
of rental equipment of 19.4% to $228.4 million from $191.2 million in 1994.
Prime's utilization of rental equipment decreased slightly in 1995 with an
ROI of 61.8% versus 63.0% in 1994, primarily due to substantial additions to
the rental fleet and a different mix of rental equipment. In May 1995, the
Company raised the listed rental rates by a weighted average of 5%; the
increases vary, depending on the equipment type and duration of rental.
Although Prime attempts to achieve rental rates that are as close to list
price as possible, actual rental rates realized are generally lower than
listed rental rates owing to competitive conditions in various markets.

NEW EQUIPMENT SALES. Sales of new equipment in 1995 increased 6.8% to
$34.6 million from $32.4 million in 1994 primarily due to improved general
economic conditions and higher selling prices.

USED RENTAL EQUIPMENT SALES. Sales of used rental equipment in 1995
increased 13.7% to $23.1 million from $20.4 million in 1994 due to high
demand for used rental equipment and the Company's normal fleet upgrading.

PARTS AND MERCHANDISE SALES. Sales of parts and merchandise in 1995
increased 11.9% to $32.2 million from $28.8 million in 1994. This increase
correlates to the higher rental revenue and sales of equipment since parts
and merchandise generally complement the equipment the Company rents and
sells.

SERVICE AND OTHER INCOME. Service and other income in 1995 increased
17.4% to $13.8 million from $11.8 million in 1994. This increase reflects
the increased rental revenue.

GROSS PROFIT. Gross profit in 1995 decreased 9.2% to $68.8 million from
$75.8 million in 1994. Gross profit as a percentage of total revenues was 28.4%
in 1995 and 35.8% in 1994. This decrease primarily reflects higher depreciation
expense and cost of sales of rental equipment sold (non-cash items) due to the
increase in fair value of rental equipment as a result of the 1994 Acquisition.
The result of the increase to fair value was to decrease 1995 gross profits by
$22.6 million as compared to a $1.1 million decrease in 1994. Direct operating
expenses increased primarily due to higher compensation costs (reflecting an
increased number of employees) and increased maintenance costs necessary to
support the increased size of the rental fleet and to staff new rental equipment
yards. The increase in direct operating expenses also reflects start-up costs of
opening eight new rental equipment yards in 1995.

Depreciation for rental equipment acquired subsequent to January 1, 1995 was
changed as described in Note 2 to the Consolidated Financial Statements.

SELLING, GENERAL, ADMINISTRATIVE AND OTHER EXPENSES. Selling, general,
administrative and other expenses in 1995 increased 19.1% to $36.8 million from
$30.9 million in 1994. This increase primarily reflects higher sales commissions
due to increased rental and sales revenue in 1995 and unusually low expenses in
1994 due to a one-time insurance settlement with a prior owner which generated
approximately a $2.1 million gain and a franchise tax refund of approximately
$500,000. As a percentage of total revenues, selling, general, administrative
and other expenses in 1995 was 15.2% versus 14.6% in 1994.

INTEREST EXPENSE. Interest expense net of interest income increased 120.5%
to $30.5 million in 1995 from $13.9 million in 1994. This increase reflects
higher interest expense relating to higher levels of indebtedness incurred in
connection with the 1994 Acquisition. Immediately prior to the 1994 Acquisition,
the Company had outstanding debt of $133.0 million, and immediately after the
1994 Acquisition, the Company had outstanding debt of $235.0 million. At
December 31, 1995, outstanding debt aggregated $265.0 million, of which $155.0
million was at variable rates, $100.0 million was at a fixed rate of 12.75%, and
$10.0 million was at a fixed rate of 14%. At that date, after giving effect to
the interest rate swap

31
<PAGE>

described in Note 8 to the Consolidated Financial Statements, approximately
$75.0 million of indebtedness bore interest at variable rates.

INCOME TAX EXPENSE (BENEFIT). Income tax expense in 1995 was a benefit of
$3.2 million (including a $0.8 million tax benefit on the extraordinary loss),
compared to an expense of $8.5 million in 1994. The effective income tax rate
for both periods differs from the federal statutory rate of 35% primarily as the
result of the non tax-deductible amortization of goodwill. At December 31, 1995,
the Company has an alternative minimum tax credit carry forward of approximately
$3.1 million and a corresponding valuation allowance. The allowance was
established since at that time it was not likely that the benefit of the credits
would be realized due to the high level of interest expense resulting from the
financing of the 1994 Acquisition.

NET INCOME (LOSS) BEFORE EXTRAORDINARY ITEM. Net income decreased from
income of $12.1 million in 1994 to a loss of $7.4 million in 1995. This loss
includes the write off of the covenant not to compete with the former owner of
Primeco. Pinault S.A., the parent of Artemis, has exited the rental industry as
a result of the divestiture of Pinault Equipment. See Note 5 to the Consolidated
Financial Statements. The amount written off in 1995 was $3.6 million ($5.9
million pretax). Net income was also impacted by the factors discussed above.

1994 COMPARED TO 1993

TOTAL REVENUES. Total revenues in 1994 increased 21.6% to $211.9 million
from $174.2 million in 1993. This increase was primarily a result of higher
rental revenue and an increase in the sale of new and used equipment.

RENTAL REVENUE. Rental revenue in 1994 increased 17.6% to $118.6
million from $100.8 million in 1993. This increase was a result of an
overall improvement in economic conditions, an increase in the average
amount of equipment available for rental, higher utilization of rental
equipment and an increase in rental rates in March 1994. The average amount
of equipment available for rental in 1994 increased as evidenced by an
increase in the monthly average original cost of rental equipment of 9.8% to
$191.2 million from $174.2 million in 1993. The Company's higher utilization
of rental equipment is reflected by an increase in ROI to 63.0% in 1994 from
59.0% in 1993. In March 1994, the Company raised average listed rental rates
by varying amounts depending on equipment type and duration of rental, with
a weighted average increase of approximately 5%, which was the first such
increase since 1991. Although the Company attempts to achieve rental rates
that are as close to list price as possible, actual rental rates realized
are generally lower than listed rental rates owing to competitive conditions
in various markets.

NEW EQUIPMENT SALES. Sales of new equipment in 1994 increased 23.8% to
$32.4 million from $26.2 million in 1993 primarily due to improved general
economic conditions.

USED RENTAL EQUIPMENT SALES. Sales of used rental equipment in 1994
increased 50.8% to $20.4 million from $13.5 million in 1993 due to high
demand for rental equipment in 1994 and a $2.3 million used equipment
auction in 1994 (there was no such auction in 1993).

PARTS AND MERCHANDISE SALES. Sales of parts and merchandise in 1994
increased 20.6% to $28.8 million from $23.9 million in 1993. This increase
correlates to the higher rental revenue and sales of equipment since parts
and merchandise generally complement the equipment Primeco rents and sells.

SERVICE AND OTHER INCOME. Service and other income in 1994 increased
19.2% to $11.8 million from $9.9 million in 1993. This increase reflects the
increased rental revenue.

GROSS PROFIT. Gross profit in 1994 increased 21.5% to $75.8 million from
$62.4 million in 1993. This increase primarily reflects the increase in total
revenues. This increase was partly offset by a 15.7% increase in direct
operating expenses in 1994 to $53.6 million from $46.3 million in 1993. The
increase was also partly offset by higher depreciation expense and cost of sales
of rental equipment due to the increase

32
<PAGE>
in carrying value of rental equipment as a result of the 1994 Acquisition.
Direct operating expenses increased primarily due to higher compensation costs
(reflecting an increased number of employees) and increased maintenance costs
necessary to support the increased size of the rental fleet and to staff new
rental equipment yards. The increase in direct operating expenses also reflects
start-up costs of opening five new rental equipment yards in 1994. Gross profit
as a percentage of total revenues was 35.8% in both 1994 and 1993.

SELLING, GENERAL, ADMINISTRATIVE AND OTHER EXPENSES. Selling, general,
administrative and other expenses in 1994 increased 9.4% to $30.9 million from
$28.2 million in 1993. This increase primarily reflects higher sales commissions
due to increased rental and sales revenue in 1994, offset by a one-time benefit
from a settlement of approximately $2.1 million with a prior owner of the
Company and a franchise tax refund of approximately $500,000. As a percentage of
total revenues, selling, general, administrative and other expenses in 1994
declined to 14.6% from 16.2% in 1993.

INTEREST EXPENSE. Interest expense net of interest income increased 8.6% to
$13.9 million in 1994 from $12.8 million in 1993. This increase reflects higher
interest expense following the 1994 Acquisition. Prior to the 1994 Acquisition,
reduced outstanding debts were offset by higher interest rates during that
period as compared to 1993. At December 31, 1994, outstanding debt aggregated
$235.0 million, of which $225.0 million was at variable rates and $10.0 million
was at a fixed annual rate of 14%. At that date, after giving effect to the
interest rate swaps described in Note 8 to the Consolidated Financial
Statements, approximately $145.0 million of indebtedness bore interest at
variable rates.

INCOME TAX EXPENSE (BENEFIT). Income tax expense was $8.5 million in 1994
compared to an expense of $4.4 million in 1993. The effective income tax rate
for both periods differ from the federal statutory rate of 34.0% due to high
levels of non tax-deductible amortization of goodwill. The Company had net
operating loss carry forwards for federal and state income tax purposes of
approximately $9.3 million. At December 31, 1994, the Company had a valuation
allowance established which eliminates the deferred tax asset associated with
the net operating losses. The allowance was established since at that time it
was not more likely than not that the benefit of these losses would be realized
due to the high level of interest expense resulting from the financing of the
1994 Acquisition and the limitations placed on the utilization of the net
operating losses as a result of the 1994 Acquisition.

NET INCOME (LOSS). Net income in 1994 increased to $12.1 million from $4.5
million in 1993. This increase reflects the factors discussed above.

LIQUIDITY AND CAPITAL RESOURCES

During the six months ended June 30, 1996, and the years ended December 31,
1993, 1994 and 1995, the Company's principal sources of funds consisted of the
net cash provided by operating activities, the proceeds from the sale of used
rental equipment and, in 1995, the proceeds from its credit facility, the
proceeds from the issuance of $100 million in Senior Notes and a $10 million
capital infusion from the Company's stockholders. See "Description of Certain
Indebtedness." The components of net cash provided by operating activities are
detailed on the Statements of Cash Flows in the Consolidated Financial
Statements and include net income or loss adjusted for (i) depreciation and
amortization, (ii) the gains (or losses) on the sales of used rental equipment
and (iii) the effect of changes in certain operating assets and liabilities. Net
cash provided by operating activities excludes proceeds from the sale of rental
equipment. Net cash provided by operating activities for the six months ended
June 30, 1996, increased 38.6% to $14.0 million from $10.1 million for the
corresponding period in 1995. This increase was primarily caused by the
acquisition of American Hi-Lift. Net cash provided by operating activities in
1995 decreased 14.4% to $32.2 million from $37.6 million in 1994. This decrease
resulted primarily from increased interest expense and increased working capital
investment. Net cash provided by operating activities in 1994 decreased 4.8% to
$37.6 million from $39.5 million in 1993. This decrease resulted primarily from
a decrease in certain operating liabilities and the absence of the decrease in
inventory levels experienced in 1993, and was partly offset by increased rental
revenue and deferred income taxes.

33
<PAGE>

For the six months ended June 30, 1996, the Company's principal uses of
funds were for the acquisition of American Hi-Lift and the purchase of equipment
for the Company's rental fleet. The gross rental equipment capital expenditures
for the six months ended June 30, 1996, increased 5.3% to $50.5 million from
$48.0 million for the corresponding period in 1995. Of those amounts, $25.8
million and $18.3 million was spent in the six months ended June 30, 1996 and
1995, respectively, to replace used rental equipment sold with the remaining
amount being a net increase in investment in the rental fleet. Proceeds from the
sale of rental equipment for the six months ended June 30, 1996, increased 39.6%
to $17.0 million from $12.2 million for the corresponding period in 1995.

During the years ended December 31, 1993, 1994 and 1995, the Company's
principal uses of funds were for the purchase of equipment for its rental fleet
and the payment of principal on its outstanding indebtedness. The gross rental
equipment capital expenditures were $38.1 million, $52.8 million and $89.4
million in 1993, 1994 and 1995, respectively. Of those amounts, $20.4 million,
$33.0 million and $34.6 million were spent to replace used rental equipment sold
in 1993, 1994 and 1995 respectively, with the remaining amounts being a net
increase in investment in the rental fleet. Proceeds from the sale of used
rental equipment were $13.5 million, $20.5 million and $23.1 million in 1993,
1994 and 1995, respectively.

The Company has no long-term minimum purchase commitments for rental
equipment. Management has budgeted $98 million of gross fleet capital
expenditures exclusive of acquisitions in 1996, of which approximately $54
million will be used to replace used rental equipment sold, with the remaining
amounts being a net increase in investment in rental fleet. These expenditures
will be offset by expected proceeds from the sale of used equipment of
approximately $31 million. Prime will utilize these capital expenditures to
expand the fleet at existing rental equipment yards, to satisfy the equipment
needs of current and new Integrated Rental Management-TM- customers, to provide
for the equipment needs of new rental equipment yards, and to maintain and grow
the fleet at the rental yards recently acquired in connection with the 1996
Acquisitions. The Company also expects to spend approximately $6 million in 1996
on non-equipment related capital expenditures consisting of buildings, land,
furniture and fixtures and environmental capital expenditures. In addition to
the budgeted capital expenditures, the Company is currently considering several
potential acquisitions, although the Company does not currently have any
understandings or agreements with respect to potential acquisitions. In 1996,
Primeco purchased all of the outstanding stock of American Hi-Lift for
approximately $66.5 million, and all of the assets of Alpine for approximately
$11 million. The purchases were funded by a $9.4 million capital contribution
from certain stockholders of the Company and the balance through borrowings from
Prime's credit facility.

The Company's operations are subject to various environmental laws and
regulations. In order to comply with these requirements, the Company is engaged
in ongoing remediation, capital improvement and periodic compliance activities.
In connection with the 1994 Acquisition, an environmental consultant conducted
certain investigations of the Company's properties and compliance with
applicable environmental laws. In 1995, Prime spent approximately $1.3 million
on environmental matters, including costs related to remediation, compliance and
capital requirements, and has budgeted approximately $4.4 million in 1996 for
such matters. As of June 30, 1996, the Company had a reserve for environmental
remediation of $7.0 million and related receivables from state trust fund
programs and a seller of equipment yards of $2.0 million.

Prime incurred substantial indebtedness in connection with the 1994
Acquisition and the 1996 Acquisitions. At September 30, 1996, Prime had
indebtedness outstanding of $354.0 million, consisting of $244.0 million under
the credit facility, $100 million under the Senior Notes and $10 million under
the Subordinated Notes. Prime also incurred additional indebtedness of $11
million under its credit facility in connection with its purchase of Alpine's
assets. Prime received net proceeds of approximately $96.0 million from the
Senior Notes, which were issued on March 6, 1995. Such proceeds were used to
repay $75.0 million of indebtedness under a subordinated loan facility plus
accrued interest and $20.0 million of indebtedness under the revolving credit
portion of the credit facility (without reducing the commitment under the credit
facility).

34
<PAGE>

Prime believes that cash provided by operations, proceeds from the sale of
used equipment in the ordinary course of business and funds available under the
credit facility will be sufficient to permit Prime to meet its payment
obligations under the credit facility and the Senior Notes and to meet its
anticipated capital expenditures as described above.

The credit facility requires Prime to maintain interest rate protection,
which it has done through rate swap agreements covering a portion of its
outstanding and available credit facility including the portion related to
letters of credit. Accordingly, at December 31, 1995, Primeco had outstanding
interest rate swap agreements (total notional amount of $80.0 million) placed
with financial institutions, one of which is an affiliate of Salomon Brothers
Inc, that effectively converted a portion of its floating-rate debt to
fixed-rate debt. At December 31, 1995, the market value of the swaps represented
a loss of approximately $2.6 million. See Note 8 to the Consolidated Financial
Statements. The rate swap agreements expire in February, 1997 and March, 1997,
respectively, and the floating interest rate for the final period has been set.
The Company currently has no plans to, and is not required to, replace such
agreements. Upon expiration of such agreements, the Company must pay an
aggregate of approximately $1.29 million to cover market losses.

QUARTERLY RESULTS

The following table sets forth certain unaudited consolidated statement of
operations data for the fiscal quarters in the years ended December 31, 1994 and
1995, and the six months ended June 30, 1996. The unaudited quarterly
information has been prepared on the same basis as the annual financial
information and, in management's opinion, includes all adjustments (consisting
only of normal recurring adjustments) necessary to present fairly the
information for the quarters presented. As a result of the 1994 Acquisition, the
results subsequent to that date are not comparable to prior periods.

<TABLE>
<CAPTION>
1996
QUARTERS
1994 QUARTERS ENDED 1995 QUARTERS ENDED ENDED
------------------------------------------------ ------------------------------------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31 JUNE 30 SEPT. 30 DEC. 31 MAR. 31
----------- ----------- ----------- --------- --------- --------- --------- --------- -----------

<CAPTION>
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>

Total revenues.......... $ 47,197 $ 54,299 $ 54,383 $ 56,045 $ 55,889 $ 59,471 $ 62,876 $ 64,551 $ 70,930
Gross profit............ 16,534 20,046 20,035 19,175 14,844 17,561 18,276 18,156 23,360
Operating income........ 6,122 9,747 9,724 8,866 4,552 7,206 7,689 1,342(1) 11,078
Interest expense
(net)................. 3,096 3,169 3,247 4,340 7,086 7,726 7,713 8,021 8,471
Extraordinary (loss) net
of tax benefit........ -- -- -- -- (1,268) -- -- -- --
Net income (loss)....... 1,640 3,944 3,886 2,614 (3,205) (623) (372) (4,457) 1,236

<CAPTION>
<S> <C>
JUNE 30
-----------
<S> <C>
Total revenues.......... $ 82,526
Gross profit............ 27,572
Operating income........ 13,508
Interest expense
(net)................. 9,768
Extraordinary (loss) net
of tax benefit........ --
Net income (loss)....... 1,906
</TABLE>

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

(1) Reflects the write-off of noncompete recorded at 1994 Acquisition. See Note
5 to the Consolidated Financial statements.

OTHER MATTERS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS 121"), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
SFAS 121, which is effective for fiscal years beginning after December 15, 1995,
requires that long-lived assets and certain identifiable intangibles to be held
and used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. Prime adopted SFAS 121 at the beginning of 1996, without a material
effect on the financial statements.

The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 123, entitled "ACCOUNTING FOR STOCK-BASED
COMPENSATION" ("SFAS No. 123"), in October 1995. Prime will adopt the new
disclosure rules of SFAS No. 123 in 1997.

35
<PAGE>

RECENT OPERATING RESULTS

Based on preliminary operating results for the third quarter of 1996,
management estimates that total revenues for the nine months ended September 30,
1996 increased 34.5% to approximately $239.6 million (compared to $178.2 million
for the comparable period of the prior year), operating income increased 104.6%
to approximately $39.7 million (compared to $19.4 million for the comparable
period of the prior year) and net income was approximately $6.0 million
(compared to a $2.9 million net loss for the comparable period of the prior
year). The increase in total revenues was primarily the result of the
acquisition of American Hi-Lift on February 26, 1996, which did not contribute
to revenues in the nine months ended September 30, 1995. ROI for the nine months
ended September 30, 1996, was 55% (compared to 61% for the comparable period of
the prior year and 54.3% for the six months ended June 30, 1996).

36
<PAGE>
BUSINESS

GENERAL

Prime seeks to be the market leader in the regions it services while
maximizing its profitability and cash flow. The Company attributes its success
to its operating strategy which includes, among other things, a focus on
customer service, a modern and diverse rental fleet, and a proprietary POS
system. Management believes that the consistent delivery of high quality
service, including 24 hour on-call maintenance, repair and support services
differentiates Prime from its competitors. Prime believes it also offers one of
the most comprehensive and well maintained fleets of equipment in the rental
equipment industry. The Company employs an extensive preventive maintenance
program for its rental fleet, increasing the dependability, useful life and
resale value of the equipment. In addition, the Company's proprietary POS system
enables each rental equipment yard manager on a real-time basis to search the
Company's entire rental fleet for needed equipment, determine its location and
arrange for delivery to customers using the Company's radio-dispatched fleet of
trucks and trailers and independent carriers. The Company believes that its
extensive, well maintained rental fleet, coupled with its ability to redeploy
equipment rapidly and efficiently among its yards, allows it to optimize fleet
utilization and return on fleet investment.

Prime's 101 rental equipment yards cover 52 markets within the 13 states in
which Prime operates. Although Prime operates in several regions, Prime
considers its principal markets to be in the southern Unites States.

Primeco was purchased from W.R. Grace & Co. in 1989 by Compagnie Francaise
de l'Afrigue Occidentale, a French company which, in turn, was acquired by an
affiliate of Artemis in 1993. In December 1994, affiliates of Investcorp and a
group of international investors formed Prime Service, Inc. to acquire Primeco
from Artemis.

INDUSTRY

According to a survey conducted for the AED, the equipment rental industry
has grown from approximately $600 million in 1982 to approximately $13 billion
in 1993, the last period for which such data are available. This increase
represents a compound annual growth rate of 32%. In addition, according to the
RER, rental revenues for the top 100 equipment rental companies increased
approximately 25% to $2.5 billion in 1995 from approximately $2.0 billion in
1994. Management believes that this growth reflects, in part, increased
outsourcing trends by industrial corporations related to an increased emphasis
on minimizing capital invested to purchase low usage equipment as well as
reducing the labor costs associated

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with maintaining and servicing such equipment. While equipment users
traditionally have rented equipment for specific purposes, such as supplementing
capacity during peak periods in connection with special projects, the
convenience and cost-saving factors of utilizing rental equipment have
encouraged customers to look to suppliers such as the Company as ongoing
comprehensive sources of equipment. Management believes that demand for rental
equipment by the industrial segment will continue to increase as these
industrial companies continue to outsource many non-core operations. According
to recent surveys conducted by the CIT Group, commercial construction
contractors intend to increase the percentage of equipment they rent without a
purchase option to an estimated 8% of their total equipment requirements in 1996
from less than 5% in 1994.

STRATEGY

INCREASE RENTAL FLEET AT EXISTING RENTAL EQUIPMENT YARDS. From 1991 to
1995, Prime experienced a significant increase in the demand for its rental
equipment, as evidenced by a decline in Prime's percentage of equipment not
rented within the last 90 days (non-rental rate) from an average monthly rate of
7.0% in 1991 to an average monthly rate of 3.4% in 1994, 3.6% in 1995 and 3.5%
for the first six months of 1996, despite increasing the rental fleet (based on
average original cost) from $172.9 million in 1991 to $325.5 million for the six
month period ended June 30, 1996. The Company targets a non-rental rate of 5%,
which it believes minimizes lost revenue opportunities resulting from having
insufficient equipment to meet demand, while maximizing the Company's return on
equity. Prior to the 1994 Acquisition, the Company's capital expenditure program
was limited by the Company's prior owners. From 1991 to 1994, the Company did
not make any material acquisitions and purchased an aggregate of $33.7 million
of equipment (exclusive of amounts required to replace used equipment sold in
the ordinary course of business and inclusive of rental equipment purchases for
new yards). Despite revenues increasing during this period from $146.3 million
in 1991 to $211.9 million in 1994, management believes that its capital
expenditures program and resulting rental equipment fleet were not adequate to
meet the market demand. Since the 1994 Acquisition, the Company has
significantly increased its rental fleet by purchasing approximately $56.3
million of equipment through December 31, 1995, and $24.7 million during the six
month ended June 30, 1996 (exclusive of amounts required to replace used
equipment sold in the ordinary course of business and recent acquisitions, but
inclusive of rental equipment purchases for new yards). Management expects its
total 1996 rental equipment purchases to be $42.9 million (in each case
exclusive of amounts required to replace used equipment sold in the ordinary
course of business and recent acquisitions, but inclusive of rental equipment
purchases for new yards).

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EXPAND RENTAL EQUIPMENT YARD NETWORK. Prime intends to selectively expand
its network of rental equipment yards through a combination of acquisitions of
suitable existing rental equipment yards and to a lesser extent by opening new
rental equipment yards. Management believes that its management information
systems, size and operating expertise provide a competitive advantage in making
acquisitions as these strengths allow Prime to (i) integrate targets quickly
into its information and operating structure, (ii) realize significant synergies
in the form of reduced overhead and lower cost of goods through greater
purchasing power, (iii) enhance revenue by supplying acquired yards with
additional equipment to optimize the rental fleet mix and add new business lines
at those yards and (iv) enhance revenue by expanding coverage of national
accounts. The Company primarily targets acquisitions of stable equipment
businesses in new or existing markets where an existing owner has limited
resources to expand the rental equipment fleet. Pursuant to this strategy, in
February 1996 Prime acquired American Hi-Lift Corporation, adding a net of 12
yards in seven states, and in July 1996 Prime acquired the assets of Alpine,
adding a net six yards in the state of Washington and expanding Prime's presence
in the Northwest. In the case of the 1996 Acquisitions, Prime completed the
integration of the acquired equipment yards and the acquired fleet into the
Company's management information systems on the closing date of each
acquisition. In connection with the integration of the business of American
Hi-Lift, Prime's management reduced on an annualized basis the selling, general,
administrative and other expenses associated with American Hi-Lift by
approximately $5 millon, as compared to $15.2 million incurred by American
Hi-Lift for the year ended March 31, 1995.

MAXIMIZE UTILIZATION AND PROFITABILITY OF RENTAL FLEET. Prime believes that
it maintains customer loyalty by maintaining a diverse modern fleet. During the
first six months of 1996, the average age of Prime's rental fleet was 37 months.
Prime's proprietary POS system allows it to monitor the demand for and actual
usage of its equipment on a real-time basis. The Company, taking advantage of
its presence in numerous markets, can allocate new equipment and transfer
current equipment to yards with high rental activity. In addition, if
utilization of equipment declines, management is able to quickly react by
decreasing purchases of new equipment or replacement of used rental equipment
sold. The Company believes its comprehensive preventative maintenance program
allows it to increase the useful life of its equipment and obtain premium values
when it is sold.

The Company is a Delaware corporation. Its principal executive officers are
located at 16225 Park Ten Place, Suite 200, Houston, Texas 77084. Its telephone
number is (713) 578-5600.

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OPERATIONS

Typically, Prime's rental equipment yards occupy approximately 2.2 acres and
include (i) a service center, (ii) a customer showroom displaying selected
rental equipment, new equipment offered for sale and related merchandise, (iii)
an equipment service area and (iv) storage facilities for equipment requiring
protection from inclement weather. Each rental equipment yard is staffed by, on
average, approximately 15 full-time employees and one part-time employee,
including a manager, assistant manager, sales assistants, truck drivers,
mechanics and other personnel. Currently, the Company's yard managers have been
with the Company for an average of seven years. Most of the rental equipment
yards offer a full range of equipment for rental and sale, with the actual mix
designed to meet the anticipated needs of the customers in each location. Prime
continues to expand its network of rental equipment yards selectively through a
combination of acquisitions of suitable existing rental equipment yards in new
and existing markets and, to a lesser extent, openings of new rental equipment
yards in its existing markets. Prime increased its yard count from 74 in 1994 to
101 as of August 31, 1996, for a net increase of 27 rental facilities. The
Company operates all of its yards, including acquired yards, under the name
PRIME EQUIPMENT-Registered Trademark-.

CUSTOMERS

Prime has developed a diverse base of over 40,000 customers who have done
business with Prime in the last 12 months, ranging from "Fortune 500" companies
operating nationwide to subcontractors and homeowners. During 1995, no single
customer accounted for more than 3.0% of total revenues, and the ten largest
customers accounted for less than 9.5% of total revenues. Generally, Prime's
customer base includes three broad categories: (i) commercial construction
companies, (ii) industrial companies and (iii) subcontractors, homeowners and
others. Commercial construction and industrial customers accounted for
approximately 50% and 40%, respectively, of Prime's total revenues in 1995, with
subcontractors, homeowners and other customers generating the remaining 10%.

COMMERCIAL CONSTRUCTION. Prime's commercial construction customers include
national and regional contractors and subcontractors involved in commercial
construction projects, such as office and apartment buildings, roads, bridges
and highways, and plants and other manufacturing facilities. Prime's equipment
is used in each phase of a commercial construction project, and includes
backhoes used for digging, compaction equipment used for compacting earth,
trowels used for laying concrete, and welding machines, booms and lifts used in
the construction of buildings. Although the commercial construction market is
cyclical on a regional basis, Prime's geographic diversity makes it less
sensitive to downturns in any one region.

INDUSTRIAL. Management believes Prime is one of the largest suppliers of
rental equipment to industrial companies in the southern United States, based
upon equipment rental revenues. Prime's industrial customers, many of which
operate 24 hours per day and seven days per week, use equipment rented from
Prime to perform work required to construct, maintain and repair major
industrial and manufacturing facilities. Prime's industrial customers represent
a broad range of industries including pulp and paper, chemical, petrochemical,
steel, aluminum and textiles. In addition, Prime serves several public
utilities. Aerial equipment such as boom lifts and platforms is used by
industrial customers to conduct safety inspections and routine maintenance,
while equipment such as air tools and air compressors is used in combustible
environments where the risk of explosion prevents the use of electrical tools
and equipment. Prime has benefited from the growing trend of large industrial
corporations towards outsourcing many non-core components of their businesses
and heightened safety and environmental standards that require compliance and
ongoing maintenance by industrial customers.

SUBCONTRACTORS, HOMEOWNERS AND OTHERS. Primarily through 11 yards in Texas,
Prime rents landscaping, plumbing, remodeling and home improvement tools to
subcontractors, homeowners and other customers. Equipment rentals to
subcontractors and homeowners generally are for shorter periods (often one to
two days) and provide higher gross margins relative to other market segments,
but require greater

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maintenance and management time than commercial and industrial rentals. Revenues
from subcontractors, homeowners and others accounted for approximately 10% of
Prime's total revenues in 1995, and Management does not anticipate any material
expansion in this business segment.

PRODUCTS AND SERVICES

Equipment rental, including the Integrated Rental Management-TM- program and
shutdown and turnaround services, represents Prime's principal line of business.
In 1995, rental equipment together with rental-related revenue (such as damage
waiver income, delivery charges, labor charges and warranty income), accounted
for 62.9% of Prime's total revenues. Prime also acts as a distributor of new
equipment on behalf of nationally known equipment manufacturers. Revenues from
the sale of new equipment accounted for approximately 14.3% of Prime's total
revenues in 1995. The balance of Prime's 1995 revenues were derived from the
sale of parts and related merchandise such as diamond saw blades, coolers,
gloves and safety equipment (13.3%) and the sale of used rental equipment
(9.5%).

RENTAL EQUIPMENT. Prime believes it offers one of the most comprehensive
and well-maintained fleets of equipment in the rental equipment industry. Prime
believes that its new-equipment distribution relationships, together with the
volume of its equipment purchases, help it to achieve favorable pricing and
terms on its rental fleet equipment purchases. Prime's rental fleet consists of
approximately 40,000 pieces of equipment. Five categories of equipment
represented approximately 75.7% (based on original cost) of Prime's total rental
equipment fleet as of December 31, 1995: (i) platforms and booms (28.7%), (ii)
forklifts (14.4%), (iii) air compressors and dryers (13.4%), (iv) loaders and
backhoes (11.8%) and (v) scissors and vertical platforms (7.4%). The mix of
equipment at each of Prime's rental equipment yards is tailored to meet the
demands of the local customer base.

Prime seeks to maintain a modern efficient rental fleet through regular
sales of used rental equipment and ongoing capital investment in new rental
equipment. In addition, Prime believes it has one of the most advanced
preventive maintenance programs in the rental equipment industry. This program
extends the useful life of Prime's rental equipment and produces higher resale
prices. Management attempts to balance the objective of obtaining acceptable
prices from equipment sales against the revenues obtainable from used equipment
rentals. As of June 30, 1996, the weighted average age of the various categories
of Prime's rental equipment was 37 months. Over the last five years, Prime
received an average of 58% of the original cost of equipment upon resale,
largely due to the ongoing preventative maintenance of the equipment and its
significant remaining useful life at the time of resale. The weighted average
age of equipment sold was 66 months for 1995, and 69 months for the first six
months of 1996.

Prime believes that many customers choose to rent equipment rather than to
purchase or lease it in order to minimize capital requirements and maintenance
costs and to maximize the flexibility of equipment utilization and availability.
Accordingly, Prime offers flexible rental terms and conditions to its customers.
Customers may rent equipment by the day, week or month, with the daily rental
rate declining as the duration of the rental term increases. During 1995 and the
first six months of 1996, the average rental was for a period of 13 days.
Generally, Prime's industrial customers tend to rent for longer periods of time
than commercial construction customers, subcontractors or homeowners. Prime
provides 24 hour maintenance, repair and support services to customers,
including service at the customer's job site.

INTEGRATED RENTAL MANAGEMENT-TM- PROGRAM. Prime believes that the
Integrated Rental Management-TM- program offers an attractive opportunity for
growth by capitalizing on Prime's customized POS system and strong national
account relationships. Prime has entered into agreements with certain "Fortune
500" industrial companies to act as the exclusive supplier and manager of
industrial rental equipment used by each such customer, its contractors and
subcontractors in connection with repair, maintenance and construction at
certain of such customers' plants. Prime believes that customers benefit from
this arrangement in a number of ways, including cost savings, reduced capital
investment in equipment and related maintenance costs, and increased ability to
focus on their core operations through outsourcing

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equipment needs. Prime benefits through increased revenues, as well as the
reduction of operating costs, and improved fleet utilization rates as a result
of the sole-source arrangement with the customer. The existing Integrated Rental
Management-TM- contracts generally require several months notice for
termination. There can be no assurance that Prime will be able to maintain its
existing Integrated Rental Management-TM- contracts or obtain additional
Integrated Rental Management-TM- contracts in the future. If Prime's existing
Integrated Rental Management-TM- contracts were to be terminated by the
customers, Prime would redeploy the rental equipment dedicated to servicing
those contracts among its existing rental equipment yards and, if necessary,
proportionately reduce its purchases of new rental equipment. Management
believes that the Integrated Rental Management-TM- program affords significant
growth opportunities due to the trend by industrial companies toward outsourcing
non-core components of their businesses.

SHUTDOWN AND TURNAROUND SERVICES. Prime's "Turnaround Central" operation,
located in Houston, Texas, is dedicated to providing industrial customers with
the equipment, tools and supplies needed to perform scheduled periodic
maintenance and repairs ("turnarounds") as well as required repairs resulting
from accidents or emergencies that curtail operations ("shutdowns"). In
addition, Prime assists the customer in managing and monitoring the location and
utilization of the equipment and tools by utilizing a bar-code scanning system
that enables Prime's personnel to track the equipment and identify the employees
of the customer using such equipment. The lost production experienced as a
consequence of turnarounds and shutdowns make these procedures costly to
manufacturers who therefore place a premium on efficiency and speed in
accomplishing the required maintenance or repairs. Turnaround Central is
generally able to deliver its comprehensive package to a customer anywhere in
the United States in less than 24 hours. Management believes that few of Prime's
competitors offer specialized services tailored to meet the demands of
turnarounds and shutdowns. The Turnaround Central operation helps to promote
Prime's relationships with its industrial customers by efficiently providing
them with a critical, value-added service.

SALES OF NEW EQUIPMENT. Prime is a distributor for over 30 major equipment
manufacturers, including JLG Industries, Inc., Simon Aerials, Inc.,
Snorkel-Economy and Genie Industries (booms and high-reach equipment), Lull
Industries, Inc. and Gehl Construction (rough terrain forklifts and skid-steer
loaders), Sullair Corporation (air compressors), Chicago Pneumatic Tool Company
(air tools), Target Products, Inc. (concrete saws) and Wacker Corporation (earth
compaction equipment). Prime is the leading distributor of various lines of
equipment for several of these manufacturers. During 1995, five categories of
equipment, consisting of air compressors and dryers, platform booms, saws,
compaction equipment and forklifts, accounted for approximately 55.9% of Prime's
sales of new equipment. Prime believes that its distribution relationships,
together with the volume of its purchases, help it to achieve favorable prices
and terms on equipment purchased for its rental fleet. Sales of new equipment
offer flexibility to the customer and also provide Prime with improved
relationships and visibility with its customers.

SALES OF USED EQUIPMENT. Prime maintains a regular program of selling used
equipment in order to adjust the size and composition of its rental fleet to
changing market conditions and to maintain the quality of its available rental
fleet. Prime is generally able to achieve favorable sales prices for its used
equipment due to its strong preventive maintenance program and its practice of
selling used equipment before it becomes obsolete or irreparable. Management is
also able to adjust and balance the rate of used equipment sales and new
equipment purchases to deal with changing economic conditions and thereby
minimize the short-term adverse effects of declines in economic activity. In
general, Prime seeks to sell approximately 12-15% of its used equipment rental
fleet each year based on original cost. The weighted average age of equipment
sold in 1995 was 66 months. Sales of used equipment are accomplished by Prime in
several ways, including: (i) directly from rental equipment yards; (ii) from
Prime's two dedicated used equipment yards (one in Texas and one in Florida);
(iii) through advertising; and (iv) through auctions.

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RELATED PARTS AND MERCHANDISE SALES. Prime also sells parts, supplies and
merchandise, including diamond and regular saw blades, drill bits, shovels,
goggles, hard hats and other safety gear and coolers, as a complement to its
equipment rental and sale business.

OTHER SERVICES. Prime also offers maintenance service to its customers that
own equipment and generates revenues from damage waiver charges, delivery
charges (particularly for larger pieces of equipment) and warranty income.
Although these services comprised only 6% of Prime's total revenues for 1995,
they provide relatively high margins and contribute to Prime's profitability.

PURCHASING AND SUPPLIERS

Prime's size, purchasing volume and new equipment distribution relationships
enable it to purchase equipment directly from manufacturers at prices and on
terms that Prime believes to be more favorable than are available to its smaller
competitors. All of Prime's purchasing is coordinated through its central
purchasing department. All suppliers of Prime must meet specified standards of
quality and experience. Prime participates in dealer quality councils and
training programs with certain of its suppliers. The favorable pricing, service,
training and information that Prime receives from its suppliers represent a
competitive advantage that Prime believes is significant. Prime's Product
Evaluation Committee meets quarterly to analyze the effectiveness, quality and
profitability of Prime's equipment and to address equipment procurement issues.
The Product Evaluation Committee is composed of corporate management and yard
employees whose experience with specific equipment brands and models,
supplemented by performance data captured by Prime's POS system, provides the
basis for equipment procurement decisions. Prime believes that it could replace
any of its existing suppliers if it were to lose its ability to purchase
equipment from such suppliers.

MAINTENANCE PROGRAM

Prime's preventive maintenance program establishes a schedule of preventive
maintenance customized to each category of equipment. To administer this
program, Prime employs a full-time staff of 468 trained mechanics, who perform
equipment maintenance at Prime's yards and at customers' job sites. In contrast,
Prime believes that many of its competitors do not practice preventive
maintenance to the same extent as Prime and tend to focus a greater portion of
their maintenance efforts on repairing damaged or inoperable equipment. As a
result of this program, Prime believes that it is able to obtain more dependable
performance from its rental equipment fleet, extend the useful life of its
rental equipment fleet and obtain more favorable prices when used rental
equipment is sold.

POS SYSTEM

Prime's advanced proprietary POS system, which has been in place in all of
Prime's rental equipment yards since October 1992, is used by Prime for the
day-to-day management of approximately 40,000 pieces of rental equipment. This
computer system links all of Prime's rental equipment yards, headquarters and
other facilities, permitting universal access to real-time data concerning the
location, rental status and maintenance history of each piece of equipment in
the rental fleet. In addition, the POS system provides information concerning
customer sales and credit histories, generates rental contracts and processes
more than 65,000 invoices per month. The POS system is linked to Prime's
management information system, which provides management with access to
up-to-date financial information concerning Prime's performance. Prime's systems
professionals also developed the customized, proprietary software used in
Prime's Integrated Rental Management-TM- program, as well as software programs
for specific customer needs. Prime's data center, located at its headquarters in
Houston, Texas, employs an IBM mainframe computer system for its flexibility and
capacity to accommodate Prime's systems needs for the near future. In the event
Prime's POS system becomes disabled, Prime has retained disaster recovery
back-up services which will provide computer systems at several off-site
locations. The Company believes that its current

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information systems, along with its internal development staff and outside
consultants, will provide the necessary flexibility to accommodate changing
customer needs and future growth of the Company.

SALES, MARKETING AND ADVERTISING

Prime markets its services in four principal ways, the most important of
which is marketing through its sales force. Prime also has developed a national
accounts program, a telemarketing program and certain promotional activities to
supplement and support the efforts of Prime's sales force.

SALES FORCE. Prime markets its products and value-added services primarily
through its 181 member sales force, consisting of the Vice President of Sales
and Marketing, two Directors of Sales, and ten sales managers who oversee 168
sales representatives. Prime's sales force is knowledgeable about all of Prime's
services and products, including the rental of equipment, sales of new and used
equipment, sales of parts and merchandise, and Prime's value-added rental
services, including Integrated Rental Management-TM- and Turnaround Central.
Operating directly from the local rental equipment yards, sales managers and
representatives call regularly on contractors' job sites and industrial
facilities in their sales territories, often assisting customers in planning for
their equipment requirements. Prime also provides its sales force with extensive
training, including frequent in-house training by supplier representatives
regarding the operating features and maintenance requirements of new equipment.
Members of Prime's sales force earn commissions on all equipment rentals and
sales that they generate.

NATIONAL ACCOUNTS. Prime's national accounts department is dedicated
exclusively to marketing to large customers with a nationwide presence in order
to develop regional or multi-regional relationships. The national accounts
department supplements the efforts of the sales force whose members deal
directly with management of the local production facilities of national firms.
National account marketers call on the corporate headquarters of Prime's main
industrial and commercial construction customers in order to expand existing
business relationships to include additional production facilities or
construction sites. Multi-facility arrangements are covered by "blanket"
contracts with the national accounts department. The terms of these blanket
contracts typically designate Prime as the preferred supplier of rental
equipment at designated customer facilities. Since the national accounts program
was initiated in 1991, the number of national account customers has increased
from 42 to 86 (representing approximately 350 operating facilities to which
Prime rents and sells equipment under blanket contracts). In 1995, national
account customers represented approximately 13.4% of Prime's total revenues, and
Prime's top ten national accounts represented over 7.6% of Prime's total
revenues.

RENTAL CRITERIA. Prime's rental criteria differ from those of a traditional
leasing company, in that the duration of a rental period is shorter and
therefore credit exposure is lower. Prime's rental periods range from an average
of four days for a smaller subcontractor or residential user to 18 days for
industrial customers, with an overall average rental period of 13 days. Other
than customers who pay by cash, check or credit card, potential customers who
are applying for open account status must receive credit approval from the
Company's credit department prior to the delivery of any rental equipment.

TELEMARKETING. Management believes that Prime's telemarketing program is
one of the most advanced programs currently in use in the rental equipment
industry. Prime's telemarketing department, which was established in 1991,
employs four full-time telemarketers who are based at Prime's headquarters in
Houston and make approximately 2,200 targeted telephone calls per month, or 100
telephone calls per day per telemarketer. The telemarketers are aided by
in-house, custom-designed software, which contains an extensive database
providing access to over 250,000 active or potential customers. This database
enables the telemarketers to understand each prospect's activities and their
potential equipment needs before placing a call. The primary objectives of the
telemarketers are: (i) to generate leads and open new accounts for sales
personnel in the field by calling on companies in a targeted geographical area;
(ii) to call on inactive accounts to review whether they have current or
near-term equipment needs; and (iii) to perform market research.

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PROMOTIONAL ACTIVITIES. Prime actively promotes its services by direct mail
and advertising in the yellow pages of telephone directories in the markets it
serves. Prime also hosts open houses, customer appreciation events and other
special promotional events. Prime provides a toll-free telephone number that
automatically connects the caller to Prime's rental equipment yard closest to
that caller. Furthermore, Prime also prints its marketing materials in Spanish
to address the Hispanic customer base in many of its markets in the southwestern
United States.

INTERNET WEB PAGE. In addition to its principal marketing methods, the
Company is currently in the process of creating an internet web page that is
anticipated to be used as a marketing tool to describe the Company's locations,
product lines, and used rental equipment available for sale, which went on-line
in October 1996.

PROPERTIES

Prime owns 47 of its rental locations and leases 47 rental locations as well
as its approximately 23,000 square foot headquarters space in Houston, Texas,
with the majority of its leases having multiple five- or ten-year renewal
options. These figures do not include the seven Integrated Rental Management-TM-
service centers that are located on-site at customer-owned locations. As part of
its 101 yards, Prime also operates a used rental equipment yard in each of Texas
and Florida, equipment service centers at various sites, a national warranty
center, and the Turnaround Central facility. Prime has granted mortgages on 40
of its owned real property sites to the lenders under its credit facility to
secure Prime's obligations thereunder. The total investment in owned facilities
is approximately $25.5 million at June 30, 1996, while the average base rent on
leased facilities is approximately $66,000 annually. Management believes that
none of Prime's leased facilities, individually, is material to the operations
of Prime. In addition, Prime maintains a fleet of 714 trucks and 161 trailers,
of which 82 trucks and 101 trailers are owned by Prime as of June 30, 1996.

COMPETITION

The rental equipment industry is fragmented and highly competitive. Each
market in which Prime operates is served by numerous competitors, ranging from
large multi-regional or regional companies, such as Hertz Equipment Rental
(currently the largest rental equipment company), to small, independent
businesses with a limited number of locations. Prime believes that participants
in the rental equipment market compete on the basis of service, breadth of
product line, quality and price. In general, Prime believes that regional and
multi-regional operators, especially larger operators such as Prime, enjoy
substantial competitive advantages over small, independent rental businesses who
cannot afford to maintain the broad and extensive rental equipment fleet and
high level of maintenance and service that Prime offers. In its markets, Prime
believes that its POS system, its commitment to customer service and fleet
maintenance and its centralized management systems enable it to compete
successfully with other large regional and multi-regional operators.

EMPLOYEES

At June 30, 1996, Prime had a total of 1,726 employees, of which 699 were
salaried and 1,027 were hourly personnel. Of these, 131 were involved in
administration, 189 in sales and marketing, and 1,406 in operations and rental
equipment yard management. Prime is committed to, and has realized significant
benefits from, its formal employee training programs including the Quality
Improvement Program and management and salesforce training programs. Prime
believes that this investment in its employees, in conjunction with services
such as safety awareness programs for both customers and employees and drug-and
alcohol-free workplace policies, is a competitive advantage that positions Prime
to be responsive to customer needs. None of Prime's work force is unionized and
management believes that its relationship with employees is satisfactory.

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TRADE NAMES

Primeco is the owner of the trademark PRIME EQUIPMENT-Registered Trademark-
registered with the U.S. Patent and Trademark Office for use in connection with
the rental of light to medium construction equipment. Prime has also filed with
the U.S. Patent and Trademark Office a declaration of intent to use the
trademark Integrated Rental Management-TM-. Although management believes that
the PRIME EQUIPMENT-Registered Trademark- name is recognized among customers in
the industry, it does not believe that Prime's operations are dependent to any
significant extent on any single trade name. Primeco has granted its lenders
under its credit facility a lien on its intellectual property, including the
PRIME EQUIPMENT-Registered Trademark- trademark.

ENVIRONMENTAL REGULATION

Prime is subject to various evolving Federal, state and local environmental
laws and regulations governing, among other things, emissions to air, discharge
to waters and the generation, handling, storage, transportation, treatment and
disposal of hazardous substances and wastes. These laws and regulations provide
for substantial fees and sanctions for violations, and, in many cases, could
require Prime to remediate a site to meet applicable legal requirements.

In 1995, Prime spent approximately $1.3 million on environmental matters,
including costs related to remediation, compliance, and capital requirements,
and has budgeted expenditures of approximately $4.4 million in 1996 for such
matters. At June 30, 1996, Prime had a reserve for environmental remediation of
$7.0 million and a related receivable from state trust fund programs and a
seller of certain yards of $2.0 million. The actual cost of remediating
environmental conditions may be different than that accrued by Prime due to the
difficulty in estimating such costs and due to potential changes in the status
of legislation and state reimbursement programs. The Company does not maintain
an insurance policy for environmental matters.

Management believes that the amounts required to correct any identified
environmental condition and to maintain compliance with applicable environmental
regulations will not have a material adverse effect on the financial condition
or results of operations of Prime. See Note 9 to Consolidated Financial
Statements.

LEGAL PROCEEDINGS

From time to time, the Company has been and is involved in various legal
proceedings, all of which management believes are routine in nature and
incidental to the conduct of its business. The ultimate legal and financial
liability of the Company with respect to such proceedings cannot be estimated
with certainty, but the Company believes, based on its examination of such
matters, that none of such proceedings, if determined adversely to the Company,
would have a material adverse effect on the financial condition or results of
operations of the Company.

46
<PAGE>
MANAGEMENT

DIRECTORS, EXECUTIVE OFFICERS AND KEY EMPLOYEES

The following table sets forth the name, age and position of each of the
directors, executive officers and certain key employees of the Company and
Primeco. Each director of the Company will hold office until the next annual
meeting of shareholders of the Company or until his successor has been elected
and qualified. Officers of the Company are elected by the Board of Directors of
the Company and serve at the discretion of the Board of Directors.

<TABLE>
<CAPTION>
NAME AGE POSITIONS
- -------------------------------------------------- --- --------------------------------------------------------
<S> <C> <C>
Thomas E. Bennett................................. 51 President, Chief Executive Officer, Director
Brian Fontana..................................... 38 Executive Vice President, Chief Financial Officer
Kevin L. Loughlin................................. 46 Director of Finance, Treasurer, Secretary
John D. Latimer................................... 50 Controller, Assistant Treasurer, Assistant Secretary
Peter A. Post..................................... 52 Vice President Operations
James O. York..................................... 53 Vice President of Sales and Marketing
Gerald E. Lane.................................... 55 Director of Central Division
Michael Gordon.................................... 44 Director of Eastern Division
Rick L. McCurry................................... 49 Director of Western Division
Christopher J. O'Brien............................ 38 Director
Charles J. Philippin.............................. 45 Director
Jon P. Hedley..................................... 35 Director
Christopher J. Stadler............................ 32 Director
</TABLE>

Thomas E. Bennett joined the Company in 1975 as Equipment Manager. He became
a Rental Equipment Yard Manager in 1978 of the Company's largest distribution
location, and was named Regional Manager in 1979. In 1987, Mr. Bennett was
promoted to Vice President of the Southwest Division. In 1988, he was selected
as the Vice President of Operations and of the Company and was named President,
Chief Executive Officer and a director in 1990. Prior to joining the Company,
Mr. Bennett worked for the Tool Crib, Inc. for 11 years.

