Mueller Industries Inc – ‘S-4’ on 9/30/98

As of:  Wednesday, 9/30/98   ·   Accession #:  1047469-98-36024   ·   File #:  333-64823

in

this entire Filing. an “Entity” Search.

Show

Documents searched

and

each “hit”. the 1st “hit”.

↓↑Hints

Registration of Securities Issued in a Business-Combination Transaction   —   Form S-4
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: S-4         Registration of Securities Issued in a               153    839K 
                          Business-Combination Transaction                       
 2: EX-23.1     Consent of Experts or Counsel                          1      6K 
 3: EX-23.2     Consent of Experts or Counsel                          1      6K 
 4: EX-99.1     Miscellaneous Exhibit                                  2±     8K 
 5: EX-99.2     Miscellaneous Exhibit                                  4     17K 
 6: EX-99.3     Miscellaneous Exhibit                                  1      7K 

S-4   —   Registration of Securities Issued in a Business-Combination Transaction
Document Table of Contents

S-4
1st Page of 153
TOC
↑Top
Previous
Next
↓Bottom
Just 1st
 
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 30, 1998

                                                 REGISTRATION NO. 333-
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------------

FORM S-4
REGISTRATION STATEMENT
UNDER 
THE SECURITIES ACT OF 1933
--------------------------

MUELLER INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)

                                                                [Download Table]
                                                                               
          DELAWARE                        3351                   25-0790410    
(State or other jurisdiction  (Primary Standard Industrial    (I.R.S. Employer 
     of incorporation)        Classification Code Number)   Identification No.)

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

6799 GREAT OAKS ROAD, SUITE 200 
MEMPHIS, TENNESSEE 38138
(901) 753-3200
(Address, including zip code, and telephone number, including 
area code, of registrant's principal executive offices) 
------------------------------

WILLIAM H. HENSLEY, ESQ.
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY 
6799 GREAT OAKS ROAD, SUITE 200 
MEMPHIS, TENNESSEE 38138
(901) 753-3200
(Name, address, including zip code, and telephone number, 
including area code, of agent for service)
------------------------------

WITH COPIES TO: 

                                                                [Download Table]
                                                                              
   NEIL NOVIKOFF, ESQ.                              JERRY W. AMOS, ESQ.       
WILLKIE FARR & GALLAGHER                     AMOS, JEFFRIES & ROBINSON, L.L.P.
   787 SEVENTH AVENUE                              230 NORTH ELM STREET       
NEW YORK, NEW YORK 10019                     GREENSBORO, NORTH CAROLINA 27401 
     (212) 728-8000                                   (336) 273-5569          

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

   APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other   
conditions to the merger (the "Merger") of a subsidiary of the Registrant with  
and into Halstead Industries, Inc. ("Halstead") pursuant to the Merger Agreement
described in the enclosed Proxy Statement/Prospectus have been satisfied or     
waived. If the securities being registered on this form are being offered in    
connection with the formation of a holding company and there is compliance with 
General Instruction G, check the following box. / /                             

If this Form is filed to register additional securities for an offering 
pursuant to Rule 462(b) under the Securities Act, check the following box and   
list the Securities Act registration statement number of the earlier effective  
registration statement for the same offering. / /                               

If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act   
registration statement number of the earlier effective registration statement   
for the same offering. / /                                                      
--------------------------

CALCULATION OF REGISTRATION FEE 

                                                        [Enlarge/Download Table]

                                                                             PROPOSED MAXIMUM   PROPOSED MAXIMUM 
            TITLE OF EACH CLASS OF SECURITIES                AMOUNT TO BE     OFFERING PRICE   AGGREGATE OFFERING
                   TO BE REGISTERED (1)                     REGISTERED (2)       PER SHARE          PRICE (3)    
                                                                                                                 
Common Stock, $.01 par value..............................                          N/A            $33,710,000   



            TITLE OF EACH CLASS OF SECURITIES                  AMOUNT OF                                         
                   TO BE REGISTERED (1)                    REGISTRATION FEE                                      
                                                                                                                 
Common Stock, $.01 par value..............................      $9,945                                           

(1) This Registration Statement relates to Common Stock, par value $.01 per     
 share ("Mueller Shares"), of the Registrant issuable to holders of Common
Stock, par value $.10 per share, of Halstead ("Halstead Shares").       

(2) A currently indeterminate number of Mueller Shares. The number of Mueller   
    Shares to be issued in the Merger will be calculated based upon the Exchange
Ratio set forth in the Merger Agreement.                                