Brian Fontana joined Primeco on April 1, 1996 as Executive Vice President
and Chief Financial Officer. Mr. Fontana was employed previously with National
Convenience Stores, Incorporated (NCS), a company traded on the New York Stock
Exchange until it was acquired by Diamond Shamrock in 1995. Mr. Fontana joined
NCS in 1990 as Assistant Treasurer and was appointed to Treasurer in February
1992. In August 1993, he was promoted to Vice President and Treasurer of NCS, a
position he held until December 1993, when Mr. Fontana was named Vice President
and Chief Financial Officer of NCS.

Kevin L. Loughlin joined the Company in 1980 as Controller and Vice
President of Finance and held this position until 1990, when he was named
Executive Vice President, Chief Financial Officer, Secretary and Treasurer. He
was elected a director of the Company in January 1995. From 1973 to 1979, Mr.
Loughlin was employed by W.R. Grace where he served in various accounting and
financial capacities. Prior to joining W.R. Grace, Mr. Loughlin was an
accounting supervisor for Dun & Bradstreet from 1971 to 1973.

John D. Latimer served as Assistant Controller of the Company from 1979 to
1989. In 1982, he was elected to the office of Assistant Secretary of the
Company. In December 1989, he was named Controller and Assistant Treasurer of
the Company.

Peter A. Post joined the Company in 1979 as a Rental Equipment Yard Manager.
In December 1979, Mr. Post was promoted to Regional Manager for East Texas,
Louisiana and Alabama, where he served until 1988 when he was named Vice
President of Operations for the Southwest Division. In January 1990, Mr. Post
became Vice President, Southwest Division.

47
<PAGE>

James O. York joined the Company in April, 1996 as the Vice President of
Sales and Marketing. Prior to joining Primeco, Mr. York held similar positions
during the past 17 years with Tate, Inc. and Trak International, both of which
are manufacturers of construction and industrial equipment.

Gerald E. Lane joined the Company in 1981 as a Rental Equipment Yard
Manager. In 1983, he was promoted to Regional Manager and in October 1992, was
named Vice President, Southeast Division. Prior to joining the Company, Mr. Lane
worked for Hertz Equipment Rental Company for 18 years.

Michael Gordon joined the Company in 1981 as a sales representative. In
1982, he was promoted to Rental Equipment Yard Manager. In 1988, Mr. Gordon was
promoted to Regional Manager for the Houston area. In 1993 he became Regional
Manager for the Company's California Region. Mr. Gordon was promoted to Director
of the Eastern Division in September 1995. Prior to joining the Company, Mr.
Gordon was employed by JLG Industries for three years.

Rick L. McCurry joined the Company in 1989 as Regional Manager for North
Texas and Oklahoma. He remained in this position until September 1995 when he
was named Director of Operations Western Division. Prior to joining the Company,
Mr. McCurry served as General Manager at Zuni Rental in Albuquerque, New Mexico
for six years.

Christopher J. O'Brien became director of Prime in December 1994. He has
been an executive of Investcorp, its predecessor or one or more of its
wholly-owned subsidiaries since November 1993. Mr. O'Brien is a director of
Simmons Company.

Charles J. Philippin became a director of Prime in December 1994. He has
been an executive of Investcorp, its predecessor or one or more of its
wholly-owned subsidiaries since October 1994. Prior to joining Investcorp, Mr.
Philippin was a partner with Coopers & Lybrand L.L.P. Mr. Philippin is a
director of Saks Holdings, Inc., Simmons Company and Color Tile, Inc.

Jon P. Hedley became a director of Prime in September 1996. He has been an
executive of Investcorp, its predecessor or one of more of its wholly-owned
subsidiaries since April 1990. Mr. Hedley is a director of Saks Holdings, Inc.,
Simmons Company and Color Tile, Inc.

Christopher J. Stadler became a director of Prime in September 1996. He has
been an executive of Investcorp, its predecessor or one or more of its
wholly-owned subsidiaries since April 1, 1996. Prior to joining Investcorp, Mr.
Stadler was a Director with CS First Boston Corporation.

COMMITTEES OF THE BOARD OF DIRECTORS

AUDIT COMMITTEE. Promptly following the consummation of the Offering, the
Board of Directors of the Company will establish an audit committee (the "Audit
Committee"). The Audit Committee will make recommendations concerning the
engagement of independent public accountants, review with the independent public
accountants the scope and results of the audit engagement, approve professional
services provided by the independent public accountants, review the independence
of the independent public accountants, consider the range of audit and non-audit
fees and review the adequacy of the Company's internal accounting controls. The
Audit Committee initially will consist of an independent director who the
Company intends to elect prior to the consummation of the Offering.

COMPENSATION COMMITTEE. Promptly following the consummation of the
Offering, the Board of Directors of the Company will establish a compensation
committee (the "Compensation Committee") to establish remuneration levels for
executive officers of the Company and oversee implementation of the Company's
stock option plans and any other incentive programs.

48
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

In 1995, the Company had no compensation committee or other committee of the
Board of Directors performing similar functions. Decisions concerning
compensation of executive officers were made by the Company's Board of
Directors.

DIRECTOR COMPENSATION

The Company pays no additional remuneration to its employees or to
executives of Investcorp for serving as directors. Other directors will receive
an annual retainer of $25,000 in cash and incentive compensation, including but
not limited to restricted stock, $1,500 for each regular or special meeting and
reimbursement of out-of-pocket expenses incurred in attending meetings of the
Board of Directors and any committees of the Board on which they serve.

EXECUTIVE COMPENSATION

The following table sets forth all cash compensation earned in the previous
three years by the Company's Chief Executive Officer and each of the other four
most highly compensated executive officers whose remuneration exceeded $100,000
(collectively, the "Named Executive Officers"). The current compensation
arrangements for each of these officers are described in "Employment
Arrangements".

<TABLE>
<CAPTION>
PRIME
LTIP (OPTIONS) ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(1) PAYOUTS(2) (#)(3) COMPENSATION(4)
- ---------------------------------------------------- --------- ---------- ---------- ----------- ----------- -----------------
<S> <C> <C> <C> <C> <C> <C>
Thomas E. Bennett................................... 1995 $ 225,000 $ 330,000 -- 58,352 $ 4,620
Chief Executive Officer 1994 172,500 95,757 $74,000 -- 4,620
1993 161,000 93,980 -- -- 4,497

Kevin L. Loughlin................................... 1995 140,000 160,000 -- 19,438 4,620
Director of Finance, 1994 135,600 63,544 47,017 -- 4,620
Treasurer and Secretary 1993 130,000 61,750 -- -- 4,497

Peter A. Post....................................... 1995 130,625 140,000 -- 16,861 4,620
Vice President of Operations 1994 110,500 41,387 38,040 -- 4,620
1993 105,000 30,975 -- -- 4,122

Gerald E. Lane...................................... 1995 110,000 110,000 -- 14,520 4,620
Director of Central Division 1994 96,700 56,441 14,080 -- 4,620
1993 86,000 51,887 -- -- 2,944

John D. Latimer..................................... 1995 97,983 29,792 -- 10,363 3,863
Controller 1994 94,650 30,288 490 -- 3,673
1993 91,000 27,300 -- -- 3,218
</TABLE>

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

(1) Earned in year shown but paid in subsequent year.

(2) Amounts paid upon termination of Artemis's phantom stock plan pursuant to
the 1994 Acquisition.

(3) Following the closing of the 1994 Acquisition, certain members of management
were offered the opportunity to purchase shares of Common Stock from the
original investors at a price of $3.86 per share (the price per share paid
by the original participants in the 1994 Acquisition). The number of shares
purchased by the Named Executive Officers were as follows: Thomas E. Bennett
(58,352); Kevin L. Loughlin (19,438); Peter A. Post (16,861); Gerald E. Lane
(14,520); and John D. Latimer (10,363).

(4) Amounts paid pursuant to the Company's defined contribution 401(k) plan
matching program.

49
<PAGE>
The following table provides information with respect to stock options
granted during the fiscal year ended December 31, 1995 to the Named Executive
Officers:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF STOCK
PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM (D)
------------------------------------------------------------------- ----------------------
<S> <C> <C> <C> <C> <C> <C>
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS
UNDERLYING GRANTED TO EXERCISE OF
OPTIONS GRANTED EMPLOYEES IN BASE PRICE PER EXPIRATION
NAME (A) FISCAL YEAR SHARE DATE 5% (B) 10% (C)
- ------------------------------ --------------- ----------------- --------------- -------------- ---------- ----------
Thomas E. Bennett............. 58,352 26.3% $ 3.86 Dec. 2, 2004 $ 141,524 $ 358,665
Kevin L. Loughlin............. 19,438 8.7 3.86 Dec. 2, 2004 $ 47,145 $ 119,481
Peter A. Post................. 16,861 7.6 3.86 Dec. 2, 2004 $ 40,895 $ 103,639
Gerald E. Lane................ 14,520 6.5 3.86 Dec. 2, 2004 $ 35,216 $ 89,248
John D. Latimer............... 10,363 4.7 3.86 Dec. 2, 2004 $ 25,135 $ 63,701
</TABLE>

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

(a) The options are for shares of Common Stock and were granted on December 2,
1994, and vest at 20% per year over five years upon achievement of certain
objectives. Prime achieved its 1995 objective and 20% of the options for
each Named Executive Officer vested on March 30, 1996. To the extent not
earlier vested or terminated, all options will vest on the tenth anniversary
of the date of grant and will expire 30 days thereafter if not exercised.
All options will also vest upon certain changes in control. Upon
consummation of the Offering, the vesting schedule for these options has
accelerated such that an additional 20% of the options will vest upon
closing of the Offering and 30% of such options will vest on each of
December 31, 1997 and 1998.

(b) Represents an assumed market price per share of $6.29.

(d) The dollar amounts under columns headed 5% and 10% represent the
hypothetical gain or "option spread" that would exist for the options based
on assumed 5% and 10% annual compounded rates of share price appreciation
over the full option term. These assumed rates for a 5% hypothetical gain
would result in a price per share on December 2, 2004 of $6.29 and for a 10%
hypothetical gain would result in a price per share on December 2, 2004 of
$10.00.

The following table contains certain information regarding options to
purchase shares of Common Stock held as of December 31, 1995 be each of the
Named Executive Officers. None of such Named Executive Officers exercised any
options during fiscal 1995.

<TABLE>
<CAPTION>
NUMBER OF SECURITIES UNDERLYING
UNEXERCISED HOLDINGS OPTIONS AT
FY-END
------------------------------------
<S> <C> <C>
NAME EXERCISABLE UNEXERCISABLE (A)
- --------------------------------------------------------------- ----------------- -----------------
Thomas E. Bennett.............................................. 0 58,352
Kevin L. Loughlin.............................................. 0 19,438
Peter A. Post.................................................. 0 16,861
Gerald E. Lane................................................. 0 14,520
John D. Latimer................................................ 0 10,363
</TABLE>

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

(a) Options are for shares of Common Stock and vest 20% per year over five years
upon achievement of certain objectives. Prime achieved its 1995 objective
and 20% of the options for each Named Executive Officer vested on March 30,
1996. Upon consummation of the Offering, the vesting

50
<PAGE>

schedule for these options will accelerate such that an additional 20% of
the options will vest upon closing of the Offering and 30% of such options
will vest on each of December 31, 1997 and 1998.

EMPLOYEE BENEFIT PLANS

The Company has a noncontributory defined benefit pension plan (the "Plan")
covering substantially all of its employees. The following table sets forth the
estimated annual benefits payable upon retirement under the Plan based on
retirement at age 65 and 1995 covered compensation of $25,920:

<TABLE>
<CAPTION>
YEARS OF SERVICE
REMUNERATION -----------------------------------------------------
(I.E. FINAL EARNINGS) 15 20 25 30 35
- ----------------------------------------------------------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
$125,000................................................... $ 24,971 $ 33,055 $ 41,319 $ 49,583 $ 57,846
$150,000 and above......................................... 30,041 40,055 50,069 60,083 70,096
</TABLE>

For each of the individuals listed above, the Plan covers total compensation
as listed in the Summary Compensation Table, but limited to $150,000 as required
by the Employee Retirement Income Security Act of 1974. Each of the five
officers listed in the Summary Compensation Table has credited service as of
December 31, 1995 of 6.3 years. Benefits under the Plan are based on (i) final
earnings (the highest five consecutive years' earnings out of the last ten years
before retirement date or average earnings received in the last five full years
before early retirement or termination of employment), (ii) covered compensation
(the average of the Social Security Taxable Wage Bases for the 35-year period
ending at Social Security Retirement Age) and (iii) years of credited service.
Benefits under the Plan are determined by a formula which multiplies (x) the sum
of 1% of final earnings up to covered compensation and 1.4% of final earnings in
excess of covered compensation by (y) the years of credited service up to 35
years. There is no reduction for early retirement at age 62. The Company's
policy is to fund all current and prior service costs. Plan assets are invested
in various segregated accounts with an insurance company. Benefits under the
Plan are not subject to any offset.

The Company also sponsors a defined contribution 401(k) plan that covers
substantially all employees. The Company matches 50 percent of employee
contributions limited to a maximum equal to three percent of eligible employee
compensation. Company contributions to the plan were approximately $471,000,
$588,000 and $633,000 in 1993, 1994 and 1995, respectively.

EMPLOYMENT ARRANGEMENTS

Primeco has entered into employment agreements with Thomas E. Bennett, Brian
Fontana, Kevin L. Loughlin, Peter A. Post and Gerald E. Lane. Mr. Bennett's
agreement, effective as of December 2, 1994, provides that he shall serve as
President and Chief Executive Officer. Upon the expiration of the initial seven
year term, Mr. Bennett's agreement shall automatically be extended for an
additional term of one year, unless either party has notified the other party of
its election to terminate the agreement, not later than 90 days prior to the
scheduled expiration date. During the term of employment, the agreement provides
for an annual base salary of $225,000 subject to annual review by the Board
provided that the level of base salary shall not be subject to reduction. Mr.
Bennett's current annual base salary is $240,000. Mr. Bennett is entitled to
participate in the management cash incentive bonus program, and in all fringe
benefit programs maintained by Primeco. Mr. Bennett's employment agreement also
provides that in the event that Primeco terminates his employment or elects to
not renew the agreement other than for cause, Mr. Bennett will receive monthly
one-twelfth of his annual base salary at the time of such termination for the
period ending on the earlier of the expiration date of the employment agreement
or the first anniversary of the date of termination. If Mr. Bennett's employment
is terminated by death, Primeco shall pay to Mr. Bennett's estate or legal
representative a lump sum payment equal to 25% of Mr. Bennett's annual base
salary in effect at such time. If Mr. Bennett's employment is terminated based
upon a permanent disability, Primeco shall pay to Mr. Bennett a lump sum of 50%
of Mr. Bennett's annual base salary in effect at such time.

51
<PAGE>

Mr. Fontana, Mr. Loughlin, Mr. Post and Mr. Lane's employment agreements are
substantially identical to Mr. Bennett's except that the annual base salaries
differ, the initial term for Mr. Lane is three years, and the initial term for
Messrs. Fontana, Post and Loughlin is five years. The initial annual base
salaries for Messrs. Fontana, Loughlin, Post and Lane were $160,000, $140,000,
$125,000 and $110,000, respectively. The current annual base salaries for
Messrs. Fontana, Loughlin, Post and Lane are $160,000, $150,000, $150,000 and
$115,000, respectively.

Upon his employment, Mr. Fontana also purchased 25,918 shares of Common
Stock at a purchase price of $3.86 per share and was awarded options for 25,918
shares of Common Stock with an exercise price of $3.86 per share. Mr. Fontana
will also participate in Prime's bonus plan. Bonuses awarded under the plan for
1996 would be paid in 1997.

Upon his employment, Mr. York purchased 12,959 shares of Common Stock at a
purchase price of $3.86 per share and was awarded options for 12,959 shares of
Common Stock with an exercise price of $3.86 per share. The options for Messrs.
Fontana and York shall vest 20% at the consummation of the Offering, 20% at
December 31, 1997, and 30% at each December 31, 1998 and 1999.

The Company currently intends to enter into an employment agreement on
substantially the same terms as Mr. Bennett's with James O. York, except that
Mr. York's agreement would have an initial term of five years and Mr. York's
initial base salary would be $125,000, his current annual salary.

MANAGEMENT STOCK INCENTIVE PLANS

The Old Stock Plan provides incentives to employees and directors of Prime
and Primeco by granting them awards tied to the Common Stock. The Old Stock Plan
will be administered by the Compensation Committee, which will have broad
authority in administering and interpreting the Old Stock Plan. Awards to
employees are not restricted to any specified form or structure and may include,
without limitation, sales or bonuses of stock, restricted stock, stock options
or stock appreciation rights. Options granted under the Old Stock Plan may be
options intended to qualify as incentive stock options ("ISOs") under Section
422 of the Internal Revenue Code of 1986, as amended, or options not intended to
so qualify. An award granted under the Old Stock Plan to an employee may include
a provision terminating the award upon termination of employment under certain
circumstances or accelerating the receipt of benefits upon the occurrence of
specified events, including, at the discretion of the Compensation Committee,
any change of control of Prime. Upon consummation of the Offering, the Company
does not contemplate making any further awards under the Old Stock Plan.

In connection with the Offering, Prime has adopted the New Stock Plan. The
New Stock Plan will be administered by the Compensation Committee, which will
have broad authority in administering the New Stock Plan. Awards to employees
may take the form of options, sales or grants of restricted stock, or stock
appreciation rights. Options granted under the New Stock Plan may be options
intended to qualify as ISOs, and those not intended to so qualify. An award
granted under the New Stock Plan to an employee may include a provision
terminating the award upon termination of employment under certain circumstances
or accelerating the receipt of benefits upon the occurrence of specified events.
The Company has reserved 1,500,000 shares of Common Stock for issuance under the
New Stock Plan.

52
<PAGE>

The Company has approved the grant to its executive officers of options
under the New Stock Plan to purchase the following number of shares of Common
Stock:

<TABLE>
<CAPTION>
NAME NUMBER OF SHARES
- ------------------------------------------------------------ -----------------

<S> <C>
Thomas E. Bennett 154,275
Brian Fontana 36,300
Kevin L. Loughlin 25,410
Pete A. Post 19,965
James O. York 19,965
</TABLE>

Such options will be granted at the Offering price upon the consummation of
the Offering. After consummation of the Offering, the options will vest over
five years at 20% per year.

The Company has also approved the grant of options upon consummation of the
Offering for 90,750 shares of Common Stock in the aggregate on substantially the
same terms to its management other than the executive officers listed above.

53
<PAGE>
CERTAIN TRANSACTIONS

The Company was capitalized with $70.0 million of equity contributed by
Investcorp, its affiliates and other international and domestic investors and
$10.0 million aggregate principal amount of Subordinated Notes acquired for $9
million by Invifin S.A., an affiliate of Investcorp, and other international
investors. The Subordinated Notes are due on March 31, 2006 and bear interest at
a fixed annual rate of 14%. See Note 8 to Consolidated Financial Statements. The
Company capitalized Primeco with $79.0 million in exchange for 100% of the
outstanding common and preferred stock of Primeco in connection with the
consummation of the 1994 Acquisition. This capital contribution to Primeco, in
addition to borrowings under the credit facility and the subordinated loan
facility, provided the sources of the consideration for the 1994 Acquisition and
related costs and fees. The Company paid $150,000 in fees to Invifin in
connection with the Subordinated Notes. The Company intends to repay the
Subordinated Notes with the proceeds from the Offering. Following repayment of
the Subordinated Notes, the Company intends to contribute to Primeco the
outstanding preferred stock of Primeco.

In connection with the 1994 Acquisition, Primeco paid Investcorp
International, Inc. ("III") fees of $2.7 million for arranging Primeco's credit
facility. Primeco also entered into an agreement for management advisory,
strategic planning and consulting services (the "Management Agreement") with III
pursuant to which Primeco agreed to pay III $1.5 million per year for a five
year term. Primeco prepaid III $4.5 million for the first three years of the
term and agreed to make quarterly payments during the fourth and fifth years. In
connection with the 1994 Acquisition, Primeco also entered into an agreement
with Investcorp Bank E.C. ("EC") for a term of five years pursuant to which
Primeco paid EC approximately $7.6 million in exchange for EC's assistance in
arranging financing for the 1994 Acquisition and for EC's covenant not to
arrange or facilitate the acquisition of a competitor of Primeco without
Primeco's consent. These two agreements will be terminated in connection with
the Offering.

In connection with the purchase of American Hi-Lift, Equipment Rental
Limited, Arlington Limited, Freeport Limited, LaPorte Limited and Plano Limited
made a capital infusion of $9.4 million into the Company which, in turn, paid
$1.0 million to III on February 26, 1996 for financial advisory services related
to the purchase of American Hi-Lift. This capital contribution, plus borrowing
from Prime's credit facility, provided funds for the completion of the American
Hi-Lift purchase.

The Company paid legal fees of approximately $197,000 and $82,000 in 1993
and 1994, respectively, to a law firm with which John Hyland, a former director
of the Company who resigned upon the closing of the 1994 Acquisition, was
affiliated during that time.

54
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Common Stock immediately prior to and immediately following
completion of the Offering, by (i) each person who is known by the Company to
own beneficially more than 5% of the outstanding shares of the Common Stock,
(ii) each director and executive officer named in the Summary Compensation
Table, (iii) all executive officers and directors as a group, and (iv) each
Selling Stockholder. Unless otherwise indicated, each person has sole voting
power and investment power with respect to the shares attributed to them.

<TABLE>
<CAPTION>
PRIOR TO THE OFFERING AFTER THE OFFERING(1)
------------------------ NUMBER OF SHARES -------------------------
NUMBER OF SUBJECT TO OVER- NUMBER OF
NAME OF BENEFICIAL OWNER SHARES PERCENT ALLOTMENT OPTION SHARES PERCENT
- ---------------------------------------------- ----------- ----------- ----------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Investcorp (2)................................ 7,585,863 36.6% -- 7,200,460 24.7%
SIPCO Limited (3)............................. 7,585,863 36.6 -- 7,200,460 24.7
Arlington Limited (5)......................... 616,594 2.9 33,296 583,297 2.0
Ballet Limited (5)............................ 8,349 * 451 7,898 *
Denary Limited (5)............................ 8,349 * 451 7,898 *
Equipment Equity Limited (4).................. 607,889 2.9 32,826 575,063 2.0
Equipment Holdings Limited (4)................ 1,197,900 5.7 64,687 1,133,213 3.9
Equipment Investment Limited (4).............. 1,787,910 8.5 96,547 1,691,363 5.8
Equipment Rental Limited (4).................. 1,158,486 5.5 62,558 1,095,928 3.8
Equity PEA Limited (4)........................ 901,863 4.3 48,701 853,162 2.9
Equity PEB Limited (4)........................ 901,863 4.3 48,701 853,162 2.9
Equity PEC Limited (4)........................ 1,240,062 5.9 66,963 1,173,099 4.0
Equity PED Limited (4)........................ 370,416 1.8 20,002 350,414 1.2
Fleet Equity Limited (4)...................... 1,197,900 5.7 64,687 1,133,213 3.9
Freeport Limited (5).......................... 616,594 2.9 33,296 583,298 2.0
Gleam Limited (5)............................. 8,349 * 451 7,898 *
Highlands Limited (5)......................... 8,349 * 451 7,898 *
Investcorp Investment Equity Limited (4)...... 14,520 * 784 13,736 *
Laporte Limited (5)........................... 616,594 2.9 33,296 583,298 2.0
New Prime Equity Limited (4).................. 459,757 2.2 24,827 434,930 1.5
New Prime Investments Limited (4)............. 457,198 2.2 24,689 432,509 1.5
Noble Limited (5)............................. 8,349 * 451 7,898 *
Outrigger Limited (5)......................... 8,349 * 451 7,898 *
PE Holdings Limited (4)....................... 1,197,900 5.7 64,687 1,133,213 3.9
PE Investments Limited (4).................... 1,197,900 5.7 64,687 1,133,213 3.9
Plano Limited (5)............................. 616,594 2.9 33,296 583,298 2.0
Prime Equity Limited (4)...................... 1,197,900 5.7 64,687 1,133,213 3.9
Prime Holdings Limited (4).................... 1,197,900 5.7 64,687 1,133,213 3.9
Quill Limited (5)............................. 8,349 * 451 7,898 *
Radial Limited (5)............................ 8,349 * 451 7,898 *
Rental Equity Limited (4)..................... 1,197,900 5.7 64,686 1,133,213 3.9
Rental Holdings Limited (4)................... 1,197,900 5.7 64,686 1,133,213 3.9
Shoreline Limited (5)......................... 8,349 * 451 7,898 *
Zinnia Limited (5)............................ 8,349 * 451 7,898 *
Thomas E. Bennett (6)......................... 70,022 * -- 81,692(7) *
Brian Fontana (6)............................. 25,918 * -- 31,101(7) *
Kevin L. Loughlin (6)......................... 23,326 * -- 27,213(7) *
Peter A. Post (6)............................. 20,233 * -- 23,605(7) *
Gerald E. Lane (6)............................ 17,424 * -- 20,328(7) *
John D. Latimer (6)........................... 12,436 * -- 14,508(7) *
Jon P. Hedley................................. 7,107 * -- 7,107 *
Christopher J. O'Brien........................ 2,222 * -- 2,222 *
Charles J. Philippin.......................... 14,958 * -- 14,958 *
Christopher J. Stadler........................ -- * -- -- *
All directors and executive officers
as a group (10 people)...................... 198,830 * -- 222,736 *
</TABLE>

- ------------------------
* Less than 1%.

(1) Assumes exercise of the over-allotment option.

(2) Investcorp does not own any shares of the Common Stock. The number of shares
shown as owned by Investcorp includes all of the shares owned by Arlington
Limited, Ballet Limited, Chase Nominees (Guernsey) Limited, Denary Limited,
Equipment Rental Limited, Equity PEA Limited, Equity PEB Limited, Equity PEC
Limited, Equity PED Limited, Freeport Limited, Gleam Limited, Highlands
Limited, Investcorp Investment Equity Limited, LaPorte

55
<PAGE>

Limited, Noble Limited, Outrigger Limited, Plano Limited, Quill Limited,
Radial Limited, Shoreline Limited and Zinnia Limited. Other than Equipment
Rental Limited and Investcorp Investment Equity Limited, which are indirect
wholly owned subsidiaries of Investcorp, Investcorp owns no stock in such
entities. Investcorp may be deemed to share beneficial ownership of the
shares of Common Stock held by such entities because such entities or their
shareholders or principals have entered into revocable management agreements
with a wholly owned subsidiary of Investcorp pursuant to which each such
entity has granted such subsidiary the authority to direct the voting and
disposition of the stock owned by such entity for so long as such agreement
is in effect. No shares are listed for Investcorp in the column indicating
shares subject to the over-allotment option because Investcorp does not
directly own any such shares. The number of shares shown as owned by
Investcorp after the Offering gives effect to the sale of the shares subject
to the over-allotment option by the foregoing entities. Investcorp is a
Luxembourg corporation, with its registered address at 37 rue Notre-Dame,
Luxembourg.

(3) SIPCO Limited ("SIPCO") does not directly own any Common Stock. The number
of shares shown as owned by SIPCO consists of the shares Investcorp is
deemed to beneficially own. SIPCO may be deemed to control Investcorp
through its ownership of a majority of the stock of a company which
indirectly owns a majority of Investcorp's outstanding stock. No shares are
listed for SIPCO in the column indicating shares subject to the
over-allotment option because SIPCO does not directly own any such shares.
The number of shares shown as owned by SIPCO after the Offering gives effect
to the sale of the shares subject to the over-allotment option by the
entities set forth in note (1) hereto. SIPCO is a Cayman Islands corporation
with its address at P.O. Box 1111, West Wind Building, George Town, Grand
Cayman, British West Indies.

(4) PO Box 1111, West Wind Building, Harbour Drive, George Town, Grand Cayman,
British West Indies.

(5) PO Box 2197, West Wind Building, Harbour Drive, George Town, Grand Cayman,
British West Indies.

(6) Includes the following shares of Common Stock, purchasable within 60 days of
October 9, 1996, upon exercise of Stock Options granted prior to the closing
of the Offering, by the following individuals: Thomas E. Bennett (11,670
Shares), Brian Fontana (0 Shares), Kevin L. Loughlin (3,887 Shares), Peter
A. Post (3,372 Shares), Gerald E. Lane (2,904 Shares) and John D. Latimer
(2,073 Shares).

(7) Includes the following shares of Common Stock, purchasable within 60 days of
the closing of the Offering, upon exercise of stock options granted prior to
the closing of the Offering, by the following individuals: Thomas E. Bennett
(23,340 Shares), Brian Fontana (5,184 Shares), Kevin L. Loughlin (7,774
Shares), Peter A. Post (6,774 Shares), Gerald E. Lane (5,808 Shares) and
John D. Latimer (4,146 Shares).

56
<PAGE>
DESCRIPTION OF CAPITAL STOCK

GENERAL

Upon completion of the Offering, the Company's authorized capital stock will
consist of ten million shares of preferred stock, of which no shares will be
issued and outstanding, and 100 million shares of Common Stock, $.01 par value
per share, of which 27,991,544 shares will be issued and outstanding. The
material terms of the Company's Certificate of Incorporation and Bylaws are
discussed below.

COMMON STOCK

Holders of Common Stock are entitled to one vote per share in the election
of directors and on all other matters on which stockholders are entitled or
permitted to vote. Holders of Common Stock are not entitled to vote cumulatively
for the election of directors. Holders of Common Stock have no redemption,
conversion, preemptive or other subscription rights. There are no sinking fund
provisions relating to the Common Stock. In the event of the liquidation,
dissolution or winding up of the Company, holders of Common Stock are entitled
to share ratably in all of the assets of the Company, if any, remaining after
satisfaction of the debts and liabilities of the Company. The outstanding shares
of Common Stock are, and the shares of Common Stock offered hereby will be, upon
payment therefor as contemplated herein, validly issued, fully paid and
nonassessable.

Holders of Common Stock are entitled to receive dividends when and as
declared by the Board of Directors of the Company out of funds legally available
therefor. The Company does not anticipate paying cash dividends on the Common
Stock in the foreseeable future. See "Dividend Policy."

PREFERRED STOCK

The Board of Directors is authorized, subject to certain limitations
prescribed by law, to issue the preferred stock in one or more classes or series
and to fix the designations, powers, preferences, rights, qualifications,
limitations or restrictions of any such class or series. The rights of the
holders of Common Stock will be subject to, and may be adversely affected by,
the rights of the holders of any preferred stock that may be issued in the
future. The issuance of preferred stock, while providing desirable flexibility
in connection with possible acquisitions and other corporate purposes, could
have the effect of making it more difficult for a third party to acquire a
majority of the outstanding voting stock of the Company. The Company has no
current plans to issue shares of preferred stock.

CERTAIN PROVISIONS OF DELAWARE LAW

The Company is incorporated under the Delaware General Corporation law (the
"DGCL"). The Company is subject to Section 203 of the DGCL, which restricts
certain transactions and "business combinations" between a Delaware corporation
and an "interested stockholder" (in general, a stockholder owning 15% or more of
the corporation's outstanding voting stock) or an affiliate or associate of an
interested stockholder, for a period of three years from the date the
stockholder becomes an interested stockholder. A "business combination" includes
mergers, asset sales and other transactions resulting in a financial benefit to
the interested stockholder. Subject to certain exceptions, unless the
transaction is approved by the board of directors and the holders of at least
66 2/3% of the outstanding voting stock of the corporation (excluding shares
held by the interested stockholder), Section 203 prohibits significant business
transactions such as a merger with, disposition of assets to or receipt of
disproportionate financial benefits by the interested stockholder, or any other
transaction that would increase the interested stockholder's proportionate
ownership of any class or series of the corporation's stock. The statutory ban
does not apply if, upon consummation of the transaction in which any person
becomes an interested stockholder, the interested stockholder owns at least 85%
of the outstanding voting stock of the corporation (excluding shares held by
persons who are both directors and officers or by certain employee stock plans).

57
<PAGE>
The Company's Certificate of Incorporation contains certain provisions
permitted under the DGCL relating to the liability of directors. The Certificate
of Incorporation provides that, to the fullest extent permitted by the DGCL, no
director of the Company will be liable to the Company or its stockholders for
monetary damages for breach of fiduciary duty as a director. The Certificate of
Incorporation and Bylaws of the Company also contain provisions indemnifying the
directors and officers of the Company to the fullest extent permitted by the
DGCL.

Section 203 and the provisions of the Company's Certificate of Incorporation
and Bylaws described above may make it more difficult for a third party to
acquire, or discourage acquisition bids for, the Company. Section 203 and these
provisions could have the effect of inhibiting attempts to change the membership
of the Board of Directors of the Company. In addition, the limited liability
provisions in the Certificate of Incorporation and the indemnification
provisions in the Certificate of Incorporation and Bylaws may discourage
stockholders from bringing a lawsuit against directors for breach of their
fiduciary duty (including breaches resulting from grossly negligent conduct) and
may have the effect of reducing the likelihood of derivative litigation against
directors and officers, even though such an action, if successful, might
otherwise have benefited the Company and its stockholders. Furthermore, a
stockholder's investment in the Company may be adversely affected to the extent
the Company pays the costs of settlement and damage awards against directors and
officers of the Company pursuant to the indemnification provisions in the
Company's Bylaws. The limited liability provisions in the Certificate of
Incorporation will not limit the liability of directors under Federal securities
laws.

SHARES RESERVED FOR ISSUANCE

The Company has 1,759,727 shares of Common Stock reserved for issuance upon
the exercise of options granted or to be granted under the Stock Plans. Upon
consummation of the Offering, options for the purchase of 606,392 shares will
have been granted. Upon the closing of the Offering, options for the purchase of
94,042 shares of Common Stock will be fully vested.

TRANSFER AGENT

The transfer agent and registrar for the Common Stock is ChaseMellon
Shareholder Services.

LISTING

The Common Stock has been approved for listing on the New York Stock
Exchange under the symbol " ," subject to official notice of issuance.

58
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS

CREDIT AGREEMENT

GENERAL. The Company has received commitments from its lenders to amend and
restate its credit facility in connection with the Offering (although the
Offering is not conditioned on such amendment and restatement). The credit
agreement, as so amended and restated in connection with the Offering (the
"Credit Facility") among Primeco, the several lenders from time to time parties
thereto (collectively, the "Lenders"), The Chase Manhattan Bank, formerly
Chemical Bank, as administrative agent (the "Administrative Agent"), and The CIT
Group/Business Credit, Inc., as collateral agent (the "Collateral Agent")
provides for a $123.5 million term loan facility maturing on December 31, 2002
(the "Term Loan Facility"), and a $175.0 million revolving credit facility
maturing on December 31, 2001 (the "Revolving Loan Facility"), of which $10
million is available in the form of standby or trade letters of credit.

Primeco utilized all of the proceeds of the Term Loan Facility, and $25.0
million of the $175.0 million Revolving Loan Facility, in connection with the
1994 Acquisition. Subject to borrowing base limitation, the remaining
availability under the Revolving Loan Facility may be utilized to meet Primeco's
current working capital requirements, including the issuance of standby and
trade letters of credit. Primeco can also utilize the remaining availability to
fund capital expenditures, subject to borrowing base limitations and certain
limits on annual capital expenditure. As of September 30, 1996, $244.0 million
in principal amount is outstanding under the Credit Facility. In connection with
the Offering, the Company will apply $110.2 million of the net proceeds thereof
to reduce the outstanding principal amount of the Revolving Loan Facility
without effecting a permanent reduction of the commitments thereunder, leaving
$10.3 million outstanding. Primeco from time to time has amended covenants
contained in the Credit Facility to accommodate acquisitions and increases in
capital expenditure levels.

The Loans under the Credit Facility are secured by a first priority security
interest in substantially all of the personal property of Primeco. In addition,
the Loans are guaranteed by the Company. The Company's guarantee is secured by a
pledge of all of the issued and outstanding capital stock of Primeco. Primeco is
also required to grant mortgages in after acquired real property acquired for
consideration in excess of $1 million.

Borrowings under the Credit Facility will accrue interest at either the
Alternate Base Rate (the "Alternate Base Rate") or an adjusted Eurodollar Rate
(the "Eurodollar Rate"), at the option of the Company, plus the applicable
interest margin. The Alternate Base Rate at any time is determined to be the
highest of (i) the Federal Funds Rate plus 1/2 of 1% per annum, (ii) the Base CD
Rate (as defined below) plus 1% per annum and (iii) The Chase Manhattan Bank's
prime rate. The applicable interest margins will be determined according to the
Company's debt coverage ratio for each measurement period. The interest margin
with respect to loans made under the revolving credit facility will be between
0% and 1% per annum with respect to loans that accrue interest at the Alternate
Base Rate and 1.00% and 2.25% per annum with respect to loans that accrue
interest at the Eurodollar Rate. The applicable interest margin will be between
0.50% and 1.50% with respect to term loans that accrue interest at the Alternate
Base Rate and will be between 1.75% and 2.75% per annum for term loans that
accrue interest at the Eurodollar Rate. As used herein, "Base CD Rate" means the
secondary market rate for three-month certificates of deposit of money center
banks, adjusted for reserves and assessments.

The Credit Facility contains certain covenants and restrictions that, among
other things, restrict: (i) consolidations, mergers and sales of assets of
Primeco and its subsidiaries; (ii) the incurrence of liens or other
encumbrances; (iii) the incurrence of contingent obligations; (iv) the payment
of dividends; (v) prepayments and amendments of subordinated debt instruments
and equity; (vi) investments, loans and advances; (vii) certain transactions
with affiliates; (viii) capital expenditures and (ix) incurrence of
indebtedness. The Credit Facility will allow Primeco to pay dividends to the
Company in amounts required for the Company to pay certain operating costs in
the normal course of business. The Company is also permitted to pay other cash
dividends in an amount limited to 25% of Primeco's consolidated net income

59
<PAGE>

from the effective date of the amended and restated Credit Facility, not to
exceed $3 million in any fiscal year.

The Credit Facility also requires that Primeco satisfy the following
financial tests: (i) Primeco is required to generate a minimum consolidated
EBITDA (tested on a rolling four-quarter basis) of $81.0 million for fiscal
1996, increasing to $142.0 million for the four quarters ended September 30,
2002; (ii) the Company is required to maintain a maximum debt to Consolidated
EBITDA (tested on a rolling four-quarter basis) ratio of 5.00 to 1.0 beginning
in the fourth quarter of fiscal 1996, decreasing to 3.5 to 1.0 in the third
quarter of fiscal 2002; and (iii) the Company is required to maintain a minimum
Interest Coverage Ratio (tested on a rolling four-quarter basis) of 2.0 to 1.0
in the third quarter of fiscal 1996, increasing to 2.7 to 1.0 in the third
quarter of fiscal 2002. The Company is currently in compliance with all
financial tests set forth in the Credit Facility.

Upon the occurrence of certain Events of Default (as defined), all amounts
owing under the Credit Facility may become immediately due and payable. Events
of Default under the Credit Facility include, among other things: (1) failure to
pay principal when due or interest within five days after due; (2) any material
inacurracy in any representation or warranty; (3) certain cross-defaults under
other indebtedness, in each case provided that the aggregate other indebtedness
is at least $5.0 million; (4) certain insolvency events; (5) certain prohibited
ERISA events; (6) judgments aggregating $5.0 million or more (excluding amounts
covered by insurance), not stayed, discharged, vacated or bonded within the
applicable time for such action; or (7) a change of control, which is deemed to
occur if any person (other than Investcorp, any of its affiliates or
subsidiaries, senior management of the Company or Primeco, any entity that is
majority-owned by such senior management of the Company or Primeco, or any
person acting in the capacity of an underwriter) directly or indirectly acquires
25% or more, on a fully diluted basis, of the outstanding voting power of the
common stock of the Company or Primeco.

SUBORDINATED DEBT

On March 6, 1995, $100.0 million aggregate principal amount of 12.75% Senior
Subordinated Notes due March 1, 2005 (the "Senior Notes") were issued by Primeco
pursuant to an Indenture (the "Indenture"), between Primeco and Texas Commerce
Bank National Association, as Trustee (the "Trustee"). The Senior Notes are
unsecured senior subordinated obligations of Primeco.

Upon 30 days' prior notice by Primeco, the Senior Notes will be redeemable
in whole or in part, on or after March 1, 2000, and prior to maturity, at the
following redemption prices (expressed in percentages of principal amount), plus
accrued interest to the redemption date.

If redeemed during the 12-month period commencing on or after March 1 of the
years set forth below:

<TABLE>
<CAPTION>
PERIOD REDEMPTION PRICE
- ---------------------------------------------------------------------------- ----------------
<S> <C>
2000........................................................................ 106.375%
2001........................................................................ 104.250
2002........................................................................ 102.125
2003 and thereafter......................................................... 100.000
</TABLE>

The Company intends to contribute approximately $37.5 million of the net
proceeds from the Offering to Primeco to enable Primeco, in accordance with the
terms of the Indenture, to redeem approximately $33.3 million aggregate
principle amount of Senior Notes, together with the accrued but unpaid interest
and premium thereon, at a redemption price of $37.5 million.

The Indenture contains various restrictive covenants that, among other
things, limit: (i) the incurrence of certain additional indebtedness by Primeco;
(ii) the creation of senior indebtedness of Primeco which is, by its terms,
subordinated in right of payment to other indebtedness of Primeco; and (iii) the
payment of dividends on capital stock of Primeco. See "Risk Factors--No
Dividends".

60
<PAGE>

Each holder will have the right to require Primeco to repurchase all or any
part of such holder's Senior Notes at a purchase price in cash equal to 101% of
the principal amount thereof plus accrued and unpaid interest, if any, to the
date of purchase upon the occurrence of a change in control, which is deemed to
occur (i) if any person (other than Investcorp, any of its affiliates or
subsidiaries, senior management of the Company or Primeco (collectively, the
"Permitted Holders"), or any person acting in the capacity of an underwriter)
directly or indirectly acquires 35% or more of the total voting power of the
Company or Primeco, provided that Permitted Holders do not hold at least the
same percentage of such total voting power as such person and cannot designate
for election a majority of the board members, or (ii) if any person other than
Permitted Holders nominates a majority of the directors of the Company or
Primeco, and such directors are elected.

An Event of Default is defined in the Indenture as, among other things, (i)
a default in any payment of interest when due, continued for 30 days, (ii) a
default in the payment of principal when due, (iii) the failure to comply with
certain covenants, (iv) a cross-default of other indebtedness in excess of $10.0
million, (v) bankruptcy, insolvency or reorganization of Primeco or a
significant subsidiary, or (vi) a judgment in excess of $10.0 million.

SHARES ELIGIBLE FOR FUTURE SALE

Upon completion of the Offering, assuming no exercise of the over-allotment
option, 27,991,544 shares of Common Stock will be outstanding. Of these shares,
the 7,250,000 shares of Common Stock sold in the Offering will be available for
resale in the public market without restriction or further registration under
the Securities Act, except that shares purchased by an "affiliate" of the
Company (in general, any person who has a control relationship to Primeco) may
be resold only if registered under the Securities Act or if transferred pursuant
to an exemption from registration, including resales pursuant to Rule 144
promulgated under the Securities Act ("Rule 144") and Regulation S promulgated
under the Securities Act ("Regulation S"). Of the remaining outstanding shares
of Common Stock, 1,287,371 were sold in offshore distributions under Regulation
S within the past year, 13,824,887 were sold in offshore distributions under
Regulation S more than one year ago, and 5,629,286 are deemed to be "restricted
securities" as that term is defined in Rule 144. Pursuant to Rule 701 under the
Securities Act, 115,836 of the restricted securities will be available for
resale in the public market without restriction commencing 90 days after the
date of this Prospectus. Commencing 90 days after the date of this Prospectus,
all of the remaining restricted securities are eligible for sale in the public
market in compliance with Rule 144. The existing stockholders of the Company
have agreed, subject to certain exceptions, that they will not offer, sell or
otherwise dispose of any of the shares of Common Stock owned by them for a
period of 180 days after the date of this Prospectus without the prior written
consent of CS First Boston Corporation. Additionally, the Company has agreed
that, during the period of 180 days from the date of this Prospectus, subject to
certain exceptions, they will not issue, sell, offer or agree to sell, grant any
options for the sale of (other than employee stock options) or otherwise dispose
of, directly or indirectly, any shares of Common Stock or any securities
convertible into or exercisable for Common Stock, other than pursuant to the
Offering.

In addition, up to 259,727 shares of Common Stock may be issued upon
exercise of certain employee stock options that Prime has granted, of which
options to purchase 94,042 shares of Common Stock will be exercisable upon the
closing of the Offering. Also, the Company will grant, conditioned upon the
closing of the Offering, options for the purchase of 346,665 shares of Common
Stock, which will vest. The Company intends to file a registration statement on
Form S-8 under the Securities Act to register the 1,759,727 shares of Common
Stock reserved for issuance under the Management Stock Incentive Plans. As a
result, any shares issued upon exercise of stock options granted under such
plans will be available, subject to special rules for affiliates, for resale in
the public market after the effective date of such registration statement,
subject to applicable lock-up arrangements. See "Underwriting" and
"Management--Stock Incentive Plan."

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<PAGE>

In general, under Rule 144 as currently in effect, any person (or persons
whose shares are aggregated) owning restricted securities issued by the Company
or last sold by an affiliate of the Company more than two years ago is entitled
to sell, within any three-month period, a number of restricted securities which
does not exceed the greater of 1% of the then-outstanding shares of the
Company's Common Stock (279,915 shares immediately after the Offering) or the
average weekly trading volume of the Common Stock during the four calendar weeks
preceding the date on which notice of the sale is filed with the Commission.
Sales under Rule 144 also may be subject to certain manner of sale provisions,
notice requirements and the availability of current public information about the
Company. The volume of sale limitations and other provisions of Rule 144 (other
than the two year holding period requirement) also apply to any shares that are
not restricted securities but that are beneficially owned by an affiliate of the
Company. Any person (or persons whose shares are aggregated) who is not deemed
to have been an affiliate of the Company at any time during the three months
preceding a sale, and owning restricted securities issued by the Company or last
sold by an affiliate of the Company more than three years ago, is entitled to
sell such shares under Rule 144(k) without regard to the volume limitation,
manner of sale provisions, public information requirements or notice
requirements. Regulation S permits the sale by issuers, affiliates and others of
shares in an "offshore transaction" (as defined in Regulation S), subject to
certain other conditions including the requirement that the purchaser not resell
the shares to a U.S. person during a one year restricted period (or a 40-day
restricted period if the shares are distributed in reliance on Regulation S
after the Company's securities are registered under the Exchange Act). After
such one year (or 40-day) holding period, shares of Common Stock that were sold
under Regulation S and which are not held by an affiliate of the Company are
available for resale in the public market without restriction.

Prior to the Offering, there has been no public market for the Common Stock.
No prediction can be made as to the effect, if any, that market sales of shares
of Common Stock that are restricted securities or the availability of such
shares will have on the market price of the Common Stock prevailing from time to
time. Nevertheless, sales of substantial amounts of Common Stock, or the
perception that such sales could occur, could adversely affect prevailing market
prices for the Common Stock and could impair the Company's future ability to
raise capital through an offering of equity securities.

Certain holders of the Common Stock, including the Selling Stockholders,
have, subject to certain conditions and restrictions, the right to include their
shares of Common Stock in registered public offerings of Common Stock (or
securities exchangeable for a convertible into Common Stock) undertaken by the
Company for its own account, as well as require the Company to register the sale
of their shares of Common Stock upon demand.

62
<PAGE>
UNDERWRITING

Under the terms and subject to the conditions contained in an Underwriting
Agreement dated October , 1996 (the "U.S. Underwriting Agreement"), the
Underwriters named below (the "U.S. Underwriters"), for whom CS First Boston
Corporation, Merrill Lynch, Pierce, Fenner & Smith Incorporated and Salomon
Brothers Inc are acting as representatives (the "Representatives"), have
severally but not jointly agreed to purchase from the Company the following
respective numbers of U.S. Shares:

<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER U.S. SHARES
- --------------------------------------------------------------------------------- -----------
<S> <C>
CS First Boston Corporation......................................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated..........................................................
Salomon Brothers Inc.............................................................

-----------
Total....................................................................... 5,800,000
-----------
-----------
</TABLE>

The U.S. Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the U.S.
Underwriters will be obligated to purchase all of the U.S. Shares offered hereby
(other than those shares covered by the over-allotment option described below)
if any are purchased. The U.S. Underwriting Agreement provides that, in the
event of a default by a U.S. Underwriter, in certain circumstances the purchase
commitments of non-defaulting U.S. Underwriters may be increased or the U.S.
Underwriting Agreement may be terminated.

66
<PAGE>

The Company and the Selling Stockholders have entered into a Subscription
Agreement (the "Subscription Agreement") with the Managers of the International
Offering (the "Managers" and, together with the U.S. Underwriters, the
"Underwriters") providing for the concurrent offer and sale of the International
Shares outside the United States and Canada. The closing of the U.S. Offering is
a condition to the closing of the International Offering and vice versa.

The Selling Stockholders have granted to the U.S. Underwriters and the
Managers an option, exercisable by CS First Boston Corporation, expiring at the
close of business on the 30th day after the date of this Prospectus, to purchase
up to 1,087,500 additional outstanding shares from the Selling Stockholders at
the initial public offering price less the underwriting discounts and
commissions, all as set forth on the cover page of this Prospectus. Such option
may be exercised only to cover over-allotments in the sale of the shares of
Common Stock offered hereby. To the extent such option is exercised, each U.S.
Underwriter and each Manager will become obligated, subject to certain
conditions, to purchase approximately the same percentage of such additional
shares being sold to the U.S. Underwriters and the Managers as the number of
U.S. Shares set forth next to such U.S. Underwriter's name in the preceding
table and as the number set forth next to such Manager's name in the
corresponding table in the prospectus relating to the International Offering
bears to the sum of the total number of shares of Common Stock in such tables.

The Company has been advised by the Representatives that the U.S.
Underwriters propose to offer the U.S. Shares in the United States and Canada to
the public initially at the public offering price set forth on the cover page of
this Prospectus and, through the Representatives, to certain dealers at such
price less a concession of $ per share, and the U.S. Underwriters and
such dealers may allow a discount of $ per share on sales to certain
other dealers. After the initial public offering, the public offering price and
concession and discount to dealers may be changed by the Representatives.

The public offering price, the aggregate underwriting discounts and
commissions per share and per share concession and discount to dealers for the
U.S. Offering and the concurrent International Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and Managers (the
"Intersyndicate Agreement" relating to the Offering, changes in the public
offering price, concession and discount to dealers will be made only upon the
mutual agreement of CS First Boston Corporation, as representative of the U.S.
Underwriters, and CS First Boston Limited ("CSFBL"), on behalf of the Managers.

Pursuant to the Intersyndicate Agreement, each of the U.S. Underwriters has
agreed that, as part of the distribution of the U.S. Shares and subject to
certain exceptions, it has not offered or sold, and will not offer or sell,
directly or indirectly, any shares of Common Stock or distribute any prospectus
relating to the Common Stock to any person outside the United States or Canada
or to any other dealer who does not so agree. Each of the Managers has agreed or
will agree that, as part of the distribution of the International Shares and
subject to certain exceptions, it has not offered or sold, and will not offer or
sell, directly or indirectly, any shares of Common Stock or distribute any
prospectus relating to the Common Stock in the United States or Canada or to any
other dealer who does not so agree. The foregoing limitations do not apply to
stabilization transactions or to transactions between the U.S. Underwriters and
the Managers pursuant to the Intersyndicate Agreement. As used herein, "United
States" means the United States of America (including the States and the
District of Columbia), its territories, possessions and other areas subject to
its jurisdiction, "Canada" means Canada, its provinces, territories, possessions
and other areas subject to its jurisdiction, and an offer or sale shall be in
the United States or Canada if it is made to (i) any individual resident in the
United States or Canada or (ii) any corporation, partnership, pension, profit-
sharing or other trust or other entity (including any such entity acting as an
investment adviser with discretionary authority) whose office most directly
involved with the purchase is located in the United States or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the U.S.
Underwriters and the Managers of such number of shares of Common Stock as may be
mutually agreed upon. The price of any shares so sold will be the public
offering price, less such amount as may be mutually agreed upon by CS First
Boston Corporation, as representative of the U.S. Underwriters, and CSFBL, on
behalf of the

67
<PAGE>

Managers, but not exceeding the selling concession applicable to such shares. To
the extent there are sales between the U.S. Underwriters and the Managers
pursuant to the Intersyndicate Agreement, the number of shares of Common Stock
initially available for sale by the U.S. Underwriters or by the Managers may be
more or less than the amount appearing on the cover page of the Prospectus.
Neither the U.S. Underwriters nor the Managers are obligated to purchase from
the other any unsold shares of Common Stock.

The Representatives and CS First Boston Limited have informed the Company
that they do not expect discretionary sales by the U.S. Underwriters and the
Managers to exceed 5% of the shares of Common Stock being offered hereby.

Each of the Company, the Selling Stockholders and certain other stockholders
has agreed that it will not offer, sell, contract to sell, announce its
intention to sell, pledge or otherwise dispose of, directly or indirectly, or
file with the Securities and Exchange Commission a registration statement under
the Securities Act relating to, any additional shares of the Company's Common
Stock or securities convertible into or exchangeable or exercisable for any
shares of the Company's Common Stock without the prior written consent of CS
First Boston Corporation for a period of 180 days after the date of this
Prospectus, except in the case of the Company, issuances pursuant to the
exercise of employee stock options granted under the Company's existing
incentive plans or pursuant to the Company's dividend reinvestment plan.

At the request of the Company, the U.S. Underwriters have reserved up to
shares of Common Stock for sale, at the initial public offering price less
the underwriting discount, to officers and employees of Investcorp S.A. and its
subsidiaries and directors, officers and employees of the Company and its
subsidiaries. The number of shares available for sale to the general public will
be reduced to the extent such persons purchase such reserved shares. Any
reserved shares not so purchased will be offered by the U.S. Underwriters to the
general public on the same terms as the other shares offered hereby.

The Company and the Selling Stockholders have agreed to indemnify the U.S.
Underwriters and the Managers against certain liabilities, including civil
liabilities under the Securities Act, or contribute to payments which the U.S.
Underwriters or the Managers may be required to make in respect thereof.

The Common Stock has been approved for listing on the New York Stock
Exchange, under the symbol " ," subject to official notice of issuance. In
connection with the listing of the Common Stock on the New York Stock Exchange,
the U.S. Underwriters and the Managers will undertake to sell round lots of 100
shares or more to a minimum of 2,000 beneficial owners.

Prior to the Offering, there has been no established trading market for the
Common Stock. The initial price to the public for the Common Stock offered
hereby has been determined by negotiation among the Company, the Managers and
the Representatives. The factors considered in determining the initial price to
the public include the history of and the prospects for the industry in which
the Company competes, the ability of the Company's management, the past and
present operations of the Company, the historical results of operations of the
Company, the prospects for future earnings of the Company, the general condition
of the securities markets at the time of the Offering and the recent market
prices of securities of generally comparable companies. There can be no
assurance, however, that the prices at which the Common Stock will sell in the
public market after this Offering will not be lower than the price at which they
are sold by the U.S. Underwriters or the Managers.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of the shares of Common Stock in Canada is being made only
on a private placement basis exempt from the requirement that the Company
prepare and file a prospectus with the securities regulatory authorities in each
province where trades of the Common Stock are effected. Accordingly, any resale
of the Common Stock in Canada must be made in accordance with applicable
securities laws which will vary depending on the relevant jurisdiction, and
which may require resales to be made in accordance with available statutory
exemptions or pursuant to a discretionary exemption granted by the applicable

68
<PAGE>

Canadian securities regulatory authority. Purchasers are advised to seek legal
advice prior to any resale of the Common Stock.

REPRESENTATIONS OF PURCHASERS

Each purchaser of the Common Stock in Canada who receives a purchase
confirmation will be deemed to represent to the Company, the Selling
Stockholders and the dealer from whom such purchase confirmation is received
that (i) such purchaser is entitled under applicable provincial securities laws
to purchase such Common Stock without the benefit of a prospectus qualified
under such securities laws, (ii) where required by law, that such purchaser is
purchasing as principal and not as agent and (iii) such purchaser has reviewed
the text above under "Resale Restrictions."

RIGHTS OF ACTION AND ENFORCEMENT

The Common Stock being offered are those of a foreign issuer and Ontario
purchasers will not receive the contractual right of action prescribed by
section 32 of the Regulation under the SECURITIES ACT (Ontario). As a result,
Ontario purchasers must rely on other remedies that may be available, including
common law rights of action for damages or rescission or rights of action under
the civil liability provisions of the U.S. federal securities laws.

All of the Company's directors and officers as well as the experts named
herein may be located outside of Canada and, as a result, it may not be possible
for Ontario purchasers to effect service of process within Canada upon the
Company or such persons. All or a substantial portion of the assets of the
Company and such persons may be located outside of Canada and, as a result, it
may not be possible to satisfy a judgment against the Company or such persons in
Canada or to enforce a judgment obtained in Canadian courts against such Company
or persons outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of the Common Stock to whom the SECURITIES ACT (British
Columbia) applies is advised that such purchaser is required to file with the
British Columbia Securities Commission a report within ten days of the sale of
any Common Stock acquired by such purchaser pursuant to this Offering. Such
report must be in the form attached to British Columbia Securities Commission
Blanket Order BOR #95/17, a copy of which may be obtained from the Company. Only
one such report must be filed in respect of the Common Stock acquired on the
same date and under the same prospectus exemption.

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Gibson, Dunn & Crutcher LLP, New York, New York, and for
the U.S. Underwriters by Cravath, Swaine & Moore, New York, New York.

EXPERTS

The (i) consolidated financial statements of the Company as of December 31,
1994 and 1995, for the year ended December 31, 1995 for the period January 1,
1994, to December 1, 1994, and for the period December 2, 1994, to December 31,
1994, and (ii) financial statements of Alpine Equipment Rentals and Supply
Company as of December 31, 1994 and 1995, and for the years then ended, have
been included herein in reliance on the reports of Coopers & Lybrand L.L.P.,
independent certified public accountants, given on the authority of that firm as
experts in accounting and auditing.

The (i) financial statements of the Company for the year ended December 31,
1993, and (ii) financial statements of Vibroplant U.S., Inc., as of March 31,
1995 and February 25, 1996, and for each of the years in the two-year period
ended March 31, 1995, and the period from April 1, 1995, through February 25,
1996, have been included herein and in the registration statement in reliance
upon the reports of KPMG Peat Marwick LLP, independent certified public
accountants, appearing elsewhere herein, and upon the authority of said firm as
experts in accounting and auditing. The report of KPMG Peat Marwick LLP

69
<PAGE>

covering the Vibroplant U.S., Inc. financial statements contains an explanatory
paragraph that states that Vibroplant U.S., Inc. changed its method of computing
depreciation in 1995 and its method of accounting for income taxes in 1994.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the shares of Common Stock
offered hereby on Form S-1 (herein, together with all amendments and exhibits,
referred to as the "Registration Statement") under the Securities Act of 1933,
as amended (the "Securities Act"). This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission. For
further information, reference is hereby made to the Registration Statement.
Statements made in this Prospectus as to the contents of any contract,
agreement, indenture or other document referred to are not necessarily complete.
With respect to each such contract, agreement, indenture or other document filed
as an Exhibit to the Registration Statement, reference is made to such exhibit
for a more complete description thereof, and each such statement shall be deemed
qualified in its entirety by such reference. The Registration Statement and the
exhibits and schedules thereto may be inspected and copied (at prescribed rates)
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549 and at the
Commission's regional offices located at Citicorp Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661, and Seven World Trade Center, New
York, New York 10048. The Commission maintains a World Wide Web site on the
Internet at http://www.sec.gov that contains reports, proxy and information
statements and other information regarding registrants that file electronically
with the Commission.

The Company's wholly-owned subsidiary, Primeco, is subject to the reporting
requirements of Sections 13(a) and 15(d) of the Securities Exchange Act of 1934,
as amended, and in accordance therewith Primeco separately files reports and
other information with the Commission. Such reports and other information are
available and may be inspected and copied (at prescribed rates) at the
Commission's facilities referenced above, or accessed via the Commission's Web
site.

70
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<S> <C>
PRIME SERVICE, INC.

Reports of Independent Accountants................................................. F-2

Consolidated Balance Sheet......................................................... F-4

Consolidated Statement of Operations............................................... F-5

Consolidated Statement of Stockholder's Equity..................................... F-6

Consolidated Statement of Cash Flows............................................... F-7

Notes to Consolidated Financial Statements......................................... F-8

VIBROPLANT U.S., INC.

Independent Auditors' Report....................................................... F-25

Balance Sheets..................................................................... F-26

Statements of Operations........................................................... F-27

Statements of Stockholder's Equity................................................. F-28

Statements of Cash Flows........................................................... F-29

Notes to Financial Statements...................................................... F-30

ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

Report of Independent Accountants.................................................. F-38

Balance Sheet...................................................................... F-39

Statement of Operations............................................................ F-40

Statement of Stockholders' Equity.................................................. F-41

Statement of Cash Flows............................................................ F-42

Notes to Financial Statements...................................................... F-43
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors and Shareholders
Prime Service, Inc.:

We have audited the accompanying consolidated balance sheet of Prime
Service, Inc. and Subsidiary (the "Company") as of December 31, 1995 and 1994
and the related consolidated statements of operations, stockholders' equity and
cash flows of the Company for the year ended December 31, 1995 and for the
period from December 2, 1994 through December 31, 1994, and of the Predecessor
(as defined in Note 1) for the period from January 1, 1994 through December 1,
1994. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audits. The financial statements of the Predecessor for
the year ended December 31, 1993 were audited by other auditors whose report
dated January 28, 1994 expressed an unqualified opinion on those statements.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As explained in Note 1 to the financial statements, controlling ownership of
the Predecessor was acquired by the Company in a purchase transaction as of
December 2, 1994. The acquisition was accounted for as a purchase and,
accordingly, the purchase price was allocated to the assets and liabilities of
the Predecessor based upon their estimated fair value at December 2, 1994.
Accordingly, the financial statements of the Company are not comparable to those
of the Predecessor.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of the Company as
of December 31, 1995 and 1994, and the consolidated results of the Company's
operations and its cash flows for the year ended December 31, 1995 and for the
period from December 2, 1994 through December 31, 1994, and the results of the
Predecessor's operations and its cash flows for the period from January 1, 1994
through December 1, 1994, in conformity with generally accepted accounting
principles.

COOPERS & LYBRAND L.L.P.

Houston, Texas
August 30, 1996, except as to
the information regarding
the Stock Split in
October 1996 presented
in Note 18, for which the
date is October 9, 1996.

F-2
<PAGE>

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Primeco Inc.:

We have audited the accompanying statements of operations, common
stockholder's equity and cash flows of Primeco Inc. (the Predecessor) for the
year ended December 31, 1993. These financial statements are the responsibility
of Primeco's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the results of the operations and the cash flows of
Primeco Inc. for the year ended December 31, 1993, in conformity with generally
accepted accounting principles.

KPMG PEAT MARWICK LLP

Houston, Texas
January 28, 1994

F-3
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)

<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31,
1994 1995
------------ ------------ JUNE 30,
1996
-----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents............................................... $ 12,090 $ 178 $ 120
Accounts receivable, net................................................ 30,175 36,467 46,305
Inventories............................................................. 12,689 17,399 23,376
Rental equipment, net................................................... 153,818 181,798 246,412
Property, plant and equipment, net...................................... 20,768 22,334 28,929
Cost in excess of fair value of net assets acquired, net................ 117,713 115,084 130,301
Other assets............................................................ 22,150 18,719 18,536
------------ ------------ -----------
Total assets........................................................ $ 369,403 $ 391,979 $ 493,979
------------ ------------ -----------
------------ ------------ -----------

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable........................................................ $ 12,122 $ 14,968 $ 8,330
Accrued expenses........................................................ 23,578 27,607 28,680
Debt.................................................................... 235,000 265,000 344,000
Deferred income taxes................................................... 27,594 21,876 30,415
Other liabilities....................................................... 1,476 1,552 9,041
Commitments and contingencies (Notes 8 and 9)
STOCKHOLDERS' EQUITY
Common stock (Note 11).................................................. 182 182 208
Paid-in capital......................................................... 69,818 69,818 79,192
Accumulated deficit..................................................... (367) (9,024) (5,882)
Less Treasury Stock at cost............................................. -- -- (5)
------------ ------------ -----------
Stockholders' equity................................................ 69,633 60,976 73,513
------------ ------------ -----------
Total liabilities and stockholders' equity.......................... $ 369,403 $ 391,979 $ 493,979
------------ ------------ -----------
------------ ------------ -----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-4
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF OPERATIONS

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD FROM PERIOD FROM
FOR THE YEAR JANUARY 1, DECEMBER 2, FOR THE YEAR FOR THE SIX
ENDED 1994 THROUGH 1994 THROUGH ENDED MONTHS
DECEMBER 31, DECEMBER 1, DECEMBER 31, DECEMBER 31, ENDED JUNE
1993 1994 1994 1995 30, 1995
------------ ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
PREDECESSOR PREDECESSOR SUCCESSOR SUCCESSOR SUCCESSOR
------------ ------------ ------------- ------------ -----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Revenue:
Rental revenue.................................... $ 100,829 $ 108,272 $ 10,321 $ 138,983 $ 64,198
New equipment sales............................... 26,162 29,728 2,668 34,601 16,316
Rental equipment sales............................ 13,498 18,718 1,641 23,144 12,303
Parts and merchandise sales....................... 23,874 26,551 2,236 32,223 15,957
Service revenue and other income.................. 9,886 10,806 983 13,836 6,586
------------ ------------ ------------- ------------ -----------
174,249 194,075 17,849 242,787 115,360
------------ ------------ ------------- ------------ -----------
Cost of sales:
Depreciation--rental equipment.................... 17,456 17,365 2,822 37,427 15,808
Cost of new equipment sales....................... 22,211 25,269 2,251 28,960 13,684
Cost of rental equipment sales, net of accumulated
depreciation.................................... 7,999 11,809 1,134 22,853 12,219
Cost of parts and merchandise sales............... 17,902 20,175 1,736 24,157 12,176
Direct operating expenses......................... 46,288 48,981 4,592 60,553 29,068
------------ ------------ ------------- ------------ -----------
111,856 123,599 12,535 173,950 82,955
------------ ------------ ------------- ------------ -----------
62,393 70,476 5,314 68,837 32,405
------------ ------------ ------------- ------------ -----------
Selling, general, administrative and other.......... 28,248 28,030 2,871 36,821 17,267
Depreciation and amortization:
Noncompete agreements............................. 7,260 5,008 123 5,877 750
Cost in excess of fair value of assets required... 3,254 2,983 232 2,955 1,476
Property, plant and equipment..................... 1,980 1,893 191 2,395 1,154
Interest expense, net............................... 12,753 11,605 2,247 30,546 14,812
------------ ------------ ------------- ------------ -----------
53,495 49,519 5,664 78,594 35,459
------------ ------------ ------------- ------------ -----------
Income (loss) before income taxes............... 8,898 20,957 (350) (9,757) (3,054)
Income tax expense (benefit)........................ 4,350 8,506 17 (2,368) (494)
------------ ------------ ------------- ------------ -----------
Net income (loss) before extraordinary item..... 4,548 12,451 (367) (7,389) (2,560)
------------ ------------ ------------- ------------ -----------
Extraordinary item--loss on early extinguishment of
debt, net of tax benefit of $794.................. -- -- -- (1,268) (1,268)
------------ ------------ ------------- ------------ -----------
------------ ------------ ------------- ------------ -----------
Net income (loss)................................... $ 4,548 $ 12,451 $ (367) $ (8,657) $ (3,828)
------------ ------------ ------------- ------------ -----------
------------ ------------ ------------- ------------ -----------
Income (loss) per common share:
Net income (loss) before extraordinary item..... $ (.02) $ (.41) $ (.14)
Extraordinary item.............................. -- (.07) (.07)
------------- ------------ -----------
Net income (loss)............................... $ (.02) $ (.48) $ (.21)
------------- ------------ -----------
------------- ------------ -----------
Weighted average common shares outstanding.......... 18,150 18,150 18,150
------------- ------------ -----------
------------- ------------ -----------

<CAPTION>
FOR THE SIX
MONTHS
ENDED JUNE
30, 1996
-----------
<S> <C>
SUCCESSOR
-----------
(UNAUDITED)
<S> <C>
Revenue:
Rental revenue.................................... $ 87,678
New equipment sales............................... 21,303
Rental equipment sales............................ 17,148
Parts and merchandise sales....................... 18,730
Service revenue and other income.................. 8,597
-----------
153,456
-----------
Cost of sales:
Depreciation--rental equipment.................... 18,097
Cost of new equipment sales....................... 17,867
Cost of rental equipment sales, net of accumulated
depreciation.................................... 14,215
Cost of parts and merchandise sales............... 13,622
Direct operating expenses......................... 38,723
-----------
102,524
-----------
50,932
-----------
Selling, general, administrative and other.......... 23,171
Depreciation and amortization:
Noncompete agreements............................. --
Cost in excess of fair value of assets required... 1,618
Property, plant and equipment..................... 1,557
Interest expense, net............................... 18,239
-----------
44,585
-----------
Income (loss) before income taxes............... 6,347
Income tax expense (benefit)........................ 3,205
-----------
Net income (loss) before extraordinary item..... 3,142
-----------
Extraordinary item--loss on early extinguishment of
debt, net of tax benefit of $794.................. --
-----------
-----------
Net income (loss)................................... $ 3,142
-----------
-----------
Income (loss) per common share:
Net income (loss) before extraordinary item..... $ .16
Extraordinary item.............................. --
-----------
Net income (loss)............................... $ .16
-----------
-----------
Weighted average common shares outstanding.......... 19,879
-----------
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-5
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

(IN THOUSANDS)

<TABLE>
<CAPTION>
CAPITAL STOCK TOTAL
---------------------- PAID-IN ACCUMULATED TREASURY STOCKHOLDERS'
SHARES PAR VALUE CAPITAL DEFICIT STOCK EQUITY
--------- ----------- ---------- ------------ ----------- ------------
<S> <C> <C> <C> <C> <C> <C>
Predecessor:
Balance at January 1, 1993...................... 1,000 $ 1 $ 128,736 $ (23,010) $ -- $ 105,727
Net income...................................... -- -- -- 4,548 -- 4,548
--------- ----- ---------- ------------ ----- ------------
Predecessor:
Balance at December 31, 1993.................... 1,000 $ 1 128,736 (18,462) -- 110,275
Net income...................................... -- -- -- 12,451 -- 12,451
--------- ----- ---------- ------------ ----- ------------
Predecessor:
Balance at December 1, 1994..................... 1,000 $ 1 $ 128,736 $ (6,011) $ -- $ 122,726
--------- ----- ---------- ------------ ----- ------------
--------- ----- ---------- ------------ ----- ------------
Successor:
Balance at December 2, 1994..................... $ -- $ -- $ -- $ -- $ -- $ --
Sale of common stock on December 2, 1994........ 18,150 182 69,818 -- -- 70,000
Net loss........................................ -- -- -- (367) -- (367)
--------- ----- ---------- ------------ ----- ------------
Successor:
Balance at December 31, 1994.................... 18,150 182 69,818 (367) -- 69,633
Net loss........................................ -- -- -- (8,657) -- (8,657)
--------- ----- ---------- ------------ ----- ------------
Successor:
Balance at December 31, 1995.................... 18,150 182 69,818 (9,024) -- 60,976
--------- ----- ---------- ------------ ----- ------------
Sale of common stock (unaudited)................ 2,593 26 9,374 -- -- 9,400
Purchase of Treasury Stock (unaudited).......... -- -- -- -- (5) (5)
Net income (unaudited).......................... -- -- -- 3,142 -- 3,142
--------- ----- ---------- ------------ ----- ------------
Successor:
Balance at June 30, 1996 (unaudited)............ 20,743 208 79,192 $ (5,882) $ (5) $ 73,513
--------- ----- ---------- ------------ ----- ------------
--------- ----- ---------- ------------ ----- ------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-6
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENT OF CASH FLOWS

(IN THOUSANDS)

<TABLE>
<CAPTION>
FOR THE FOR THE
PERIOD FROM PERIOD FROM
FOR THE JANUARY 1, DECEMBER 2, FOR THE FOR THE
YEAR ENDED 1994 THROUGH 1994 THROUGH YEAR ENDED SIX MONTHS
DECEMBER 31, DECEMBER 1, DECEMBER 31, DECEMBER 31, ENDED JUNE
1993 1994 1994 1995 30, 1995
------------ ------------ ------------- ------------ -----------
<S> <C> <C> <C> <C> <C>
PREDECESSOR PREDECESSOR SUCCESSOR SUCCESSOR SUCCESSOR
------------ ------------ ------------- ------------ -----------

<CAPTION>
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Operating activities:
Net income (loss).................................... $ 4,548 $ 12,451 $ (367) $ (8,657) $ (3,828)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization...................... 29,949 27,249 3,368 48,656 19,242
Deferred income tax provision (benefit)............ 4,351 4,465 9 (4,924) (321)
Net (gain) loss on disposal of rental equipment,
and property, plant and equipment................ (4,817) (6,701) (363) 508 212
Provision for doubtful accounts.................... 928
Extraordinary loss on extinguishment of debt....... 1,268 1,268
Effect of changes in operating assets and
liabilities:
Decrease (increase) in accounts receivable....... (3,656) (6,611) 730 (6,291) (1,737)
Decrease (increase) in inventories............... 3,084 (182) 22 (4,710) (4,969)
Decrease (increase) in prepaid expenses and
other.......................................... 225 597 (232) (572) (2,378)
Increase (decrease) in accounts payable, accrued
expenses and other liabilities................. 5,859 2,668 (385) 6,945 2,617
------------ ------------ ------------- ------------ -----------
Net cash provided by operating activities............ 39,543 34,864 2,782 32,223 10,106
------------ ------------ ------------- ------------ -----------
Investing activities:
Additions to rental equipment........................ (38,088) (48,830) (3,984) (89,372) (47,978)
Additions to property, plant and equipment........... (1,980) (2,627) (223) (3,736) (1,230)
Payment to seller for the 1994 Acquisition........... (138,000)
Payments for acquisition costs....................... (13,667) (328) (325)
Purchase of AHL, net of cash acquired
Proceeds from sales of rental equipment.............. 13,497 18,862 1,680 23,079 12,210
Proceeds from disposals of property, plant and
equipment.......................................... 240 1,075 4 154 63
Payments for noncompete agreement related to
acquisition........................................ (200)
------------ ------------ ------------- ------------ -----------
Net cash used in investing activities................ (26,531) (31,520) (154,190) (70,203) (37,260)
------------ ------------ ------------- ------------ -----------
Financing activities:
Proceeds from Predecessor revolving line of credit... 2,000 10,000
Payments of Predecessor revolving line of credit..... (10,000)
Proceeds from revolving line of credit............... 26,000 (4,000)
Payments of revolving line of credit................. (20,000)
Payments of Predecessor debt......................... (15,000) (133,000)
Proceeds from Successor debt......................... 225,000 100,000 100,000
Payments of Successor debt........................... (76,000) (75,500)
Payments of financing costs.......................... (13,974) (3,932) (3,906)
Proceeds from issuance of common stock............... 70,000
Proceeds from issuance of Subordinated Notes......... 10,000
Purchase of Treasury Stock...........................
------------ ------------ ------------- ------------ -----------
Net cash provided (used) by financing activities..... (13,000) 158,026 26,068 16,594
------------ ------------ ------------- ------------ -----------
Net (decrease) increase in cash and cash equivalents... 12 3,344 6,618 (11,912) (10,560)
Cash and cash equivalents at beginning of period....... 2,116 2,128 5,472 12,090 12,090
------------ ------------ ------------- ------------ -----------
Cash and cash equivalents at end of period............. $ 2,128 $ 5,472 $ 12,090 $ 178 $ 1,530
------------ ------------ ------------- ------------ -----------
------------ ------------ ------------- ------------ -----------

<CAPTION>
FOR THE
SIX MONTHS
ENDED JUNE
30, 1996
-----------
<S> <C>
SUCCESSOR
-----------
(UNAUDITED)
<S> <C>
Operating activities:
Net income (loss).................................... $ 3,142
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization...................... 21,272
Deferred income tax provision (benefit)............ 1,245
Net (gain) loss on disposal of rental equipment,
and property, plant and equipment................ (2,568)
Provision for doubtful accounts....................
Extraordinary loss on extinguishment of debt.......
Effect of changes in operating assets and
liabilities:
Decrease (increase) in accounts receivable....... (3,962)
Decrease (increase) in inventories............... (2,628)
Decrease (increase) in prepaid expenses and
other.......................................... 538
Increase (decrease) in accounts payable, accrued
expenses and other liabilities................. (3,030)
-----------
Net cash provided by operating activities............ 14,009
-----------
Investing activities:
Additions to rental equipment........................ (50,513)
Additions to property, plant and equipment........... (2,449)
Payment to seller for the 1994 Acquisition...........
Payments for acquisition costs....................... (105)
Purchase of AHL, net of cash acquired (66,503)
Proceeds from sales of rental equipment.............. 17,045
Proceeds from disposals of property, plant and
equipment.......................................... 63
Payments for noncompete agreement related to
acquisition........................................
-----------
Net cash used in investing activities................ (102,462)
-----------
Financing activities:
Proceeds from Predecessor revolving line of credit...
Payments of Predecessor revolving line of credit.....
Proceeds from revolving line of credit............... 79,500
Payments of revolving line of credit.................
Payments of Predecessor debt.........................
Proceeds from Successor debt.........................
Payments of Successor debt........................... (500)
Payments of financing costs..........................
Proceeds from issuance of common stock............... 9,400
Proceeds from issuance of Subordinated Notes.........
Purchase of Treasury Stock........................... (5)
-----------
Net cash provided (used) by financing activities..... 88,395
-----------
Net (decrease) increase in cash and cash equivalents... (58)
Cash and cash equivalents at beginning of period....... 178
-----------
Cash and cash equivalents at end of period............. $ 120
-----------
-----------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-7
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS

1. THE COMPANY

The consolidated financial statements of Prime Service, Inc. ("Prime"),
formerly Prime Holding, Inc., include the accounts of Prime and its subsidiary.
Intercompany accounts and transactions are eliminated in consolidation. On
December 2, 1994, Prime acquired Primeco Inc. (the "1994 Acquisition") from a
subsidiary of Artemis S.A. (the "Seller") through Prime's subsidiary Prime
Acquisition Corp. ("PAC"). Immediately following the completion of the
Acquisition, PAC merged into Primeco Inc. ("Primeco"), as a result of which
Primeco became a wholly-owned subsidiary of Prime. Prime has substantially no
assets or investments other than the shares of stock of Primeco. Prime was
initially capitalized with $70.0 million of equity contributed by Investcorp
S.A. ("Investcorp"), its affiliates and other international investors and $10.0
million in principal amount of subordinated indebtedness (the "Subordinated
Notes") provided by Invifin S.A. ("Invifin"), an affiliate of Investcorp. For
purposes of identification and description, Prime is referred to as the
"Predecessor" for the period prior to the 1994 Acquisition, the "Successor" for
the period subsequent to the Acquisition and the "Company" for both periods.

The Company's operations primarily consist of renting equipment and, to a
lesser extent, selling complementary parts, merchandise and used equipment to
commercial construction, industrial and residential users. The Company also acts
as a distributor of new equipment on behalf of major equipment manufacturers.

The total purchase price for the 1994 Acquisition, including fees and
expenses relating to its financing, and the covenant-not-to-compete payment, was
approximately $305.0 million (repayment of $133.0 million of the Predecessor's
debt, cash payment of $138.0 million to the Seller and $34.0 million of
transaction and financing fees) and was accounted for by the purchase method.
Accordingly, the assets and liabilities of the Predecessor were adjusted to
reflect the allocation of the purchase price based on estimated fair values.

The following selected pro forma financial information presents the year
ended December 31, 1994, as though the controlling ownership of the Predecessor
had been acquired on January 1, 1994, and assumes that there were no other
changes in the operations of the Predecessor. The pro forma results are not
necessarily indicative of the financial results that might have occurred had the
1994 Acquisition actually taken place on January 1, 1994, or of future results
of operations (in thousands).

<TABLE>
<CAPTION>
PRO FORMA
FOR THE YEAR
ENDED
DECEMBER 31, 1994
-----------------
<S> <C>
(UNAUDITED)
Revenues................................................................... $ 211,924
Net loss................................................................... (546)
Net loss per share......................................................... (.03)
</TABLE>

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RENTAL AGREEMENTS

The Company rents equipment primarily to the construction, industrial and
homeowner markets. Rental agreements are structured as operating leases, and
rental revenue is recognized in the period in which it is earned.

F-8
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INVENTORIES

New equipment held for sale is valued at the lower of cost or market, with
cost being determined on the specific identification method. Parts and
merchandise are valued at lower of cost or market, with cost determined by the
retail method.

RENTAL EQUIPMENT

Rental equipment is recorded at cost. Depreciation for rental equipment
acquired prior to January 1, 1995 is computed using the straight-line method
over the estimated four-year useful life of the assets, after giving effect to
an estimated salvage value of 33 1/3%. Rental equipment acquired subsequent to
January 1, 1995 is depreciated over the estimated five year useful life of the
assets, after giving effect to an estimated salvage value of 50%. Accumulated
depreciation was $2.8 million, $38.9 million and $55.5 million at December 31,
1994, 1995, and June 30, 1996, respectively.

Expenditures for additions or improvements which extend asset lives are
capitalized in the period incurred. Normal repairs and maintenance costs are
expensed as incurred. When rental equipment is disposed of, the related cost and
accumulated depreciation are removed from the respective accounts, and any gains
or losses are included in results of operations.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the assets,
giving effect to an estimated salvage value.

The estimated useful lives for buildings and improvements range from 15 to
30 years and the estimated useful lives for equipment and furniture and fixtures
range from 5 to 10 years.

Expenditures for additions or improvements which extend asset lives are
capitalized in the period incurred. Normal repairs and maintenance costs are
expensed as incurred. When property, plant and equipment are disposed of, the
related cost and accumulated depreciation are removed from the respective
accounts, and any gains or losses are included in results of operations.

COST IN EXCESS OF FAIR VALUE OF NET ASSETS ACQUIRED

Goodwill represents the excess of the cost over the fair value of net assets
acquired. At each balance sheet date, management assesses whether there has been
a permanent impairment in the value of goodwill by comparing anticipated
undiscounted future cash flows from operating activities with the carrying value
of the goodwill. The amount of any resulting impairment is calculated by
discounting the same undiscounted cash flows from operating activities. The
factors considered by management in this assessment include operating results,
trends and prospects as well as the effects of obsolescence, demand, competition
and other economic factors.

Goodwill is amortized on a straight-line basis over the estimated life of 40
years. Accumulated amortization was $232,000, $3.1 million and $4.8 million at
December 31, 1994 and 1995, and June 30, 1996, respectively.

F-9
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
INCOME TAXES

The Predecessor filed a consolidated income tax return with the Seller for
the period ended December 2, 1994. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to the differences
between the financial statement carrying value of existing assets and
liabilities and their respective tax bases. Deferred tax assets and liabilities
are measured by using enacted tax rates that are applicable to the future years
in which deferred tax assets or liabilities are expected to be realized or
settled. The effect of a change in tax rates on deferred tax assets and
liabilities is recognized in net earnings in the period in which the tax rate
change was enacted. The Company establishes a valuation allowance when it is
more likely than not that a deferred tax asset will not be recovered.

CASH EQUIVALENTS

For purposes of reporting cash flows, cash and cash equivalents include cash
on hand and all highly liquid investment instruments purchased with original
maturities of three months or less.

INTEREST RATE SWAP AGREEMENTS

The existing interest swaps effectively convert a portion of the Company's
variable-rate debt to a fixed rate. The income earned or expense incurred as a
result of the interest paid exceeding interest received (or vice versa) under
terms of interest rate swap agreements is accrued in the period incurred or
earned, as the notional amounts of the swap agreements were designated to
specific debt (Note 8). Therefore, the related income and expense is accounted
for as an adjustment to the interest expense related to that debt.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to significant
concentrations of credit risk consist primarily of cash, accounts receivable and
interest rate swaps. As of December 31, 1994 and 1995, and June 30, 1996, the
Company had no significant concentrations of credit risk except for the interest
rate swaps discussed in Note 8.

The Company maintains cash and cash equivalents with various financial
institutions located throughout the country in order to limit exposure. The
Company's periodic evaluations of the relative credit standing of these
financial institutions are considered in the Company's investment strategy.

Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of entities comprising the Company's customer
base and their geographic dispersion. The Company generally does not require
collateral on accounts receivable. At December 31, 1994 and 1995, and June 30,
1996, the Company had an allowance for doubtful accounts of approximately
$925,000.

EARNINGS PER SHARE

The Company's earnings per share calculation is based upon the weighted
average number of common shares outstanding during the period for all classes of
common stock. Stock Options are considered common stock equivalents if their
inclusion is dilutive.

F-10
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
ESTIMATES

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the dates of the financial
statements and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from estimates. Significant
estimates used by the Company relate to estimated salvage values and remediation
of environmental matters.

RECLASSIFICATIONS

Certain amounts previously reported in the financial statements have been
reclassified to conform with the presentation used for the year ended December
31, 1995 with no impact on stockholder's equity or operations.

UNAUDITED INTERIM FINANCIAL INFORMATION

In the opinion of management, the accompanying unaudited interim
consolidated financial statements contain all adjustments (consisting only of
normal recurring items) necessary to present fairly the consolidated financial
position of the Company as of June 30, 1996 and the consolidated results of its
operations and cash flows for the six months ended June 30, 1995 and 1996.
Certain information and footnote disclosures normally included in consolidated
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the Securities and
Exchange Commission's rules and regulations. The results of operations for all
interim periods presented are not necessarily indicative of the results to be
expected for the full year.

3. INVENTORIES

Inventories consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)
New equipment held for sale................................ $ 4,662 $ 6,882 $ 9,821
Merchandise................................................ 4,571 6,328 6,397
Parts...................................................... 3,121 4,008 6,810
Other...................................................... 335 181 348
--------- --------- -----------
$ 12,689 $ 17,399 $ 23,376
--------- --------- -----------
--------- --------- -----------
</TABLE>

F-11
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

4. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Property, plant and equipment at cost:
Land..................................................... $ 5,932 $ 6,068 $ 7,707
Buildings and improvements............................... 9,737 11,160 14,446
Transportation equipment................................. 1,238 1,817 2,798
Furniture and fixtures................................... 2,759 3,594 4,768
Shop and other equipment................................. 1,293 1,954 3,029
--------- --------- -----------
20,959 24,593 32,748
Accumulated depreciation................................... (191) (2,259) (3,819)
--------- --------- -----------
Net property, plant and equipment.................... $ 20,768 $ 22,334 $ 28,929
--------- --------- -----------
--------- --------- -----------
</TABLE>

5. OTHER ASSETS

Other assets consist of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- --------- -----------
<S> <C> <C> <C>
(UNAUDITED)
Deferred financing costs, less accumulated amortization of $158, $2,764 and
$6,005, respectively......................................................... $ 13,825 $ 13,804 $ 12,563
Noncompete agreement, less accumulated amortization of $123.................... 5,877 -- --
Prepaid expenses and other..................................................... 1,248 840 1,793
Estimated reimbursements related to environmental remediation obligations (see
Note 9)...................................................................... 1,200 1,200 2,055
Prepaid management fee (see Note 6)............................................ -- 2,875 2,125
--------- --------- -----------
$ 22,150 $ 18,719 $ 18,536
--------- --------- -----------
--------- --------- -----------
</TABLE>

In connection with the 1994 Acquisition, the Company paid the Seller $6.0
million for a noncompete agreement. During 1995 and in January 1996, the Seller
divested itself of all its rental equipment operations which significantly
reduced the Seller's ability to compete against the Company. Consequently, the
Company determined that the noncompete agreement provided no future benefit to
the Company, and accordingly, the unamortized balance of approximately $4.5
million was written off and is included in depreciation and amortization expense
in the December 31, 1995 consolidated statement of operations.

The costs incurred in obtaining long-term financing are amortized over the
terms of the agreement using the effective interest method. Amortization of
deferred financing costs included in interest expense for the year ended
December 31, 1993, the period from January 1 to December 1, 1994, the period
from December 2, 1994 to December 31, 1994, and for the year ended December 31,
1995, approximated $399,000, $319,000, $158,000 and $2.8 million, respectively.
Amortization of deferred financing costs included in interest expense for the
six-month periods ended June 30, 1995 and 1996 approximated $1,270,000 and
$1,241,000, respectively.

F-12
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. RELATED PARTY TRANSACTIONS

Under the terms of a management agreement, the Company will pay an annual
management fee to Investcorp of $1.5 million. During 1995, the Company prepaid
the management fee for the next three years.

In connection with the Acquisition, the Successor paid Investcorp and its
affiliates approximately $11.5 million in exchange for Investcorp's assistance
in arranging the Acquisition, the bank financing, and issuing the Subordinated
Notes.

The Predecessor paid the Seller an annual management fee of $500,000. The
Predecessor also paid legal fees of approximately $82,000 to a law firm with
which one of the directors of the Predecessor was affiliated.

7. EMPLOYEE BENEFIT PLANS

The Company has a noncontributory defined benefit pension plan covering
substantially all of its employees. Benefits are based on years of service and
the employees' highest average earnings received in any five consecutive years
during the last ten years before retirement. The Company funds the plan in
accordance with the Employee Retirement Income Security Act of 1974 and the
Internal Revenue Code. Plan assets are invested in various segregated accounts
with an insurance company, the underlying investments of which are cash
equivalents, marketable equity securities, government securities and other
corporate securities.

The assumptions used in accounting for the defined benefit plan for the
Successor and Predecessor periods are as follows: weighted-average discount rate
is 6.75% for 1993, 8% for 1994 and 7% for 1995; rates of increase in
compensation levels is 5.5% for all periods; and the expected long-term rate of
return on plan assets is 9.5% for all periods.

Net periodic pension cost consisted of the following components (in
thousands):

<TABLE>
<CAPTION>
FOR THE
PERIOD FOR THE PERIOD
FROM FROM
FOR THE YEAR JANUARY 1, DECEMBER 2, FOR THE YEAR
ENDED 1994 THROUGH 1994 THROUGH ENDED
DECEMBER 31, DECEMBER 1, DECEMBER 31, DECEMBER 31,
1993 1994 1994 1995
------------- ------------- --------------- ------------
<S> <C> <C> <C> <C>
PREDECESSOR PREDECESSOR SUCCESSOR SUCCESSOR
------------- ------------- --------------- ------------
Service cost........................................ $ 1,180 $ 1,235 $ 113 $ 1,524
Interest cost....................................... 304 379 34 549
Actual return on plan assets........................ (377) (173) (3) (1,111)
Net total of other components....................... 225 (98) (21) 749
------ ------ ----- ------------
Net periodic pension cost........................... $ 1,332 $ 1,343 $ 123 $ 1,711
------ ------ ----- ------------
------ ------ ----- ------------
</TABLE>

F-13
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. EMPLOYEE BENEFIT PLANS (CONTINUED)
The actuarial present value of the accumulated benefit of the plan is as
follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31
--------------------
<S> <C> <C>
1994 1995
--------- ---------
Vested..................................................................... $ 2,557 $ 3,808
Nonvested.................................................................. 382 1,152
--------- ---------
Total...................................................................... $ 2,939 $ 4,960
--------- ---------
--------- ---------
</TABLE>

The reconciliation of the funded status of the plan is as follows (in
thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1994 1995
--------- ---------
Projected benefit obligation.............................................. $ 5,784 $ 9,880
Plan assets at fair value................................................. 4,287 6,740
--------- ---------
Projected benefit obligation in excess of plan assets..................... 1,497 3,140
Unrecognized net loss..................................................... -- (1,142)
--------- ---------
Net pension liability..................................................... $ 1,497 $ 1,998
--------- ---------
--------- ---------
</TABLE>

The Company sponsors a defined contribution 401(k) plan that covers
substantially all employees. The Company matches 50 percent of employee
contributions limited to a maximum equal to 3 percent of eligible employee
compensation. Company contributions to the plan in the Predecessor and Successor
periods ending December 31, 1993, December 1, 1994, December 31, 1994 and
December 31, 1995 approximated $471,000, $540,000, $48,000, and $633,000,
respectively.

8. DEBT

Debt consists of the following (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- JUNE 30,
1994 1995 1996
--------- ---------
(UNAUDITED)
-----------
<S> <C> <C> <C>
Senior term loan............................. $ 125,000 $ 124,000 $ 123,500
Senior revolving credit loan................. 25,000 31,000 110,500
Subordinated loan facility................... 75,000 -- --
Senior subordinated notes.................... -- 100,000 100,000
Subordinated Notes to related party.......... 10,000 10,000 10,000
--------- --------- -----------
$ 235,000 $ 265,000 $ 344,000
--------- --------- -----------
--------- --------- -----------
</TABLE>

The Successor's bank credit agreement provides for a $300 million senior
credit facility including a $125 million term loan and a $175 million revolving
credit facility. The term loan requires semiannual payments which began June 30,
1995, and extend through December 31, 2000. The outstanding balance under the
revolving credit facility and any amounts owed as a result of letters of credit
being funded (see Note 9) become due December 31, 1999. The senior term loan and
the senior revolving credit loan are collateralized by substantially all the
assets of the Company.

F-14
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. DEBT (CONTINUED)
On March 6, 1995 the Company issued $100 million of 12.75% senior
subordinated notes due March 1, 2005. The Company received net proceeds of
approximately $96 million, which were used to repay $75 million of indebtedness
under the subordinated loan facility plus accrued interest and $20 million of
indebtedness under the revolving credit portion of the senior credit facility.
The loss incurred on the early extinguishment of the subordinated loan facility,
resulting from the write off of deferred financing costs, has been reflected as
an extraordinary loss on the consolidated statement of operations.

The interest rate under the senior bank credit agreement is based, at the
Company's option, on the lead lending bank's alternate base rate or the bank's
Eurodollar deposit rate, plus margins as follows:

<TABLE>
<CAPTION>
REVOLVING
TERM LOAN CREDIT LOAN
----------- -----------
<S> <C> <C>
Alternate base rate margin.......................................... 1.75% 1.25%
Eurodollar deposit rate margin...................................... 3.00% 2.50%
</TABLE>

The interest rates in effect at December 31, 1995 for the term loan and the
revolving credit loan were 8.8% and 8.4%, respectively. The interest rates in
effect at December 31, 1994 for the term loan, revolving credit loan and
subordinated loan facility were 9.2%, 9.3%, and 12.5%, respectively.

A commitment fee of 1/2 of 1% per annum is charged on the unused portion of
the revolving credit facility.

With respect to Eurodollar deposit (LIBOR-based) rate loans, the Company can
elect interest rate periods ending one, two, three or six months from the
expiration of the preceding period.

The bank credit agreement requires the maintenance of certain financial
ratios and places restrictions on capital expenditures, leases, additional
borrowings, mergers and acquisitions, and payments of dividends. Certain of
these loan requirements change during the term of the agreement and some become
more restrictive.

The Predecessor bank credit agreement required the Company to maintain
interest rate swap agreements covering a portion of its outstanding and
available credit facility including that portion related to letters of credit.
At December 1, 1994, the Predecessor had outstanding interest rate swap
agreements with two financial institutions which effectively converted floating
rate debt to fixed rate debt. The Successor's bank credit agreement also has
requirements for interest rate swaps. Accordingly, the interest rate swaps that
were in effect at Acquisition were continued by the Successor. A fee of $250,000
was paid in connection with this arrangement. The terms of the interest rate
swaps and the unrealized losses at December 31, 1994 and 1995 are as follows
(dollars in thousands):

<TABLE>
<CAPTION>
1994 1995
NOTIONAL PAY UNREALIZED UNREALIZED
AMOUNT MATURITY DATE RATE RECEIPT RATE LOSSES LOSSES
- ------------- -------------------- --------- ------------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
$ 40,000,000 February 27, 1997 9.13% 6 month LIBOR $ (2,200) $ (1,405)
40,000,000 March 21, 1997 8.99% 6 month LIBOR (1,900) (1,317)
</TABLE>

The Company is exposed to credit losses for amounts receivable from
counterparties for interest to the extent variable interest rates exceed fixed
interest rates per the swap agreements (an average of 9.06%) each quarter in the
event of nonperformance by the counterparties to the agreements. In addition,
cancellation of the agreements due to nonperformance by the counterparties would
also cause an increase

F-15
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. DEBT (CONTINUED)
in interest expense in future periods to the extent that the fixed interest
rates per the swap agreements were less than variable interest rates during such
periods. However, the Company does not anticipate nonperformance by the
counterparties. A 1% increase in interest rates on $80.0 million would increase
interest expense by $800,000 per annum. The Company is subject to market loss in
the event of falling interest rates on both swaps. Unrealized losses are the net
amounts of money that would be paid for equal and offsetting interest rate
swaps.

As part of the Company's initial capitalization, the Company issued $10.0
million in subordinated notes to Invifin, an affiliate of Investcorp. The notes
are due on March 31, 2006 and bear interest at 14%. Holdings incurred a fee of
$1.2 million in connection with the issuance of these notes. This fee has been
capitalized as a deferred financing cost and is being amortized over the term of
the note using the effective interest method.

Maturities of debt are as follows at June 30, 1996 (in thousands):

<TABLE>
<CAPTION>
JUNE 30,
- ---------------------------------------------------------------------------------
<S> <C>
(UNAUDITED)
1996............................................................................. $ 500
1997............................................................................. 1,000
1998............................................................................. 12,000
1999............................................................................. 145,500
2000 and thereafter.............................................................. 185,000
-----------
$ 344,000
-----------
-----------
</TABLE>

Outstanding debt of the Predecessor included a term loan of $71.0 million, a
revolving credit facility of up to $80.0 million and a $6.0 million commitment
for the issuance of letters of credit. As part of the 1994 Acquisition, the
Company replaced this debt with the securities detailed above.

Cash paid for interest, including cash paid under interest rate swaps,
totaled $25.3 million for the year ended December 31, 1995. Cash paid for
interest in 1994 was $1.3 million in the Successor period, and approximately
$12.3 million in the Predecessor period. Cash paid for interest in 1993
approximated $11.4 million.

F-16
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES

LEASES

The Company leases facilities, computer equipment, rental equipment, autos
and trucks under operating leases. Minimum future obligations for operating
leases in effect at December 31, 1995 are (in thousands):

<TABLE>
<S> <C>
DECEMBER 31,
- -------------------------------------------------------------------
1996............................................................... $ 5,979
1997............................................................... 5,031
1998............................................................... 3,829
1999............................................................... 2,116
2000............................................................... 1,205
Thereafter......................................................... 1,608
---------
Total minimum obligations.......................................... $ 19,768
---------
---------
</TABLE>

Lease expense charged to operations in the accompanying statements of
operations was approximately $7.2 million for the year ended December 31, 1995.
Lease expense charged to operations for 1994 was $537,000 in the Successor
period, and $5.1 million in the Predecessor period. Lease expense charged to
operations for 1993 was approximately $4.2 million.

LEGAL MATTERS

The Company is party to legal proceedings and potential claims arising in
the ordinary course of its business. In the opinion of management based on
discussions with legal counsel, the Company has adequate legal defense and/or
insurance coverage with respect to these matters, and management does not
believe that the ultimate resolution of these matters will materially affect the
Company's operations, financial position or cash flows for any period.

ENVIRONMENTAL MATTERS

The Company is subject to various evolving federal, state and local
environmental laws and regulations governing, among other things, emissions to
air, discharge to waters and the generation, handling, storage, transportation,
treatment and disposal of hazardous substances and wastes. These laws and
regulations provide for substantial fees and sanctions for violations, and, in
many cases, could require Prime to remediate a site to meet applicable legal
requirements.

In 1995, the Company spent approximately $1.3 million on environmental
matters, including remediation and compliance costs, and has budgeted
expenditures of approximately $4.4 million in 1996 for such matters. At June 30,
1996, the Company had a reserve for environmental remediation of $7.0 million
and a related receivable from state trust fund programs and a seller of certain
yards of $2.0 million related to environmental matters that are at least
probable of creating liabilities. The Company's environmental remediation
expenditures principally relate to the clean-up of contaminated soil caused by
leaking underground gasoline storage tanks ("USTs"). The Company estimates total
remediation costs based on the estimated cost of remediation of known
environmental issues at specific sites and records a liability based on that
estimate. Pursuant to the 1994 Acquisition agreement, the Seller has agreed to
indemnify the Company for 80% of any environmental remediation costs paid by the
Company (and not refunded) in

F-17
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

9. COMMITMENTS AND CONTINGENCIES (CONTINUED)

excess of $5.8 million, subject to certain defined limitations. It is reasonably
possible that the actual cost of remediating contaminated sites and removing
tanks may be different than that accrued due to the difficulty in estimating
such costs and due to potential changes in the status of regulation and state
reimbursement programs. Any additional amounts will be reflected as a charge to
operations when and if such amounts become probable and can be reasonably
estimated. No estimate can be made of the possible loss or range of possible
loss, if any, in excess of current amounts accrued.

Management believes that the amounts required to correct any identified
environmental condition
and to maintain compliance with applicable environmental regulations will not
have a material adverse effect on the financial condition or results of
operations of the Company.

RISK MANAGEMENT

The Company is self-insured for physical damage or loss to its rental
equipment. Presently, the Company has an insurance deductible of $250,000 per
occurrence for claims related to workers' compensation, vehicle liability, and
general liability. The annual deductible related to employee health benefit
claims is $100,000 per employee.

In February 1994, the Company settled a dispute with W.R. Grace & Co., a
former owner, regarding general liability and workers' compensation insurance.
Accordingly, a liability of $2.0 million, originally recorded in 1990, was
reversed and recorded as a reduction of selling, general and administrative
expenses in the statements of operations in the Predecessor period.

LETTERS OF CREDIT

As of December 31, 1994 and 1995, and June 30, 1996, the Company had letters
of credit outstanding totaling $5.1 million, $8.7 million and $7.7 million,
respectively. These letters of credit guarantee the funding of environmental
remediation and the Company's share of insured claims. None of the Company's
assets are pledged as collateral for these letters of credit.

F-18
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10. INCOME TAXES

The components of the provision (benefit) for income taxes consist of the
following (in thousands):

<TABLE>
<CAPTION>
FOR THE FOR THE
FOR THE PERIOD PERIOD FOR THE
YEAR FROM FROM YEAR
ENDED JANUARY 1, DECEMBER 2, ENDED
DECEMBER 1994 THROUGH 1994 THROUGH DECEMBER
31, DECEMBER 1, DECEMBER 31, 31,
1993 1994 1994 1995
----------- ------------- ------------- -----------
PREDECESSOR PREDECESSOR SUCCESSOR SUCCESSOR
----------- ------------- ------------- -----------
<S> <C> <C> <C> <C>
Tax provision/(benefit) at statutory rate
(35%)................................... $ 3,025 $ 7,335 $ (123) $ (3,415)
Amortization of cost in excess of fair
value net assets acquired............... 1,106 1,044 96 1,138
Utilization of net operating loss
carryforwards........................... -- -- -- (668)
Change in estimate of prior year net
operating loss and alternative minimum
tax credit carryforward................. -- -- -- (509)
Change in valuation allowance............. -- -- -- 478
Increase in alternative minimum tax credit
carryforward............................ -- -- -- 600
Other..................................... 219 127 44 8
----------- ------ ------ -----------
4,350 8,506 17 (2,368)
Tax benefit from extraordinary item--loss
on extinguishment of debt............... -- -- -- (794)
----------- ------ ------ -----------
$ 4,350 $ 8,506 $ 17 $ (3,162)
----------- ------ ------ -----------
----------- ------ ------ -----------
</TABLE>

The classification of the provision (benefit) for income taxes consists of
the following (in thousands):

Income taxes payable as of December 31, 1994 and 1995 were $2.0 million and
$1.1 million, respectively.

F-19
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10. INCOME TAXES (CONTINUED)
The components of deferred tax liability are as follows (in thousands):

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
1994 1995
--------- ---------
<S> <C> <C>
Deferred tax liabilities:
Tax depreciation in excess of book...................... $ 31,782 $ 28,897
Other................................................... 820
--------- ---------
32,602 28,897
Deferred tax assets:
Accrued casualty losses................................. 1,342 1,708
Allowance for doubtful accounts......................... -- 356
Accrued interest........................................ -- 334
Accrued pension costs................................... 1,158 785
Accrued medical expenses................................ 280 539
Accrued environmental costs............................. 860 1,116
Accrued bonus........................................... 1,284 --
Non-compete agreements.................................. -- 2,143
Net operating losses.................................... 3,679 33
Investment tax credits.................................. 47 --
Alternative minimum tax credit carryforwards............ -- 3,100
Other................................................... -- 40
--------- ---------
8,650 10,154
Less: valuation allowance................................. (3,642) (3,133)
--------- ---------
Net deferred tax liability........................ $ 27,594 $ 21,876
--------- ---------
--------- ---------
</TABLE>

As of December 31, 1995, the Company has state income tax net operating loss
carryforwards of approximately $962,000. Substantially all of the Company's net
operating loss carryforwards expire in the year 2004. Additionally, the Company
has federal alternative minimum tax credit carryforwards of approximately $3.1
million. Cash paid for income taxes during the year ended December 31, 1995
amounted to approximately $3.5 million. The Company paid no cash for income
taxes during 1994 in the Successor period and approximately $2.9 million in the
Predecessor period. Cash paid for income taxes approximated $156,000 during
1993. At December 31, 1995 and 1994 the Company had a valuation allowance
established which eliminates the deferred tax asset associated with the net
operating losses and alternative minimum tax credit carryforwards. The allowance
was established since it is not likely that the benefit of these assets will be
realized due to the Company's high level of interest expense.

F-20
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. STOCKHOLDER'S EQUITY (IN THOUSANDS, EXCEPT FOR PER-SHARE AMOUNTS)

CAPITALIZATION:

The following is a summary of the capitalization of the Company:

<TABLE>
<CAPTION>
CLASS A CLASS C CLASS D COMMON TOTAL
SHARES SHARES SHARES SHARES SHARES
--------- --------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C>
Balance at December 31, 1994
Authorized.......................................... 18,604 10,527 182 29,312 58,625
Issued.............................................. 16,140 1,828 182 -- 18,150
Outstanding......................................... 16,140 1,828 182 -- 18,150

Balance at December 31, 1995
Authorized.......................................... 18,604 10,527 182 29,312 58,625
Issued.............................................. 16,140 1,919 91 -- 18,150
Outstanding......................................... 16,140 1,919 91 -- 18,150

Balance at June 30, 1996
Authorized (unaudited).............................. 18,604 10,527 182 29,312 58,625
Issued (unaudited).................................. 18,555 2,097 91 -- 20,743
Outstanding (unaudited)............................. 18,555 2,095 91 -- 20,741
</TABLE>

All of the stock has a $.01 par value per share. The transfer of any shares
of stock is restricted as specified in the Company's Certificate of Designation
(the "Certificate").

CONVERSION OF STOCK:

In the event of an initial public offering or sale of the Company, as
defined in the Certificate, all issued and outstanding shares of Class A, Class
C and Class D Stock not otherwise redeemed by the Company shall automatically
convert into shares of Common Stock on a one-for-one basis.

VOTING RIGHTS:

Holders of shares of Class D Stock and Common Stock are entitled to one vote
for each share of such stock held. Until a change of control of the Company, as
defined in the Certificate, holders of Class A and Class C Stock have no voting
rights, except that the holders of these shares shall have the right to one vote
for each share held as to the approval of any change to the Certificate of
Incorporation that would increase or decrease the par value of such stock, or
change the powers, preferences or special rights of such stock so as to have a
material adverse effect on such holders.

Effective upon a change of control, holders of shares of Class A and Class C
Stock shall be entitled to one vote for each share of stock held.

Currently, affiliates of Investcorp S.A. ("Investcorp") own all of the
outstanding voting stock of the Company. Investcorp owns no voting stock and
less than 10% of the Company's total outstanding stock.

LIQUIDATION RIGHTS:

In the event of liquidation of the Company, each holder of Class A and Class
C Stock shall be entitled to receive $.001 per share before any payment or
distribution shall be made or set aside for payment on the Class D Stock or
Common Stock. Any remaining assets or proceeds therefrom are to be distributed
to all stockholders on a pro rata basis.

F-21
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

11. STOCKHOLDER'S EQUITY (IN THOUSANDS, EXCEPT FOR PER-SHARE AMOUNTS)
(CONTINUED)

DIVIDEND RIGHTS:

Dividends are payable to all stockholders on a pro rata basis upon
declaration of such dividends by the Board of Directors.

12. MANAGEMENT STOCK INCENTIVE PLAN (IN THOUSANDS, EXCEPT PER-SHARE AMOUNTS)

At the 1994 Acquisition, Prime adopted a Management Stock Incentive Plan
(the "Plan"), in order to provide incentives to employees and directors of Prime
and Primeco by granting them option awards of Class C Stock of Prime. The Plan
is administered by a committee of the Board of Directors of Prime (the
"Compensation Committee"), which has broad authority in administering and
interpreting the Plan and in determining the type and amounts of awards granted
under the Plan. The exercise price of each option is $3.86 per share, which is
the same price per share paid by existing holders of Class C stock to acquire
Class C stock. Each option is subject to certain vesting provisions. To the
extent not earlier vested or terminated, all options will vest on the tenth
anniversary of the date of grant and will expire 30 days thereafter if not
exercised.

<TABLE>
<CAPTION>
NUMBER OF
SHARES
-----------
<S> <C>
Options Outstanding December 2, 1994.......................................... --
Granted..................................................................... 222,174
Exercised................................................................... --
Forfeited................................................................... --
-----------

Options Outstanding December 31, 1994......................................... 222,174
Granted..................................................................... --
Exercised................................................................... --
Forfeited................................................................... --
-----------

Options Outstanding December 31, 1995......................................... 222,174
Granted (unaudited)......................................................... 38,860
Exercised (unaudited).......................................................
Forfeited (unaudited)....................................................... (1,307)
-----------

Options Outstanding June 30, 1996............................................. --
-----------
-----------
</TABLE>

Of the options outstanding, none were exercisable as of December 31, 1995
and 44,431 were exercisable as of June 30, 1996.

13. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company has the following types of financial instruments:

- Cash and cash equivalents

- Accounts receivable

- Accounts payable

- Interest rate swaps

- Debt

F-22
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

13. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)
Due to the short maturity of these instruments, their carrying values
approximate their fair values, except for debt and interest rate swaps.
Management believes that the carrying value of debt approximates its fair value
as of December 31, 1995 and 1994. The fair value of the interest rate swaps is
disclosed in Note 8.

14. ACQUISITION OF AMERICAN HI-LIFT:

On February 26, 1996, Prime completed the purchase of all of the outstanding
stock of Vibroplant U.S., Inc. Prime paid a purchase price of $66.5 million for
the shares of Vibroplant U.S., which included repayment of the outstanding bank
debt of Vibroplant U.S. Vibroplant U.S. merged into Primeco after the closing.
In conjunction with the Vibroplant U.S. acquisition, deferred tax liabilities of
$7.3 million were recorded.

Vibroplant U.S. (which operates as American Hi-Lift) operates 17 rental
locations in California, Texas, Florida, Louisiana, Ohio, Alabama, South
Carolina and Georgia. American Hi-Lift specializes in renting and selling aerial
lift equipment to industrial and commercial customers.

In conjunction with this transaction, certain existing stockholders
purchased approximately 134,000 shares of Class A, for net proceeds of $9.4
million ($.6 million was paid to Investcorp). Prime then used these funds, as
well as borrowings under its Senior Credit Facility, to fund the transaction.

The following pro forma statement of operations presents the results of
operations for the year ended December 31, 1995 and for the six month periods
ended June 30, 1996 and 1995 as though the controlling ownership of American
Hi-Lift had been acquired on January 1, 1995, and assumes that there were no
other changes in the operations of Prime. The pro forma results are not
necessarily indicative of the financial results that might have occurred had the
transaction included in the pro forma statements actually taken place on January
1, 1995, or of future results of operations (in thousands).

<TABLE>
<CAPTION>
PRO FORMA FOR
PRO FORMA FOR SIX MONTHS ENDED
YEAR ENDED JUNE 30,
DECEMBER 31, ----------------------
1995 1996 1995
-------------- ---------- ----------
<S> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Revenues........................................... $ 296,451 $ 162,399 $ 141,511
Net (loss) income.................................. (3,936) 3,843 (2,674)
Net (loss) income per share........................ ($ .22) $ .19 ($ .15)
</TABLE>

15. RECENT ACCOUNTING PRONOUNCEMENTS

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121 ("SFAS 121"), Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.
SFAS 121, which is effective for fiscal years beginning after December 15, 1995,
requires that long-lived assets and certain identifiable intangibles be held and
used by an entity to be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. The Company adopted SFAS 121 at the beginning of 1996. The impact
of adopting this statement did not have a material effect on the financial
statements.

The Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 123, entitled "ACCOUNTING FOR STOCK-BASED
COMPENSATION" ("SFAS No. 123"), in October 1995. The Company will adopt the new
disclosure rules of SFAS No. 123 in fiscal year 1997.

F-23
<PAGE>

PRIME SERVICE, INC. AND SUBSIDIARY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

16. ACQUISITION OF ALPINE

On July 29, 1996, Primeco completed the purchase of substantially all of the
assets of Alpine Equipment Rentals & Supply Company, Inc. ("Alpine"). Primeco
paid a purchase price of approximately $11.0 million for such assets, and also
paid $350,000 in respect of covenants not to compete for two senior executives
of Alpine.

17. INITIAL PUBLIC OFFERING

The Company is in the process of filing an initial public offering for the
issuance of shares of Common Stock. This offering is expected to be completed
during the fourth quarter of 1996. Upon completion of the initial public
offering, the Company will (i) terminate its management agreement with
Investcorp, and (ii) use a portion of the net proceeds to retire a portion of
its current debt. As a result of the above, the Company will write-off the
unamortized prepaid management fee ($2.1 million at June 30, 1996) and a portion
of the deferred financing costs ($1.2 million at June 30, 1996), and incur
redemption penalty expense of $4.6 million (not accrued at June 30, 1996). In
addition, Prime will grant to certain members of management, conditioned upon
the closing of the initial public offering, options for the purchase of 346,665
shares of Common Stock.

18. STOCK SPLIT

In October 1996, Prime effected a 18.15 to one stock split for all classes
of Common Stock in the form of a common stock dividend (the "Stock Split").
Prime also increased the number of authorized shares of its Common Stock to
100,000,000 and authorized 10,000,000 shares of preferred stock. All share and
per share information has been restated to reflect the Stock Split.

F-24
<PAGE>

INDEPENDENT AUDITORS' REPORT

Board of Directors and Stockholder
Vibroplant U.S., Inc.:

We have audited the accompanying balance sheets of Vibroplant U.S., Inc. as
of February 25, 1996 and March 31, 1995, and the related statements of
operations, stockholder's equity and cash flows for the period from April 1,
1995 through February 25, 1996, and for each of the years in the two-year period
ended March 31, 1995. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Vibroplant U.S., Inc. as of
February 25, 1996 and March 31, 1995, and the results of its operations and its
cash flows for the period from April 1, 1995 through February 25, 1996, and for
each of the years in the two-year period ended March 31, 1995, in conformity
with generally accepted accounting principles.

As discussed in note 3 to the financial statements, the Company changed its
method of computing depreciation in 1995. As discussed in note 2(e) to the
financial statements, the Company changed its method of accounting for income
taxes in 1994 to adopt the provisions of the Financial Accounting Standards
Board's Statement of Financial Accounting Standards No. 109, "Accounting for
Income Taxes."

KPMG PEAT MARWICK LLP

Fort Worth, Texas
April 8, 1996

F-25
<PAGE>

VIBROPLANT U.S., INC.
BALANCE SHEETS
MARCH 31, 1995 AND FEBRUARY 25, 1996

<TABLE>
<CAPTION>
MARCH 31, FEBRUARY 25,
1995 1996
------------- -------------
<S> <C> <C>
ASSETS (NOTE 7)
Current assets:
Cash and cash equivalents........................................................ $ 3,003,586 $ 3,693,078
Trade accounts receivable, less allowance for doubtful accounts of approximately
$610,000 in 1995 and $601,000 in 1996 (note 2 (f))............................. 9,114,993 7,186,288
Income taxes receivable (note 8)................................................. 436,899 424,622
Inventories (notes 4 and 12)..................................................... 3,146,086 3,717,727
Prepaid expenses................................................................. 492,778 321,929
Deferred income taxes (note 8)................................................... 891,634 723,696
------------- -------------
Total current assets......................................................... 17,085,976 16,067,340
Property and equipment, net (notes 5 and 12)....................................... 53,803,575 57,484,172
Other assets, net.................................................................. -- 163,155
------------- -------------
Total assets................................................................. $ 70,889,551 $ 73,714,667
------------- -------------
------------- -------------

LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current installments of long-term debt (note 7).................................. $ 7,500,000 $ 7,500,000
Current installments of obligations under capital leases (note 6)................ 145,086 226,000
Accounts payable................................................................. 1,060,433 697,971
Accrued expenses................................................................. 2,899,085 2,910,724
Accrued dividends (note 1)....................................................... -- 15,000,000
------------- -------------
Total current liabilities.................................................... 11,604,604 26,334,695
Long-term debt, excluding current installments (note 7)............................ 17,000,000 13,250,000
Obligations under capital leases, excluding current installments (note 6).......... 163,543 325,069
Accrued environmental costs (note 11).............................................. -- 3,000,000
Deferred income taxes (note 8)..................................................... 8,994,367 10,181,154
------------- -------------
Total liabilities............................................................ 37,762,514 53,090,918
------------- -------------
Stockholder's equity (note 1):
Common stock, $.01 par value, 700,000 shares authorized, 489,691 shares issued
and outstanding................................................................ 4,897 4,897
Additional paid-in capital....................................................... 21,881,396 21,881,396
Retained earnings................................................................ 12,897,384 394,096
Less treasury stock, 14,691 shares, at cost (note 9)............................. (1,656,640) (1,656,640)
------------- -------------
Total stockholder's equity................................................... 33,127,037 20,623,749
Commitments and contingencies (notes 6 and 11)
------------- -------------
$ 70,889,551 $ 73,714,667
------------- -------------
------------- -------------
</TABLE>

See accompanying notes to financial statements.

F-26
<PAGE>
VIBROPLANT U.S., INC.

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED MARCH 31, 1994 AND 1995 AND
THE PERIOD FROM APRIL 1, 1995 THROUGH FEBRUARY 25, 1996

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, FEBRUARY 25,
1994 1995 1996
------------- ------------- -------------
<S> <C> <C> <C>
Rental revenue (note 2 (f))......................................... $ 40,442,447 $ 38,584,141 $ 37,203,561

Equipment sales..................................................... 9,332,918 8,116,332 8,848,837
Less cost of sales (note 3)......................................... (6,646,228) (6,971,298) (6,083,250)
------------- ------------- -------------
2,686,690 1,145,034 2,765,587
------------- ------------- -------------

Parts and labor sales............................................... 3,017,420 3,592,854 3,559,906
Less cost of sales.................................................. (1,786,999) (2,085,990) (1,901,780)
------------- ------------- -------------
1,230,421 1,506,864 1,658,126
------------- ------------- -------------
Operating profits............................................. 44,359,558 41,236,039 41,627,274
------------- ------------- -------------

Selling, general and administrative expenses
(notes 6, 9 and 10)............................................... 15,703,727 15,207,889 12,760,387
Depreciation and amortization (note 3).............................. 12,595,813 7,716,029 7,372,818
Operating salaries, wages and benefits.............................. 5,783,733 5,798,864 5,709,057
Other operating expenses (notes 5 and 6)............................ 7,456,803 7,927,021 9,876,408
------------- ------------- -------------
Total operating expenses...................................... 41,540,076 36,649,803 35,718,670
------------- ------------- -------------
Operating income.............................................. 2,819,482 4,586,236 5,908,604
------------- ------------- -------------

Other expenses (income);
Interest expense (note 7)......................................... 2,212,715 1,828,363 1,517,196
Other, net........................................................ 419,029 (166,059) (224,381)
------------- ------------- -------------
Total other expenses.......................................... 2,631,744 1,662,304 1,292,815
------------- ------------- -------------
Income before income taxes and cumulative effect of changes in
accounting methods.......................................... 187,738 2,923,932 4,615,789

Income taxes (note 8)............................................... 133,200 1,578,469 2,119,077
------------- ------------- -------------
Income before cumulative effect of changes in accounting
methods..................................................... 54,538 1,345,463 2,496,712

Cumulative effect at April 1, 1994 of change in accounting for
depreciation (note 3)............................................. -- 4,782,132 --

Cumulative effect at April 1, 1993 of change in accounting for
income taxes (note 2 (e))......................................... (139,218) -- --
------------- ------------- -------------
Net income (loss)............................................. $ (84,680) $ 6,127,595 $ 2,496,712
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

See accompanying notes to financial statements.

F-27
<PAGE>
VIBROPLANT U.S., INC.

STATEMENTS OF STOCKHOLDER'S EQUITY

FOR THE YEARS ENDED MARCH 31, 1994 AND 1995 AND
THE PERIOD FROM APRIL 1, 1995 THROUGH FEBRUARY 25, 1996

<TABLE>
<CAPTION>
COMMON STOCK
---------------------- ADDITIONAL
NUMBER OF PAID-IN RETAINED TREASURY
SHARES AMOUNT CAPITAL EARNINGS STOCK TOTAL
----------- --------- ------------- -------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Balance, March 31, 1993............... 489,691 $ 4,897 $ 21,881,396 $ 6,854,469 $ -- $ 28,740,762
Net loss.............................. -- -- -- (84,680) -- (84,680)
Acquisition of 14,691 shares of common
stock (note 9)...................... -- -- -- -- (1,656,640) (1,656,640)
----------- --------- ------------- -------------- ------------- --------------
Balance, March 31, 1994............... 489,691 4,897 21,881,396 6,769,789 (1,656,640) 26,999,442
Net income............................ -- -- -- 6,127,595 -- 6,127,595
----------- --------- ------------- -------------- ------------- --------------
Balance, March 31, 1995............... 489,691 4,897 21,881,396 12,897,384 (1,656,640) 33,127,037
Net income............................ -- -- -- 2,496,712 -- 2,496,712
Dividend.............................. -- -- -- (15,000,000) -- (15,000,000)
----------- --------- ------------- -------------- ------------- --------------
Balance, February 25, 1996............ 489,691 $ 4,897 $ 21,881,396 $ 394,096 $ (1,656,640) $ 20,623,749
----------- --------- ------------- -------------- ------------- --------------
----------- --------- ------------- -------------- ------------- --------------
</TABLE>

See accompanying notes to financial statements.

F-28
<PAGE>
VIBROPLANT U.S., INC.

STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED MARCH 31, 1994 AND 1995 AND
FOR THE PERIOD FROM APRIL 1, 1995 THROUGH FEBRUARY 25, 1996

<TABLE>
<CAPTION>
MARCH 31, MARCH 31, FEBRUARY 25,
1994 1995 1996
------------- -------------- --------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)............................................... $ (84,680) $ 6,127,595 $ 2,496,712
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Cumulative effect of change in accounting for depreciation.... -- (4,782,132) --
Depreciation and amortization................................. 12,683,697 7,716,029 7,372,818
Provision for bad debts....................................... 300,934 1,055,639 462,715
Provision for loss on real property........................... -- 340,000 --
Deferred income taxes, including $139,218 cumulative effect of
change in accounting for income taxes in 1994............... 11,856 1,630,216 1,354,725
Changes in operating assets and liabilities:
Trade accounts receivable..................................... (573,708) 32,422 1,465,990
Income taxes receivable....................................... 192,763 (307,375) 12,277
Inventories................................................... 4,310,272 3,658,797 3,176,459
Prepaid expenses.............................................. (105,787) 107,995 170,849
Other assets.................................................. -- -- (163,155)
Accounts payable.............................................. (387,489) 421,454 (362,462)
Accrued environmental costs................................... -- -- 3,000,000
Accrued expenses.............................................. (48,912) (232,904) 11,639
------------- -------------- --------------
Net cash provided by operating activities................... 16,298,946 15,767,736 18,998,567
------------- -------------- --------------
Cash flows used in investing activities:
Purchases of property and equipment............................. (6,877,795) (10,941,427) (14,344,316)
Decrease in other assets........................................ 21,624 434,016 --
------------- -------------- --------------
Net cash used in investing activities....................... (6,856,171) (10,507,411) (14,344,316)
------------- -------------- --------------
Cash flows from financing activities:
Proceeds from long-term debt.................................... 2,500,000 24,750,000 --
Payments on long-term debt...................................... (10,159,576) (22,275,344) (3,750,000)
Payments under capital lease obligations........................ -- -- (214,759)
Payments on advances from Parent................................ -- (5,000,000) --
Decrease in bank overdraft...................................... (454,641) (392,366) --
Purchases of treasury stock..................................... (985,269) (671,371) --
------------- -------------- --------------
Net cash used in financing activities....................... (9,099,486) (3,589,081) (3,964,759)
------------- -------------- --------------
Net increase in cash and cash equivalents......................... 343,289 1,671,244 689,492
Cash and cash equivalents at beginning of period.................. 989,053 1,332,342 3,003,586
------------- -------------- --------------
Cash and cash equivalents at end of period........................ $ 1,332,342 $ 3,003,586 $ 3,693,078
------------- -------------- --------------
------------- -------------- --------------
</TABLE>

See accompanying notes to financial statements.

F-29
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS

1. STOCK PURCHASE AGREEMENT

On February 26, 1996, pursuant to a stock purchase agreement dated as of
January 9, 1996, Primeco, Inc. (Prime) purchased all of the outstanding stock of
Vibroplant U.S., Inc. (the Company) from Vibroplant plc (the Parent). Prime also
repaid the Company's outstanding bank debt as of February 26, 1996, which was
approximately $36,700,000.

Prior to the stock purchase agreement the Company declared dividends of
$15,000,000 and paid an intercompany account balance of $1,700,000 (including
additional management fees of $1,500,000 recognized at closing) to the Parent
from the proceeds of additional borrowings from a bank.

In conjunction with the stock purchase agreement, on February 26, 1996, the
Parent paid divestiture bonuses totaling $1,024,500 to former employees of the
Company. Severance payments were made to former employees totaling $791,050.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(A) DESCRIPTION OF BUSINESS

The Company is engaged in the rental, sales and servicing of aerial lift
equipment. The majority of the Company's customers are engaged in the
construction industry and are located throughout the United States. No single
customer accounted for more than five percent of the Company's sales in 1994,
1995 or 1996.

(B) CASH EQUIVALENTS

The Company considers all highly liquid investments with original maturities
of three months or less to be cash equivalents.

Inventories consist of equipment replacement parts and supplies and
equipment held for sale. Inventories are carried at the lower of cost or market
value. Cost is determined using the first-in, first-out (FIFO) method for parts
and supplies. Cost for equipment held for sale is determined using the specific
identification method.

(D) PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Property and equipment under
capital leases are stated at the lower of the present value of net minimum lease
payments or fair value at the inception of the lease.

Effective April 1, 1994, the Company retroactively changed to the declining
balance method for depreciating rental equipment (note 3). Remaining assets are
depreciated using the straight-line method over the estimated useful lives of
the assets (generally 5 to 30 years). Property and equipment under capital
leases are amortized on a straight-line basis over the shorter of the lease term
or estimated useful lives of the assets.

Upon sale or retirement, the related cost and accumulated depreciation are
eliminated from the accounts and gains and loses are recognized in income.
Repairs and maintenance which do not extend the lives or improve the respective
assets are charged to expense as incurred.

F-30
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(E) INCOME TAXES

Effective April 1, 1993, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" (Statement
109), on a prospective basis and has reported the cumulative effect of the
change in the 1994 statement of operations. Under the asset and liability method
of Statement 109, deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and their
respective tax bases and operating loss and tax credit carryforwards. Deferred
tax assets and liabilities are measured using enacted tax rates expected to
apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the effect on deferred
tax assets and liabilities of a change in tax rates is recognized in income in
the period that includes the enactment date.

(F) REVENUE RECOGNITION

Rental revenue is recognized on the accrual basis. Included in trade
accounts receivable are unbilled rental revenues of approximately $1,296,000 and
$1,255,000 at March 31, 1995 and February 25, 1996, respectively.

(G) FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash and cash equivalents approximate fair value
because of the short maturity of such instruments.

The carrying amounts of long-term debt approximate fair value due to the
variable interest rate on such obligation.

(H) USE OF ESTIMATES

Management of the Company has made a number of estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities to prepare these financial statements in
conformity with generally accepted accounting principles. Actual results could
differ from those estimates.

(I) NEW ACCOUNTING STANDARD

In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of," (Statement 121).
Statement 121 requires that certain long-lived assets and certain intangibles be
reviewed for impairment whenever events or changes in circumstances indicate
that the carrying value of an asset may not be recoverable. Management cannot
currently estimate whether the adoption of Statement 121 in 1997 will have a
material adverse effect on the Company's financial position or results of
operations.

3. CHANGE IN ACCOUNTING FOR DEPRECIATION

Effective April 1, 1994, the Company changed its method of depreciating
rental equipment from the straight line method to the declining balance method.
The new method of depreciation was adopted to

F-31
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. CHANGE IN ACCOUNTING FOR DEPRECIATION (CONTINUED)
provide a better matching of revenues and expenses over the lives of the rental
equipment and was applied retroactively to equipment acquisitions of prior
years. The effect of the change in 1995 was to increase the cost of equipment
sold by $1,400,000 and to decrease depreciation by $3,700,000. It was not
practical to determine the effect of this change in 1994. The cumulative
adjustment as of April 1, 1994 to retroactively apply the new method of
$4,782,000, after reduction for income taxes of $2,820,000, is included in 1995
income.

4. INVENTORIES

Inventories consist of the following at March 31, 1995 and February 25,
1996:

<TABLE>
<CAPTION>
1995 1996
------------ ------------
<S> <C> <C>
Replacement parts and supplies.................................... $ 2,761,984 $ 2,733,309
Equipment held for sale........................................... 384,102 984,418
------------ ------------
$ 3,146,086 $ 3,717,727
------------ ------------
------------ ------------
</TABLE>

5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following at March 31, 1995 and
February 25, 1996:

<TABLE>
<CAPTION>
COST, NET OF
ACCUMULATED ACCUMULATED
COST DEPRECIATION DEPRECIATION
-------------- ------------- -------------
<S> <C> <C> <C>
1995:
Rental equipment................................................... $ 86,810,271 $ 39,682,393 $ 47,127,878
Transportation equipment........................................... 2,799,966 2,205,431 594,535
Furniture and equipment............................................ 2,814,630 2,002,819 811,811
Land............................................................... 1,893,119 -- 1,893,119
Buildings.......................................................... 4,936,110 1,559,878 3,376,232
-------------- ------------- -------------
$ 99,254,096 $ 45,450,521 $ 53,803,575
-------------- ------------- -------------
-------------- ------------- -------------

1996:
Rental equipment................................................... $ 88,130,589 $ 37,268,732 $ 50,861,857
Transportation equipment........................................... 2,712,800 1,835,984 876,816
Furniture and equipment............................................ 2,769,952 2,184,891 585,061
Land............................................................... 1,795,465 -- 1,795,465
Buildings.......................................................... 5,061,195 1,696,222 3,364,973
-------------- ------------- -------------
$ 100,470,001 $ 42,985,829 $ 57,484,172
-------------- ------------- -------------
-------------- ------------- -------------
</TABLE>

In 1995 the Company recorded a provision for loss on real property of
$340,000. This provision, which is included in other operating expenses in the
accompanying statements of operations, is the result of a decline in the fair
market value of the property.

F-32
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. LEASES

The Company is obligated under various capital leases for transportation
equipment that expire at various dates during the next four years. At March 31,
1995 and February 25, 1996, the gross amount of equipment and related
accumulated amortization recorded under capital leases were as follows:

<TABLE>
<CAPTION>
1995 1996
---------- ----------
<S> <C> <C>
Transportation equipment.............................................. $ 494,000 $ 951,000
Less accumulated amortization......................................... 144,000 299,000
---------- ----------
$ 350,000 $ 652,000
---------- ----------
---------- ----------
</TABLE>

Amortization of assets held under capital leases is included with the
depreciation expense.

The Company also has several noncancelable operating leases, primarily for
rental and transportation equipment and land and buildings, that expire over the
next six years. Rental expense for operating leases during 1994, 1995 and 1996
consisted of the following:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ---------- ------------
<S> <C> <C> <C>
Rental equipment........................................................... $ -- $ -- $ 507,000
Transportation equipment................................................... 323,000 384,000 471,000
Land and buildings......................................................... 658,000 605,000 540,000
---------- ---------- ------------
$ 981,000 $ 989,000 $ 1,518,000
---------- ---------- ------------
---------- ---------- ------------
</TABLE>

Rental expense is included in selling, general and administrative expenses
for land and buildings and other operating expenses for rental and
transportation equipment in the accompanying statements of operations.

Future minimum lease payments under noncancelable operating leases (with
initial or remaining lease terms in excess of one year) and future minimum
capital lease payments as of February 25, 1996 are:

<TABLE>
<CAPTION>
CAPITAL OPERATING
YEAR ENDING MARCH 31: LEASES LEASES
- ---------------------------------------------------------------------------------- ------------- ---------------
<S> <C> <C>
1997.............................................................................. $ 286,000 $ 1,519,000
1998.............................................................................. 165,000 1,216,000
1999.............................................................................. 129,000 1,021,000
2000.............................................................................. 48,000 476,000
2001.............................................................................. -- 166,000
2002.............................................................................. -- 160,000
------------- ---------------
Total minimum lease payments...................................................... 628,000 $ 4,558,000
---------------
---------------
Less amount representing interest (at rates ranging from 8% to 11%)............... (76,931)
-------------
Present value of net minimum capital lease payments............................... 551,069
Less current installments of obligations under capital leases..................... (226,000)
-------------
Obligations under capital leases, excluding current installments.................. $ 325,069
-------------
-------------
</TABLE>

F-33
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

7. LONG-TERM DEBT

Long-term debt consists of the following at March 31, 1995 and February 25,
1996 (note 1):

<TABLE>
<CAPTION>
1995 1996
------------- -------------
<S> <C> <C>
Term loan with a bank, due in varying installments through June 1999, with interest
at LIBOR plus 1.125% (6.9% at February 25, 1996) secured by substantially all of
the Company's assets and guaranteed by the Parent................................ $ 24,500,000 $ 20,750,000
Less current installments.......................................................... 7,500,000 7,500,000
------------- -------------
Long-term debt, excluding current installments..................................... $ 17,000,000 $ 13,250,000
------------- -------------
------------- -------------
</TABLE>

The loan agreement provides the Company with term loan of $24,500,000, a
$5,000,000 revolving credit facility and letters of credit totaling $2,220,000.
There were no borrowings outstanding under the revolving credit facility or the
letters of credit at March 31, 1995 or February 25, 1996. In connection with
these loan agreements, the Parent has executed guaranty agreements which also
require the Parent to meet various restrictive and affirmative covenants.

Aggregate maturities of long-term debt at February 25, 1996 are as follows:

<TABLE>
<CAPTION>
YEAR ENDING MARCH 31:
- -------------------------------------------------------------------------------
<S> <C>
1997........................................................................... $ 7,500,000
1998........................................................................... 3,750,000
1999........................................................................... 9,500,000
-------------
$ 20,750,000
-------------
-------------
</TABLE>

8. INCOME TAXES

Total income taxes for the years ended March 31, 1994 and 1995 and for the
period from April 1, 1995 through February 25, 1996, were as follows:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ------------ ------------
<S> <C> <C> <C>
Income from operations.................................................... $ 133,200 $ 1,578,469 $ 2,119,077
Cumulative effect of change in accounting for depreciation................ -- 2,820,621 --
---------- ------------ ------------
$ 133,200 $ 4,399,090 $ 2,119,077
---------- ------------ ------------
---------- ------------ ------------
</TABLE>

F-34
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)

Income tax expense (benefit) attributable to income from operations consists
of the following for the years ended March 31, 1994 and 1995 and for the period
from April 1, 1995 through February 25, 1996:

<TABLE>
<CAPTION>
CURRENT DEFERRED TOTAL
----------- ------------ ------------
<S> <C> <C> <C>
1994:
Federal.................................................................. $ 252,729 $ (116,720) $ 136,009
State.................................................................... 7,833 (10,642) (2,809)
----------- ------------ ------------
$ 260,562 $ (127,362) $ 133,200
----------- ------------ ------------
----------- ------------ ------------

1995:
Federal.................................................................. $ (152,834) $ 1,458,614 $ 1,305,780
State.................................................................... 101,087 171,602 272,689
----------- ------------ ------------
$ (51,747) $ 1,630,216 $ 1,578,469
----------- ------------ ------------
----------- ------------ ------------

1996:
Federal.................................................................. $ 340,352 $ 1,212,122 $ 1,552,474
State.................................................................... 424,000 142,603 566,603
----------- ------------ ------------
$ 764,352 $ 1,354,725 $ 2,119,077
----------- ------------ ------------
----------- ------------ ------------
</TABLE>

Income tax expense attributable to income from operations for the years
ended March 31, 1994 and 1995 and for the period from April 1, 1995 through
February 25, 1996, differed from the amounts computed by applying the marginal
U.S. Federal income tax rate of 34 percent to pretax income as a result of the
following:

<TABLE>
<CAPTION>
1994 1995 1996
---------- ------------ ------------
<S> <C> <C> <C>
Computed "expected" income tax expense.................................... $ 63,830 $ 994,000 $ 1,569,000
Adjustments to deferred tax assets and liabilities for changes in State
income tax rates........................................................ -- 255,000 --
Recognition of valuation allowance for deferred tax assets................ -- 160,000 --
State income taxes, net of Federal income tax benefit..................... (1,854) 117,000 374,000
Tax effect of amortization of nondeductible goodwill...................... 29,900 -- --
Other..................................................................... 41,324 52,469 176,077
---------- ------------ ------------
$ 133,200 $ 1,578,469 $ 2,119,077
---------- ------------ ------------
---------- ------------ ------------
</TABLE>

F-35
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

8. INCOME TAXES (CONTINUED)
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and deferred tax liabilities at March 31,
1995 and February 25, 1996, are presented below:

<TABLE>
<CAPTION>
1995 1996
-------------- --------------
<S> <C> <C>
Deferred tax assets:
Trade accounts receivable, principally due to the allowance
for doubtful accounts..................................... $ 231,000 $ 228,000
Accrued expenses, principally due to insurance and
environmental reserves.................................... 715,000 1,615,000
Net operating loss carryforwards............................ 220,000 160,000
Alternative minimum tax credit carryforwards................ 2,466,000 388,000
Other....................................................... 612 20,783
-------------- --------------
Gross deferred tax assets................................. 3,632,612 2,411,783
Less valuation allowance.................................. (160,000) (160,000)
-------------- --------------
Net deferred tax assets................................... $ 3,472,612 $ 2,251,783
-------------- --------------
-------------- --------------
Deferred tax liabilities:
Property and equipment, principally due to differences in
depreciation.............................................. $ (11,520,000) $ (11,709,241)
Other....................................................... (55,345) --
-------------- --------------
Total deferred tax liabilities............................ $ (11,575,345) $ (11,709,241)
-------------- --------------
-------------- --------------
</TABLE>

The valuation allowance for deferred tax assets was $160,000 as of March 31,
1995 and February 25, 1996, respectively.

At February 25, 1996, the Company had net operating loss carryforwards for
state income tax purposes of approximately $160,000 which may be available to
offset future State taxable income, if any through 2005. In addition, the
Company has minimum tax credit carryforwards of approximately $388,000 which are
available to reduce future Federal regular income taxes, if any, over an
indefinite period.

9. RELATED PARTY TRANSACTIONS

During 1994, 1995 and 1996, management fees of $84,000, $84,000, and
$116,000 were charged to the Company by the Parent, respectively. Such amounts
are included in selling, general and administrative expenses in the accompanying
statements of operations.

In 1994, the Company purchased the outstanding common stock not owned by the
Parent for approximately $1,657,000. The Company paid approximately $985,000 in
1994 and paid the remaining balance of $657,371 in 1995.

10. EMPLOYEE BENEFIT PLANS

The Company sponsors a defined contribution plan covering substantially all
employees. The plan provides that employees can voluntarily contribute form 1%
to 15% of their compensation. The Company's contributions are discretionary and
totaled approximately $97,000, $130,000 and $222,000 in 1994, 1995 and 1996,
respectively.

F-36
<PAGE>
VIBROPLANT U.S., INC.

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

10. EMPLOYEE BENEFIT PLANS (CONTINUED)

The Company has entered into bonus compensation agreements with various
employees. Amounts recognized under these agreements were approximately
$100,000, $130,000 and $250,000 in 1994, 1995 and 1996, respectively, which are
included in selling, general and administrative expenses in the accompanying
statements of operations.

11. COMMITMENTS AND CONTINGENCIES

As a result of environmental assessments performed during 1995, the Company
identified environmental contamination of soil and ground water at certain of
the Company's rental facilities. Utilizing cost projections from a remediation
plan developed by the Company's environmental consultants, the Company developed
an estimate of future costs for the remediation. The total estimated aggregate
costs are expected to be $3,000,000, and are based on technology currently
available to treat the contaminated sites. This amount has been recognized in
other operating expenses in the accompanying 1996 statement of operations as it
represents management's best estimate of the remediation costs.

The estimate of the remediation costs could change as a result of changes to
the remediation plan required by the various governmental environmental
agencies, changes in technology available to treat the sites, or unforeseen
circumstances existing at the site. It is not possible to estimate the amount of
losses, if any, that may exceed the amounts accrued as a result of these
factors.

The Company is involved in litigation arising as a result of its acquisition
of American Hi-Lift Corporation (American) in 1988. On January 28, 1994, a jury
verdict of approximately $429,000 was rendered against American. The Company's
management intends to vigorously appeal this decision. Although the outcome of
this litigation and its ultimate impact on the Company have not been determined,
management has recognized a provision for possible losses as a result of this
contingency. Management believes that such provision is adequate to provide for
its maximum estimated liability resulting from this decision.

The Company is fully insured, subject to varying deductibles, for workers'
compensation claims in substantially all states in which it operates. In the
remaining states, the Company provides for workers' compensation claims through
incurred loss retrospective policies. management believes that the Company has
sufficiently provided for estimated claims, including the effect of any
retroactive premium adjustments, at March 31, 1995 and February 25, 1996.

The Company is involved in various other claims and legal actions arising in
the ordinary course of business. In the opinion of management, the ultimate
disposition of these matters will not have a material adverse effect on the
Company's financial position.

12. SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

Rental equipment of $4,891,358, $3,245,650, and $3,748,100 was transferred
to inventories in 1994, 1995 and 1996, respectively. Capital lease obligations
of $310,635 and $457,199 were incurred in 1995 and 1996, respectively, when the
Company entered into leases for equipment. Dividends payable to the Parent of
$15,00,000 were declared in 1996. In 1994, a liability of $671,371 was
recognized for purchases of treasury stock.

Cash paid for interest was $2,217,152, $2,034,000, and $1,640,000 in 1994,
1995 an 1996, respectively. Cash paid for income taxes was $67,799, $428,400,
and $752,000 in 1994, 1995 and 1996, respectively.

F-37
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders
Alpine Equipment Rentals and Supply Company:

We have audited the balance sheet of the Alpine Equipment Rentals and Supply
Company as of December 31, 1995 and 1994, and the related statements of
operations, stockholders' equity, and cash flows for the years then ended. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

As discussed in Note 7, substantially all of the Company's assets were sold
to Primeco Inc. on July 29, 1996.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Alpine Equipment Rentals and
Supply Company as of December 31, 1995 and 1994, and the results of its
operations and its cash flows for the years then ended in conformity with
generally accepted accounting principles.

COOPERS & LYBRAND L.L.P.

Houston, Texas
August 30, 1996

F-38
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY
BALANCE SHEET

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------------
1994 1995
------------- ------------- JUNE 30,
1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents........................................... $ 449,066 $ 135,073 $ 360,375
Bank certificate of deposit......................................... 50,000 -- --
Accounts receivable, net............................................ 1,364,801 1,734,652 1,515,773
Inventories......................................................... 21,741 21,741 21,741
Rental equipment, net............................................... 6,709,012 7,865,531 7,575,526
Property, plant and equipment, net.................................. 999,974 1,574,428 1,434,243
Other assets........................................................ -- -- 71,258
------------- ------------- -------------
Total assets.................................................... $ 9,594,594 $ 11,331,425 $ 10,978,916
------------- ------------- -------------
------------- ------------- -------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable.................................................... $ 231,347 $ 197,339 $ 169,866
Accrued expenses.................................................... 312,095 381,763 410,876
Debt................................................................ 2,307,583 3,383,084 2,958,469
Note payable to former stockholder.................................. 154,910 81,645 33,251
Commitments and Contingencies (Note 6)
Common stock, no par value, 10,000 shares authorized and 2,087
shares issued and outstanding..................................... 83,613 83,613 83,613
Paid-in capital..................................................... 66,632 66,632 66,632
Retained earnings................................................... 6,438,414 7,137,349 7,256,209
------------- ------------- -------------
Stockholders' equity............................................ 6,588,659 7,287,594 7,406,454
------------- ------------- -------------
Total liabilities and stockholders' equity...................... $ 9,594,594 $ 11,331,425 $ 10,978,916
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-39
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

STATEMENT OF OPERATIONS

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
DECEMBER 31, SIX MONTHS SIX MONTHS
--------------------------- ENDED ENDED
1994 1995 JUNE 30, 1995 JUNE 30, 1996
------------ ------------- ------------- -------------
<S> <C> <C> <C> <C>
(UNAUDITED) (UNAUDITED)
Revenues:
Rental revenue............................................. $ 8,794,296 $ 10,126,532 $ 4,627,707 $ 4,553,074
Rental equipment sales..................................... 432,054 412,341 299,892 185,153
Other income............................................... 157,615 201,718 94,576 91,171
------------ ------------- ------------- -------------
9,383,965 10,740,591 5,022,175 4,829,398

Cost of sales:
Depreciation--rental equipment............................. 587,056 614,716 283,604 298,784
Cost of rental equipment sales, net of accumulated
depreciation............................................. 401,666 372,446 265,583 173,752
Direct operating expenses.................................. 2,173,319 2,519,639 1,095,171 967,552
------------ ------------- ------------- -------------
3,162,041 3,506,801 1,644,358 1,440,088
6,221,924 7,233,790 3,377,817 3,389,310
------------ ------------- ------------- -------------
Selling, general, administrative and other................... 5,047,294 5,679,431 2,608,558 2,779,134
Depreciation--property, plant and equipment.................. 213,033 298,572 137,220 135,722
Interest expense............................................. 174,305 270,019 108,031 153,499
------------ ------------- ------------- -------------
5,434,632 6,248,022 2,853,809 3,068,355
Income before income taxes............................. 787,292 985,768 524,008 320,955
Income tax expense........................................... 29,842 36,838 31,500 2,100
------------ ------------- ------------- -------------
Net income............................................. $ 757,450 $ 948,930 $ 492,508 $ 318,855
------------ ------------- ------------- -------------
------------ ------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-40
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

STATEMENT OF STOCKHOLDERS' EQUITY

<TABLE>
<CAPTION>
TOTAL
COMMON COMMON PAID-IN RETAINED STOCKHOLDERS'
SHARES STOCK CAPITAL EARNINGS EQUITY
----------- --------- --------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Balance at January 1, 1994.......................... 2,087 $ 83,613 $ 66,632 $ 5,720,964 $5,871,209
Net Income........................................ 757,450 757,450
Stockholder distributions......................... (40,000) (40,000)
----- --------- --------- ------------ ------------
Balance at December 31, 1994........................ 2,087 83,613 66,632 6,438,414 6,588,659
Net Income........................................ 948,930 948,930
Stockholder distributions......................... (249,995) (249,995)
----- --------- --------- ------------ ------------
Balance at December 31, 1995........................ 2,087 83,613 66,632 7,137,349 7,287,594
Net Income (six months, unaudited)................ 318,855 318,855
Stockholder distributions (unaudited)............. (199,995) (199,995)
----- --------- --------- ------------ ------------
Balance at June 30, 1996 (unaudited)................ 2,087 $ 83,613 $ 66,632 $ 7,256,209 $7,406,454
----- --------- --------- ------------ ------------
----- --------- --------- ------------ ------------
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-41
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

STATEMENT OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31,
-------------------------- SIX MONTHS ENDED
1994 1995 JUNE 30, 1995
------------ ------------ -----------------
<S> <C> <C> <C>
(UNAUDITED)
Operating activities:
Net income......................................................... $ 757,450 $ 948,930 $ 492,508
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation..................................................... 800,089 913,288 420,824
Net gain on disposal of rental equipment; and property, plant and
equipment...................................................... (31,738) (57,195) (34,309)
Provision for doubtful accounts.................................. 22,697 --
Effect on changes in operating assets and liabilities:
Decrease (increase) in accounts receivable..................... (266,979) (369,851) 29,970
Increase in other assets....................................... -- -- (75,157)
Increase in accounts payable and accrued expenses and other
liabilities.................................................. 160,420 35,660 225,947
------------ ------------ -----------------
Net cash provided by operating activities.................... 1,441,939 1,470,832 1,059,783
Investing activities:
Additions to rental equipment...................................... (264,603) (141,509) (135,401)
Additions to property, plant and equipment......................... (34,047) (778,499) (353,964)
Proceeds from sales of rental equipment............................ 432,054 412,341 299,892
Proceeds from disposals of property, plant and equipment........... 1,350 17,300 3,600
Maturity of bank certificate of deposit............................ -- 50,000 50,000
------------ ------------ -----------------
Net cash (used in) provided by investing activities.......... 134,754 (440,367) (135,873)
Financing activities:
Proceeds from debt................................................. 75,000 567,000
Payments of debt................................................... (1,316,018) (1,661,463) (602,886)
Shareholder distributions.......................................... (40,000) (249,995) (249,995)
------------ ------------ -----------------
Net cash used in financing activities........................ (1,281,018) (1,344,458) (852,881)
Net (decrease) increase in cash and cash equivalents................. 295,675 (313,993) 71,029
Cash and cash equivalents at beginning of period..................... 153,391 449,066 449,066
------------ ------------ -----------------
Cash and cash equivalents at end of period........................... $ 449,066 $ 135,073 $ 520,095
------------ ------------ -----------------
------------ ------------ -----------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest............................. $ 174,305 $ 270,019
Cash paid during the year for income taxes......................... $ 33,356 $ 33,342
Additions to rental equipment and property, plant and equipment
financed through promissory notes................................ $ 1,626,310 $ 2,096,699

<CAPTION>
SIX MONTHS ENDED
JUNE 30, 1996
-----------------
<S> <C>
(UNAUDITED)
Operating activities:
Net income......................................................... $ 318,855
Adjustment to reconcile net income to net cash provided by
operating activities:
Depreciation..................................................... 434,506
Net gain on disposal of rental equipment; and property, plant and
equipment...................................................... (11,401)
Provision for doubtful accounts.................................. --
Effect on changes in operating assets and liabilities:
Decrease (increase) in accounts receivable..................... 218,879
Increase in other assets....................................... (71,258)
Increase in accounts payable and accrued expenses and other
liabilities.................................................. 1,640
-----------------
Net cash provided by operating activities.................... 891,221
Investing activities:
Additions to rental equipment...................................... (175,058)
Additions to property, plant and equipment......................... (3,010)
Proceeds from sales of rental equipment............................ 185,153
Proceeds from disposals of property, plant and equipment........... --
Maturity of bank certificate of deposit............................ --
-----------------
Net cash (used in) provided by investing activities.......... 7,085
Financing activities:
Proceeds from debt................................................. 330,000
Payments of debt................................................... (803,009)
Shareholder distributions.......................................... (199,995)
-----------------
Net cash used in financing activities........................ (673,004)
Net (decrease) increase in cash and cash equivalents................. 225,302
Cash and cash equivalents at beginning of period..................... 135,073
-----------------
Cash and cash equivalents at end of period........................... $ 360,375
-----------------
-----------------
Supplemental disclosure of cash flow information:
Cash paid during the year for interest.............................
Cash paid during the year for income taxes.........................
Additions to rental equipment and property, plant and equipment
financed through promissory notes................................
</TABLE>

The accompanying notes are an integral part of the financial statements.

F-42
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

NOTES TO FINANCIAL STATEMENTS

1. THE COMPANY

Alpine Equipment Rental and Supply Company (the "Company") was formed in
1974. The Company's operations primarily consist of renting equipment and, to a
lesser extent, selling used equipment to commercial construction, industrial and
residential users in the Washington State area.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

RENTAL AGREEMENTS

INVENTORIES

Inventory is valued at the lower of cost or market, with cost being
determined on the specific identification method.

RENTAL EQUIPMENT

Rental equipment is recorded at cost. Depreciation for rental equipment is
computed using the straight-line method over the estimated five-year useful life
of the assets, after giving effect to an estimated salvage value. Accumulated
depreciation was approximately $3,780,000 and $4,072,000 and $4,207,000 at
December 31, 1994 and 1995 and June 30, 1996, respectively.

Expenditures for additions or improvements which extend asset lives are
capitalized in the period incurred. Normal repairs and maintenance costs are
expensed as incurred. When rental equipment is disposed of, the related costs
and accumulated depreciation are removed from the respective accounts, and any
gains or losses are included in results of operations.

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at cost. Depreciation is computed
on the straight-line basis over the estimated useful lives of the assets, giving
effect to an estimated salvage value.

The estimated useful lives for leasehold improvements is 15 years and the
estimated useful lives for vehicles, shop tools, and furniture and fixtures is 5
years.

Expenditures for additions or improvements which extend asset lives are
capitalized in the period incurred. Normal repairs and maintenance costs are
expensed as incurred. When property, plant and equipment are disposed of, the
related cost and accumulated depreciation are removed from the respective
accounts, and any gains or losses are included in results of operations.

INCOME TAXES

As of July 1, 1988, the stockholders elected to report the Company's taxable
income as an "S" Corporation for federal income tax purposes, pursuant to
Section 1374(a) of the Internal Revenue Code. Previously, the Company was
organized as a "C" Corporation. As an "S" Corporation, the income of the Company
is taxable directly to the stockholders. Accordingly, the Company is not subject
to federal income taxes with the exception of federal income taxes on gains
realized from the sale of depreciable personal property owned at June 30, 1988
and sold prior to July 1, 1998. Of the original potential taxable gain of

F-43
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

$1,059,000, the Company has recognized approximately $777,000 through December
31, 1995. The remaining gain of approximately $282,000 will be recognized in
1996 following the sale of these assets (see Note 7).

CASH EQUIVALENTS

Cash and cash equivalents include cash on hand and all highly liquid
investment instruments purchased with original maturities of three months or
less.

CONCENTRATION OF CREDIT RISK

Financial instruments that potentially subject the Company to concentrations
of credit risk consist principally of cash and cash equivalents and accounts
receivable. The Company maintains cash deposits with one bank, which from
time-to-time, may exceed federally insured limits. Management periodically
assesses the financial condition of the institution and believes that any
possible credit risk is minimal.

Concentrations of credit risk with respect to trade accounts receivable are
limited due to the large number of entities comprising the Company's customer
base. However, the majority of the Company's customers operate in the state of
Washington and therefore the Company is vulnerable to the general economic
conditions of that state. The Company generally does not require collateral on
accounts receivable. At December 31, 1994 and 1995 and June 30, 1996 the Company
had an allowance for doubtful accounts of $22,697.

ESTIMATES

UNAUDITED INTERIM FINANCIAL INFORMATION

In the opinion of management, the accompanying unaudited interim condensed
financial statements contain all adjustments (consisting only of normal
recurring items) necessary to present fairly the financial position of the
Company as of June 30, 1996 and the results of its operations and cash flows for
the six months ended June 30, 1995 and 1996. Certain information and footnote
disclosures normally included in financial statements prepared in accordance
with generally accepted accounting principles have been condensed or omitted
pursuant to the Securities and Exchange Commission's rules and regulations. The
results of operations for all interim periods presented are not necessarily
indicative of the results to be expected for the full year.

F-44
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment consist of the following as of December 31,
1994 and 1995 and June 30, 1996 (in thousands):

<TABLE>
<CAPTION>
1994 1995
------------- ------------- 1996
-------------
(UNAUDITED)
<S> <C> <C> <C>
Property, plant and equipment at cost:
Vehicles....................................... $ 1,614,046 $ 2,068,177 $ 2,068,177
Shop tools..................................... 188,937 214,266 215,545
Leasehold improvements......................... 295,544 455,186 455,186
Furniture and fixtures......................... 119,363 313,647 315,378
------------- ------------- -------------
2,217,890 3,051,276 3,054,286
Accumulated depreciation......................... (1,217,916) (1,476,848) (1,620,043)
------------- ------------- -------------
Net property, plant and equipment.......... $ 999,974 $ 1,574,428 $ 1,434,243
------------- ------------- -------------
------------- ------------- -------------
</TABLE>

4. RELATED PARTY TRANSACTIONS

The Company leases two of its facilities from partnerships owned by certain
Company shareholders. The leases call for lease payments aggregating $13,903 per
month and both expire in 1996. The rental expense for these leases included in
the statement of operations was approximately $163,000 and $167,000 for the
years ended December 31, 1994 and 1995, respectively.

The Company issued a note payable to a former stockholder for the purchase
of that stockholder's shares of Company stock. See Note 5 for additional
information.

5. DEBT AND NOTE PAYABLE TO FORMER STOCKHOLDER

Debt consists of the following at December 31, 1994 and 1995 and June 30,
1996 (in thousands):

<TABLE>
<CAPTION>
1994 1995
------------ ------------ 1996
------------
(UNAUDITED)
<S> <C> <C> <C>
Revolving credit agreement.......................... $ -- $ 267,000 $ 397,000
Promissory notes issued for the purchase of rental
equipment and property, plant and equipment....... 2,307,583 3,116,084 2,361,469
Note payable to bank................................ -- -- 200,000
------------ ------------ ------------
$ 2,307,583 $ 3,383,084 2,958,469
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

In January 1993, the Company borrowed approximately $200,000 from a bank to
fund distributions to stockholders. This loan accrued interest at 10% and was
repaid in April, 1994.

In March 1993, the Company entered into a one-year revolving credit
agreement with a bank which has been renewed annually. The agreement originally
provided for a $200,000 line of credit which was increased to $400,000 on
December 27, 1995. Interest on the outstanding debt is based on prime plus 1%
(9.5% at December 31, 1994 and 1995) and is collateralized by equipment. The
amount available for additional borrowings under this revolving credit agreement
at December 31, 1995 was approximately $133,000. Borrowings under this revolving
credit agreement are payable on demand.

In connection with the purchase of rental equipment and property, plant and
equipment, the Company has issued promissory notes to several creditors with
varying terms. All notes issued are collateralized by the purchased equipment
and bear interest at various rates ranging from 7.5% to 10.75%

F-45
<PAGE>
ALPINE EQUIPMENT RENTALS AND SUPPLY COMPANY

NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. DEBT AND NOTE PAYABLE TO FORMER STOCKHOLDER (CONTINUED)
at December 31, 1995. All notes are payable in monthly installments and mature
on various dates through December 1999.

The note payable to stockholder is a promissory note issued to a former
Company stockholder for the purchase of that stockholder's shares of Company
stock. Monthly installments are due on the note in the amount of $7,500,
including interest at 9%, through December 1, 1996.

Maturities of debt and the note payable are as follows at December 31, 1995:

<TABLE>
<CAPTION>
DECEMBER 31,
- ------------------------------------------------------------------------------------
<S> <C>
1996.............................................................................. $ 1,748,702
1997.............................................................................. 921,022
1998.............................................................................. 564,991
1999.............................................................................. 230,014
------------
$ 3,464,729
------------
------------
</TABLE>

In January 1996, the Company borrowed $200,000 from a bank to fund
distributions of $199,995 to stockholders during that month. This loan bears
interest at 10.25% and is payable on demand.

6. COMMITMENTS AND CONTINGENCIES:

LEASES

The Company leases facilities under operating leases. Minimum future
obligations for operating leases in effect at December 31, 1995 are:

<TABLE>
<CAPTION>
DECEMBER 31,
- ------------------------------------------------------------------------------------
<S> <C>
1996.............................................................................. $ 419,476
1997.............................................................................. 207,223
1998.............................................................................. 209,430
1999.............................................................................. 193,104
2000.............................................................................. 129,376
------------
Total Minimum Obligations......................................................... $ 1,158,609
------------
------------
</TABLE>

Lease expense charged to operations in the accompanying statement of
operations was approximately $445,000 and $510,000 for the years ended December
31, 1994 and 1995, respectively.

In 1996, two of the Company's operating leases with monthly lease payments
of $8,000 and $7,800, respectively, were extended through July 31, 2002.

7. SUBSEQUENT EVENTS

On July 29, 1996, the Company's shareholders agreed to sell substantially
all of the assets of the Company to Primeco Inc. for approximately $11 million
of cash and a $350,000 payment for a covenant not to compete. This sale required
the Company to recognize its remaining tax liability of approximately $282,000
(as discussed in Note 2) for assets owned prior to July 1, 1988.

F-46
<PAGE>
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE
SOLICITATION OF AN OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR
THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 10
Use of Proceeds................................. 15
Dividend Policy................................. 15
Capitalization.................................. 16
Dilution........................................ 17
Pro Forma Consolidated Financial Statements..... 18
Selected Consolidated Historical, Pro Forma
Financial and Other Data...................... 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 27
Business........................................ 37
Management...................................... 47
Certain Transactions............................ 54
Principal and Selling Stockholders.............. 55
Description of Capital Stock.................... 57
Description of Certain Indebtedness............. 59
Shares Eligible for Future Sale................. 61
Certain U.S. Tax Considerations Applicable
to Non-U.S. Holders of Common Stock........... 63
Underwriting.................................... 66
Notice to Canadian Residents.................... 68
Legal Matters................................... 69
Experts......................................... 69
Additional Information.......................... 70
Index to Financial Statements................... F-1
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PROSPECTUS WHEN
ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR
SUBSCRIPTIONS.

Prime Service, Inc.

7,250,000 Shares

Common Stock
($0.01 PAR VALUE)

PROSPECTUS

CS First Boston
Merrill Lynch & Co.
Salomon Brothers Inc

- --------------------------------------------------------------------------------
<PAGE>

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE
SECURITIES LAWS OF ANY SUCH STATE.

<PAGE>

[INTERNATIONAL PAGE]

SUBJECT TO COMPLETION, DATED OCTOBER 9, 1996

7,250,000 Shares
Prime Service, Inc.
Common Stock
($0.01 PAR VALUE)

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

ALL OF THE SHARES OF COMMON STOCK, $0.01 PAR VALUE (THE "COMMON STOCK"), OF
PRIME SERVICE, INC. (THE "COMPANY" OR "PRIME") OFFERED HEREBY ARE BEING SOLD BY
THE COMPANY (THE "OFFERING"), EXCEPT THAT THE SELLING STOCKHOLDERS NAMED
HEREIN UNDER PRINCIPAL AND SELLING STOCKHOLDERS (THE "SELLING STOCKHOLDERS")
HAVE GRANTED THE U.S. UNDERWRITERS AND THE MANAGERS THE OPTION TO PURCHASE
UP TO AN AGGREGATE OF 1,087,500 SHARES OF THE COMMON STOCK SOLELY TO
COVER OVER-ALLOTMENTS. SEE "PRINCIPAL AND SELLING STOCKHOLDERS" AND
"UNDERWRITING." OF THE 7,250,000 SHARES OF COMMON STOCK BEING OFFERED,
1,450,000 SHARES ARE INITIALLY BEING OFFERED OUTSIDE THE UNITED
STATES AND CANADA (THE "INTERNATIONAL SHARES") BY THE MANAGERS (THE
"INTERNATIONAL OFFERING") AND 5,800,000 SHARES ARE INITIALLY BEING
CONCURRENTLY OFFERED IN THE UNITED STATES AND CANADA (THE "U.S.
SHARES") BY THE U.S. UNDERWRITERS (THE "U.S. OFFERING" AND,
TOGETHER WITH THE INTERNATIONAL OFFERING, THE "OFFERING"). THE
OFFERING PRICE AND UNDERWRITING DISCOUNTS AND COMMISSIONS OF
THE INTERNATIONAL OFFERING AND THE U.S.
OFFERING ARE IDENTICAL.

OF THE 7,250,000 SHARES BEING OFFERED BY THE U.S. UNDERWRITERS AND THE MANAGERS,
500,000 SHARES WILL BE RESERVED FOR SALE TO OFFICERS AND EMPLOYEES OF
INVESTCORP S.A. AND ITS SUBSIDIARIES AND TO DIRECTORS, OFFICERS AND EMPLOYEES
OF THE COMPANY AND ITS SUBSIDIARIES. SEE "SUBSCRIPTION AND SALE." PRIOR TO
THIS OFFERING, THERE HAS BEEN NO PUBLIC MARKET FOR THE COMMON STOCK. IT IS
ANTICIPATED THAT THE INITIAL PUBLIC OFFERING PRICE WILL BE BETWEEN $22.00
AND $25.00 PER SHARE. FOR INFORMATION RELATING TO THE FACTORS CONSIDERED
IN DETERMINING THE INITIAL OFFERING PRICE TO THE
PUBLIC, SEE "SUBSCRIPTION AND SALE."

THE COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL " ," SUBJECT TO OFFICIAL NOTICE OF ISSUANCE.

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

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN CONNECTION WITH
AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS" BEGINNING ON PAGE 10
HEREIN.

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

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

(1) SEE "SUBSCRIPTION AND SALE" FOR INFORMATION RELATING TO RESERVED SHARES.

(2) BEFORE DEDUCTION OF EXPENSES PAYABLE BY THE COMPANY ESTIMATED AT $ .

(3) THE SELLING STOCKHOLDERS HAVE GRANTED THE MANAGERS AND THE U.S. UNDERWRITERS
AN OPTION, EXERCISABLE FOR 30 DAYS FROM THE DATE OF THIS PROSPECTUS, TO
PURCHASE A MAXIMUM OF 1,087,500 ADDITIONAL SHARES OF COMMON STOCK TO COVER
OVER-ALLOTMENTS IF ANY. IF THE OPTION IS EXERCISED IN FULL, THE TOTAL PRICE
TO PUBLIC WILL BE $ , UNDERWRITING DISCOUNTS AND COMMISSIONS WILL BE
$ , PROCEEDS TO COMPANY WILL REMAIN THE SAME, AND PROCEEDS TO
SELLING STOCKHOLDERS WILL BE $ .

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

THE INTERNATIONAL SHARES ARE OFFERED BY THE SEVERAL MANAGERS WHEN, AS AND IF
DELIVERED TO AND ACCEPTED BY THE MANAGERS AND SUBJECT TO THEIR RIGHT TO REJECT
ORDERS IN WHOLE OR IN PART. IT IS EXPECTED THAT THE INTERNATIONAL SHARES WILL BE
READY FOR DELIVERY ON OR ABOUT NOVEMBER , 1996, AGAINST PAYMENT IN IMMEDIATELY
AVAILABLE FUNDS.

CS First Boston

Merrill Lynch International Limited Salomon Brothers International Limited

<PAGE>

THE DATE OF THIS PROSPECTUS IS OCTOBER , 1996

<PAGE>

[International Page]

[INSERT MAP]

IN THIS PROSPECTUS, REFERENCES TO "DOLLARS" AND "$" ARE TO UNITED STATES
DOLLARS.

2
<PAGE>
PROSPECTUS SUMMARY

THE COMPANY

GENERAL

Prime is the second largest rental equipment company in the United States,
based upon 1995 rental equipment revenues, and currently operates 101 rental
equipment yards in 13 states. The Company rents over 100 different types of
equipment, such as aerial manlifts, portable air compressors, forklifts and
light earth moving equipment and small equipment such as lawnmowers, plumbing
equipment and hand tools, to commercial construction, industrial and residential
users. The Company also sells complementary parts and merchandise and used
equipment, and acts as a distributor of new equipment on behalf of nationally
known equipment manufacturers. At September 30, 1996, the Company had an
equipment rental fleet with a book value of $257.1 million ($360.7 million at
original cost) comprised of over 40,000 pieces of equipment. Over the period
from 1991 to 1995, Prime's total revenues increased from $146.2 million to
$242.8 million, a compound annual growth rate of 13.5%. Total 1995 revenues on a
pro forma basis for two acquisitions completed in 1996 would have been $307.2
million, an increase of 45% over the 1994 historical result. Due to the
Company's substantial financial leverage and special charges, Prime reported a
net loss of $8.7 million in 1995 compared to net income of $13.9 million in the
year ended December 31, 1994.

3
<PAGE>
INDUSTRY

STRATEGY

4
<PAGE>

5
<PAGE>

THE OFFERING

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

RISK FACTORS

6
<PAGE>
RISK FACTORS

GENERAL ECONOMIC CONDITIONS

ABILITY TO IMPLEMENT AND MANAGE GROWTH STRATEGY

10
<PAGE>

DEPENDENCE ON KEY PERSONNEL

IMPACT OF SIGNIFICANT COMPETITION

ENVIRONMENTAL LIABILITIES

CONTROL BY PRINCIPAL STOCKHOLDERS

11
<PAGE>

LIABILITY AND INSURANCE

IMMEDIATE AND SUBSTANTIAL DILUTION

NO DIVIDENDS

EFFECT OF CERTAIN CHARTER, CHANGE OF CONTROL AND STATUTORY PROVISIONS

Primeco's credit facility and subordinated indebtedness contain provisions
that, under certain circumstances, will cause such indebtedness to become due
upon the occurrence of a change of control of

12
<PAGE>

Primeco or the Company. See "Description of Certain Indebtedness." These
provisions could have the effect of making it more difficult for a third party
to acquire control of the Company.

NO PRIOR PUBLIC MARKET; POSSIBLE VOLATILITY IN PRICE OF COMMON STOCK

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of the Offering, 27,991,544 shares of Common Stock will be
outstanding. The 7,250,000 shares (8,337,500 if the over-allotment is exercised
in full) sold in the Offering will be freely transferable without restriction
under the Securities Act of 1933, as amended (the "Securities Act"), except for
shares acquired by "affiliates" of the Company as that term is defined under the
Securities Act. Of the remaining 20,741,544 outstanding shares of Common Stock
(assuming exercise of the over-allotment), 1,287,371 were sold in offshore
distributions under Regulation S within the past year, 13,824,887 were sold in
offshore distributions under Regulation S more than one year ago and 5.629,286
are deemed to be restricted securities. Pursuant to Rule 701 under the
Securities Act, 115,836 of the restricted securities will be available for
resale in the public market without restriction commencing 90 days after the
date of this Prospectus. Commencing 90 days after the date of this Prospectus,
all of the remaining restricted securities are eligible for sale in the public
market in compliance with Rule 144 under the Securities Act. Subject to certain
exceptions, the Company and all of the present stockholders of the Company have
agreed that they will not offer, issue, pledge, sell, transfer or otherwise
dispose of any shares of Common Stock or securities convertible into or
exercisable or exchangeable for shares of Common Stock for a period of 180 days
after the date of this Prospectus without the prior written consent of CS First
Boston Corporation. See "Principal and Selling Stockholders" and "Subscription
and Sale."

13
<PAGE>

statement, subject to applicable lock-up arrangements. See
"Management--Management Stock Incentive Plans."

14
<PAGE>
DESCRIPTION OF CERTAIN INDEBTEDNESS

CREDIT AGREEMENT

Primeco utilized all of the proceeds of the Term Loan Facility, and $25.0
million of the $175.0 million Revolving Loan Facility, in connection with the
1994 Acquisition. The remaining availability under the Revolving Loan Facility
may be utilized to meet Primeco's current working capital requirements,
including the issuance of standby and trade letters of credit. Primeco can also
utilize the remaining availability to fund capital expenditures, subject to
borrowing base limitations and certain limits on annual capital expenditure. As
of September 30, 1996, $244.0 million in principal amount is outstanding under
the Credit Facility. In connection with the Offering, the Company will apply
$110.2 million of the net proceeds thereof to reduce the outstanding principal
amount of the Revolving Loan Facility, leaving $10.3 million outstanding.
Primeco from time to time has amended covenants contained in the Credit Facility
to accommodate acquisitions and increases in capital expenditure levels.

The Loans under the Credit Facility are secured by a first priority security
interest in substantially all of the assets of Primeco. In addition, the Loans
are guaranteed by the Company. The Company's guarantee is secured by a pledge of
all of the issued and outstanding capital stock of Primeco. Primeco is also
required to grant mortgages in after acquired real property acquired for
consideration in excess of $1 million.

The Credit Facility contains certain covenants and restrictions that, among
other things, restrict: (i) consolidations, mergers and sales of assets of
Primeco and its subsidiaries; (ii) the incurrence of liens or other
encumbrances; (iii) the incurrence of contingent obligations; (iv) the payment
of dividends; (v) prepayments and amendments of subordinated debt instruments
and equity; (vi) investments, loans and advances; (vii) certain transactions
with affiliates; (viii) capital expenditures and (ix) incurrence of
indebtedness. The Credit Facility will allow Primeco to pay dividends to the
Company in amounts required for the Company to pay certain operating costs in
the normal course of business and other cash dividends in an amount limited to
25% of Primeco's consolidated net income from the effective date of the amended
and restated Credit Facility, not to exceed $3 million in any fiscal year.

59
<PAGE>

material inacurracy in any representation or warranty; (3) certain
cross-defaults under other indebtedness, in each case provided that the
aggregate other indebtedness is at least $5.0 million; (4) certain insolvency
events; (5) certain prohibited ERISA events; (6) judgments aggregating $5.0
million or more (excluding amounts covered by insurance), not stayed,
discharged, vacated or bonded within the applicable time for such action; or (7)
a change of control, which is deemed to occur if any person (other than
Investcorp, any of its affiliates or subsidiaries, senior management of the
Company or Primeco, any entity that is majority-owned by such senior management
of the Company or Primeco, or any person acting in the capacity of an
underwriter) directly or indirectly acquires 25% or more, on a fully diluted
basis, of the outstanding voting power of the common stock of the Company or
Primeco.

SUBORDINATED DEBT

If redeemed during the 12-month period commencing on or after March 1 of the
years set forth below:

60
<PAGE>

million, (v) bankruptcy, insolvency or reorganization of Primeco or a
significant subsidiary, or (vi) a judgment in excess of $10.0 million.

SHARES ELIGIBLE FOR FUTURE SALE

In addition, up to 259,727 shares of Common Stock may be issued upon
exercise of certain employee stock options that Prime has granted, of which
options to purchase 94,042 shares of Common Stock will be exercisable upon the
closing of the Offering. Also, the Company will grant, conditioned upon the
closing of the Offering, options for the purchase of 346,665 shares of Common
Stock, which will vest. The Company intends to file a registration statement on
Form S-8 under the Securities Act to register the 1,759,727 shares of Common
Stock reserved for issuance under the Management Stock Incentive Plans. As a
result, any shares issued upon exercise of stock options granted under such
plans will be available, subject to special rules for affiliates, for resale in
the public market after the effective date of such registration statement,
subject to applicable lock-up arrangements. See "Subscription and Sale" and
"Management-- Stock Incentive Plan."

61
<PAGE>

provisions, public information requirements or notice requirements. Regulation S
permits the sale by issuers, affiliates and others of shares in an "offshore
transaction" (as defined in Regulation S), subject to certain other conditions
including the requirement that the purchaser not resell the shares to a U.S.
person during a one year restricted period (or a 40-day restricted period if the
shares are distributed in reliance on Regulation S after the Company's
securities are registered under the Exchange Act). After such one year (or
40-day) holding period, shares of Common Stock that were sold under Regulation S
and which are not held by an affiliate of the Company are available for resale
in the public market without restriction.

62
<PAGE>

SUBSCRIPTION AND SALE

The institutions named below ("the Managers") have, pursuant to a
Subscription Agreement dated , (the "Subscription Agreement"),
severally and not jointly, agreed with the Company to subscribe and pay for the
following respective numbers of International Shares as set forth opposite their
names:

<TABLE>
<CAPTION>
NUMBER OF
INTERNATIONAL
MANAGER SHARES
- ------------------------------------------------------------------------- -------------------

<S> <C>
CS FIRST BOSTON LIMITED..................................................
MERRILL LYNCH INTERNATIONAL LIMITED......................................
SALOMON BROTHERS INTERNATIONAL LIMITED...................................

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

TOTAL.............................................................. 1,450,000
-------------------
-------------------
</TABLE>

The Subscription Agreement provides that the obligations of the Managers are
such that, subject to certain conditions precedent, the Managers will be
obligated to purchase all the International Shares (other than those shares
covered by the over-allotment option described below) if any are purchased. The
Subscription Agreement provides that, in the event of a default by a Manager, in
certain circumstances the purchase commitments of the non-defaulting managers
may be increased or the Subscription Agreement may be terminated.

The Company and the Selling Stockholders have entered into an Underwriting
Agreement (the "Underwriting Agreement") with the U.S. Underwriters of the U.S.
Offering (the "U.S. Underwriters" and together with the Managers, the
"Underwriters") providing for the concurrent offer and sale of the U.S. Shares
in the United States and Canada. The closing of the U.S. Offering is a condition
to the closing of the International Offering and vice versa.

66
<PAGE>

The Selling Stockholders have granted to the Managers and the U.S.
Underwriters an option exercisable by CS First Boston Corporation, expiring at
the close of business on the 30th day after the date of this Prospectus to
purchase up to 1,087,500 additional shares at the initial public offering price,
less the underwriting discounts and commissions, all as set forth on the cover
page of this Prospectus. Such option may be exercised only to cover
over-allotments in the sale of the shares of Common Stock offered hereby. To the
extent that this option to purchase is exercised, each Manager and each U.S.
Underwriter will become obligated, subject to certain conditions, to purchase
approximately the same percentage of additional shares being sold to the
Managers and the U.S. Underwriters as the number of International Shares set
forth next to such Manager's name in the preceding table and as the number set
forth next to such U.S. Underwriter's name in the corresponding table in the
Prospectus relating to the U.S. Offering bears to the sum of the total number of
shares of Common Stock in such tables.

The Company has been advised by CS First Boston Limited, on behalf of the
Managers, that the Managers propose to offer the International Shares outside
the United States and Canada initially at the public offering price set forth on
the cover page of this Prospectus and, through the Managers, to certain dealers
at such price less a commission of $ per share and that the Managers and such
dealers may reallow a commission of $ per share on sales to certain other
dealers. After the initial public offering, the public offering price and
commission and reallowance may be changed by the Managers.

The offering price and the aggregate underwriting discounts and commissions
per share and per share commission and reallowance to dealers for the
International Offering and the concurrent U.S. Offering will be identical.
Pursuant to an Agreement between the U.S. Underwriters and Managers (the
"Intersyndicate Agreement") relating to the Offering, changes in the offering
price, the aggregate underwriting discounts and commissions per share and per
share commission and reallowance to dealers will be made only upon the mutual
agreement of CS First Boston Limited, on behalf of the Managers, and CS First
Boston Corporation, as representative of the U.S. Underwriters.

Pursuant to the Intersyndicate Agreement, each of the Managers has agreed
that, as part of the distribution of International Shares and subject to certain
exceptions, it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares of Common Stock or distribute any prospectus relating to
the Common Stock in the United States or Canada or to any other dealer who does
not so agree. Each of the U.S. Underwriters has agreed that, as part of the
distribution of the U.S. Shares and subject to certain exceptions, it has not
offered or sold and will not offer or sell, directly or indirectly, any shares
of Common Stock or distribute any prospectus relating to the Common Stock to any
person outside the United States and Canada or to any other dealer who does not
so agree. The foregoing limitations do not apply to stabilization transactions
or to transactions between the Managers and the U.S. Underwriters pursuant to
the Intersyndicate Agreement. As used herein, "United States" means the United
States of America (including the States and the District of Columbia), its
territories, possessions and other areas subject to its jurisdiction, "Canada"
means Canada, its provinces, territories, possessions and other areas subject to
its jurisdiction, and an offer or sale shall be in the United States or Canada
if it is made to (i) any individual resident in the United States or Canada or
(ii) any corporation, partnership, pension, profit-sharing or other trust or
other entity (including any such entity acting as an investment adviser with
discretionary authority) whose office most directly involved with the purchase
is located in the United States or Canada.

Pursuant to the Intersyndicate Agreement, sales may be made between the
Managers and the U.S. Underwriters of such number of shares of Common Stock as
may be mutually agreed upon. The price of any shares so sold will be the public
offering price less such amount agreed upon by CS First Boston Limited, on
behalf of the Managers, and CS First Boston Corporation, as representative of
the U.S. Underwriters, but not exceeding the selling concession applicable to
such shares. To the extent there are sales between the Managers and the U.S.
Underwriters pursuant to the Intersyndicate Agreement, the number of shares of
Common Stock initially available for sale by the Managers or by the U.S.
Underwriters may be more or less than the amount appearing on the cover page of
this Prospectus. Neither the Managers nor the U.S. Underwriters are obligated to
purchase from the other any unsold shares of Common Stock.

67
<PAGE>

Each of the Managers and the U.S. Underwriters severally represents and
agrees that: (i) it has not offered or sold and prior to the date six months
after the date of issue of the shares of Common Stock offered in the Offering
will not offer or sell any shares of Common Stock to persons in the United
Kingdom, except to persons whose ordinary activities involve them in acquiring,
holding, managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United Kingdom
within the meaning of the Public Offers of Securities Regulations 1995; (ii) it
has complied and will comply with all applicable provisions of the Financial
Services Act of 1986 with respect to anything done by it in relation to any
shares of Common Stock in, from or otherwise involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue of any
shares of Common Stock to a person who is of a kind described in Article 11(3)
of the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 or is a person to whom such document may otherwise lawfully be issued
or passed on.

CSFBL, on behalf of the Managers, and the representatives of the U.S.
Underwriters have informed the Company that they do not expect discretionary
sales by the Managers or the U.S. Underwriters to exceed 5% of the shares of
Common Stock being offered hereby.

At the request of Prime, the U.S. Underwriters have reserved up to 500,000
shares of Common Stock for sale, at the initial public offering price less the
underwriting discount, to officers and employees of Investcorp S.A. and its
subsidiaries and directors, officers and employees of Prime and its
subsidiaries. The number of shares available for sale to the general public will
be reduced to the extent such persons purchase such reserved shares. Any
reserved shares not so purchased will be offered by the U.S. Underwriters to the
general public on the same terms as the other shares offered hereby.

The Company and the Selling Stockholders have agreed to indemnify the
Managers and the U.S. Underwriters against certain liabilities, including civil
liabilities under the Securities Act, or contribute to payments which the
Managers and the U.S. Underwriters may be required to make in respect thereof.

Application has been made to list the shares of Common Stock on the New York
Stock Exchange, under the proposed symbol " ." In connection with the
listing of the Common Stock on the New York Stock Exchange, the Managers and the
U.S. Underwriters will undertake to sell round lots of 100 shares or more to a
minimum of 2,000 beneficial owners.

Prior to the Offering, there has been no established trading market for the
Common Stock. The initial price to the public for the Common Stock offered
hereby has been determined by negotiation among the Company, the Managers, and
the representatives of the U.S. Underwriters. The factors considered in
determining the initial price to the public include the history of and the
prospects for the industry in which the Company competes, the ability of the
Company's management, the past and present operations of the Company, the
historical results of operations of the Company, the prospects for future
earnings of the Company, the general condition of the securities markets at the
time of the Offering and the recent market prices of securities of generally
comparable companies. There can be no assurance, however, that the prices at
which the Common Stock will sell in the public market after this Offering will
not be lower than the price at which they are sold by the Managers and the U.S.
Underwriters.

68
<PAGE>
NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

REPRESENTATIONS OF PURCHASERS

RIGHTS OF ACTION AND ENFORCEMENT

NOTICE TO BRITISH COLUMBIA RESIDENTS

LEGAL MATTERS

The validity of the shares of Common Stock offered hereby will be passed
upon for the Company by Gibson, Dunn & Crutcher LLP, New York, New York, and for
the Managers by Cravath, Swaine & Moore, New York, New York.

EXPERTS

69
<PAGE>
herein in reliance on the reports of Coopers & Lybrand L.L.P., independent
certified public accountants, given on the authority of that firm as experts in
accounting and auditing.

ADDITIONAL INFORMATION

70
<PAGE>
- --------------------------------------------------------------------------------

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND,
IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMPANY, ANY SELLING STOCKHOLDER OR ANY MANAGER.
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR THE SOLICITATION OF AN
OFFER TO BUY ANY OF THE SECURITIES OFFERED HEREBY IN ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH OFFER IN SUCH JURISDICTION. NEITHER
THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION HEREIN IS CORRECT AS
OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO CHANGE IN
THE AFFAIRS OF THE COMPANY SINCE SUCH DATE.

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

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
---------
<S> <C>
Prospectus Summary.............................. 3
Risk Factors.................................... 10
Use of Proceeds................................. 15
Dividend Policy................................. 15
Capitalization.................................. 16
Dilution........................................ 17
Pro Forma Consolidated Financial Statements..... 18
Selected Consolidated Historical, Pro Forma
Financial and Other Data...................... 25
Management's Discussion and Analysis of
Financial Condition and Results of
Operations.................................... 27
Business........................................ 37
Management...................................... 47
Certain Transactions............................ 54
Principal and Selling Stockholders.............. 55
Description of Capital Stock.................... 57
Description of Certain Indebtedness............. 59
Shares Eligible for Future Sale................. 61
Certain U.S. Tax Considerations Applicable
to Non-U.S. Holders of Common Stock........... 63
Subscription and Sale........................... 66
Notice to Canadian Residents.................... 69
Legal Matters................................... 69
Experts......................................... 69
Additional Information.......................... 70
Index to Financial Statements................... F-1
</TABLE>

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

UNTIL , 1996 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES IN THE UNITED
STATES, WHETHER OR NOT PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO
DELIVER A U.S. PROSPECTUS. THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE
OBLIGATION OF DEALERS TO DELIVER A U.S. PROSPECTUS WHEN ACTING AS UNDERWRITERS
AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS OR SUBSCRIPTIONS IN TRANSACTIONS IN
THE UNITED STATES.

Prime Service, Inc.

7,250,000 Shares

Common Stock
($0.01 PAR VALUE)

PROSPECTUS

CS First Boston
Merrill Lynch
International Limited
Salomon Brothers International Limited

- --------------------------------------------------------------------------------
<PAGE>

[Inside front Cover]

Prime Equipment logo with slogan "Discover the Difference."

Photos displaying the equipment yards and various pieces of
construction equipment in use.

[Inside Gatefold]

Map to territorial United States indicating locations of the Company's
equipment rental yards, with caption "Over 100 Locations Coast to Coast."

Photos displaying construction equipment undergoing maintenance, with
caption "On-Going Preventive Maintenance Program."

Photos of Company personnel inspecting sites and utilizing office and
other equipment, with caption "Industrial Services Division."

Photos of Company personnel utilizing equipment, with caption "Safety
Training."

Photos of employees at work in various capacities, with caption "Quality
Employees."

[Inside Back Cover]

Photos of construction equipment at the yards and at work in the field,
with heading "Representing A Broad Range of Equipment Manufacturers."
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
SEC Fee................................................................... $ 67,242
NASD Fee.................................................................. 20,000
State Blue Sky Qualification.............................................. 20,000
NYSE Listing Fee.......................................................... 165,100
Legal Fees................................................................ 350,000
Printing.................................................................. 250,000
Accounting Fees........................................................... 300,000
Transfer Agent's fees and expenses........................................ 3,500
Miscellaneous.............................................................
---------
Total................................................................. $
---------
---------
</TABLE>

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(A) EXHIBITS:

<TABLE>
<CAPTION>
EXHIBIT
NUMBER: DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>

2.1 Form of Underwriting Agreement*

2.2 Form of Subscription Agreement.*

3.1 Amended and Restated Certificate of Incorporation of the Company**

3.2 Amended and Restated Certificate of Designation of the Company**

3.3 Amendment to the Amended and Restated Certificate of Incorporation of the Company**

3.4 Amended and Restated Bylaws of the Company**

3.5 Amendment to the Amended and Restated Certificate of Incorporation of the Company

3.6 Form of Amended and Restated Certificate of Incorporation of the Company to be filed immediately
following the closing of the Offering.

4.1 Form of Common Stock Certificate

4.2 Form of Indenture between Primeco and Texas Commerce Bank National Association, as trustee.
(Incorporated by reference to Exhibit 4 of Primeco's Registration Statement on Form S-1, Registration
Statement No. 33-87404, originally filed with the SEC on December 15, 1994 (the "Primeco Registration
Statement").)

4.3 See Exhibits 3.1 and 3.2 as to rights of holders of the Company's Class A Common Stock, Class C Common
Stock and Class D Common Stock prior to the Offering.

4.4 Indenture between Prime Holding, Inc. and AIBC Services N.V., as trustee, dated as of November 29, 1994.

5.1 Opinion of Gibson, Dunn & Crutcher LLP

10.1 Agreement for Management Advisory, Strategic Planning and Consulting Services, dated as of December 1,
1994, between Investcorp International Inc. and Prime Acquisition Corp. (Incorporated by reference to
Exhibit 10(c) of the Primeco Registration Statement.)
</TABLE>

II-1
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER: DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.2 Agreement for Management Advisory, Strategic Planning and Consulting Services dated as of February 26,
1996 between Investcorp International Inc. and Primeco. (Incorporated by reference to Exhibit 10.2 of
Primeco's Annual Report on Form 10-K for the year ended December 31, 1995.)

10.3 Prime Service, Inc. Management Stock Incentive Plan. (Incorporated by reference to Exhibit 10.3 of
Primeco's Annual Report on Form 10-K for the year ended December 31, 1995 (the "Primeco 10-K").)

10.4 Credit Agreement dated as of December 1, 1994, among Prime Acquisition Corp., the lenders party thereto,
Chemical bank as Administrative Agent, and The CIT Group Business Credit, Inc., as collateral agent.
(Incorporated by reference to Exhibit 10(d) of the Primeco Registration Statement).

10.5 Amendment No. 1 to Credit Agreement, dated as of November 1, 1995, among Primeco, the lenders party
thereto, Chemical Bank as Administrative Agent, and The CIT Group/Business Credit, Inc. as collateral
agent. (Incorporated by reference to Exhibit 10.5 of the Primeco 10-K.)

10.6 Amendment No. 2 to Credit Agreement, dated as of January 10, 1996, among Primeco Inc., the lenders party
thereto, Chemical Bank as Administrative Agent, and The CIT Group/ Business Credit, Inc. as collateral
agent. (Incorporated by reference to Exhibit 10.6 of the Primeco 10-K.)

10.7 Security Agreement dated as of December 1, 1994, between Prime Acquisition Corp. and The CIT
Group/Business Credit, Inc. as collateral agent. (Incorporated by reference to Exhibit 10(e) of the
Primeco Registration Statement).

10.8 Interest Rate and Currency Exchange Agreement, dated as of March 7, 1990 between Primeco and Salomon
Brothers Holding Company, Inc., as modified by the Schedule to the Interest Rate and Currency Exchange
Agreement dated as of March 7, 1990, as supplemented by the Letter Agreement dated March 7, 1990
confirming the swap transaction and as amended by the Letter Agreement dated as of December 1, 1994.
(Incorporated by reference to Exhibit 10(g) of the Primeco Registration Statement).

10.9 Letter Agreement dated as of December 1, 1994 between Primeco and Chemical Bank confirming a swap
transaction. (Incorporated by reference to Exhibit 10(h) of the Primeco Registration Statement).

10.10 Employment Agreement, dated December 2, 1994 between Primeco and Thomas E. Bennett (Incorporated by
reference to Exhibit 10.10 of the Primeco 10-K.)

10.11 Employment Agreement, dated April 1, 1996 between Primeco and Brian Fontana (Incorporated by reference
to Exhibit 10.1 of Primeco's Quarterly Report on Form 10-Q for the quarter ended June 30, 1996).

10.12 Employment Agreement, dated December 2, 1994, between Primeco and Kevin L. Loughlin (Incorporated by
reference to Exhibit 10.11 of the Primeco 10-K.)

10.13 Employment Agreement, dated December 2, 1994 between Primeco and Peter A. Post (Incorporated by
reference to Exhibit 10.12 of the Primeco 10-K.)

10.14 Employment Agreement, dated December 2, 1994 between Primeco and Gerald E. Lane (Incorporated by
reference to Exhibit 10.13 of the Primeco 10-K.)

10.15 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Charles J. Phillipin.
(Incorporated by reference to Exhibit 10(k) of the Primeco Registration Statement.)

10.16 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Christopher J. O'Brien.
(Incorporated by reference to Exhibit 10(l) of the Primeco Registration Statement.)
</TABLE>

II-2

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER: DESCRIPTION OF EXHIBITS
- ----------- --------------------------------------------------------------------------------------------------------
<C> <S>
10.17 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Thomas E. Bennett. (Incorporated
by reference to Exhibit 10(m) of the Primeco Registration Statement.)

10.18 Indemnity Agreement, dated as of April 1, 1996, between Primeco and Brian Fontana (Incorporated by
reference to Exhibit 10.2 of Primeco's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996).

10.19 Indemnity Agreement, dated as of December 2, 1994 between Primeco and E. Garrett Bewkes, III.
(Incorporated by reference to Exhibit 10(I) of the Primeco Registration Statement.)

10.20 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Robert V. Glaser. (Incorporated by
reference to Exhibit 10(j) of the Primeco Registration Statement.)

10.21 Indemnity Agreement, dated as of January 30, 1995 between Primeco and Kevin L. Loughlin. (Incorporated
by reference to Exhibit 10(o) of the Primeco Registration Statement.)

10.22 Settlement Agreement and Release, dated as of February 26, 1996, by and among Michael Murnin, Randal
Shields, Lloyd Glick, Randolph Goss, Thomas Darnell, Chris Fix, Carlos Goff, Cathy Albritton, Vibroplant
U.S. Inc, and Vibroplant plc. (Incorporated by reference to Exhibit 10.20 of the 1995 10-K).

10.23 Stock Purchase Agreement, dated as of January 9, 1996, and as amended and supplemented by the Closing
Supplement to Stock Purchase Agreement dated as of February 26, 1996, by and among Vibroplant plc,
Vibroplant Investments, Ltd. and Primeco Inc. (Incorporated by reference to Exhibits 2.1 and 2.2 of
Primeco's Current Report on Form 8-K, filed with the SEC on March 12, 1996).

10.24 Form of Mortgage from Primeco Inc. to the CIT Group/Business Credit, Inc. and schedule of substantially
identical mortgages pursuant to Rule 12b-31 of the Exchange Act. (Incorporated by reference to Exhibit
10.23 of the Primeco 10-K.)

10.25 Stock Purchase Agreement, dated October 2, 1994, as amended by Amendment No. 1, dated as of November 28,
1994, between Prime Acquisition Corp. and American Perco, Inc. (Incorporated by reference to Exhibits
10(a) and 10(b) of the Primeco Registration Statement.)

10.26 Asset Purchase and Sale Agreement, dated as of May 13, 1996, as amended as of July 29, 1996, among
Primeco, Alpine Equipment Rentals & Supply Company, Inc., Gary R. Eide, Dale V. Houg, Jerome G.
Schneider and Edward M. Zawislak (incorporated by reference to Exhibits 2.1 and 2.2 of Primeco's
Quarterly Report on Form 10-Q for the quarter ended June 30, 1996).

10.27 Holdings Guarantee, dated as of December 1, 1994, made by the Company in favor of the CIT Group/Business
Credit, Inc.**

10.28 Holdings Pledge Agreement, dated as of December 1, 1994, made by the Company in favor of the CIT
Group/Business Credit, Inc.**

22.1 Subsidiaries of the Company

23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1)

23.2 Consent of Coopers & Lybrand L.L.P.

23.3 Consent of KPMG Peat Marwick LLP

23.4 Consent of KPMG Peat Marwick LLP

24.1 Power of Attorney (included on signature page of this Registration Statement).**
</TABLE>

II-3

<PAGE>

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

* To be filed by amendment.

** Previously Filed.

(B) FINANCIAL STATEMENTS SCHEDULES:

1. FINANCIAL STATEMENTS INCLUDED: SEE INDEX TO FINANCIAL STATEMENTS INCLUDED
ON PAGE F-1.

All schedules for which provision is made in the applicable accounting
regulations of the Securities and Exchange Commission are omitted either because
they are not required or because the required information is included in the
financial statements and notes thereto included herein. See "Index to Financial
Statements" in the Consolidated Financial Statements.

ITEM 17. UNDERTAKINGS.

1. Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers or controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

2. The undersigned registrant hereby undertakes that:

(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule430A and contained in a
form of prospectus filed by the registrant pursuant to Rule424(b)(1) or (4)
or 497(h) under the Securities Act shall be deemed to be a part of this
registration statement as of the time it was declared effective.

(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

(3) The Company will provide to the underwriters at the closing
specified in the underwriting agreements, certificates in such denominations
and registered in such names as required by the underwriters to permit
prompt delivery to each purchaser.

II-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Houston, State of Texas,
on October 9, 1996.

PRIME SERVICE, INC.

By: _______/S/ THOMAS E. BENNETT______

NAME: ________THOMAS E. BENNETT_______

TITLE: __ PRESIDENT, CHIEF EXECUTIVE
OFFICER AND DIRECTOR________

Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the capacities and on the
dates indicated.

SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------

/s/ THOMAS E. BENNETT
- ------------------------------ President, Chief Executive October 9, 1996
Thomas E. Bennett Officer and Director

/s/ BRIAN FONTANA Executive Vice President
- ------------------------------ and Chief Financial October 9, 1996
Brian Fontana Officer

/s/ JOHN D. LATIMER Controller, Assistant
- ------------------------------ Treasurer and Assistant October 9, 1996
John D. Latimer Secretary

*
- ------------------------------ Director October 9, 1996
Jon P. Hedley

II-5
<PAGE>

SIGNATURE CAPACITY DATE
- ------------------------------ -------------------------- -------------------

*
- ------------------------------ Director October 9, 1996
Christopher J. O'Brien

*
- ------------------------------ Director October 9, 1996
Charles J. Philippin

*
- ------------------------------ Director October 9, 1996
Christopher J. Stadler

*By: /s/ BRIAN FONTANA
-------------------------
Brian Fontana October 9, 1996
ATTORNEY IN FACT

II-6
<PAGE>
INDEX TO EXHIBITS

2.1 Form of Underwriting Agreement*

2.2 Form of Subscription Agreement*

3.1 Amended and Restated Certificate of Incorporation of the Company**

3.2 Amended and Restated Certificate of Designation of the Company**

3.3 Amendment to the Amended and Restated Certificate of Incorporation of the Company**

3.4 Amended and Restated Bylaws of the Company**

3.5 Amendment to the Amended and Restated Certificate of Incorporation of the Company.

3.6 Form of Amended and Restated Certificate of Incorporation of the Company to be filed immediately
following the closing of the Offering.

4.1 Form of Common Stock Certificate

4.3 See Exhibits 3.1 and 3.2 as to rights of holders of the Company's Class A Common Stock, Class C
Common Stock and Class D Common Stock prior to the Offering.

4.4 Indenture between Prime Holding, Inc. and AIBC Services N.V., as trustee, dated as of November 29,
1994.

5.1 Opinion of Gibson, Dunn & Crutcher LLP

10.1 Agreement for Management Advisory, Strategic Planning and Consulting Services, dated as of December
1, 1994, between Investcorp International Inc. and Prime Acquisition Corp. (Incorporated by reference
to Exhibit 10(c) of the Primeco Registration Statement.)

10.2 Agreement for Management Advisory, Strategic Planning and Consulting Services dated as of February
26, 1996 between Investcorp International Inc. and Primeco. (Incorporated by reference to Exhibit
10.2 of Primeco's Annual Report on Form 10-K for the year ended December 31, 1995.)

10.4 Credit Agreement dated as of December 1, 1994, among Prime Acquisition Corp., the lenders party
thereto, Chemical bank as Administrative Agent, and The CIT Group Business Credit, Inc., as
collateral agent. (Incorporated by reference to Exhibit 10(d) of the Primeco Registration Statement).

10.5 Amendment No. 1 to Credit Agreement, dated as of November 1, 1995, among Primeco, the lenders party
thereto, Chemical Bank as Administrative Agent, and The CIT Group/ Business Credit, Inc. as
collateral agent. (Incorporated by reference to Exhibit 10.5 of the Primeco 10-K.)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
SEQUENTIALLY
NUMBER
NUMBERED
PAGE DESCRIPTION OF EXHIBITS
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.6 Amendment No. 2 to Credit Agreement, dated as of January 10, 1996, among Primeco Inc., the lenders
party thereto, Chemical Bank as Administrative Agent, and The CIT Group/Business Credit, Inc. as
collateral agent. (Incorporated by reference to Exhibit 10.6 of the Primeco 10-K.)

10.8 Interest Rate and Currency Exchange Agreement, dated as of March 7, 1990 between Primeco and Salomon
Brothers Holding Company, Inc., as modified by the Schedule to the Interest Rate and Currency
Exchange Agreement dated as of March 7, 1990, as supplemented by the Letter Agreement dated March 7,
1990 confirming the swap transaction and as amended by the Letter Agreement dated as of December 1,
1994. (Incorporated by reference to Exhibit 10(g) of the Primeco Registration Statement).

10.9 Letter Agreement dated as of December 1, 1994 between Primeco and Chemical Bank confirming a swap
transaction. (Incorporated by reference to Exhibit 10(h) of the Primeco Registration Statement).

10.10 Employment Agreement, dated December 2, 1994 between Primeco and Thomas E. Bennett (Incorporated by
reference to Exhibit 10.10 of the Primeco 10-K.)

10.11 Employment Agreement, dated April 1, 1996 between Primeco and Brian Fontana (Incorporated by
reference to Exhibit 10.1 of Primeco's Quarterly Report on Form 10-Q for the quarter ended June 30,
1996).

10.12 Employment Agreement, dated December 2, 1994, between Primeco and Kevin L. Loughlin (Incorporated by
reference to Exhibit 10.11 of the Primeco 10-K.)

10.13 Employment Agreement, dated December 2, 1994 between Primeco and Peter A. Post (Incorporated by
reference to Exhibit 10.12 of the Primeco 10-K.)

10.14 Employment Agreement, dated December 2, 1994 between Primeco and Gerald E. Lane (Incorporated by
reference to Exhibit 10.13 of the Primeco 10-K.)

10.15 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Charles J. Phillipin.
(Incorporated by reference to Exhibit 10(k) of the Primeco Registration Statement.)

10.16 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Christopher J. O'Brien.
(Incorporated by reference to Exhibit 10(l) of the Primeco Registration Statement.)

10.17 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Thomas E. Bennett.
(Incorporated by reference to Exhibit 10(m) of the Primeco Registration Statement.)

10.19 Indemnity Agreement, dated as of December 2, 1994 between Primeco and E. Garrett Bewkes, III.
(Incorporated by reference to Exhibit 10(I) of the Primeco Registration Statement.)
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
SEQUENTIALLY
NUMBER
NUMBERED
PAGE DESCRIPTION OF EXHIBITS
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.20 Indemnity Agreement, dated as of December 2, 1994 between Primeco and Robert V. Glaser. (Incorporated
by reference to Exhibit 10(j) of the Primeco Registration Statement.)

10.21 Indemnity Agreement, dated as of January 30, 1995 between Primeco and Kevin L. Loughlin.
(Incorporated by reference to Exhibit 10(o) of the Primeco Registration Statement.)

10.22 Settlement Agreement and Release, dated as of February 26, 1996, by and among Michael Murnin, Randal
Shields, Lloyd Glick, Randolph Goss, Thomas Darnell, Chris Fix, Carlos Goff, Cathy Albritton,
Vibroplant U.S. Inc, and Vibroplant plc. (Incorporated by reference to Exhibit 10.20 of the 1995
10-K).

10.24 Form of Mortgage from Primeco Inc. to the CIT Group/Business Credit, Inc. and schedule of
substantially identical mortgages pursuant to Rule 12b-31 of the Exchange Act. (Incorporated by
reference to Exhibit 10.23 of the Primeco 10-K.)

10.25 Stock Purchase Agreement, dated October 2, 1994, as amended by Amendment No. 1, dated as of November
28, 1994, between Prime Acquisition Corp. and American Perco, Inc. (Incorporated by reference to
Exhibits 10(a) and 10(b) of the Primeco Registration Statement.)

10.27 Holdings Guarantee, dated as of December 1, 1994, made by the Company in favor of the CIT
Group/Business Credit, Inc.**

10.28 Holdings Pledge Agreement, dated as of December 1, 1994, made by the Company in favor of the CIT
Group/Business Credit, Inc.**

22.1 Subsidiaries of the Company

23.1 Consent of Gibson, Dunn & Crutcher LLP (included in Exhibit 5.1)

23.2 Consent of Coopers & Lybrand L.L.P.

23.3 Consent of KPMG Peat Marwick LLP

23.4 Consent of KPMG Peat Marwick LLP

24.1 Power of Attorney (included on signature page of this Registration Statement).**

27.1 Financial Data Schedule**
</TABLE>

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

* To be filed by amendment.

** Previously filed.

<PAGE>

CERTIFICATE OF AMENDMENT
OF
RESTATED CERTIFICATE
OF
INCORPORATION
OF
PRIME SERVICE, INC.

PRIME SERVICE, INC., a Delaware corporation (the "Corporation"), DOES
HEREBY CERTIFY:

FIRST: That the Board of Directors of the Corporation, by unanimous
written consent to action in lieu of a meeting, adopted resolutions proposing
and declaring advisable an amendment to the Restated Certificate of
Incorporation of the Corporation filed by the Corporation on November 23, 1994
(as amended, the "Restated Certificate of Incorporation"), as amended by the
Certificate of Designation filed by the Corporation on November 30, 1994 (as
amended, the "Certificate of Designation"), including certain revisions to the
Certificate of Designation of the Corporation.

SECOND: That the resolutions so adopted by the Board of Directors provided
for amending the Restated Certificate of Incorporation and the Certificate of
Designation of the Corporation as follows:

(a) Article FOURTH of the Restated Certificate of Incorporation shall be
deleted and replaced in its entirety with the following:

"FOURTH: The total number of shares of stock which the Corporation
shall have authority to issue is 129,312,250. 18,603,750 of said shares
shall be designated as shares of Class A Stock, all of which shall be of
the same series with $.01 par value per share. 10,527,000 of said shares
shall be designated as Class C Stock, all of which shall be of the same
series with $.01 par value per share. 181,500 of said shares shall be
designated as Class D Stock, all of which shall be of the same series with
$.01 par value per share. 100,000,000 of said shares shall be designated
as Common Stock, all of which shall be of the same series with $.01 par
value per share. The shares of each class of stock of the Corporation
shall be issued as a class, without series. Each such class may have such
voting powers, full or limited, including the right to have more or less
than one vote per share, or no voting powers, and such designations,
preferences, dividend rights and other special rights, qualifications,
limitations and restrictions as shall be stated and expressed in a
resolution or resolutions of the Board of Directors and filed with the
Secretary of State of the State of Delaware in accordance with the Delaware
General Corporation Law."

<PAGE>

(b) Section 2 of the Certificate of Designation shall be deleted and
replaced in its entirety with the following:

"2. DESIGNATION AND NUMBER. As set forth in the Certificate of
Incorporation, the first class of stock of the Corporation shall have a par
value of $0.01 per share and shall be designated as "Class A Stock" and the
number of shares constituting such class shall be 18,603,750. The second
class of stock of the Corporation shall have a par value of $0.01 per share
and shall be designated as "Class C Stock" and the number of shares
constituting such class shall be 10,527,000. The third class of stock of
the Corporation shall have a par value of $0.01 per share and shall be
designated as "Class D Stock" and the number of shares constituting such
class shall be 181,500. The fourth class of stock of the Corporation shall
have a par value of $0.01 per share and shall be designated as "Common
Stock" and the number of shares constituting such class shall be
100,000,000. The Class A Stock, Class C Stock, Class D Stock and Common
Stock are sometimes referred to collectively herein as the "Stock." The
Corporation may, by an amendment to the Certificate of Incorporation duly
adopted, increase or decrease, at any time and from time to time (but not
below the number of shares of Class A Stock, Class C Stock, Class D Stock
or Common Stock then outstanding), the number of authorized shares of
Class A Stock, Class C Stock, Class D Stock or Common Stock, as the case
may be. Shares of Stock redeemed, purchased or otherwise acquired by the
Corporation pursuant to the terms hereof shall be retired and shall revert
to authorized but unissued Class A Stock, Class C Stock, Class D Stock or
Common Stock, as the case may be.

THIRD: That in lieu of a meeting and vote of stockholders, the Class D
stockholders of the Corporation, being the only stockholders of the Corporation
entitled to vote thereon, have given their unanimous written consent to the
amendment in accordance with the provisions of Section 228 of the General
Corporation Law of the State of Delaware.

<PAGE>

IN WITNESS WHEREOF, the undersigned have executed this Amendment to the
Restated Certificate of Incorporation as of this 8th day of October, 1996.

PRIME SERVICE, INC.

By: /s/ Thomas E. Bennett
----------------------------------
Name: Thomas E. Bennett
Title: Chief Executive Officer

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

<PAGE>

EXHIBIT 3.6

AMENDED
AND
RESTATED
CERTIFICATE OF INCORPORATION
OF
PRIME SERVICE, INC.

The undersigned, for the purpose of amending and restating the Certificate
of Incorporation of Prime Service, Inc., a Delaware corporation (the
"Corporation"), does hereby certify that:

(1) The name of the Corporation is Prime Service, Inc.

(2) The Corporation was originally incorporated under the name Prime
Holding, Inc. The date of filing of its original Certificate of Incorporation
with the Secretary of State of Delaware was November 17, 1994.

(3) This Restated Certificate of Incorporation was duly adopted as of
October __, 1996, pursuant to Section 242 and Section 245 of the Delaware
General Corporation Law.

(4) Written consent and notice of the actions taken has been given in
accordance with Section 228 of the Delaware General Corporation Law.

(5) The Certificate of Incorporation of Prime Service, Inc. is hereby
amended and restated in its entirety as follows:

FIRST: The name of the Corporation (hereinafter called the "Corporation")
is Prime Service, Inc.

SECOND: The address, including street, number, city, and county, of the
registered office of the Corporation in the State of Delaware is 1013 Centre
Road, City of Wilmington 19801, County of New Castle, and the name of the
registered agent of the Corporation in the State of Delaware at such address is
The Corporation Service Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the Delaware General
Corporation Law.

FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 110,000,000 consisting of:

(a) 100,000,000 shares of common stock, par value $.01 per share ("Common
Stock"); and

<PAGE>

(b) 10,000,000 shares of preferred stock, par value $.01 per share
("Preferred Stock").

The shares of Preferred Stock may be issued from time to time in one or more
series. The board of directors is hereby vested with the authority to fix by
resolution or resolutions the designations and the powers, preferences and
relative, participating, optional or other special rights, and qualifications,
limitations or restrictions thereof, including without limitation the dividend
rate, conversion or exchange rights, redemption price and liquidation
preferences, of any series of Preferred Stock, and to fix the number of shares
constituting any such series, and to increase or decrease the number of shares
of any such series (but not below the number of shares thereof outstanding). In
case the number of shares of any such series shall be so decreased, the shares
constituting such decrease shall resume the status which they had prior to the
adoption of the resolution or resolutions originally fixing the number of shares
of such series.

FIFTH: The name and the mailing address of the incorporator is as follows:

NAME MAILING ADDRESS
---- ---------------

Jacqueline Casper Corporation Service Company
1013 Centre Road
Wilmington, DE 19801

SIXTH: The Corporation is to have perpetual existence.

SEVENTH: Whenever a compromise or arrangement is proposed between this
Corporation and its creditors or any class of them and/or between this
Corporation and its stockholders or any class of them, any court of equitable
jurisdiction within the State of Delaware may, on the application in a summary
way of this Corporation or of any creditor or stockholder thereof or on the
application of any receiver or receivers appointed for this Corporation under
Section 291 of Title 8 of the Delaware Code or on the application of trustees in
dissolution or of any receiver or receivers appointed for this Corporation under
Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or
class of creditors, and/or of the stockholders or class of stockholders of this
Corporation, as the case may be, to be summoned in such manner as the said court
directs. If a majority in number representing three-fourths in value of the
creditors or class of creditors, and/or of the stockholders or class of
stockholders of this Corporation, as the case may be, agree to any compromise or
arrangement, the said compromise or arrangement and to any reorganization of
this Corporation as a consequence of such compromise or arrangement, the said
compromise or arrangement and the said reorganization shall, if sanctioned by
the court to which the said application has been made, be binding on all the
creditors or class of creditors, and/or on all the stockholders or class of
stockholders, of this Corporation, as the case may be, and also on this
Corporation.

EIGHTH: For the management of the business and for the conduct of the
affairs of the Corporation, and in further definition, limitation, and
regulation of the powers of the Corporation and of its directors and of its
stockholders or any class thereof, as the case may be, it is further provided:

<PAGE>

1. The management of the business and the conduct of the affairs of
the Corporation shall be vested in its Board of Directors. The number of
directors which shall constitute the whole Board of Directors shall be
fixed by, or in the manner provided in, the Bylaws. The phrase "whole
Board" and the phrase "total number of the directors" shall be deemed to
have the same meaning, to wit, the total number of directors which the
Corporation would have if there were no vacancies.

2. After the original or other Bylaws of the Corporation have been
adopted, amended, or repealed, as the case may be, in accordance with the
provisions of Section 109 of the Delaware General Corporation Law, and,
after the Corporation has received any payment of any of its stock, the
power to adopt, amend, or repeal the Bylaws of the Corporation may be
exercised by the Board of Directors of the Corporation.

3. No outstanding shares of any class of stock which is denied
voting power under the provisions of the Certificate of Incorporation or a
Certificate of Designation shall entitle the holder thereof to the right to
vote at any meeting of stockholders except as may be specified in the
Certificate of Incorporation or a Certificate of Designation or as the
provisions of paragraph (2) of subsection (b) of Section 242 of the
Delaware General Corporation Law shall otherwise require, provided, that
such paragraph of the Delaware General Corporation Law shall not entitle
the holder of a share of any class of stock to vote on the increase of the
number of authorized shares of such class of stock or the decrease of the
number of authorized but not outstanding shares of such class of stock, if
such class of stock is not a class of stock that has general voting powers
including, without limitation, the power to elect directors.

NINTH: The fullest extent permitted by the Delaware General Corporation Law
as the same may be amended or supplemented, a director of the Corporation shall
not be liable to the Corporation or its stockholders for monetary damages for
breach of fiduciary duty as a director. If the Delaware General Corporation Law
is amended after the date of the filing of this Certificate of Incorporation to
authorize corporate action further eliminating or limiting the personal
liability of directors, then the liability of a director of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Delaware
General Corporation Law, as so amended from time to time. No repeal or
modification of this Article NINTH by the stockholders shall adversely affect
any right or protection of a director of the Corporation existing by virtue of
this Article NINTH at the time of such repeal or modification.

TENTH: The Corporation shall, to the fullest extent permitted by the
Delaware General Corporation Law, as the same may be amended or supplemented,
indemnify any and all persons whom it shall have power to indemnify under said
law from and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said law, and the indemnification provided for
herein shall not be deemed exclusive of any other right to which those
indemnified may be entitled under any Bylaw, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official capacity
and as to action in other capacity while holding such office, and shall continue
as to a person who has ceased to be a director, officer, employee, or agent and
shall inure to the benefit of the heirs, executors, and administrators of such a
person. If the Delaware General Corporation Law is amended after the date of the
filing of

<PAGE>

this Certificate of Incorporation to authorize corporate action providing for
additional indemnification, then the Corporation shall provide for such
indemnification to the fullest extent permitted by the Delaware General
Corporation Law, as so amended from time to time. No repeal or modification of
this Article TENTH by the stockholders shall adversely affect any right of any
person otherwise entitled to indemnification by virtue of this Article TENTH at
the time of such repeal or modification.

ELEVENTH: From time to time any of the provisions of this Certificate of
Incorporation may be amended, altered, or repealed, and other provisions
authorized by the laws of the State of Delaware at the time in force may be
added or inserted in the manner and at the time prescribed by said laws, and all
rights at any time conferred upon the stockholders of the Corporation by this
Certificate of Incorporation are granted subject to the provisions of this
Article ELEVENTH.

IN WITNESS WHEREOF, the undersigned has executed this Restated Certificate
of Incorporation under seal and on behalf of Prime Service, Inc. and has
attested such execution and does verify and affirm, under penalties of perjury,
that this Restated Certificate of Incorporation is the act and deed of the
Corporation and that the facts stated herein are true as of this __ day of
October, 1996.

PRIME SERVICE, INC.

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

[SEAL]

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

<PAGE>

Temporary Certificate - Exchangeable for Definitive Engraved Certificate - When
Ready for Delivery.

[LOGO]

PRIME SERVICE, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE

COMMON STOCK COMMON STOCK
PAR VALUE $.01 PAR VALUE $.01

SEE REVERSE FOR CERTAIN DEFINITIONS
THIS CERTIFICATE IS TRANSFERABLE -----------------
IN NEW YORK, NEW YORK CUSIP 000000 00 0
-----------------

- --------------------------------------------------------------------------------
This certifies that

is the owner of
- --------------------------------------------------------------------------------
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK OF

----------------PRIME SERVICE, INC.-----------------
Transferable on the books of the Corporation by the holder hereof, in person or
by duly authorized attorney, upon surrender of this Certificate properly
endorsed. This Certificate is not valid until countersigned by the Transfer
Agent and registered by the Registrar.
Witness the facsimile seal of said Corporation and the facsimile signatures
of its duly authorized officers.

Countersigned and Registered:
CHASE MELLON SHAREHOLDER SERVICES
Transfer Agent and Registrar

By:
AUTHORIZED SIGNATURE

DATED:

SECRETARY PRESIDENT AND CHAIRMAN OF THE BOARD

<PAGE>

The following abbreviations, when used in the inscription on the face of
this Certificate, shall be construed as though they were written out in full
according to applicable laws and regulations:

TEN COM - as tenants in common
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and not as tenants in
common

UNIF GIFT MIN ACT - _______ Custodian ________ under Uniform Gifts
(Cust) Minor
to Minors Act ___________________
(State)

Additional abbreviations may also be used though not in the above list.

NOTICE: THE SIGNATURE OF THIS ASSIGNMENT MUST CORRESPOND WITH THE NAME(S) AS
WRITTEN UPON THE FACE OF THE CERTIFICATE IN EVERY PARTICULAR, WITHOUT ALTERATION
OR ENLARGEMENT OR ANY CHANGE WHATEVER.

FOR VALUE RECEIVED HEREBY SELL, ASSIGN AND TRANSFER UNTO
PLEASE INSERT SOCIAL SECURITY OR OTHER
INDENTIFYING NUMBER OF ASSIGNEE

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

________________________________________________________________________________

________________________________________________________________________________
(NAME AND ADDRESS OF TRANSFEREE SHOULD BE PRINTED OR TYPEWRITTEN)

________________________________________________________________________________

_________________________________________________________________________ SHARES
OF THE COMMON STOCK REPRESENTED BY THE WRITTEN CERTIFICATE AND DO HEREBY
IRREVOCABLY CONSTITUTE AND APPOINT

____________________________________________________________________ ATTORNEY
TO TRANSFER THE SAID STOCK ON THE BOOKS OF THE WITHIN-NAMED CORPORATION WITH
FULL POWER OF SUBSTITUTION IN THE PROMISES.

DATED: _______________________________
________________________________________
SIGNATURE

SIGNATURE(S) GUARANTEED

By_____________________________________
THIS SIGNATURE SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(Banks, Stockbrokers, Savings and Loan Associations and Credit Unions) WITH
MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM PURSUANT TO
S.E.C. RULE 17Ad-15.

<PAGE>

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

PRIME HOLDING, INC.

AIBC SERVICES N.V.

TRUSTEE

_________________

INDENTURE

DATED AS OF NOVEMBER 29, 1994
_________________

$10,000,000

14% SENIOR SUBORDINATED NOTES DUE MARCH 31, 2006

- --------------------------------------------------------------------------------
<PAGE>

TABLE OF CONTENTS

RECITALS OF THE COMPANY. . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONE DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION. . 1
SECTION 1.01. Definitions. . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Compliance Certificate and Opinions. . . . . . . . 9
SECTION 1.03. Form of Documents Delivered to Trustee.. . . . . . 9
SECTION 1.04. Acts of Holders. . . . . . . . . . . . . . . . . . 10
SECTION 1.05. Notices, Etc., to Trustee and Company. . . . . . . 10
SECTION 1.06. Notice to Holders; Waiver. . . . . . . . . . . . . 11
SECTION 1.07. Effect of Headings and Table of Contents.. . . . . 11
SECTION 1.08. Successors and Assigns.. . . . . . . . . . . . . . 11
SECTION 1.09. Separability Clause. . . . . . . . . . . . . . . . 12
SECTION 1.10. Benefits of Indenture. . . . . . . . . . . . . . . 12
SECTION 1.11. GOVERNING LAW; JURISDICTION. . . . . . . . . . . . 12
SECTION 1.12. Execution in Counterparts. . . . . . . . . . . . . 12
SECTION 1.13. Legal Holidays.. . . . . . . . . . . . . . . . . . 12
ARTICLE TWO THE NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.01. Forms Generally. . . . . . . . . . . . . . . . . . 13
SECTION 2.02. Title and Terms. . . . . . . . . . . . . . . . . . 13
SECTION 2.03. Date and Denomination of Notes; Interest; Place of
Payment.. . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.04. Execution, Authentication and Delivery.. . . . . . 14
SECTION 2.05. Temporary Notes. . . . . . . . . . . . . . . . . . 15
SECTION 2.06. Registration, Registration of Transfer and
Exchange. . . . . . . . . . . . . . . . . . . . . 15

i
PRIME HOLDING INDENTURE

<PAGE>

SECTION 2.07. Mutilated, Destroyed, Lost or Stolen Notes.. . . . 16
SECTION 2.08. Payment of Interest; Interest Rights Preserved.. . 17
SECTION 2.09. Persons Deemed Owners. . . . . . . . . . . . . . . 18
SECTION 2.10. Cancellation.. . . . . . . . . . . . . . . . . . . 18
ARTICLE THREE SATISFACTION AND DISCHARGE . . . . . . . . . . . . . . . 18
SECTION 3.01. Satisfaction and Discharge of Indenture. . . . . . 18
SECTION 3.02. Application of Trust Funds.. . . . . . . . . . . . 20
ARTICLE FOUR REMEDIES. . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.01. Events of Default. . . . . . . . . . . . . . . . . 20
SECTION 4.02. Acceleration of Maturity; Rescission and
Annulment.. . . . . . . . . . . . . . . . . . . . 22
SECTION 4.03. Collection of Indebtedness and Suits for Enforcement
by the Trustee . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 4.04. Trustee May File Proofs of Claim.. . . . . . . . . 23
SECTION 4.05. Trustee May Enforce Claims Without Possession of
Notes.. . . . . . . . . . . . . . . . . . . . . . 24
SECTION 4.06. Application of Funds Collected.. . . . . . . . . . 24
SECTION 4.07. Limitation on Suits. . . . . . . . . . . . . . . . 25
SECTION 4.08. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . . 25
SECTION 4.09. Restoration of Rights and Remedies.. . . . . . . . 26
SECTION 4.10. Rights and Remedies Cumulative.. . . . . . . . . . 26
SECTION 4.11. Delay or Omission Not Waiver.. . . . . . . . . . . 26
SECTION 4.12. Control by Holders.. . . . . . . . . . . . . . . . 26
SECTION 4.13. Waiver of Past Defaults. . . . . . . . . . . . . . 26
SECTION 4.14. Undertaking for Costs. . . . . . . . . . . . . . . 27
SECTION 4.15. Waiver of Stay or Extension Laws.. . . . . . . . . 27

ii
PRIME HOLDINGS INDENTURE

<PAGE>

ARTICLE FIVE THE TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 5.01. Certain Duties and Responsibilities. . . . . . . . 28
SECTION 5.02. Notice of Defaults.. . . . . . . . . . . . . . . . 29
SECTION 5.03. Certain Rights of Trustee. . . . . . . . . . . . . 29
SECTION 5.04. Not Responsible for Recitals or Issuance of Notes. 30
SECTION 5.05. May Hold Notes; Paying Agent; Other Individual
Rights of Trustee. . . . . . . . . . . . . . . . . . . . . . 30
SECTION 5.06. Funds Held in Trust. . . . . . . . . . . . . . . . 30
SECTION 5.07. Compensation and Reimbursement.. . . . . . . . . . 30
SECTION 5.08. Corporate Trustee Required; Eligibility. . . . . . 31
SECTION 5.09. Resignation and Removal; Appointment of a
Successor. . . . . . . . . . . . . . . . . . . . . 31
SECTION 5.10. Acceptance of Appointment by Successor Trustee.. . 32
SECTION 5.11. Merger, Conversion, Consolidation or Succession to
Business . . . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 5.12. Appointment of Authenticating Agent. . . . . . . . 33
ARTICLE SIX HOLDERS' LISTS AND REPORTS BY THE COMPANY. . . . . . . . . 34
SECTION 6.01. Company to Furnish Trustee Names and Addresses of
Holders. . . . . . . . . . . . . . . . . . . . . . . . . . . 34
SECTION 6.02. Preservation of Information. . . . . . . . . . . . 35
SECTION 6.03. Reports by the Company.. . . . . . . . . . . . . . 35
ARTICLE SEVEN CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE . . 35
SECTION 7.01. Company May Not Consolidate, Etc., on
Certain Terms. . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 7.02. Successor Corporation Substituted. . . . . . . . . 36
ARTICLE EIGHT SUPPLEMENTAL INDENTURES. . . . . . . . . . . . . . . . . 36
SECTION 8.01. Supplemental Indentures Without Consent of Holders. 36

iii
PRIME HOLDINGS INDENTURE

<PAGE>

SECTION 8.02. Supplemental Indentures With Consent of Holders. . 37
SECTION 8.03. Execution of Supplemental Indentures.. . . . . . . 38
SECTION 8.04. Effect of Supplemental Indentures. . . . . . . . . 38
SECTION 8.05. Reference in Notes to Supplemental Indentures. . . 38
ARTICLE NINE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.01. Payment of Principal, Premium, if any, and
Interest . . . . . . . . . . . . . . . . . . . . . 38
SECTION 9.02. Maintenance of Office or Agency. . . . . . . . . . 38
SECTION 9.03. Funds for Note Payments to Be Held in Trust. . . . 39
SECTION 9.04. Corporate Existence. . . . . . . . . . . . . . . . 40
SECTION 9.05. Maintenance of Properties. . . . . . . . . . . . . 40
SECTION 9.06. Payment of Taxes and Other Claims. . . . . . . . . 41
SECTION 9.07. Provision of Reports.. . . . . . . . . . . . . . . 41
SECTION 9.08. Waiver of Usury Defense. . . . . . . . . . . . . . 41
SECTION 9.09. Waiver of Certain Covenants. . . . . . . . . . . . 41
SECTION 9.10. Statement by Officers as to Default. . . . . . . . 42
SECTION 9.11. Limitation on Indebtedness.. . . . . . . . . . . . 42
SECTION 9.12. Limitation on the Payment of Dividends and
Purchase of Stock. . . . . . . . . . . . . . . . . . . . . . 43
SECTION 9.13. Change of Control. . . . . . . . . . . . . . . . . 43
ARTICLE TEN REDEMPTION OF NOTES. . . . . . . . . . . . . . . . . . . . 45
SECTION 10.01. Applicability of Article. . . . . . . . . . . . . 45
SECTION 10.02. Optional Redemption.. . . . . . . . . . . . . . . 45
SECTION 10.03. Election to Redeem. . . . . . . . . . . . . . . . 45
SECTION 10.04. Selection by Company of Notes to be Redeemed. . . 45
SECTION 10.05. Notice of Redemption. . . . . . . . . . . . . . . 46

iv
PRIME HOLDINGS INDENTURE

<PAGE>

SECTION 10.06. Deposit of Redemption Price.. . . . . . . . . . . 46
SECTION 10.07. Notes Payable on Redemption Date. . . . . . . . . 47
SECTION 10.08. Notes Redeemed in Part. . . . . . . . . . . . . . 47
ARTICLE ELEVEN SUBORDINATION . . . . . . . . . . . . . . . . . . . . . 47
SECTION 11.01. Agreement of Subordination. . . . . . . . . . . . 47
SECTION 11.02. Payments to Holders of Notes. . . . . . . . . . . 48
SECTION 11.03. Subrogation of Notes. . . . . . . . . . . . . . . 50
SECTION 11.04. Authorization by Holders of Notes.. . . . . . . . 51
SECTION 11.05. Notice to Trustee.. . . . . . . . . . . . . . . . 51
SECTION 11.06. Trustee's Relation to Senior Indebtedness.. . . . 52
SECTION 11.07. No Impairment of Subordination. . . . . . . . . . 52
SECTION 11.08. Article Eleven Not to Prevent Events of
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 11.09. Continuing Effect.. . . . . . . . . . . . . . . . 52
SECTION 11.10. Individual Rights of Senior Lenders.. . . . . . . 53
SECTION 11.11. Article Applicable to Paying Agents and
Depositaries.. . . . . . . . . . . . . . . . . . 53

v
PRIME HOLDINGS INDENTURE
<PAGE>

This INDENTURE is dated as of November 29, 1994 from PRIME HOLDING,
INC., a Delaware corporation (the "Company"), to AIBC SERVICES N.V., a
Netherlands Antilles corporation (the "Trustee").

RECITALS OF THE COMPANY

For its lawful corporate purposes, the Company has duly authorized
the issue of its 14% Senior Subordinated Notes due March 31, 2006 (the "Notes")
of substantially the tenor and amount hereinafter set forth, and to provide
therefor the Company has duly authorized the execution and delivery of this
Indenture.

All acts and things necessary to make the Notes, when executed by the
Company and authenticated and delivered by the Trustee, as provided in this
Indenture, the valid, binding and legal obligations of the Company, and to
constitute this Indenture a valid agreement according to its terms, have been
done and performed, and the execution of this Indenture and the issue hereunder
of the Notes in all respects have been duly authorized.

NOW, THEREFORE, THIS INDENTURE WITNESSETH:

In consideration of the premises and the purchase and acceptance of
the Notes by the Holders thereof, the Company covenants and agrees with the
Trustee for the equal and proportionate benefit of the Holders from time to time
of the Notes as follows:

ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.01. DEFINITIONS.

The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes of
this Indenture and of any indenture supplemental hereto shall have the
respective meanings specified in this Section 1.01. The words "herein,"
"hereof" and "hereunder" and words of similar import refer to this Indenture as
a whole and not to any particular Article, Section or other subdivision. The
terms defined in this Article One include the plural as well as the singular.

ACT, when used with respect to any Holder, has the meaning specified
in Section 1.04.

AFFILIATE of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified

<PAGE>

Person. For the purposes of this definition, "control", when used with respect
to any specified Person, means the power to direct the management and policies
of such Person, directly or indirectly, whether through the ownership of voting
securities, by contract, proxy or otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.

AUTHENTICATING AGENT means any Person authorized by the Trustee to
act on behalf of the Trustee to authenticate Notes.

BANK AGENT means (a) Chemical Bank as long as Chemical Bank is the
Administrative Agent under the Senior Credit Facility and (b) thereafter, any
other administrative agent under the Senior Credit Facility.

BANKRUPTCY LAW means Title 11 of the U.S. Code or any similar
Federal or state law for the relief of debtors.

BUSINESS DAY means any day on which banking institutions in both
Curacao, Netherlands Antilles, and New York, New York, are open for business.

BRIDGE LOAN AGREEMENT means the Bridge Loan Agreement dated as of
December , 1994 among Operating Company, Chemical Bank, as administrative
agent, and the lenders from time to time party thereto, as the same may be
amended, supplemented or otherwise modified from time to time in accordance with
its terms.

BRIDGE SUBORDINATED DEBT means the subordinated bridge loans or
exchange notes of Operating Company outstanding from time to time pursuant to
the Bridge Loan Agreement.

CHANGE OF CONTROL means, (a) at any time prior to an initial Public
Offering by the Company, Investcorp together with Investcorp's Affiliates ceases
to own, directly or indirectly, in the aggregate, at least 51% of the issued and
outstanding voting capital stock of the Company (any such indirect ownership of
the voting capital stock of the Company to be measured by multiplying
(i) Investcorp's (and Investcorp's Affiliates') aggregate percentage interest in
the voting power of the voting stock of any other Person which holds voting
stock of the Company by (ii) the percentage interest of the voting stock of the
Company held, directly or indirectly, by such other Person), and (b) at any time
after an initial Public Offering by the Company, if any Person (other than
Investcorp, any of Investcorp's Affiliates, any Person that is a member of
senior management of the Company or any entity the majority of the equity
ownership interests of which is owned by Investcorp, any of Investcorp's
Affiliates and members of senior management of the Company or any Person acting
in the capacity of an underwriter), whether singly or in concert with one or
more Persons, directly or indirectly, acquires 35% or more, on a fully diluted
basis, of the outstanding voting stock of the Company (excluding, for purposes
of such determination, the percentage, on a fully diluted basis, of the common
stock of the Company outstanding on the date hereof and owned, directly or
indirectly, by such Person or Persons).

PRIME HOLDINGS INDENTURE

<PAGE>

CHANGE OF CONTROL DATE has the meaning specified in Section 9.13.

CHANGE OF CONTROL OFFER has the meaning specified in Section 9.13.

CHANGE OF CONTROL PAYMENT DATE has the meaning specified in
Section 9.13.

COMMISSION means the Securities and Exchange Commission, as from
time to time constituted, created under the Securities Exchange Act of 1934, as
amended, or, if at any time after the execution of this instrument such
Commission is not existing, the body performing its duties at such time.

COMPANY means Prime Holding, Inc. and any corporation that succeeds
to Prime Holding, Inc. or any successor corporation pursuant to the provisions
of Article Seven, and thereafter "Company" shall mean such successor
corporation.

COMPANY ORDER or COMPANY REQUEST means a written order or request
signed in the name of the Company by its Chairman of the Board, a Vice Chairman,
its President or a Vice President, and by its Treasurer, an Assistant Treasurer,
its Secretary or an Assistant Secretary, and delivered to the Trustee.

CONSOLIDATED EBITDA means, for any period, the consolidated net
income of the Company and its Subsidiaries for such period, plus, without
duplication and to the extent reflected as a charge in the statement of such
consolidated net income for such period, the sum of (a) taxes measured by
income, (b) interest expense, amortization or write-off of debt discount, debt
issuance, warrant and other equity issuance costs and commissions, discounts,
redemption premium and other fees and charges associated with Indebtedness under
the Senior Credit Facility, the Notes, the Bridge Subordinated Debt or any other
Indebtness of the Company or its Subsidiaries permitted hereunder (including the
acquisition or repayment thereof), (c) cost of surety bonds, (d) depreciation
and amortization expense, (e) amortization of inventory write-up under APB 16,
amortization of intangibles (including, but not limited to, goodwill and costs
of interest-rate caps) and organization costs, (f) non-cash amortization of
financing leases, and (g) any other write-downs, write-offs, minority interests
and other non-cash charges in determining such consolidated net income for such
period.

CUSTODIAN means any receiver, trustee, assignee, liquidator,
sequestrator or similar official under any Bankruptcy Law.

DEFAULTED INTEREST has the meaning specified in Section 2.08.

EVENT OF DEFAULT has the meaning specified in Section 4.01.

FISCAL YEAR of the Company means the fiscal year of the Company in
effect at the time of any determination thereof.

GAAP means generally accepted accounting principles in effect in the
United States of America on the date of this Indenture.

PRIME HOLDINGS INDENTURE
<PAGE>

HOLDER means a Person in whose name at the time of any determination
thereof a particular Note is registered on the Note Register.

INDEBTEDNESS means the principal of and premium, if any, and interest
on, any of the following, whether outstanding at the date hereof or hereafter
incurred, created, assumed or guarantied:

(a) all indebtedness of the Company for borrowed money (including
any indebtedness secured by a Lien that is (i) given to secure all or part of
the purchase price of property subject thereto, whether given to the vendor of
such property or to another, or (ii) existing on property at the time of
acquisition thereof);

(b) all indebtedness and liabilities of the Company evidenced by
notes, Notes, bonds or other securities sold by the Company for value;

(c) all liabilities under letters of credit issued for the account
of the Company, including without limitation reimbursement obligations;

(d) all obligations of the Company under capital leases (the
capitalized amount of which is being deemed "principal" for purposes of this
definition);

(e) all indebtedness and liabilities of others of the kinds
described in any of the preceding clauses (a), (b) and (c) and all lease
obligations of others of the kind described in the preceding clause (d) or the
following clause (f) assumed by or guarantied in any manner by the Company or in
effect guarantied by the Company through an agreement to purchase, contingent or
otherwise;

(f) all Interest Swap Obligations in respect of Indebtedness
referred to in clause (a); and

(g) all renewals, extensions and refundings of indebtedness and
liabilities of the kinds described in any of the preceding clauses (a), (b),
(c), (e) and (f) and all renewals, extensions and refundings of lease
obligations of the kinds described in either of the preceding clauses (d) and
(e),

PROVIDED, HOWEVER, that "Indebtedness" shall not in any event include (i) trade
and other accounts payable and accrued expenses payable in the ordinary course
of business which are not overdue for a period of more than 90 days or, if
overdue for more than 90 days, as to which a dispute exists and adequate
reserves in conformity with GAAP have been established on the books of such
Person, and (ii) letters of credit supporting the purchase of goods in the
ordinary course of business and expiring no more than six months from the date
of issuance.

INDENTURE means this instrument as originally executed or, if amended
or supplemented as herein provided, as so amended or supplemented.

PRIME HOLDINGS INDENTURE
<PAGE>

INTEREST COVERAGE RATIO means, on the last day of any fiscal quarter
of the Company, the ratio of (a) Consolidated EBITDA for the period of four
fiscal quarters ending on such day (or, if shorter, the period commencing on the
first day of the first fiscal quarter commencing on or after the date of this
Indenture and ending on such day) to (b) cash interest expense (including fees
payable on account of letters of credit and in respect of surety bonds, but
excluding, to the extent included in interest expense in accordance with GAAP,
amortization of interest rate caps and debt discount (including discount of
liabilities and reserves established under APB 16), costs of debt issuance and
interest expense on customer deposits) for such period net of interest income,
in each case on a consolidated basis for the Company and its Subsidiaries.

INTEREST PAYMENT DATE means each date on which payment of interest is
due in respect of the Notes in accordance with the terms thereof, and shall be
November 15 and May 15 in each year, commencing May 15, 1995.

INTEREST SWAP OBLIGATIONS means the obligations of any Person
pursuant to any arrangement with any other Person whereby, directly or
indirectly, such Person is entitled to receive from time to time periodic
payments calculated by applying either a floating or a fixed rate of interest on
a stated notional amount in exchange for periodic payments made by such other
Person calculated by applying a fixed or a floating rate of interest on the same
notional amount.

INVESTCORP means INVESTCORP S.A., a company organized under the laws
of Luxembourg and as of the date hereof having an address at 37 rue Notre Dame,
Luxembourg.

INVESTCORP'S AFFILIATES means (a) any Person which, directly or
indirectly, is in control of, is controlled by, or is under common control with,
Investcorp or (b) any Person who is a director or officer (i) of Investcorp,
(ii) of any wholly-owned Subsidiary of Investcorp or (iii) of any Person
described in clause (a) above. For purposes of this definition, "control" of a
Person shall mean the power, directly or indirectly, (A) to vote a majority in
interest (more than 50%) of the securities having ordinary voting power for the
election of directors of such Person, whether by ownership of securities,
contract, proxy or otherwise, or (B) to direct or cause the direction of the
management and policies of such Person, whether by ownership of securities,
contract, proxy or otherwise.

LIEN means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, lien, charge, encumbrance, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever on or
with respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially the
same economic effect as any of the foregoing).

PRIME HOLDINGS INDENTURE
<PAGE>

MATURITY, when used with respect to any Note, means the date on which
the principal of such Note becomes due and payable as therein or herein
provided, whether at the Stated Maturity or by declaration of acceleration, call
for redemption or otherwise.

MERGER means the merger of Operating Company with and into Primeco.

NOTES has the meaning specified in the Recitals hereto.

NOTE REGISTER and NOTE REGISTRAR have the respective meanings
specified in Section 2.06.

OFFICERS' CERTIFICATE means a certificate signed by the Chairman of
the Board, a Vice Chairman, the President or a Vice President and by the
Treasurer, an Assistant Treasurer, the Chief Financial Officer, the Secretary or
an Assistant Secretary of the Company, and delivered to the Trustee.

OPERATING COMPANY means Prime Acquisition Corp., a Delaware
Corporation, and, after the merger of Prime Acquisition Inc. with and into
Primeco Inc., the surviving corporation.

OPINION OF COUNSEL means an opinion in writing signed by legal
counsel acceptable to the Trustee.

OUTSTANDING, when used with reference to Notes, means, as of the date
of determination, all Notes authenticated and delivered by the Trustee under
this Indenture, except:

(a) Notes theretofore canceled by the Trustee or delivered to the
Trustee for cancellation;

(b) Notes, or portions thereof, for the payment or redemption of
which funds in the necessary amount shall have been deposited in trust with the
Trustee or with any paying agent (other than the Company) or shall have been set
aside and segregated in trust by the Company (if the Company shall act as its
own paying agent), provided that if such Notes are to be redeemed, notice of
such redemption shall have been given pursuant to this Indenture or provision
satisfactory to the Trustee shall have been made for giving such notice; and

(c) Notes in exchange for or in lieu of which other Notes shall
have been authenticated and delivered pursuant to the terms of Section 2.07
unless proof satisfactory to the Trustee is presented that any such Notes are
held by bona fide holders in due course;

provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Notes owned by
the Company, any other obligor on the Notes or any Subsidiary of the Company
shall be deemed not to be Outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such request, demand,

PRIME HOLDINGS INDENTURE
<PAGE>

authorization, direction, notice, consent or waiver, only Notes that the Trustee
knows to be so owned shall be so disregarded. Notes so owned that have been
pledged in good faith may be regarded as Outstanding if the pledgee establishes
to the satisfaction of the Trustee the pledgee's right so to act with respect to
such Notes and that the pledgee is not the Company or any other obligor on the
Notes or a Subsidiary of the Company.

PERSON means a corporation, an association, a partnership, a joint
venture, an organization, a trust, an individual or a government or any agency
or political subdivision thereof.

PRIMECO means Primeco Inc., a Texas corporation.

PRINCIPAL OFFICE OF THE TRUSTEE means the principal office of the
Trustee at which at any particular time its corporate trust business shall be
administered.

PUBLIC OFFERING means the sale by the Company of at least 25% of its
then outstanding voting stock (after giving effect thereto) pursuant to an
effective registration statement (other than a registration statement on Form S-
4, S-8 or any successor or similar forms) filed under the Securities Act of
1933, as amended, and in compliance with all applicable state securities laws.

REDEMPTION DATE, when used with respect to any Note to be redeemed,
means the date fixed for such redemption by or pursuant to this Indenture.

REGULAR RECORD DATE, for the interest payable on any Interest Payment
Date, means the November 1 or May 1 (whether or not a Business Day), as the case
may be, next preceding such Interest Payment Date.

RESPONSIBLE OFFICER means any officer of the Trustee.

SENIOR CREDIT FACILITY means the credit facilities under the Credit
Agreement dated as of December , 1994, among Operating Company, Chemical
Bank, as Administrative Agent, The CIT Group/Business Credit, Inc., as
Collateral Agent, Chemical Bank and Bankers Trust Company as Managing Agents,
and the financial institutions which are parties thereto from time to time,
including all obligations of Operating Company and its Subsidiaries to be
incurred thereunder, and, any related notes, collateral documents, letter of
credit applications and guaranties, and any increases, renewals, extensions,
refundings, deferrals, restructurings, amendments, modifications, replacements
or refinancings of any of the foregoing (whether provided by the original
Administrative Agent, Collateral Agent and lenders under such Credit Agreement
or another Administrative Agent, Collateral Agent or other lenders and whether
or not provided under the original Credit Agreement).

SENIOR INDEBTEDNESS means, whether now existing or hereafter
incurred, (a) guaranties by the Company of Indebtedness and other monetary
obligations of Operating Company under the Senior Credit Facility pursuant to
the Holdings Guarantee (as defined in

PRIME HOLDINGS INDENTURE
<PAGE>

the Credit Agreement pursuant to which the Senior Credit Facility is provided),
(b) renewals, extensions, refundings, deferrals, restructurings, amendments and
modifications of any such indebtedness, obligation or guaranty up to an
aggregate principal amount of $350,000,000, (c) obligations of the Company
pursuant to any pledge agreements with respect to the capital stock of Operating
Company owned by the Company to support the guaranties described in clause (a)
above, and (d) any Interest Swap Obligations related to payment obligations on
Indebtedness in respect of the Senior Credit Facility incurred by the Company or
any Significant Subsidiary or guaranteed by the Company; UNLESS, in the case of
(a), (b), (c) or (d), by the terms of the instrument creating, governing or
evidencing such indebtedness, obligation or guaranty, it is provided that such
indebtedness, obligation or guaranty is not senior or superior in right of
payment to the Notes; and PROVIDED that Senior Indebtedness shall not include
any indebtedness, obligation or guaranty of the Company (i) to or in favor of
any Subsidiary of the Company, (ii) to trade creditors for materials and
supplies purchased in the ordinary course of business or (iii) to any Person
arising out of any lawsuit against the Company or any of its Subsidiaries,
including any settlement thereof. If any Senior Indebtedness under the Senior
Credit Facility is disallowed, avoided or subordinated pursuant to the
provisions of Section 548 of the Bankruptcy Law or any applicable state
fraudulent conveyance law, it shall nevertheless constitute Senior Indebtedness.

SENIOR LENDER means the Person or Persons to whom the Company is
obligated under any Senior Indebtedness on any date.

SIGNIFICANT SUBSIDIARY means, on any date, any Subsidiary of the
Company (a) the book value of the assets of which amounts to 10% or more of the
book value of the consolidated total assets of the Company and its consolidated
Subsidiaries taken as a whole, or (b) the revenues of which for the most recent
fiscal quarter amount to 10% or more of the consolidated revenues of the Company
and its consolidated Subsidiaries for such quarter, in each case as determined
in accordance with GAAP on the basis of the Company's most recently available
consolidated financial statements.

SPECIAL RECORD DATE, for the payment of any Defaulted Interest, means
a date fixed by the Trustee pursuant to Section 2.08.

STATED MATURITY means the date specified in the Notes as the fixed
date on which the principal of the Notes is due and payable in full.

SUBSIDIARY, with respect to any Person, means a corporation more than
50% of the outstanding voting stock of which is owned, directly or indirectly,
by such Person or by one or more other Subsidiaries of such Person, or by such
Person and one or more other Subsidiaries of such Person. For the purposes of
this definition, "voting stock" means stock that ordinarily has voting power for
the election of directors, whether at all times or only so long as no senior
class of stock has such voting power by reason of any contingency.

PRIME HOLDINGS INDENTURE
<PAGE>

TRUSTEE means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the provisions of Article Five, and thereafter "Trustee" shall mean
such successor Trustee.

SECTION 1.02. COMPLIANCE CERTIFICATE AND OPINIONS.

Upon any application or request by the Company to the Trustee to take
any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee (a) an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture relating to the proposed
action have been complied with and (b) an Opinion of Counsel stating that, in
the opinion of such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents specifically is required by any provision
of this Indenture relating to such particular application or request no
additional certificate or opinion shall be requested by the Trustee.

SECTION 1.03. FORM OF DOCUMENTS DELIVERED TO TRUSTEE.

In any case where several matters are required to be certified by or
covered by an opinion of any specified Person, it is not necessary that all such
matters be certified by or covered by the opinion of only one such Person, or
that they be so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and one or more
other such Persons as to other matters, and any such Person may certify or give
an opinion as to such matters in one or several documents.

Any certificate or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of
or representations by counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of or
representations by an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous and provided that the Person issuing the certificate or
opinion or representation is authorized to issue the certificate or opinion or
representation on behalf of the Person in respect of which such certificate or
opinion or representation is issued.

Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.

PRIME HOLDINGS INDENTURE
<PAGE>

SECTION 1.04. ACTS OF HOLDERS.

(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by an agent duly
appointed in writing; and except as herein otherwise expressly provided such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is expressly required by this Indenture, to the
Company. Such instrument or instruments (and the action embodied therein and
evidenced thereby) herein sometimes are referred to as the "Act" of the Holders
signing such instrument or instruments. Proof of execution of any such
instrument or of a writing appointing any such agent shall be sufficient for any
purpose of this Indenture and conclusive in favor of the Trustee and the Company
if made in the manner provided in this Section 1.04.

(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved by the affidavit of a witness of such
execution or by a certificate of a notary public or other officer authorized by
law to take acknowledgments of deeds, certifying that the individual signing
such instrument or writing acknowledged to him the execution thereof. Where
such execution is by a signer acting in a capacity other than his individual
capacity, such certificate also shall constitute sufficient proof of his
authority. The fact and date of the execution of any such instrument or
writing, or the authority of the Person executing the same, also may be proved
in any other reasonable manner that the Trustee deems sufficient.

(d) Any request, demand, authorization, direction, notice, consent,
waiver or Act of the Holder of any Note shall bind every future Holder of the
same Note and the Holder of every Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Trustee or the Company in reliance
thereon, whether or not notation of such action is made upon such Note.

SECTION 1.05. NOTICES, ETC., TO TRUSTEE AND COMPANY.

Any request, demand, authorization, direction, notice, consent,
waiver, Act of Holders or other document provided or permitted by this Indenture
to be made upon, given or furnished to, or filed with,

(a) the Trustee by any Holder or the Company shall be sufficient
for every purpose hereunder if in writing and sent to the Trustee in care of
AMACO N.V. by personal delivery, overnight courier or first-class mail, postage
prepaid, return receipt requested, at P.O. Box 3141, Kaya Jombi Mensing #36,
Curacao, Netherlands Antilles, or by telecopier at 599-9-615-392, or such other
address or telecopier number as is set forth in a notice theretofore given by
the Trustee to the Holders and the Company, or

PRIME HOLDINGS INDENTURE
<PAGE>

(b) the Company by the Trustee or any Holder shall be sufficient
for every purpose hereunder if in writing and sent to the Company by personal
delivery, overnight courier or first-class mail, postage prepaid, return receipt
requested, care of Gibson, Dunn & Crutcher, 200 Park Avenue, New York, New York
10166-0193, or by telecopier at (212) 949-7606, in each case addressed to Robert
V. Glaser with a copy to INVESTCORP International Inc. at 280 Park Avenue, 37th
Floor West, New York, New York 10017, or by telecopier (212) 983-7073, in each
case addressed to the attention of Robert V. Glaser or his designee, or at such
other address or telecopier number, or to such other Person's attention, as is
set forth in a notice theretofore given by the Company to the Trustee and the
Holders.

SECTION 1.06. NOTICE TO HOLDERS; WAIVER.

Where this Indenture provides for notice of any event or report to
Holders, such notice or report shall be deemed to have been given (unless
otherwise herein expressly provided) if in writing and mailed, first-class
postage prepaid, return receipt requested, to each Holder affected thereby, at
his address as it appears in the Note Register, not later than the latest date,
and not earlier than the earliest date, prescribed for the giving of such notice
or report. In any case where notice to Holders is to be given, neither the
failure to send such notice, nor any defect in any notice, to any particular
Holder shall affect the sufficiency of such notice with respect to other
Holders.

Where this Indenture provides for notice in any manner, such notice
may be waived in writing by the Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the Trustee, but such
filing shall not be a condition precedent to the validity of any action taken in
reliance upon such waiver.

If by reason of the suspension of regular mail service or by reason
of any other cause it shall be impracticable to give such notice by mail, such
notification as shall be made with the approval of the Trustee shall constitute
a sufficient notification for every purpose hereunder.

SECTION 1.07. EFFECT OF HEADINGS AND TABLE OF CONTENTS.

The table of contents and the titles and headings of the Articles
and Sections of this Indenture have been inserted for convenience of reference
only and are not to be considered a part hereof and in no way shall modify or
restrict any of the terms or provisions hereof.

SECTION 1.08. SUCCESSORS AND ASSIGNS.

All the covenants and agreements of the Company in this Indenture
shall bind its successors and assigns whether so expressed or not.

PRIME HOLDINGS INDENTURE
<PAGE>

SECTION 1.09. SEPARABILITY CLAUSE.

If any provision of this Indenture or in the Notes shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions shall not be affected or impaired thereby.

SECTION 1.10. BENEFITS OF INDENTURE.

Nothing in this Indenture or in the Notes, express or implied, shall
give any Person any benefit or any legal or equitable right, remedy or claim
under this Indenture, other than the parties hereto (and except for holders of
Senior Indebtedness, who shall be third party beneficiaries of this Indenture),
any paying agent, any Note Registrar and their successors hereunder and the
Holders of Notes.

SECTION 1.11. GOVERNING LAW; JURISDICTION.

THIS INDENTURE AND EACH NOTE SHALL BE DEEMED TO BE CONTRACTS MADE
UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SUCH STATE. Any claim arising under this
Indenture shall be brought only in a state or Federal court in the City of New
York, State of New York, and the Company, the Trustee and any Holders of Notes
issued pursuant to this Indenture hereby consent to the exercise of the
jurisdiction by any such court.

SECTION 1.12. EXECUTION IN COUNTERPARTS.

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

SECTION 1.13. LEGAL HOLIDAYS.

In any case where any Interest Payment Date, Redemption Date or
Change of Control Payment Date or the Stated Maturity of any Note shall not be a
Business Day, then (notwithstanding any other provision of this Indenture or the
Notes) payment of principal of or premium, if any, or interest on any Note due
on such date need not be made or effected on such date but may be made or
effected on the next succeeding Business Day with the same force and effect as
if made on the Interest Payment Date, Redemption Date or Change of Control
Payment Date or at the Stated Maturity, provided that no interest shall accrue
with respect to the payment of principal, premium, if any, or interest that is
due on such Interest Payment Date, Redemption Date, Change of Control Payment
Date or Stated Maturity, as the case may be, from such date until such next
succeeding Business Day.

PRIME HOLDINGS INDENTURE
<PAGE>

ARTICLE TWO
THE NOTES

SECTION 2.01. FORMS GENERALLY.

The Notes and the Trustee's certificate of authentication to be
borne by the Notes shall be in substantially the form set forth on Exhibit A,
which is hereby incorporated in and made a part of this Indenture, with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture, and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may be required to comply with the rules of any securities exchange or as may,
consistently herewith, be determined by the officers executing such Notes, as
evidenced by their execution of the Notes. Any portion of the text of any Note
may be set forth on the reverse thereof, with an appropriate reference thereto
on the face of the Note.

The definitive Notes may be typed, printed, lithographed or engraved
or produced by any combination of these methods, but if listed on any securities
exchange shall be produced in a manner permitted by the rules of any such
securities exchange, all as may be determined by the officers executing such
Notes, as evidenced by their execution of such Notes.

SECTION 2.02. TITLE AND TERMS.

The Notes shall be designated as "14% Senior Subordinated Notes due
March 31, 2006." Notes in the principal amount specified in the Company Order
referred to in the third paragraph of Section 2.04 may be executed by the
Company and delivered to the Trustee for authentication upon the execution of
this Indenture, or from time to time thereafter, and the Trustee thereupon shall
authenticate and deliver such Notes as provided in such Company Order; provided
that the aggregate principal amount of all Notes at any time Outstanding (except
for Notes issued in lieu of or in substitution for destroyed, lost or stolen
Notes as provided in Section 2.07) shall not exceed $10,000,000.

SECTION 2.03. DATE AND DENOMINATION OF NOTES; INTEREST; PLACE OF
PAYMENT.

The Stated Maturity of the Notes shall be March 31, 2006, and they
shall bear interest at the rate of 14% per annum from the date upon which such
Notes are originally issued under this Indenture or from the most recent
Interest Payment Date to which interest has been paid or duly provided for, as
the case may be, until Maturity. Interest on the Notes shall be computed on the
basis of the actual number of days elapsed in a 360-day year. Interest shall be
payable in arrears on each November 15 and May 15, commencing May 15, 1995 and
at Maturity. Interest shall be payable on any overdue principal and on any
overdue interest, to the extent that the payment of such interest shall be
legally enforceable, at the rate of 16% per annum.

PRIME HOLDINGS INDENTURE
<PAGE>

The principal of and premium, if any, and interest on the Notes
shall be payable at the office or agency of the Company maintained for such
purpose in Curacao, Netherlands Antilles, in such coin or currency of the United
States of America as at the time of payment is legal tender for the payment of
public and private debts; provided, however, that at the option of the Company
payment may be made by check mailed to the Person entitled thereto at his
address appearing on the Note Register. Notwithstanding the foregoing, the
principal of and premium, if any, and interest on any Note (other than the final
payment of principal on a Note) at the option of the Holder thereof shall be
paid directly to such Holder, by wire transfer of immediately available funds,
without presentment, to the address designated by such Holder in writing.
Before selling or otherwise transferring any Note, the Holder thereof shall make
a notation thereon of the aggregate amount of all payments of principal
theretofore made, and of the date to which interest has been paid.

The Notes shall be issuable in registered form without coupons in
denominations of $1,000 and any integral multiple of $1,000. Every Note shall
be dated the date of its authentication, shall bear interest from the applicable
date and shall be payable on the dates specified on the face of the form of
Note.

The rate of interest payable on any Note shall in no event exceed
the maximum rate permissible under applicable law. If interest would otherwise
be payable to the Holder of a Note in excess of the maximum lawful amount, the
interest payable shall be reduced to the maximum amount permitted under
applicable law; and if the Holder shall ever receive anything of value deemed
interest under applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall be applied to the reduction of the
principal of the Note and not to payment of interest, or if such excessive
interest exceeds the unpaid balance of principal on the Note, such excess shall
be refunded to the Company.

SECTION 2.04. EXECUTION, AUTHENTICATION AND DELIVERY.

The Notes shall be executed on behalf of the Company by its Chairman
of the Board, its Vice Chairman, its President or a Vice President, under its
corporate seal reproduced thereon attested to by its Secretary or an Assistant
Secretary. The signature of any of these officers on the Notes may be manual or
facsimile.

Notes bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Notes or did not hold
such offices at the date of such Notes.

At any time and from time to time after the execution and delivery
of this Indenture, the Company may deliver Notes executed by the Company to the
Trustee for authentication, together with a Company Order for the authentication
and delivery of such Notes; and the Trustee in accordance with such Company
Order shall authenticate and deliver such Notes as in this Indenture provided
and not otherwise.

PRIME HOLDINGS INDENTURE
<PAGE>

No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose unless there appears on such Note a
certificate of authentication substantially in the form provided for on
Exhibit A, manually executed by the Trustee, and such certificate upon any Note
shall be conclusive evidence, and the only evidence, that such Note has been
duly authenticated and delivered hereunder.

SECTION 2.05. TEMPORARY NOTES.

Pending the preparation of definitive Notes, the Company may execute
and upon Company Order the Trustee shall authenticate and deliver temporary
Notes (which may be printed, lithographed, typewritten or otherwise produced) in
any authorized denomination and substantially in the form of the definitive
Notes in lieu of which they are issued, but with such appropriate omissions,
insertions and variations as the officers executing such Notes may determine, as
evidenced by their execution of such Notes. Every such temporary Note shall be
executed by the Company and authenticated by the Trustee upon the same
conditions and in substantially the same manner, and with the same effect, as
the definitive Notes. Without unreasonable delay the Company will execute and
deliver to the Trustee definitive Notes and thereupon the temporary Notes may be
surrendered in exchange for definitive Notes at the Principal Office of the
Trustee without charge to the Holder. Upon surrender for cancellation of any
one or more temporary Notes, the Company shall execute and the Trustee shall
authenticate and deliver in exchange for the temporary Notes an equal aggregate
principal amount of definitive Notes. Until so exchanged, the temporary Notes
in all respects shall be entitled to the same benefits under this Indenture as
definitive Notes.

SECTION 2.06. REGISTRATION, REGISTRATION OF TRANSFER AND EXCHANGE.

All of the Notes issued under this Indenture shall be registered as
to both principal and interest as specified in the Notes. The Company shall
cause to be kept at the Principal Office of the Trustee a register (the "Note
Register") in which, subject to such reasonable regulations as the Trustee may
prescribe, Notes shall be registered and the transfer of Notes shall be
registered as provided in this Article Two. The Note Register shall be in
written form or in any other form capable of being converted into written form
within a reasonable time. The Trustee hereby is appointed "Note Registrar" for
the purpose of registering Notes and transfers of Notes as herein provided.

Upon due presentment for registration of transfer of any Note at any
such office or agency maintained by the Company for such purpose, the Company
shall execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Note or Notes for an equal aggregate principal
amount.

At the option of the Holder, Notes may be exchanged for a like
aggregate principal amount of Notes of other authorized denominations. Notes to
be exchanged shall be surrendered at the Principal Office of the Trustee and the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor the Note or Notes which the Holder making the exchange shall be
entitled to receive.

PRIME HOLDINGS INDENTURE
<PAGE>

Every Note presented for registration of transfer or for exchange
(if so required by the Company or the Trustee) shall be duly endorsed by, or be
accompanied by a written instrument of transfer in form satisfactory to the
Company and the Note Registrar duly executed by, the Holder or his attorney duly
authorized in writing.

No service charge shall be made for any registration of transfer or
exchange of Notes, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge that may be imposed in connection
therewith, other than an exchange pursuant to Section 2.05, 8.05, 9.13 or 10.08.

The Company shall not be required to (a) issue, register the
transfer of or exchange any Note during a period beginning at the opening of
business 15 days before the day of the mailing of (i) a notice of redemption of
Notes selected for redemption or (ii) a Change of Control Offer pursuant to
Section 9.13, and ending at the close of business on the day of such mailing or
(b) register the transfer of or exchange any Note selected for redemption or to
be repurchased pursuant to Section 9.13, in whole or in part, except the
unredeemed or unrepurchased portion of any Note being redeemed or repurchased in
part.

All Notes issued upon any registration of transfer or exchange of
Notes shall be valid obligations of the Company, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.

SECTION 2.07. MUTILATED, DESTROYED, LOST OR STOLEN NOTES.

If any Note shall become mutilated or be destroyed, lost or stolen,
the Company in its discretion may execute, and upon its request the Trustee
shall authenticate and deliver, a new Note, bearing a number not
contemporaneously Outstanding, in exchange and substitution for the mutilated
Note, or in lieu of and in substitution for the Note so destroyed, lost or
stolen. In every case the applicant for a substitute Note shall furnish to the
Company and to the Trustee such security or indemnity as may be required by them
to save each of them harmless and, in every case of destruction, loss or theft,
evidence to their satisfaction of the destruction, loss or theft of such Note
and of the ownership thereof.

Upon the issuance of any substitute Note, the Company may require
the payment of a sum sufficient to cover any tax or other governmental charge
that may be imposed in relation thereto and any other expense connected
therewith. If any Note that has matured or is about to mature or has been
called for redemption shall become mutilated or be destroyed, lost or stolen,
the Company, instead of issuing a substitute Note, may pay or authorize the
payment of the same (without surrender thereof except in the case of a mutilated
Note) if the applicant for such payment shall furnish to the Company and to the
Trustee such security or indemnity as may be required by them to save each of
them harmless and, in case of destruction, loss or theft, evidence satisfactory
to them of the destruction, loss or theft of such Note and of the ownership
thereof.

PRIME HOLDINGS INDENTURE
<PAGE>

Every substitute Note issued pursuant to the provisions of this
Section 2.07 by virtue of the fact that any Note is destroyed, lost or stolen
shall constitute an additional contractual obligation of the Company, whether or
not the destroyed, lost or stolen Note shall be found at any time, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
all other Notes duly issued hereunder.

To the extent permitted by law, all Notes shall be held and owned
upon the express condition that the foregoing provisions are exclusive with
respect to the replacement or payment of mutilated, destroyed, lost or stolen
Notes and shall preclude any and all other rights or remedies notwithstanding
any law or statute existing or hereafter enacted to the contrary with respect to
the replacement or payment of negotiable instruments or other securities without
their surrender.

SECTION 2.08. PAYMENT OF INTEREST; INTEREST RIGHTS PRESERVED.

Interest on any Note that is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the Person in whose
name that Note is registered at the close of business on the Regular Record Date
for such interest.

Any interest on any Note that is payable, but is not punctually paid
or duly provided for, on any Interest Payment Date ("Defaulted Interest")
forthwith will cease to be payable to the Holder on the relevant Regular Record
Date by virtue of his having been such Holder; and such Defaulted Interest may
be paid by the Company, at its election in each case, as provided in clause (a)
or (b) below:

(a) The Company may elect to make payment of any Defaulted Interest
to the Persons in whose names the Notes are registered on the Note Register at
the close of business on a Special Record Date for the payment of such Defaulted
Interest, which shall be fixed in the following manner. The Company shall
notify the Trustee in writing of the amount of Defaulted Interest proposed to be
paid on each Note and of the proposed payment date. At the same time the
Company shall deposit with the Trustee funds in an amount equal to the aggregate
amount of Defaulted Interest proposed to be paid, or shall make arrangements
satisfactory to the Trustee for such deposit prior to the date of the proposed
payment, such funds when deposited to be held in trust for the benefit of the
Persons entitled to such Defaulted Interest as provided in this clause (a).
Thereupon the Trustee shall fix a Special Record Date for the payment of such
Defaulted Interest which shall be not more than 15 days and not less than ten
days prior to the date of the proposed payment and not less than ten days after
the receipt by the Trustee of the notice of the proposed payment. The Trustee
promptly shall notify the Company of such Special Record Date and, in the name
and at the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid to each Holder at his address as it appears on the
Note Register, not less than ten days prior to such Special Record Date. Notice
of the proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to the
Persons in

PRIME HOLDINGS INDENTURE
<PAGE>

whose names the Notes are registered at the close of business on such Special
Record Date and shall no longer be payable pursuant to the following clause (b).

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

Subject to the foregoing provisions of this Section 2.08, each Note
delivered under this Indenture upon registration of transfer or in exchange for
or in lieu of any other Note shall carry the rights of interest accrued and
unpaid, and to accrue, that were carried by such other Note.

SECTION 2.09. PERSONS DEEMED OWNERS.

Prior to due presentment of a Note for registration of transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Note is registered as the owner of such Note for the
purpose of receiving payment of principal of and premium, if any, and (subject
to Section 2.08) interest on such Note and for all other purposes whatsoever,
whether or not the interest, premium, if any, or principal of such Note shall be
or have become due, and none of the Company, the Trustee or any agent of the
Company or the Trustee shall be affected by notice to the contrary.

SECTION 2.10. CANCELLATION.

All Notes surrendered for payment, redemption, exchange or
registration of transfer, if surrendered to any Person other than the Trustee,
shall be surrendered to the Trustee and promptly canceled by it. The Company at
any time may deliver to the Trustee for cancellation any Note previously
authenticated and delivered hereunder that the Company may have acquired in any
manner whatsoever, and all Notes so delivered promptly shall be canceled by the
Trustee. No Note shall be issued in lieu of or in exchange for any Note
canceled as provided in this Section 2.10, except as expressly permitted by this
Indenture. All canceled Notes held by the Trustee shall be disposed of as
directed by a Company Order. If the Company shall acquire any of the Notes,
such acquisition shall not operate as a redemption or satisfaction of the
indebtedness represented by such Notes unless and until the same are delivered
to the Trustee for cancellation.

ARTICLE THREE
SATISFACTION AND DISCHARGE

SECTION 3.01. SATISFACTION AND DISCHARGE OF INDENTURE.

This Indenture upon Company Request shall cease to be of further
effect (except as to any surviving rights of registration of transfer or
exchange of Notes herein

PRIME HOLDINGS INDENTURE
<PAGE>

expressly provided for), and the Trustee, at the expense of the Company, shall
execute such instruments as the Company reasonably may request acknowledging
satisfaction and discharge of this Indenture, when:

(a) either

(i) all Notes theretofore authenticated and delivered
(other than (A) Notes that have been exchanged, mutilated, destroyed, lost or
stolen and that have been replaced or paid as provided in Section 2.07 and (B)
Notes for whose payment funds theretofore have been deposited in trust or
segregated and held in trust by the Company and thereafter repaid to the Company
or discharged from such trust, as provided in Section 9.03) have been delivered
to the Trustee for cancellation; or

(ii) all such Notes not theretofore delivered to the
Trustee for cancellation

(A) have become due and payable,

(B) will become due and payable at their Stated
Maturity within one year, or

(C) are to be called for redemption within one
year under arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (A), (B) or (C) above, has deposited or caused
to be deposited with the Trustee as trust funds an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered to the
Trustee for cancellation, for principal, premium, if any, and interest to the
date of such deposit (in the case of Notes that have become due and payable) or
to the Stated Maturity or Redemption Date, as the case may be;

(b) the Company has paid or caused to be paid all
other amounts payable hereunder by the Company; and

(c) the Company has delivered to the Trustee an
Officer's Certificate and an Opinion of Counsel, each stating that all
conditions precedent herein provided for relating to the satisfaction and
discharge of this Indenture have been complied with.

Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Company to the Trustee under Section 5.07, the obligations of
the Trustee to any Authenticating Agent under Section 5.12 and, if funds shall
have been deposited with the Trustee pursuant to Section 3.01(a), the
obligations of the Trustee under Section 3.02 and the last paragraph of
Section 9.03 shall survive.

PRIME HOLDINGS INDENTURE
<PAGE>

SECTION 3.02. APPLICATION OF TRUST FUNDS.

Subject to the provisions of Section 9.03, all funds deposited with
the Trustee pursuant to Section 3.01 shall be held in trust and applied by it,
in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any paying agent (including the Company if
acting as its own paying agent) as the Trustee may determine, to the Persons
entitled thereto, of the principal, premium, if any, and interest for whose
payment such funds have been deposited with the Trustee.

ARTICLE FOUR
REMEDIES
SECTION 4.01. EVENTS OF DEFAULT.

"Event of Default," wherever used herein, means any one or more of
the following events (whatever the reason for such Event of Default and whether
it shall be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):

(a) default in the payment of any interest on any Note when such
interest becomes due and payable, and continuance of such default for a period
of 30 days;

(b) default in the payment of the principal of or premium, if any,
on any Note at Maturity;

(d) failure on the part of the Company duly to observe or perform
any of the covenants or agreements on the part of the Company to be performed
and set forth in Section 9.12;

(e) failure on the part of the Company duly to observe or perform
any other of the covenants or agreements on the part of the Company set forth in
the Notes or in this Indenture which continues for a period of 30 days after the
date on which there has been given, by registered or certified mail, to the
Company and the Trustee by the Holders of at least 40% in aggregate principal
amount of the Notes at the time Outstanding, a written notice specifying such
failure and requiring it to be remedied and stating that such notice is a
"Notice of Default" hereunder;

(f) the rendering of a final judgment for the payment of money
in an amount in excess of $20,000,000 (after giving effect to any applicable
insurance and bonds) against the Company and/or any Significant Subsidiary,
(i) which judgment continues undischarged, and is not waived or stayed, for a
period of 45 days after the date on which the

PRIME HOLDINGS INDENTURE
<PAGE>

right to final appeal has expired and (ii) which default continues for a period
of 30 days after the date on which there has been given, by registered or
certified mail, to the Company and the Trustee by the Holders of at least 40% in
aggregate principal amount of the Notes at the time Outstanding, a written
notice specifying the failure described in clause (i) and requiring it to be
remedied and stating that such notice is a "Notice of Default" hereunder;

(g) a default under any bond, debenture, note or other evidence of
Indebtedness of the Company (other than the Notes) or any Significant
Subsidiary, or under any mortgage, indenture or other instrument under which
there may be issued or by which there may be secured or evidenced Indebtedness
for money borrowed by the Company or such Significant Subsidiary (including
without limitation the Senior Credit Facility), whether such Indebtedness now
exists or hereafter shall be created, which Indebtedness has a principal amount
of $20,000,000 or more, and which default (i) consists of a failure to pay at
final maturity of such Indebtedness any amount in excess of $20,000,000 due and
payable on or with respect to such Indebtedness (subject to any applicable grace
periods), or (ii) has resulted in such Indebtedness being declared due and
payable, without such acceleration having been rescinded or annulled;

(h) the Company or any Significant Subsidiary, pursuant to or
within the meaning of any Bankruptcy Law:

(A) commences a voluntary case or proceeding;

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

(D) makes a general assignment for the benefit of its
creditors; or

(E) admits in writing its inability to pay its debts
generally as they become due; or

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

(A) is for relief against the Company or any Significant
Subsidiary in an involuntary case or proceeding;

(B) appoints a Custodian of the Company or any
Significant Subsidiary or for all or substantially all of their respective
properties; or

PRIME HOLDINGS INDENTURE
<PAGE>

and, in each case, such order or decree remains unstayed, undismissed,
undischarged or unbonded and in effect for 60 days.

SECTION 4.02. ACCELERATION OF MATURITY; RESCISSION AND ANNULMENT.

If an Event of Default occurs under clause (h) or (i) of
Section 4.01, then the principal of and premium, if any, and the accrued
interest on all the Notes shall become due and payable immediately. If any
other Event of Default occurs and is continuing, then, and in every such case,
the Holders of not less than 40% in aggregate principal amount of the Notes then
Outstanding, by notice in writing to the Company and to the Trustee, may declare
the principal amount of all the Notes to be due and payable, and upon any such
declaration such principal amount shall become due and payable upon receipt by
the Company and the Trustee of such written notice given hereunder.

At any time after such a declaration of acceleration has been made
and before a judgment or decree for the payment of the amount due has been
obtained by the Trustee as hereinafter provided in this Article Four, the
Holders of a majority in aggregate principal amount of the Outstanding Notes, by
written notice to the Company and the Trustee, may rescind and annul such
declaration and its consequences if:

(a) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(i) the amount of all overdue installments of interest
on all Notes in the case of an Event of Default specified in Section 4.01(a),

(ii) the principal of and premium, if any, on all Notes
that have become due to the extent such amounts have become due otherwise than
by such declaration of acceleration, and interest thereon (to the extent that
payment of such interest is lawful) at the applicable rate provided in
Section 2.03 in the case of an Event of Default specified in Section 4.01(b),

(iii) to the extent that payment of such interest is
lawful, interest upon overdue interest at the applicable rate provided in
Section 2.03, and

(iv) all sums paid or advanced by the Trustee hereunder
and the reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and

(b) all Events of Default, other than the nonpayment of the
principal of Notes that have become due solely by such declaration of
acceleration, have been cured or waived as provided in Section 4.13.

No such rescission shall affect any subsequent default or
impair any right consequent thereon.

PRIME HOLDINGS INDENTURE
<PAGE>

SECTION 4.03. COLLECTION OF INDEBTEDNESS AND SUITS FOR ENFORCEMENT
BY THE TRUSTEE.

The Company covenants that if:

(a) default is made in the payment of interest on any Note when
such interest becomes due and payable and such default continues for a period of
30 days, or

(b) default is made in the payment of the principal of or premium,
if any, on any Note at the Maturity thereof,
the Company, upon demand of the Trustee, will pay to the Trustee, for the
benefit of the Holders of such Notes, the defaulted amount then due and payable
on such Notes for principal, premium, if any, and interest, with interest (to
the extent that payment of interest on overdue interest is enforceable under
applicable law) upon overdue interest, at the applicable rate provided in
Section 2.03, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel.

If the Company fails to pay such amounts forthwith upon such demand,
the Trustee, in its own name and as trustee of an express trust, at the request
of the Holders of a majority in aggregate principal amount of the Outstanding
Notes, will institute a judicial proceeding for the collection of the sums so
due and unpaid, will prosecute such proceeding to judgment or final decree and
will enforce against the Company or any other obligor on the Notes and collect
the money adjudged or decreed to be payable in the manner provided by law out of
the property of the Company or any other obligor on the Notes, wherever
situated.

If an Event of Default occurs and is continuing, the Trustee at the
request of the Holders of a majority in aggregate principal amount of the
Outstanding Notes will proceed to protect and enforce its rights and the rights
of the Holders by such judicial proceedings as such Holders shall request to
protect and enforce such rights, whether for the specific enforcement of any
covenant or agreement in this Indenture or in aid of the exercise of any power
granted herein, or to enforce any other proper remedy.

SECTION 4.04. TRUSTEE MAY FILE PROOFS OF CLAIM.

In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor on the
Notes or the property of the Company or of such other obligor or their
creditors, the Trustee, irrespective of whether the principal of the Notes shall
then be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand on the Company
for the payment of overdue principal or interest, at the request of a majority
in aggregate principal amount of the Outstanding Notes, by intervention in such
proceedings or otherwise:

PRIME HOLDINGS INDENTURE
<PAGE>

(a) will file and prove a claim for the whole amount of principal,
premium, if any, and interest owing and unpaid in respect of the Notes and file
such other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel) and
of the Holders allowed in such judicial proceedings; and

(b) will collect and receive any funds or other property payable or
deliverable on any such claims and distribute the same;
and any Custodian or similar official in any such judicial proceeding hereby is
authorized by each Holder to make such payments to the Trustee and, in the event
that such payments shall be made directly to the Holders, to pay to the Trustee
any amount due it for the reasonable compensation, expenses, disbursements and
advances of the Trustee, its agents and counsel, and any other amounts due the
Trustee under Section 5.07.

Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder or to authorize the Trustee to vote in respect of the
claim of any Holder in any such proceeding.

SECTION 4.05. TRUSTEE MAY ENFORCE CLAIMS WITHOUT POSSESSION OF
NOTES.

All rights of action and claims under this Indenture or the Notes
may be prosecuted and enforced by the Trustee without the possession of any of
the Notes or the production thereof in any proceeding relating thereto, and any
such proceeding instituted by the Trustee shall be brought in its own name as
trustee of an express trust, and any recovery of judgment, after provision for
the payment of the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, shall be for the ratable benefit of the
Holders of the Notes in respect of which such judgment has been recovered.

SECTION 4.06. APPLICATION OF FUNDS COLLECTED.

Any funds collected by the Trustee pursuant to this Article Four
shall be applied in the following order, at the date or dates fixed by the
Trustee and, in case of the distribution of such funds on account of principal,
premium, if any, or interest, upon presentation of the Notes and the notation
thereon of the payment if only partially paid and upon surrender thereof if
fully paid:

FIRST: to the payment of all amounts due the Trustee under
Section 5.07;

SECOND: subject to Article 11 hereof, to the payment of the amounts
then due and unpaid for principal of and premium, if any, and interest on the
Notes in respect of which or for the benefit of which such funds have been
collected, ratably, without preference or

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priority of any kind, according to the amounts due and payable on such Notes for
principal, premium, if any, and interest, respectively; and

THIRD: the balance, if any, to the Company.

SECTION 4.07. LIMITATION ON SUITS.

No Holder of a Note shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless:

(a) such Holder previously has given to the Trustee written notice
of a continuing Event of Default;

(b) the Holders of not less than 40% in aggregate principal amount
of the Outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name as
Trustee hereunder;

(c) such Holder or Holders have offered to the Trustee reasonable
indemnity against the costs, expenses and liabilities to be incurred in
compliance with such request;

(d) the Trustee for 60 days after its receipt of such notice,
request and offer of indemnity shall have failed to institute any such
proceeding; and

(e) no direction inconsistent with such written request has been
given to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the Outstanding Notes;

it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of or by availing of any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holder,
or to obtain or seek to obtain priority or preference over any other Holder or
to enforce any right under this Indenture, except in the manner herein provided
and for the equal and ratable benefit of all the Holders.

SECTION 4.08. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE PRINCIPAL,
PREMIUM AND INTEREST.

Notwithstanding any other provision in this Indenture, the Holder of
any Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of and premium, if any, and (subject to Section 2.08)
interest on such Note at Maturity, or on the applicable Interest Payment Date,
as the case may be, as provided in this Indenture (or, in the case of redemption
or repurchase in conformity with Section 9.13, on the Redemption Date or the
Change of Control Payment Date, respectively), and to institute suit for the
enforcement of any such payment and such rights shall not be impaired or
affected without the consent of such Holder.

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SECTION 4.09. RESTORATION OF RIGHTS AND REMEDIES.

If the Trustee or any Holder has instituted any proceeding to enforce
any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.

SECTION 4.10. RIGHTS AND REMEDIES CUMULATIVE.

No right or remedy herein conferred upon or reserved to the Trustee or
the Holders is intended to be exclusive of any other right or remedy, and every
right and remedy, to the extent permitted by law, shall be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.

SECTION 4.11. DELAY OR OMISSION NOT WAIVER.

No delay or omission on the part of the Trustee or of any Holder of
any Note to exercise any right or power accruing upon any Event of Default shall
impair any such right or remedy or constitute a waiver of any such Event of
Default or an acquiescence therein. Every right and remedy given by this
Article Four or by law to the Trustee or to the Holders may be exercised from
time to time, and as often as may be deemed expedient, by or at the direction of
the Holders.

SECTION 4.12. CONTROL BY HOLDERS.

The Holders of a majority in aggregate principal amount of the
Outstanding Notes shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on the Trustee. The Trustee shall not take any
actions under this Article Four except for actions taken to implement the
instructions of the Holders.

SECTION 4.13. WAIVER OF PAST DEFAULTS.

The Holders of a majority in aggregate principal amount of the
Outstanding Notes on behalf of the Holders of all of the Notes may waive any
past default hereunder and its consequences except a default

(a) in the payment of the principal of or premium, if any, or
interest on any Note, or

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(b) in respect of a covenant or provision hereof that under Article
Eight cannot be modified or amended without the consent of the Holder of each
Outstanding Note affected.

Upon any such waiver, such default shall cease to exist, and any Event
of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.

SECTION 4.14. UNDERTAKING FOR COSTS.

All parties to this Indenture agree, and each Holder of any Note by
his acceptance thereof shall be deemed to have agreed, that any court in its
discretion may require, as a condition to initiating or maintaining any suit for
the enforcement of any right or remedy under this Indenture or any suit against
the Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit and that such court in its discretion may assess reasonable costs,
including reasonable attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses made by
such party litigant; but the provisions of this Section 4.14 shall not apply to
any suit instituted by the Trustee, to any suit instituted by any Holder or
group of Holders holding in the aggregate more than 40% in principal amount of
the Outstanding Notes or to any suit instituted by any Holder pursuant to
Section 4.07 hereof for the enforcement of the payment of the principal of or
premium, if any, or interest on any Note on or after the Stated Maturity, or on
the applicable Interest Payment Date, as the case may be, as provided in this
Indenture (or, in the case of redemption or repurchase, on or after the
Redemption Date or Change of Control Payment Date).

SECTION 4.15. WAIVER OF STAY OR EXTENSION LAWS.

The Company covenants (to the extent that it lawfully may do so) that
it will not at any time insist upon, plead or in any manner whatsoever claim or
take the benefit or advantage of any stay or extension law wherever enacted, now
or at any time hereafter in force, that may affect the covenants or the
performance of this Indenture; and the Company (to the extent that it lawfully
may do so) hereby expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution of any power
herein granted to the Trustee or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.

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ARTICLE FIVE
THE TRUSTEE

SECTION 5.01. CERTAIN DUTIES AND RESPONSIBILITIES.

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

(b) In the absence of bad faith on its part, the Trustee conclusively
may rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions furnished to the Trustee and
conforming to the requirements of this Indenture, but in the case of any such
certificates or opinions that by any provision hereof specifically are required
to be furnished to the Trustee, the Trustee shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Indenture.

(c) No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own grossly negligent action, its own grossly
negligent failure to act or its own willful misconduct, except that:

(i) this Section 5.01(c) shall not be construed to limit
the effect of Section 5.01(a) or 5.01(b);

(ii) the Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer, unless it shall be proved
that the Trustee was grossly negligent in ascertaining the pertinent facts;

(iii) the Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in accordance with
the direction of the Holders of a majority in aggregate principal amount of the
Outstanding Notes relating to the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Indenture; and

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

(d) Whether or not therein expressly so provided, every provision of
this Indenture relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of this
Section 5.01.

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SECTION 5.02. NOTICE OF DEFAULTS.

Within 60 days after learning of the occurrence of a default
hereunder, the Trustee shall mail to all Holders, as their names and addresses
appear in the Note Register, notice of all defaults known to the Trustee, unless
such defaults shall have been cured before the giving of such notice. For the
purpose of this Section 5.02, the term "default" means any event that is, or
after notice or lapse of time would become, an Event of Default.

SECTION 5.03. CERTAIN RIGHTS OF TRUSTEE.

(a) The Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, bond, Note, note or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties.

(b) Any request, direction, order or demand of the Company mentioned
herein shall be sufficiently evidenced by a Company Request or Company Order and
any resolution of a majority of the entire Board of Directors may be evidenced
by a copy thereof certified by the Secretary or an Assistant Secretary of the
Company.

(c) Whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed), in the absence of gross negligence or bad
faith on its part, may rely on an Officers' Certificate.

(d) The Trustee may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.

(e) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities that might be incurred by
it in complying with such request, order or direction.

(f) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order, approval, bond,
debenture, note or other paper or document, but the Trustee, in its discretion,
may make such further inquiry or investigation into such facts or matters as it
may see fit, and if the Trustee shall determine to make such further inquiry or
investigation it shall be entitled to examine the books, records and premises of
the Company, personally or by agent or attorney.

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(g) The Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys and the Trustee shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed by it with due care
hereunder.

SECTION 5.04. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF NOTES.

The recitals contained herein and in the Notes (except the Trustee's
certificate of authentication) shall be taken as the statements of the Company,
and the Trustee assumes no responsibility for their correctness. The Trustee
makes no representation as to the validity or sufficiency of this Indenture or
of the Notes. The Trustee shall not be accountable for the use or application
by the Company of Notes or the proceeds thereof.

SECTION 5.05. MAY HOLD NOTES; PAYING AGENT; OTHER INDIVIDUAL RIGHTS OF
TRUSTEE.

The Trustee, any Authenticating Agent, any paying agent, the Note
Registrar or any other agent of the Company, in its individual or any other
capacity, may become the owner or pledgee of Notes and otherwise may deal with
the Company with the same rights it would have if it were not Trustee,
Authenticating Agent, paying agent, Note Registrar or other agent. Until the
Company shall appoint another paying agent hereunder, the Trustee shall act as
paying agent. The Trustee, the Authenticating Agent and any paying agent may be
an Affiliate of the Company.

SECTION 5.06. FUNDS HELD IN TRUST.

Funds held by the Trustee in trust hereunder need not be segregated
from other funds except to the extent required by law. The Trustee shall be
under no liability for interest on any funds received by it hereunder except as
otherwise agreed with the Company.

SECTION 5.07. COMPENSATION AND REIMBURSEMENT.

The Company agrees:

(a) to pay to the Trustee from time to time reasonable compensation
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a trustee of an
express trust);

(b) except as otherwise expressly provided herein, to reimburse the
Trustee upon its request for all reasonable expenses, disbursements and advances
incurred or made by the Trustee in accordance with any provision of this
Indenture (including the reasonable compensation and the expenses and
disbursements of its agents and counsel) except any such expense, disbursement
or advance as may be attributable to its gross negligence or willful misconduct;
and

PRIME HOLDINGS INDENTURE

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(c) to indemnify the Trustee for, and to hold it harmless against,
any loss, liability or expense incurred without gross negligence or willful
misconduct on its part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.

The obligations of the Company under this Section 5.07 shall be
secured by a Lien prior to that of the Notes upon all property and funds held or
collected by the Trustee as such, except funds held in trust for the benefit of
the Holders of particular Notes.

SECTION 5.08. CORPORATE TRUSTEE REQUIRED; ELIGIBILITY.

There shall at all times be a Trustee hereunder which shall be a
corporation organized and doing business under the laws of the Netherlands
Antilles or United States of America, one of the States thereof or the District
of Columbia, authorized under such laws to exercise corporate trust powers. If
at any time the Trustee shall cease to be eligible in accordance with the
provisions of this Section 5.08, the Trustee shall resign immediately in the
manner and with the effect specified in this Article Five.

SECTION 5.09. RESIGNATION AND REMOVAL; APPOINTMENT OF A SUCCESSOR.

(a) No resignation or removal of the Trustee and no appointment of a
successor Trustee shall become effective until the acceptance of appointment by
the successor Trustee under Section 5.10.

(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
required by Section 5.10 shall not have been delivered to the Trustee within 30
days after the giving of such notice of resignation, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a successor
Trustee.

(c) The Trustee may be removed at any time by the Act of the Holders
of a majority in aggregate principal amount of the Outstanding Notes delivered
to the Trustee and to the Company.

(d) If at any time the Trustee (i) shall cease to be eligible under
Section 5.08 and shall fail to resign after written request therefor by the
Holders of at least 40% in aggregate principal amount of the Outstanding Notes,
or (ii) shall become incapable of acting, or shall be adjudged a bankrupt or an
insolvent, or a receiver of the Trustee or of its property shall be appointed,
or any public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation; then, in any such case, the Holders of a majority in aggregate
principal amount of the Outstanding Notes may remove the Trustee and appoint a
successor Trustee by an Act of such Holders, in triplicate, one copy of which
instrument shall be delivered to the Trustee so removed, the successor Trustee
and to the Company or, subject to the provisions of Section 4.14, the

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Holders of at least 40% in aggregate principal amount of the Outstanding Notes,
on behalf of themselves and all others similarly situated, may petition any
court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.

(e) If the Trustee shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of the Trustee for any cause,
the Company, by order of a majority of the entire Board of Directors, promptly
shall appoint a successor Trustee. If, within one year after such resignation,
removal or incapability, or the occurrence of such a vacancy, a successor
Trustee shall be appointed by Act of the Holders of a majority in aggregate
principal amount of the Outstanding Notes delivered to the Company and the
retiring Trustee, the successor Trustee so appointed, forthwith upon its
acceptance of such appointment, shall become the successor Trustee and supersede
the successor Trustee appointed by the Company. If no successor Trustee shall
have been so appointed by the Company or by the Holders and accepted appointment
in the manner hereinafter provided, subject to Section 4.14, the Holders of at
least 40% in aggregate principal amount of the Outstanding Notes, on behalf of
themselves and all others similarly situated, may petition any court of
competent jurisdiction for the appointment of a successor Trustee.

(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee by mailing
written notice of such event by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note Register. Each notice
shall include the name of the successor Trustee and the address of the Principal
Office of the successor Trustee.

SECTION 5.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR TRUSTEE.

Any successor Trustee appointed hereunder shall execute, acknowledge
and deliver to the Company and to its predecessor Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of its predecessor Trustee hereunder; but, on request
of the Company or the successor Trustee, such predecessor Trustee, upon payment
of any amounts then due it pursuant to the provisions of Section 5.07, shall
execute and deliver an instrument transferring to such successor Trustee all the
rights and powers of such predecessor Trustee, and shall duly assign, transfer
and deliver to such successor Trustee all property and funds held by such
predecessor Trustee hereunder. Upon request of any such successor Trustee, the
Company shall execute any and all instruments in writing for more fully and
certainly vesting in and confirming to such successor Trustee all such rights,
powers and trusts. Any Trustee ceasing to act nevertheless shall retain a Lien
upon all property or funds held or collected by such Trustee (except funds held
in trust for the benefit of Holders of particular Notes) to secure any amounts
then due it pursuant to the provisions of Section 5.07.

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No successor Trustee shall accept appointment as provided in this
Section 5.10 unless at the time of such acceptance such successor Trustee shall
be eligible under the provisions of Section 5.08.

SECTION 5.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.

Any corporation into which a corporate Trustee may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which the Trustee shall be a
party, or any corporation succeeding to all or substantially all of the
corporate trust business of such Trustee, shall be the successor to the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 5.08, without the execution or filing of any instrument or any further
act on the part of any of the parties hereto. In case any Notes shall have been
authenticated but not delivered by the Trustee then in office, any successor by
merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Notes so authenticated with the same effect
as if such successor Trustee had itself authenticated such Notes.

SECTION 5.12. APPOINTMENT OF AUTHENTICATING AGENT.

At any time the Trustee may appoint an Authenticating Agent or Agents
which shall be authorized to act on behalf of the Trustee to authenticate Notes
issued upon exchange, registration of transfer or partial redemption or
repurchase thereof or pursuant to Section 2.06 or 2.07, and the Notes so
authenticated shall be entitled to the benefits of this Indenture and shall be
valid and obligatory for all purposes as if authenticated by the Trustee
hereunder. Wherever reference is made in this Indenture to the authentication
and delivery of Notes by the Trustee or the Trustee's certificate of
authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent and a certificate
of authentication executed on behalf of the Trustee by an Authenticating Agent.
Each Authenticating Agent shall be acceptable to the Company and shall be a
corporation organized and doing business under the laws of the Netherlands
Antilles or the United States of America, one of the States thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent.
If at any time an Authenticating Agent shall cease to be eligible in accordance
with the provisions of this Section 5.12, such Authenticating Agent shall resign
immediately in the manner and with the effect specified in this Section 5.12.

Any corporation into which an Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to all or substantially all of
the corporate trust business of an Authenticating Agent, shall be the successor
to the Authenticating Agent, provided such corporation otherwise shall be
qualified and eligible under this Section 5.12, without the execution or filing
of any instrument or any further act on the part of the Trustee or the
Authenticating Agent.

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An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee at any time may
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be qualified and eligible in accordance with
the provisions of this Section 5.12, the Trustee may appoint a successor
Authenticating Agent which shall be acceptable to the Company and shall mail
written notice of such appointment by first-class mail, postage prepaid, to all
Holders as their names and addresses appear in the Note Register. Any successor
Authenticating Agent upon acceptance of its appointment hereunder shall become
vested with all the rights, powers and duties of its predecessor hereunder, with
like effect as if originally named as an Authenticating Agent herein.

The Trustee agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section 5.12, and
the Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 5.07.

If an appointment is made pursuant to this Section 5.12, the Notes may
have endorsed thereon, in addition to the Trustee's certificate of
authentication, an alternate certificate of authentication in the following
form:

"This is one of the Notes described in the within-mentioned Indenture.

AIBC SERVICES N.V.,

As Trustee

By:____________________________________

As Authenticating Agent

By:____________________________________"

Authorized Officer

ARTICLE SIX
HOLDERS' LISTS AND REPORTS BY THE COMPANY

SECTION 6.01. COMPANY TO FURNISH TRUSTEE NAMES AND ADDRESSES OF HOLDERS.

If the Trustee shall not be the Note Registrar, the Company will
furnish or cause to be furnished to the Trustee:

(a) semi-annually, not more than five days after each Regular Record
Date, a list, in such form as the Trustee reasonably may require, of the names
and addresses of the Holders as of such Regular Record Date; and

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(b) at such other times as the Trustee may request in writing, within
30 days after receipt by the Company of any such request, a list of similar form
and content as of a date not more than five days prior to the time such
information is furnished.

SECTION 6.02. PRESERVATION OF INFORMATION.

The Trustee shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders contained in the most recent
list furnished to the Trustee as provided in Section 6.01 or received by the
Trustee in its capacity as Note Registrar. The Trustee may destroy any list
furnished to it as provided in Section 6.01 upon receipt of a new list so
furnished.

SECTION 6.03. REPORTS BY THE COMPANY.

If the Company shall be subject to the requirement to file annual or
other reports with the Commission or with any securities exchange on which the
Notes are listed, it shall:

(a) file with the Trustee, within 15 days after the Company is
required to file the same with the Commission or with any securities exchange on
which the Notes are listed, copies of such annual reports and of such
information, documents and other reports (or copies of such portions of any of
the foregoing as the Commission or any such exchange from time to time by rules
and regulations may prescribe) that the Company shall be required to file with
the Commission pursuant to Section 13 or Section 15(d) of the Securities
Exchange Act of 1934, as amended, or such exchange; and

(b) file with the Trustee, in accordance with the rules and
regulations prescribed from time to time by the Commission or by any securities
exchange on which the Notes are listed, such additional information, documents
and reports as it shall file with the Commission or such securities exchange
with respect to compliance by the Company with the conditions and covenants of
this Indenture as may be required from time to time by such rules and
regulations.

ARTICLE SEVEN
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

SECTION 7.01. COMPANY MAY NOT CONSOLIDATE, ETC., ON CERTAIN TERMS.

The Company shall not consolidate with or merge into any other
corporation or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, unless:

(a) the corporation formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance or transfer, or
which leases,

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the properties and assets of the Company substantially as an entirety shall be a
corporation organized and existing under the laws of the United States, one of
the States thereof or the District of Columbia and expressly shall assume, by an
indenture supplemental hereto, executed and delivered to the Trustee, in form
satisfactory to the Trustee, the due and punctual payment of the principal of
and premium, if any, and interest on all Notes and the performance of every
covenant of this Indenture on the part of the Company to be performed or
observed;

(b) immediately after giving effect to such transaction no Event of
Default, and no event that, after notice or lapse of time or both, would become
an Event of Default, shall have occurred and be continuing; and

(c) the Company has delivered to the Trustee an Officers' Certificate
and an Opinion of Counsel, each stating that such consolidation, merger,
conveyance, transfer or lease and, if a supplemental indenture is required in
connection with such transaction, such supplemental indenture comply with this
Article Seven and that all conditions precedent herein provided for relating to
such transaction have been met.

SECTION 7.02. SUCCESSOR CORPORATION SUBSTITUTED.

Upon any consolidation or merger by the Company with or into any other
corporation or any conveyance, transfer or lease of the properties and assets of
the Company substantially as an entirety to any Person in accordance with
Section 7.01, the successor corporation formed by such consolidation or into
which the Company is merged or to which such conveyance, transfer or lease is
made shall succeed to, and be substituted for, and may exercise every right and
power of, the Company under this Indenture with the same effect as if such
successor corporation had been named as the Company herein, and thereafter,
except in the case of a lease to another Person, the predecessor corporation
shall be relieved of all obligations and covenants under this Indenture and the
Notes.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES

SECTION 8.01. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF HOLDERS.

Without the consent of any of the Holders, the Company, when
authorized by a majority of its entire Board of Directors, and the Trustee from
time to time and at any time may enter into one or more indentures supplemental
hereto for any of the following purposes:

(a) to evidence the succession of another corporation to the Company
and the assumption by the successor corporation of the covenants, agreements and
obligations of the Company herein and in the Notes;

(b) to add to the covenants of the Company for the benefit of the
Holders or to surrender any right or power herein conferred upon the Company;

PRIME HOLDINGS INDENTURE

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(d) to convey, transfer, assign, mortgage or pledge to the Trustee,
as security for the Notes, any property or assets; or

(e) to cure any ambiguity or to correct or supplement any provision
herein that may be inconsistent with any other provision herein, or to make such
other provisions in regard to matters or questions arising under this Indenture
as are not inconsistent with the provisions of this Indenture and as shall not
adversely affect the interests of the Holders.

SECTION 8.02. SUPPLEMENTAL INDENTURES WITH CONSENT OF HOLDERS.

With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Notes, by Act of the Holders
delivered to the Company and the Trustee, the Company, when authorized by a
majority of its entire Board of Directors, and the Trustee from time to time and
at any time may enter into an indenture or indentures supplemental hereto for
the purpose of adding any provision to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the rights
of the Holders under this Indenture; provided, however, that no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:

(a) change the Stated Maturity of the principal of, or the Interest
Payment Date with respect to any payment of interest on, any Note, or reduce the
rate or extend the time of payment of interest thereon, or reduce the principal
amount thereof or premium, if any, thereon, or impair the right to institute
suit for the payment on or after the Stated Maturity thereof (or, in the case of
redemption or repurchase in conformity with Section 9.13, on or after the
Redemption Date or Change of Control Payment Date), or change the place of
payment where, or the coin or currency in which, the principal of or premium, if
any, or interest on any Note is payable;

(b) reduce the percentage in principal amount of the Outstanding
Notes the consent of whose Holders is required for any waiver (or compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences) provided for in this Indenture;

(d) modify any of the Events of Default enumerated in Section 4.01;
or

(e) modify any of the provisions of Section 9.13 or Article Ten in a
manner adverse to the Holders.

It shall not be necessary for any Act of Holders under this
Section 8.02 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.

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SECTION 8.03. EXECUTION OF SUPPLEMENTAL INDENTURES.

In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article Eight or the modification
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such supplemental indenture is authorized or
permitted by this Indenture. The Trustee may, but shall not be obligated to,
enter into any such supplemental indenture that affects the Trustee's own
rights, duties or immunities under this Indenture or otherwise.

SECTION 8.04. EFFECT OF SUPPLEMENTAL INDENTURES.

Upon execution of any supplemental indenture under this Article Eight,
this Indenture shall be modified in accordance therewith, and such supplemental
indenture shall form a part of this Indenture for all purposes; and every Holder
of Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby.

SECTION 8.05. REFERENCE IN NOTES TO SUPPLEMENTAL INDENTURES.

Notes authenticated and delivered after the execution of any supplemental
indenture pursuant to this Article Eight may, and shall, if required by the
Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Notes so modified as to conform, in the opinion of the Trustee and a
majority of the entire Board of Directors of the Company, to any such
supplemental indenture may be prepared and executed by the Company and
authenticated and delivered by the Trustee in exchange for the Outstanding
Notes.
ARTICLE NINE
COVENANTS

SECTION 9.01. PAYMENT OF PRINCIPAL, PREMIUM, IF ANY, AND INTEREST.

The Company will duly and punctually pay the principal of and premium,
if any, and interest on each of the Notes in accordance with the terms of the
Notes and this Indenture.

SECTION 9.02. MAINTENANCE OF OFFICE OR AGENCY.

The Company will maintain in Curacao, Netherlands Antilles, an office
or agency where Notes may be presented for payment, redemption or repurchase,
where Notes may be surrendered for registration of transfer or exchange, and
where notices and demands to or upon the Company in respect of the Notes and
this Indenture may be served. The Company will give prompt written notice to
the Trustee of the location, and of any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Trustee with the address thereof,

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such presentations, surrenders, notices and demands may be made or served at the
Principal Office of the Trustee and the Company hereby appoints the Trustee as
its agent to receive all such presentations, surrenders, notices and demands.

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

SECTION 9.03. FUNDS FOR NOTE PAYMENTS TO BE HELD IN TRUST.

If the Company at any time shall act as its own paying agent, on or
before each due date of the principal of or premium, if any, or interest on the
Notes it will segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal, premium, if any, or
interest so becoming due until such sums shall be paid to such Persons or
otherwise disposed of as herein provided and promptly will notify the Trustee of
its action or failure so to act.

Whenever the Company shall have one or more paying agents, before each
due date of the principal of or premium, if any, or interest on the Notes it
will deposit with the principal paying agent a sum sufficient to pay the
principal, premium, if any, or interest so becoming due, such sum to be held in
trust for the benefit of the Persons entitled to such principal, premium, if
any, or interest, and (unless such principal paying agent is the Trustee) the
Company promptly will notify the Trustee of its action or any failure so to act.

The Company will cause each paying agent other than the Trustee to
execute and deliver to the Trustee an instrument in which such paying agent
shall agree with the Trustee, subject to the provisions of this Section 9.03,
that such paying agent will:

(a) hold all sums held by it as such agent for the payment of the
principal of or premium, if any, or interest on the Notes in trust for the
benefit of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;

(b) give the Trustee notice of any default by the Company (or by any
other obligor on the Notes) in the making of any payment of principal, premium,
if any, or interest; and

(c) at any time during the continuance of any such default, upon the
written request of the Trustee, forthwith pay to the Trustee all sums so held in
trust by such paying agent.

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The Company, at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, may pay,
or by Company Order direct any paying agent to pay, to the Trustee all funds
held in trust by the Company or such paying agent hereunder, such funds to be
held by the Trustee upon the same trusts as those upon which such funds were
held by the Company or such paying agent; and upon such payment by the Company
or any paying agent to the Trustee, the Company or such paying agent shall be
released from all further liability with respect to such funds.

Any funds deposited with the Trustee or any paying agent, or then held
by the Company, in trust for the payment of the principal of or premium, if any,
or interest on any Note and remaining unclaimed for two years after such
principal, premium, if any, or interest has become due and payable shall be paid
to the Company on Company Request or (if then held by the Company) shall be
discharged from such trust; and the Holder of such Note thereafter, as an
unsecured general creditor, shall look only to the Company for payment thereof,
and all liability of the Trustee or such paying agent with respect to such
funds, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such paying agent, before being
required to make any such payment, at the expense of the Company may cause to be
published once, in a newspaper published in the English language, customarily
published on each Business Day and of general circulation in Curacao,
Netherlands Antilles, and once in two Arabic language newspapers, customarily
published on each Business Day (which is also a business day in the Arabian
Gulf) and of general circulation in the Arabian Gulf, notice that such funds
remain unclaimed and that, after a date specified therein, which shall not be
less than 30 days from the date of such publication, any unclaimed balance of
such funds then remaining will be repaid to the Company.

SECTION 9.04. CORPORATE EXISTENCE.

Subject to the provisions of Article Seven, the Company will do or
cause to be done, and will cause each Significant Subsidiary to do or cause to
be done, all things necessary to preserve and keep in full force and effect its
corporate existence, rights (charter and statutory) and franchises; provided,
however, that the Company shall not be required to preserve or cause to be
preserved any such right or franchise if a majority of the entire Board of
Directors of the Company or the relevant Significant Subsidiary shall determine
that the preservation thereof is no longer desirable in the conduct of the
business of the Company or the Significant Subsidiary, as the case may be, and
that the loss thereof is not disadvantageous in any material respect to the
Holders.

SECTION 9.05. MAINTENANCE OF PROPERTIES.

The Company will cause all properties used or useful in the conduct of
its and any Significant Subsidiary's business to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and will cause to be made all necessary repairs, renewals, replacements,
betterments and improvements thereof, all as in the judgment of the Company or
such Significant Subsidiary may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at

PRIME HOLDINGS INDENTURE

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all times; provided, however, that nothing in this Section 9.05 shall prevent
the Company or any Significant Subsidiary from discontinuing the operation or
maintenance of any of such properties if such discontinuance, in the judgment of
the Company or such Significant Subsidiary, as the case may be, is desirable in
the conduct of its business and not disadvantageous in any material respect to
the Holders.

SECTION 9.06. PAYMENT OF TAXES AND OTHER CLAIMS.

The Company will pay or discharge or cause to be paid or discharged,
and will cause each Significant Subsidiary to pay, discharge or cause to be paid
or discharged, before the same shall become delinquent, (a) all material taxes,
assessments and governmental charges levied or imposed upon the Company or such
Significant Subsidiary or upon the income, profits or property of the Company or
such Significant Subsidiary and (b) all lawful, material claims for labor,
materials and supplies that, if unpaid, might by law become a Lien upon the
property of the Company or such Significant Subsidiary; provided, however, that
neither the Company nor any Significant Subsidiary shall be required to pay or
discharge or cause to be paid or discharged any such tax, assessment, charge or
claim whose amount, applicability or validity is being contested in good faith
by appropriate proceedings.

SECTION 9.07. PROVISION OF REPORTS.

The Company shall furnish to the Trustee copies of semi-annual and
annual financial statements of the Company and its Subsidiaries, together with,
in the case of annual financial statements, the related auditors' reports. The
Trustee shall distribute such copies to Holders as soon as practicable after its
receipt thereof.

SECTION 9.08. WAIVER OF USURY DEFENSE.

To the extent permitted by applicable law, the Company agrees that it
will not assert, plead (as a defense or otherwise) or in any manner whatsoever
claim (and will actively resist any attempt to compel it to assert, plead or
claim) in any action, suit or proceeding that the effective interest rate on the
Notes (or any interest or other amounts payable pursuant to Section 2.03 hereof
or the Notes) violates present or future usury or other laws relating to the
interest payable on any indebtedness and will not otherwise avail itself (and
will actively resist any attempt to compel it to avail itself) of the benefits
or advantages of any such laws.

SECTION 9.09. WAIVER OF CERTAIN COVENANTS.

The Company may omit in any particular instance to comply with any
covenant or condition set forth in this Article Nine, other than any such
covenant or condition contained in Section 9.01, 9.02, 9.03, 9.04 or 9.13, if
before the time for such compliance the Holders of at least a majority in
principal amount of the Notes at the time Outstanding shall, by Act of such
Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend
to or affect such covenant or condition except to the extent so expressly
waived and, until such waiver shall

PRIME HOLDINGS INDENTURE

<PAGE>

become effective, the obligations of the Company and the duties of the Trustee
in respect of any such covenant or condition shall remain in full force and
effect.

SECTION 9.10. STATEMENT BY OFFICERS AS TO DEFAULT.

The Company will deliver to the Trustee, within 90 days after the end
of each fiscal quarter of the Company, an Officers' Certificate stating whether
or not to the best knowledge of the signers thereof the Company is in default in
the performance and observance of any of the terms, provisions and conditions of
Sections 9.01 through 9.07 or Sections 9.10 through 9.13, and if the Company
shall be in default, specifying all such defaults and the nature and status
thereof.

SECTION 9.11. LIMITATION ON INDEBTEDNESS.

Neither the Company nor any of its Subsidiaries will incur any
Indebtedness except that the Company and, if indicated below, its Subsidiaries
shall not be prohibited hereby from incurring:

(a) Indebtedness of the Company under the Notes and this Indenture,
provided that the aggregate principal amount of Indebtedness permitted to be
outstanding on any date by this clause (a) shall not exceed $10,000,000 less the
aggregate principal amount of Notes that would have been redeemed, repurchased
or otherwise repaid on or prior to such date pursuant to the terms of this
Indenture, as in effect on the date hereof;

(b) Indebtedness of the Company or Primeco (which may be guaranteed
by any of its Subsidiaries) under the Senior Credit Facility, provided that the
aggregate principal amount of Indebtedness permitted to be outstanding
(including pursuant to letters of credit and other contingent obligations) on
any date by this clause (b) shall not exceed $350,000,000;

(c) Indebtedness of Primeco comprising Bridge Subordinated Debt in an
aggregate principal amount not in excess of $75,000,000 plus additional
Indebtedness in lieu of payment of cash interest;

(d) Indebtedness of the Company and its Subsidiaries that is
permitted under the Senior Credit Facility, as in effect from time to time
(including without limitation, the Permanent Subordinated Debt (as defined in
the Credit Agreement pursuant to which the Senior Credit Facility is provided));

(e) other Indebtedness of the Company or any of its Subsidiaries, so
long as, and to the extent that, the Interest Coverage Ratio on the last day of
the last fiscal quarter of the Company ended prior to the incurrence of such
Indebtedness, giving PRO FORMA effect to the incurrence of such Indebtedness and
the application of the proceeds thereof (including, without limitation, by
giving pro forma effect in Consolidated EBITDA to earnings of or attributable to
any company or operating assets acquired with the proceeds of such

PRIME HOLDINGS INDENTURE

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Indebtedness) on the first day of the four-quarter period then ended, is equal
to or greater than 1.00 : 1.00;

(f) Additional Indebtedness of the Company (which may comprise
Indebtedness under the Senior Credit Facility in addition to Indebtedness
otherwise herein permitted) in an aggregate principal amount at any time
outstanding not to exceed $50,000,000;

g) Indebtedness of the Company or any of its Subsidiaries under
Interest Swap Obligations relating to Indebtedness for money borrowed;

(h) Indebtedness of any wholly-owned Subsidiary of the Company to the
Company or any other Subsidiary of the Company or of the Company to any of its
wholly-owned Subsidiaries; and

(i) any Indebtedness of the Company or any of its Subsidiaries the
proceeds of which are used to redeem, repurchase, retire for value, refinance or
refund any Indebtedness referred to in clauses (a) through (h) above.

SECTION 9.12. LIMITATION ON THE PAYMENT OF DIVIDENDS AND PURCHASE OF STOCK.

The Company will not:

(a) declare or pay, or make or set aside, any dividend or
distribution on any share of its common stock (other than dividends payable
solely in shares of common stock of the Company);

(b) purchase, redeem or otherwise acquire or retire any shares of its
capital stock;

(c) set apart any sum for the purchase, redemption or other
acquisition or retirement of any shares of its capital stock; or

(d) make any other distribution, by reduction of capital or
otherwise, on or with respect to any shares of its capital stock;

provided, however, that nothing in this Section 9.12 shall prohibit the Company
from repurchasing or redeeming any of its capital stock pursuant to the terms of
any subscription agreement entered into with any officer, director or employee
of the Company or any of its Subsidiaries.

SECTION 9.13. CHANGE OF CONTROL.

If at any time after the date hereof a Change of Control occurs (the
date on which the Change of Control occurs being referred to herein as the
"Change of Control Date"), then the Company shall promptly make an offer to
purchase for cash (the "Change of

PRIME HOLDINGS INDENTURE

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Control Offer"), which shall not constitute a redemption for the purposes of
Article Ten hereof, on the last day of the next fiscal quarter of the Company
commencing after the Change of Control Date (the "Change of Control Payment
Date"), all Notes then Outstanding at the purchase price equal to the price
specified in the form of Note for optional redemptions, together with all
accrued interest to and including the Change of Control Payment Date.

Notice of the Change of Control Offer shall be mailed by the Company
not less than 25 days before the Change of Control Payment Date to the Holders
of the Notes at their last registered addresses with a copy to the Trustee. At
least five Business Days prior to the Company's mailing of a notice of Change of
Control Offer, the Company shall notify the Trustee of its obligation to offer
to repurchase all of the Notes. The Change of Control Offer shall remain open
from the time of mailing until the Change of Control Payment Date. The notice
shall be accompanied by a copy of the most recent financial statements furnished
pursuant to Section 9.07 hereof. The notice shall contain all instructions and
materials reasonably necessary to enable such Holders to tender Notes pursuant
to the Change of Control Offer. The notice, which shall govern the terms of the
Change of Control Offer, shall state:

(a) that the Change of Control Offer is being made pursuant to this
Section 9.13, that Notes may be surrendered in whole or in part (in
denominations of $1,000 and integral multiples thereof), and that all Notes will
be accepted for payment;

(b) the purchase price and the Change of Control Payment Date;

(d) that any Note (or part thereof) accepted for payment pursuant to
the Change of Control Offer shall cease to accrue interest after the Change of
Control Payment Date;

(e) that Holders electing to have a Note purchased pursuant to a
Change of Control Offer will be required to surrender the Note, with the form
entitled "Option of Holder to Elect Repurchase" on the reverse of the Note
completed, to the place specified in the notice prior to 5:00 p.m., New York
City time, on the Change of Control Payment Date;

(f) that Holders will be entitled to withdraw their election if the
Person designated in the notice receives, not later than 5:00 p.m., New York
City time, on the Change of Control Payment Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the principal
amount of the Note(s) the Holder delivered for purchase and a statement that
such Holder is withdrawing its election to have the Note(s) purchased;

(g) that Holders whose Notes are purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion of the
Notes surrendered; and

PRIME HOLDINGS INDENTURE

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(h) that the Company's obligation to repurchase is limited as set
forth in the second and third sentences of the first paragraph of this
Section 9.13.

On the Change of Control Payment Date, the Company shall (i) accept
for payment Notes or portions thereof tendered pursuant to the Change of Control
Offer, (ii) deposit with the Trustee funds sufficient to pay the purchase price
of all Notes or portions thereof so tendered and (iii) deliver to the Trustee
all Notes so accepted for payment, and the Trustee shall promptly authenticate
and mail to such Holders a new Note equal in principal amount to any unpurchased
portion of any Note surrendered. The Company will notify the Holders of the
results of the Change of Control Offer on or as soon as practicable after the
Change of Control Payment Date.

ARTICLE TEN
REDEMPTION OF NOTES

SECTION 10.01. APPLICABILITY OF ARTICLE.

Redemption of Notes at the election of the Company or otherwise, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article Ten.

SECTION 10.02. OPTIONAL REDEMPTION.

Subject to the restrictions specified in the form of Note, the Notes
may be redeemed as a whole at any time or in part from time to time, at the
redemption prices and as otherwise specified in such form of Note for
redemptions, together with all accrued interest to the Redemption Date.

SECTION 10.03. ELECTION TO REDEEM.

The election by the Company to redeem Notes pursuant to Section 10.01
shall be evidenced by a resolution adopted by a majority of the entire Board of
Directors of the Company.

SECTION 10.04. SELECTION BY COMPANY OF NOTES TO BE REDEEMED.

(a) The particular Notes to be redeemed pursuant to Section 10.02, if
less than all the Outstanding Notes are to be redeemed pursuant thereto, shall
be selected by the Company not more than 60 days nor less than 30 days prior to
the Redemption Date, from the Outstanding Notes not previously called for
redemption and, subject to Section 10.04(c) hereof, shall be redeemed pro rata
among the Holders in the proportion that the aggregate amount of Notes held by a
Holder bears to the aggregate amount of Notes Outstanding, provided Notes shall
be selected for redemption in denomination of $1,000 or integral multiples
thereof.

PRIME HOLDINGS INDENTURE

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(b) The Company promptly shall notify the Trustee in writing of the
Notes selected for redemption and, in the case of any Notes selected for partial
redemption, the principal amount thereof to be redeemed.

(c) For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Notes shall relate, in
the case of any Note redeemed or to be redeemed only in part, to the portion of
the principal amount of such Note that has been or is to be redeemed.

SECTION 10.05. NOTICE OF REDEMPTION.

Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 or more than 60 days prior to the Redemption
Date, to each Holder of Notes to be redeemed, at his address appearing in the
Note Register.

All notices of redemption shall state:

(a) the Redemption Date;

(b) the redemption price;

(c) if less than all the Outstanding Notes are to be redeemed, the
identification (and, in the case of partial redemption, the principal amounts)
of the particular Notes to be redeemed;

(d) that on the Redemption Date the redemption price will become due
and payable upon each such Note to be redeemed and that interest thereon will
cease to accrue on and after such date; and

(e) the place or places where such Notes are to be surrendered for
payment of the redemption price.

Notice of redemption of Notes to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.

SECTION 10.06. DEPOSIT OF REDEMPTION PRICE.

Prior to any Redemption Date, the Company shall deposit with the
Trustee or with the paying agent (or, if the Company is acting as its own paying
agent, it shall segregate and hold in trust as provided in Section 9.03) funds
sufficient to pay the redemption price of, and (except if the Redemption Date
shall be an Interest Payment Date) accrued interest on, all the Notes that are
to be redeemed on that date.

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SECTION 10.07. NOTES PAYABLE ON REDEMPTION DATE.

Notice of redemption having been given as aforesaid, the Notes so to
be redeemed shall become due and payable on the Redemption Date, at the
redemption price therein specified, and from and after such date (unless the
Company shall default in the payment of the redemption price and accrued
interest) such Notes shall cease to bear interest. Upon surrender of any such
Note for redemption in accordance with such notice, such Note shall be paid by
the Company at the redemption price, together with all accrued interest to the
Redemption Date; provided, however, that installments of interest whose Stated
Maturity is on or prior to the Redemption Date shall be payable to the Holders
of such Notes registered as such at the close of business on the relevant Record
Dates according to their terms and the provisions of Section 2.08.

If any Note called for redemption shall not be so paid upon surrender thereof
for redemption, the principal and premium, if any, shall, until paid, bear
interest from the Redemption Date at the applicable rate specified in
Section 2.03.

SECTION 10.08. NOTES REDEEMED IN PART.

Any Note that is to be redeemed only in part shall be surrendered at
an office or agency of the Company designated for that purpose pursuant to
Section 9.02 (with, if the Company or the Trustee so requires, due endorsement
by, or a written instrument of transfer in form satisfactory to the Company and
the Trustee duly executed by, the Holder thereof or his attorney duly authorized
in writing), and the Company shall execute, and the Trustee shall authenticate
and deliver to the Holder of such Note, at the expense of the Company, a new
Note or Notes, of any authorized denomination requested by such Holder, in an
aggregate principal amount equal to and in exchange for the unredeemed portion
of the principal amount of the Note so surrendered.

ARTICLE ELEVEN
SUBORDINATION

SECTION 11.01. AGREEMENT OF SUBORDINATION.

The Company covenants and agrees, and each Holder of Notes by his
acceptance thereof likewise covenants and agrees, that all Notes shall be issued
subject to the provisions of this Article Eleven; and each Person holding any
Note, whether upon original issue or exchange or upon transfer or assignment
thereof, accepts and agrees to be bound by such provisions.

The payment of the principal of and premium, if any, interest and any
other amount due on all Notes, to the extent and in the manner hereinafter set
forth, shall be subordinated and subject in right of payment to the prior
payment in full in cash of all Senior Indebtedness (including interest accruing
after the filing of a petition by or against the

PRIME HOLDINGS INDENTURE

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Company under any Bankruptcy Law, whether or not allowed as a claim), whether
outstanding at the date hereof or hereafter incurred.

SECTION 11.02. PAYMENTS TO HOLDERS OF NOTES.

In the event and during the continuation of any default in the payment
of principal of, premium, if any, or interest on or any other payment due under
the Senior Credit Facility, then, unless and until such default shall have been
cured or waived, no payment or distribution shall be made by or on behalf of the
Company with respect to the principal of or premium, if any, interest or any
other payment due on or with respect to the Notes.

In the event and during the continuation of any default (other than a
default of any payment due) with respect to the Senior Credit Facility
permitting the Senior Lenders thereunder to accelerate the maturity thereof,
then, unless and until such default shall have been cured or waived, no payment
or distribution shall be made by or on behalf of the Company with respect to the
principal of or premium, if any, interest or any other payment due on or with
respect to the Notes, if written notice of such default shall have been given to
the Trustee and the Company by the Bank Agent, during the period commencing on
the date on which such notice is received by the Company and the Trustee and
ending on the earlier to occur of (a) the 179th day thereafter or (b) the day on
which such default is cured or waived; provided, however, that this sentence
shall not prohibit any payment of any installment of principal of or premium, if
any, interest or any other payment due on the Notes for more than 179 days in
any 365-day period and provided, further, that no default that once formed the
basis for any such notice by the Bank Agent shall form the basis of any
subsequent notice under this paragraph. For purposes of the preceding sentence,
"default" shall mean any default or failure to observe or perform any provision
of the Senior Credit Facility, after the giving of notice, the expiration of any
grace periods, or both, so that the Senior Lenders are entitled to accelerate
the maturity thereof.

Upon any payment by the Company, or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, to creditors upon any dissolution, winding-up, total or partial
liquidation or reorganization of the Company or its property, whether voluntary
or involuntary, or any assignment for the benefit of creditors or any marshaling
of assets and liabilities, or in bankruptcy, insolvency, receivership or other
proceedings, all amounts due or to become due upon all Senior Indebtedness first
shall be paid in full in cash, or payment thereof provided for in cash in
accordance with its terms, before any payment is made on account of the
principal of or premium, if any, interest or any other amount due on or with
respect to the Notes; and upon any such dissolution, winding-up, liquidation,
reorganization, assignment, marshaling or proceedings:

(a) the Senior Lenders shall be entitled to receive payment in full
in cash and cash equivalents of all Senior Indebtedness before the Holders of
the Notes and the Trustee shall be entitled to receive any payment of principal
or premium, if any, or interest on or other amounts payable with respect to the
Notes; and

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<PAGE>

(b) any payment by the Company, or distribution of assets or
securities of the Company of any kind or character, whether in cash, property or
securities, to which the Holders of the Notes or the Trustee would be entitled
except for the provisions of this Article Eleven, shall be paid by the Company
or by any custodian, agent or other Person making such payment or distribution,
or by any Holder, the Trustee, any paying agent or any depositary if received by
it, directly to the Senior Lenders or their representative or representatives,
or the trustee or trustees under any indenture pursuant to which any instruments
evidencing any such Senior Indebtedness may have been issued, as their
respective interests may appear, to the extent necessary to pay all such Senior
Indebtedness in full in cash or cash equivalents, after giving effect to any
concurrent payment or distribution to or for the Senior Lenders.

In the event that, notwithstanding the foregoing, any payment by or
distribution of assets or securities of the Company of any kind or character,
whether in cash, property or securities, prohibited by the foregoing, shall be
received by the Trustee or the Holders before all such Senior Indebtedness is
paid in full in cash, such payment or distribution shall be held in trust for
the benefit of and shall be paid over or delivered to the Senior Lenders or
their representative or representatives, or to the trustee or trustees under any
indenture pursuant to which any instrument evidencing any such Senior
Indebtedness may have been issued, as their respective interests may appear, for
application to the payment of all such Senior Indebtedness remaining unpaid to
the extent necessary to pay all such Senior Indebtedness in full in cash or cash
equivalents in accordance with its terms, after giving effect to any concurrent
payment or distribution to or for the benefit of the Senior Lenders.

The consolidation of the Company with or the merger of the Company
into another corporation, or the liquidation or dissolution of the Company
following the conveyance or transfer of its property or assets as an entirety or
substantially as an entirety to another corporation, upon the terms and
conditions provided for in Article Seven, shall not be deemed a dissolution,
winding-up, liquidation or reorganization for the purposes of this Section 11.02
if such other corporation, as a part of such consolidation, merger, conveyance
or transfer, shall comply with the conditions stated in Article Seven. Nothing
in this Section 11.02 shall apply to claims of or payments to the Trustee
pursuant to Section 5.07.

The Senior Lenders, at any time and from time to time, without the
consent of or notice to the Holders, without incurring responsibility to the
Holders and without impairing or releasing the obligations of the Holders
hereunder to the Senior Lenders, may: (a) change the manner, place or terms
of payment or change or extend the time of payment of, or renew or alter, the
Senior Indebtedness, or otherwise amend in any manner Senior Indebtedness or
any instrument evidencing the same or any agreement under which the Senior
Indebtedness is outstanding; (b) sell, exchange, release or otherwise deal
with any property pledged, mortgaged or otherwise securing the Senior
Indebtedness; (c) release any Person liable in any manner for the collection
or payment of the Senior Indebtedness; and (d) exercise or refrain from
exercising any rights against the Company or any other Person.

For purposes of this Article Eleven, "payment" of or with respect to
the Notes includes any payment, redemption, acquisition, deposit, segregation,
retirement, sinking fund

PRIME HOLDINGS INDENTURE

<PAGE>

payment and defeasance of or with respect to the Notes, but does not include the
delivery of Outstanding or previously redeemed Notes in satisfaction of all or
any part of any sinking fund payment.

SECTION 11.03. SUBROGATION OF NOTES.

Subject to the payment in full in cash of all Senior Indebtedness at
the time outstanding, the Holders shall be subrogated to the rights of the
Senior Lenders to receive payments or distributions of cash, property or
securities of the Company applicable to the Senior Indebtedness until the
principal of and premium, if any, and interest on the Notes shall be paid in
full; and, for the purposes of such subrogation, no payments or distributions to
the Senior Lenders of any cash, property or securities to which the Holders of
the Notes or the Trustee would be entitled except for the provisions of this
Article Eleven, and no payment over pursuant to the provisions of this Article
Eleven to or for the benefit of the Senior Lenders by the Holders or the
Trustee, shall, as between the Company, its creditors other than the Senior
Lenders and the Holders, be deemed to be a payment by the Company to or on
account of such Senior Indebtedness. It is understood that the provisions of
this Article Eleven are and are intended solely for the purpose of defining the
relative rights of the Holders on the one hand and the Senior Lenders on the
other hand.

Nothing contained in this Article Eleven or elsewhere in this
Indenture (except to the extent contemplated by Section 4.02) or in the Notes is
intended to or shall impair, as between the Company, its creditors other than
the Senior Lenders and the Holders, the obligation of the Company, which is
absolute and unconditional, to pay to the Holders the principal of and premium,
if any, and interest on the Notes as and when the same shall become due and
payable in accordance with their terms, or is intended to or shall affect the
relative rights of the Holders and creditors of the Company other than the
Senior Lenders, nor shall anything herein (except to the extent contemplated by
Section 4.02) or therein prevent the Trustee or the Holder of any Note from
exercising all remedies otherwise permitted by applicable law upon default under
this Indenture, subject to the rights, if any, under this Article Eleven of the
Senior Lenders in respect of cash, property or securities of the Company
received upon the exercise of any such remedy.

Upon any payment or distribution of assets or securities of the
Company referred to in this Article Eleven, the Trustee, subject to the
provisions of Section 5.01, and the Holders shall be entitled to rely upon any
order or decree made by any court of competent jurisdiction in which such
dissolution, winding-up, liquidation, reorganization, assignment, marshaling or
proceedings are pending, or a certificate of any Custodian, agent or other
Person making such payment or distribution, delivered to the Trustee or to the
Holders, for the purpose of ascertaining the Persons entitled to participate in
such payment or distribution, the Senior Lenders and the holders of other
indebtedness of the Company, the amount thereof or payable thereon, the amount
or amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article Eleven.

PRIME HOLDINGS INDENTURE

<PAGE>

SECTION 11.04. AUTHORIZATION BY HOLDERS OF NOTES.

Each Holder of a Note by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or appropriate
to acknowledge or effectuate the subordination provided in this Article Eleven
and appoints the Trustee his attorney-in-fact for any and all such purposes
including, without limitation in the event of any dissolution, winding-up,
liquidation, marshaling of assets and liabilities or reorganization of the
Company (whether in bankruptcy, insolvency, receivership, reorganization or
similar proceedings or upon an assignment for the benefit of creditors or
otherwise) tending towards liquidation of the business and assets of the
Company, the filing of a claim for the unpaid principal balance of and premium,
if any, and accrued interest on and other obligations with respect to the Notes
in the form required in those proceedings.

SECTION 11.05. NOTICE TO TRUSTEE.

The Company shall give prompt written notice to the Trustee of any
fact known to the Company that would prohibit the making of any payment or
distribution to or by the Trustee in respect of the Notes pursuant to the
provisions of this Article Eleven. Notwithstanding the provisions of this
Article Eleven or any other provision of this Indenture, the Trustee shall not
be charged with knowledge of the existence of any fact that would prohibit the
making of any payment or distribution to or by the Trustee in respect of the
Notes pursuant to the provisions of this Article Eleven, unless and until a
Responsible Officer shall have received written notice thereof at the Principal
Office of the Trustee from the Company or a Senior Lender or from any trustee
for Senior Indebtedness; and prior to the receipt of any such written notice the
Trustee, subject to the provisions of Section 5.01, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 11.05
within one Business Day prior to the date upon which by the terms hereof any
funds may become payable for any purpose (including without limitation the
payment of the principal of or premium, if any, or interest on any Note), then,
anything herein contained to the contrary notwithstanding, the Trustee shall
have full power and authority to receive such funds and to apply the same to the
purpose for which they were received and shall not be affected by any notice to
the contrary that may be received by it within one Business Day prior to such
date.

The Trustee, subject to the provisions of Section 5.01, shall be
entitled to rely on the delivery to it of a written notice by a Person
representing himself to be a Senior Lender (or a trustee or agent on behalf of a
Senior Lender) to establish that such notice has been given by a Senior Lender
or a trustee or agent on behalf of any such Senior Lender. In the event that
the Trustee determines in good faith that further evidence is required with
respect to the right of any Person as a Senior Lender to participate in any
payment or distribution pursuant to this Article Eleven, the Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of Senior Indebtedness held by such Person, the extent to which
such Person is entitled to participate in such payment or distribution and any
other fact pertinent to the rights of such Person under this Article Eleven, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person

PRIME HOLDINGS INDENTURE

<PAGE>

pending judicial determination as to the right of such Person to receive such
payment or distribution.

SECTION 11.06. TRUSTEE'S RELATION TO SENIOR INDEBTEDNESS.

The Trustee in its individual capacity shall be entitled to all the
rights set forth in this Article Eleven in respect of any Senior Indebtedness at
any time held by it, to the same extent as any other Senior Lender, and no
provision of this Indenture shall deprive the Trustee of any of its rights as
such Senior Lender.

With respect to the Senior Lenders, the Trustee undertakes to perform
or to observe only such covenants and obligations as are specifically set
forth in this Article Eleven, and no implied covenant or obligation with
respect to the Senior Lenders shall be read into this Indenture against the
Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the
Senior Lenders. Whenever a distribution is to be made or a notice given to
Senior Lenders, the distribution may be made and the notice given to their
representative(s).

SECTION 11.07. NO IMPAIRMENT OF SUBORDINATION.

No right of any present or future Senior Lender to enforce
subordination as herein provided at any time in any way shall be prejudiced or
impaired by any act or failure to act on the part of the Company or by any act
or failure to act, in good faith, by any such Senior Lender, or by any
noncompliance by the Company with the terms, provisions and covenants of this
Indenture, regardless of any knowledge thereof which any such Senior Lender may
have or otherwise be charged with.

SECTION 11.08. ARTICLE ELEVEN NOT TO PREVENT EVENTS OF DEFAULT.

The failure to make a payment on account of principal, premium, if
any, interest or any other amount due hereunder or on the Notes by reason of any
provision in this Article Eleven shall not be construed as preventing the
occurrence of an Event of Default under Section 4.01 but the remedies in respect
thereof are limited as set forth in Article Four and any amounts realized
through the exercise of such remedies shall be subject to the provisions of this
Article Eleven.

SECTION 11.09. CONTINUING EFFECT.

THE FOREGOING PROVISIONS CONSTITUTE A CONTINUING OFFER TO ALL PERSONS
WHO BECOME, OR CONTINUE TO BE, SENIOR LENDERS; AND SUCH
PROVISIONS ARE MADE FOR THE BENEFIT OF THE SENIOR LENDERS, AND
SUCH SENIOR LENDERS ARE HEREBY MADE OBLIGEES HEREUNDER THE SAME
AS IF THEIR NAMES WERE WRITTEN HEREIN AS SUCH, AND THEY AND/OR
EACH OF THEM MAY PROCEED TO ENFORCE SUCH PROVISIONS AND NEED NOT
PROVE RELIANCE THEREON.

PRIME HOLDINGS INDENTURE

<PAGE>

SECTION 11.10. INDIVIDUAL RIGHTS OF SENIOR LENDERS.

A Senior Lender in its individual or any other capacity may become the
owner or pledgee of Notes and may otherwise deal with the Company or any
Subsidiary or Affiliate of the Company with the same rights as if it were not a
Senior Lender.

SECTION 11.11. ARTICLE APPLICABLE TO PAYING AGENTS AND DEPOSITARIES.

In case at any time any paying agent or depositary other than the
Trustee shall have been appointed by the Company and be then acting hereunder,
the term "Trustee" as used in this Article shall in such case (unless the
context otherwise requires) be construed as extending to and including such
paying agent or depositary within its meaning as fully for all intents and
purposes as if such paying agent or depositary were named in this Article in
addition to or in place of the Trustee; PROVIDED, however, that Section 11.06
shall not apply to the Company if it acts as paying agent.

AIBC Services N.V. hereby accepts the trusts in this Indenture
declared and provided, upon the terms and conditions hereinabove set forth.

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly signed, and their respective corporate seals, if any, to be hereunto
affixed and attested, all as of the date first written above.

PRIME HOLDING, INC.

By: /s/ Robert V. Glaser
-----------------------
Name: Robert V. Glaser
Title: President
Attest:

By: /s/ Christopher J. O'Brien
----------------------------
Name: Christopher J. O'Brien
Title: Secretary

AIBC SERVICES N.V.

By its Managing Director

Amaco (Curacao) N.V.

By: /s/
---------------------------

PRIME HOLDINGS INDENTURE

<PAGE>

EXHIBIT A

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, AND MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED
WITHOUT REGISTRATION UNDER SUCH ACT EXCEPT UPON DELIVERY OF AN OPINION OF
COUNSEL, SATISFACTORY IN FORM AND SUBSTANCE TO THE ISSUER, THAT ANY SUCH SALE,
PLEDGE, HYPOTHECATION OR OTHER TRANSFER MAY PROPERLY BE MADE WITHOUT
REGISTRATION UNDER SUCH ACT.

PRIME HOLDING, INC.

14% Senior Subordinated Note Due March 31, 2006

No.________________ $_________________

AS STATED IN THE INDENTURE, THE RIGHTS OF THE HOLDER HEREOF ARE SUBJECT TO
SUBORDINATION IN CERTAIN EVENTS TO ALL SENIOR INDEBTEDNESS (AS DEFINED IN THE
INDENTURE REFERRED TO HEREIN) OF THE COMPANY

Prime Holding, Inc., a Delaware corporation (the "Company", which term
includes any successor corporation under the Indenture hereinafter referred
to), for value received, hereby promises to pay to ____________________________,
or registered assigns, the principal sum of US $________________________ on
March 31, 2006, and to pay interest thereon at the rate of 14% per annum from
the date this Note was originally issued under the Indenture or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, as the case may be, until Maturity. Interest shall be computed for such
period on the basis of the actual number of days elapsed in a 360-day year.
Interest at such rate shall be payable in arrears on each November 15 and
May 15, commencing May 15, 1995 and at Maturity. Interest shall be payable at
the rate of 16% per annum on any overdue principal and on any overdue interest,
to the extent that the payment of such interest shall be legally enforceable.
The interest so payable, and punctually paid or duly provided for, on any
Interest Payment Date, will be paid, as provided in the Indenture, to the Person
in whose name this Note is registered at the close of business on the Regular
Record Date for such interest, which shall be the November 1 and May 1, as the
case may be, next preceding such Interest Payment Date. Any such interest not
so punctually paid or duly provided for on any Interest Payment Date forthwith
will cease to be payable to the Holder on such Regular Record Date by virtue of
his having been such Holder and shall be paid to the Person in whose name this
Note is registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest to be fixed by the Trustee, notice of which
shall be given to Holders not less than ten days prior to such Special Record
Date, or be paid at any time in any other lawful manner not inconsistent with
the requirements of any securities exchange on which the Notes may be listed,
and upon such notice as may be required by such exchange, all as more

<PAGE>

fully provided in the Indenture. Payment of the principal of and premium, if
any, and interest on this Note will be made at the office or agency of the
Company maintained for such purpose in Curacao, Netherlands Antilles, in such
coin or currency of the United States of America as at the time of payment is
legal tender for the payment of public and private debts; provided, however,
that at the option of the Company payment may be made by check mailed to the
Person entitled thereto at his address appearing on the Note Register.
Notwithstanding the foregoing, the principal of and premium, if any, and
interest on this Note (other than the final payment of principal) at the option
of the Holder hereof shall be made directly to such Holder, by wire transfer of
immediately available funds, without presentment, to the address designated by
such Holder in writing. Before selling or otherwise transferring this Note,
such Holder will make a notation hereon of the aggregate amount of all payments
of principal theretofore made, and of the date to which interest has been paid.

Reference is made to the further provisions of this Note set forth on
the reverse hereof. Such further provisions shall for all purposes have the
same effect as though fully set forth on this front side of this Note.

THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF THE
STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE CONSTRUED IN ACCORDANCE WITH
AND GOVERNED BY THE LAWS THEREOF.

This Note shall not be valid or become obligatory for any purpose
until the certificate of authentication hereon shall have been manually signed
by the Trustee as provided in the Indenture.

Capitalized terms used herein that are not defined herein but that are
defined in the Indenture are used as therein defined.

IN WITNESS WHEREOF, Prime Holding, Inc. has caused this instrument to
be duly executed under its corporate seal.

PRIME HOLDING, INC.

By: _____________________________________
Title: __________________________________

Attest:

_______________________________________
Title: Secretary

EXHIBIT A--FORM OF NOTE

<PAGE>

(REVERSE OF NOTE)

This Note is one of a duly authorized issue of Notes of the Company,
designated as its 14% Senior Subordinated Notes due March 31, 2006 (the
"Notes"), limited in aggregate principal amount to not more than $10,000,000 and
to be issued under an Indenture dated as of November 29, 1994 (the "Indenture"),
from the Company to AIBC Services N.V. (the "Trustee", which term includes any
successor Trustee under the Indenture), to which Indenture and all indentures
supplemental thereto reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the Holders of Notes and of the terms upon which the
Notes are, and are to be, authenticated and delivered.

Subject to the terms of Article Ten and Eleven of the Indenture, the
Notes are subject to redemption at any time or from time to time, upon not less
than 30 days' nor more than 60 days' notice, as a whole or in part, at the
election of the Company, at the following optional redemption prices (expressed
as a percentage of principal amount redeemed), if redeemed during the period
beginning on the respective date indicated below and ending on the day before
the next date indicated, plus accrued and unpaid interest thereon to the date of
such redemption on the amount redeemed:

DATE OPTIONAL REDEMPTION PRICE

December , 1994 105.0%

May 15, 1995 104.5%

November 15, 1995 104.0%

May 15, 1996 103.5%

November 15, 1996 103.0%

May 15, 1997 102.5%

November 15, 1997 102.0%

May 15, 1998 101.5%

November 15, 1998 101.0%

May 15, 1999 100.5%

November 15, 1999 and thereafter 100.0%

EXHIBIT A--FORM OF NOTE

<PAGE>

Interest that is due and payable on or prior to any such Redemption
Date will be payable to the Holders of such Notes of record at the close of
business on the relevant Record Date referred to on the face hereof, all as
provided in the Indenture.

In the event of redemption of this Note in part only, a new Note or
Notes for the unredeemed portion hereof will be issued in the name of the Holder
hereof upon the cancellation hereof.

The Indenture further provides that, upon the occurrence of a Change
of Control, the Company shall notify the Trustee in writing and shall promptly
make an offer to purchase, on the last day of the next fiscal quarter of the
Company commencing after the Change of Control Date (the "Change of Control
Payment Date"), all Notes then Outstanding at a purchase price equal to the
price specified in this Note for optional redemption, together with accrued
interest to and including the Change of Control Payment Date.

If an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all Notes may be declared, and upon
such declaration shall become, due and payable, in the manner, with the effect
and subject to the conditions provided in the Indenture.

So long as any Senior Indebtedness is outstanding or the Company shall
have any outstanding obligation thereunder, the Company may not amend or modify
in certain respects any of the subordination provisions contained in the
Indenture as against any Senior Lender who has not consented thereto.

The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Notes at the time Outstanding, evidenced as in
the Indenture provided, to execute supplemental indentures adding any provision
to or changing in any manner or eliminating any provision of the Indenture or of
any supplemental indenture or modifying in any manner the rights of the Holders
of the Notes; provided that no such supplemental indenture shall, without the
consent of the Holder of each Outstanding Note affected thereby, (a) change the
Stated Maturity of the principal of, or Interest Payment Date with respect to
any payment of interest on, any Note, or reduce the rate or extend the time of
payment of interest thereon, or reduce the principal amount thereof or premium,
if any, thereon, or impair the right to institute suit for the payment on or
after the Stated Maturity thereof or Interest Payment Date therefor, as the case
may be (or, in the case of redemption or repurchase, on or after the Redemption
Date or Change of Control Payment Date), or change the place of payment where,
or the coin or currency in which, the principal, premium, if any, or interest is
payable, (b) reduce the aforesaid percentage in principal amount of the
Outstanding Notes the consent of whose Holders is required to waive compliance
with certain provisions of the Indenture or certain defaults thereunder or to
consent to any such supplemental indenture or (c) modify certain sections of the
Indenture or the Events of Default thereunder. The Indenture also provides
that, prior to any declaration accelerating the maturity of the Notes, the
Holders of a majority in aggregate principal amount of the Notes at the time
Outstanding on behalf of the

EXHIBIT A--FORM OF NOTE

<PAGE>

Holders of all of the Notes may waive any past default or Event of Default under
the Indenture and its consequences except a default in the payment of the
principal of or premium, if any, or interest on any of the Notes and certain
other defaults. Any such consent or waiver by the Holder of this Note (unless
revoked as provided in the Indenture) shall be conclusive and binding upon such
Holder and upon all future Holders of this Note and any Note that may be issued
in exchange or substitution herefor, irrespective of whether or not any notation
thereof is made upon this Note or such other Note.

No reference herein to the Indenture and no provision of this Note or
of the Indenture (except to the extent contemplated by Section 4.02 of the
Indenture) shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and premium, if any, and
interest on this Note at the place, at the times, at the rate and in the coin or
currency herein prescribed.

The Notes are issuable only in registered form (pursuant to Regulation
Section 5f.103-1 of the Federal Income Tax Regulations) without coupons in
denominations of $1,000 and any integral multiple thereof and may be transferred
only by surrender of this Note and the reissuance by the Company of this Note to
the transferee or the issuance by the Company of a new Note or new Notes to the
transferee or transferees. At the office or agency of the Company maintained
for such purpose and in the manner and subject to the limitations provided in
the Indenture, Notes may be exchanged for a like aggregate principal amount of
Notes of other authorized denominations.

Upon due presentment for registration of transfer of this Note at the
office or agency of the Company maintained for such purpose, a new Note or Notes
of authorized denominations for an equal aggregate principal amount will be
issued to the transferee in exchange herefor, subject to the limitations
provided in the Indenture, without charge except for any tax or other
governmental charge imposed in connection therewith.

The Company, the Trustee, any paying agent, and any Note Registrar may
deem and treat the Person in whose name this Note is registered as the absolute
owner of this Note (whether or not this Note shall be overdue and
notwithstanding any notation of ownership or other writing hereon made by anyone
other than the Company or any Note Registrar), for the purpose of receiving
payment hereof and for all other purposes, and none of the Company, the Trustee,
any paying agent or any Note Registrar shall be affected by any notice to the
contrary. All payments made to or upon the order of such registered Holder, to
the extent of the sum or sums paid, shall satisfy and discharge liability for
amounts payable on this Note.

The rate of interest payable hereon shall in no event exceed the
maximum rate permissible under applicable law. If interest would otherwise be
payable to the Holder hereof in excess of the maximum lawful amount, the
interest payable shall be reduced to the maximum amount permitted under
applicable law; and if the Holder shall ever receive anything of value deemed
interest by applicable law in excess of the maximum lawful amount, an amount
equal to any excessive interest shall be applied to the reduction of the
principal

EXHIBIT A--FORM OF NOTE

<PAGE>

hereof and not to payment of interest, or if such excessive interest exceeds the
unpaid balance of principal hereon, such excess shall be refunded to the
Company.

OPTION OF HOLDER TO ELECT REPURCHASE

If you wish to have this Note repurchased by the Company pursuant to
Section 9.13 of the Indenture, check the box: /__/ If you wish to have a portion
of this Note repurchased by the Company pursuant to Section 9.13 of the
Indenture, state the amount (which must be $1,000 or integral multiples of
$1,000):
$ __________________________

DATE: ______________________

YOUR SIGNATURE: ____________________________

SIGNATURE GUARANTEE:________________________

EXHIBIT A--FORM OF NOTE

<PAGE>

TRUSTEE'S CERTIFICATE OF AUTHENTICATION

This is one of the Notes referred to in the within-mentioned Indenture.

AIBC SERVICES N.V.,

as Trustee

By: ____________________

Authorized Officer

EXHIBIT A--FORM OF NOTE

<PAGE>

October 9, 1996

(214) 698-3100 C 72661-00019

Prime Service, Inc.
16225 Park Ten Place, Suite 200
Houston, TX 77084

Re: Registration Statement on Form S-1
----------------------------------

Ladies and Gentlemen:

We have examined the Registration Statement on Form S-1 (the
"Registration Statement"), File No. 333-11517, of Prime Service, Inc., a
Delaware corporation (the "Company"), filed with the Securities and Exchange
Commission (the "Commission") pursuant to the Securities Act of 1933, as
amended (the "Securities Act"), in connection with the public offering by the
Company of up to (i) 7,250,000 newly issued shares (the "Issued Shares") of
the Common Stock, par value $.01 per share (the "Common Stock"), of the
Company and (ii) 1,087,500 shares of Common Stock reserved for issuance upon
the conversion of the Company's Class A Shares, Class C Shares and Class D
Shares at the closing of the Company's initial public offering of Common
Stock and which may be sold to the public by the Selling Stockholders named
in the Registration Statement (the "Conversion Shares", together with the
Issued Shares, the "Shares").

For the purposes of the opinion set forth below, we have examined and
are familiar with the proceedings taken and proposed to be taken by the Company
in connection with the sale of the Shares, including, among other things, such
corporate records of the Company and certificates of officers of the Company and
of public officials and such other documents as we have deemed relevant and
necessary as the basis for the opinion set forth below. In such examination, we
have assumed the genuineness of all

<PAGE>
Prime Service, Inc.
October 9, 1996
Page 2

signatures, the authenticity of all documents submitted to us as originals, the
conformity to original documents of all documents submitted to us as certified
or photostatic copies and the authenticity of the originals of such copies.

Based upon the foregoing examination and in reliance thereon, and
subject to the assumptions stated and relying on statements of fact contained
in the documents that we have examined and subject to the completion of the
proceedings to be taken by the Company, the Selling Stockholders and the
underwriters prior to the sale of the Shares and subject to the receipt from
the Commission of an order declaring the Registration Statement effective, it
is our opinion that:

1. The Issued Shares, when issued and delivered to and paid for by
the underwriters and sold as contemplated in the Registration Statement, will be
validly issued, fully paid and non-assessable.

2. The Conversion Shares, when issued upon conversion of the
Company's Class A Shares, Class C Shares and Class D Shares in accordance
with the Restated Certificate of Designation of the Company, as filed with
the Secretary of State of the State of Delaware on February 9, 1996, will be
validly issued, fully paid and non-assessable.

We render no opinion herein as to matters involving the laws of any
jurisdiction other than the laws of the United States of America and the
General Corporation Law of the State of Delaware. In rendering this opinion,
we assume no obligation to revise or supplement this opinion should current
laws, or the interpretations thereof, be changed.

We consent to the filing of this opinion as an exhibit to the
Registration Statement, and we further consent to the use of our name under the
caption "Legal Matters" in the Registration Statement and the Prospectus which
forms a part thereof. In giving these consents, we do not thereby admit that we
are within the category of persons whose consent is required under Section 7 of
the Securities Act or the Rules and Regulations of the Commission.

Very truly yours,

/s/ GIBSON, DUNN & CRUTCHER LLP

<PAGE>

EXHIBIT 22.1

SUBSIDIARIES OF PRIME SERVICE, INC.

Prime Service, Inc. owns 100% of the capital stock of Primeco Inc. a Texas
corporation.

Primeco Inc. owns 100% of the capital stock of Prime Equipment Company, a Texas
corporation which is currently inactive.

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EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this registration statement on Form S-1 of
our report dated August 30, 1996, except as to Note 18, for which the date is
October 9, 1996, on our audits of the consolidated financial statements of Prime
Service, Inc. and Subsidiary, as well as our report dated August 30, 1996 on our
audits of Alpine Equipment Rentals and Supply Company. We also consent to the
reference to our firm under the caption "Experts".

COOPERS & LYBRAND L.L.P.

Houston, Texas
October 9, 1996

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EXHIBIT 23.3

INDEPENDENT AUDITORS' CONSENT

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.

KPMG PEAT MARWICK LLP

Houston, Texas
October 9, 1996

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EXHIBIT 23.4

INDEPENDENT AUDITORS' CONSENT

We consent to the use of our report included herein and to the reference to our
firm under the heading "Experts" in the prospectus.

Our report dated April 8, 1996, contains an explanatory paragraph that states
that Vibroplant U.S., Inc. changed its method of computing depreciation in 1995
and its method of accounting for income taxes in 1994.

KPMG PEAT MARWICK LLP

Fort Worth, Texas
October 9, 1996