(3) Estimated solely for purposes of calculating the registration fee pursuant  
 to Rule 457(f)(2) of the Securities Act of 1933, based upon the aggregate
book value of the Halstead Shares on June 26, 1998.                     
--------------------------

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 THAT SPECIFICALLY STATES THAT THIS REGISTRATION        
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF  
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME    
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), 
MAY DETERMINE.                                                                  

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

S-4
2nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 2nd
HALSTEAD INDUSTRIES, INC. 
300 NORTH GREENE STREET, SUITE 1700 
GREENSBORO, NORTH CAROLINA 27401
[            ], 1998

Dear Stockholders:                                                              

  You are cordially invited to attend a special meeting of stockholders (the
"Special Meeting") of Halstead Industries, Inc. ("Halstead"), to be held at the 
offices of Halstead, 300 North Greene Street, Greensboro, North Carolina on     
[            ], 1998 at 10:00 a.m. local time. At the Special Meeting, you will 
be asked to consider and vote on the Agreement and Plan of Merger, dated as of  
August 7, 1998 (the "Merger Agreement"), by and among Halstead, Mueller         
Industries, Inc., a Delaware corporation ("Mueller"), and Mueller Acquisition   
Corp., a Delaware corporation and a wholly owned subsidiary of Mueller ("Merger 
Sub"), pursuant to which Merger Sub will merge with and into Halstead (the      
"Merger"), and each share of common stock of Halstead ("Halstead Shares") (other
than shares held by dissenting stockholders) will be converted into the right to
receive shares of common stock of Mueller ("Mueller Shares"), as described      
below.                                                                          

 At the effective date of the Merger (the "Effective Date"), each Halstead
Share outstanding immediately prior to the Effective Date (other than shares    
held by dissenting stockholders) will be converted into the right to receive a  
number of Mueller Shares calculated according to a formula based in part upon   
the Average Market Price (defined below) of Mueller Shares (the "Exchange       
Ratio"). The Exchange Ratio provides that the number of Mueller Shares to be    
exchanged for each Halstead Share will be determined by dividing the Purchase   
Price (defined below) by the product of (a) the number of Halstead Shares       
outstanding immediately prior to the Effective Date (other than shares held by  
Halstead or owned by Mueller, Merger Sub or another Mueller subsidiary) and (b) 
the Average Market Price of a Mueller Share. "Purchase Price" means $92,750,000 
less the Halstead Expenses (defined below). "Halstead Expenses" means the       
expenses incurred by Halstead for all services rendered, and expenses advanced, 
in connection with the Merger by the accountants, attorneys and financial       
advisors of Halstead, the Halstead Employee Stock Ownership Plan and the        
Halstead Management Stock Ownership Plan prior to the closing date of the Merger
(the "Closing Date "). The "Average Market Price" means the average closing     
price of one Mueller Share on the New York Stock Exchange ("NYSE") for the 30   
consecutive trading days immediately preceding the Closing Date.                

Halstead's management anticipates that the Purchase Price will be       
approximately $92,000,000 or $26,218 per Halstead Share based on an estimated   
$750,000 for the Halstead Expenses. Assuming Halstead Expenses of $750,000 and  
an Average Market Price of $    (the per share closing price for Mueller Shares 
on the NYSE on                ), each Halstead Share surrendered in the Merger  
would be converted into the right to receive      Mueller Shares. STOCKHOLDERS  
SHOULD RECOGNIZE, HOWEVER, THAT THE FINAL DETERMINATION OF THE PURCHASE PRICE   
WILL NOT BE MADE UNTIL THE CLOSING DATE, AT WHICH TIME A FINAL DETERMINATION    
WILL BE MADE AS TO THE AMOUNT OF THE HALSTEAD EXPENSES, AND THAT THE NUMBER OF  
MUELLER SHARES TO BE RECEIVED BY HOLDERS OF HALSTEAD SHARES WILL BE AFFECTED BY 
FLUCTUATIONS IN THE PRICE OF MUELLER SHARES DURING THE 30 CONSECUTIVE TRADING   
DAYS PRIOR TO THE CLOSING DATE. FURTHERMORE, ANY CHANGES IN THE MARKET PRICE OF 
MUELLER SHARES AFTER THE PERIOD DURING WHICH THE AVERAGE MARKET PRICE IS        
DETERMINED WILL NOT AFFECT THE NUMBER OF MUELLER SHARES THAT HOLDERS OF HALSTEAD
SHARES WILL RECEIVE, AND THE ACTUAL MARKET PRICE OF MUELLER SHARES AT THE       
EFFECTIVE DATE COULD BE MORE OR LESS THAN THE AVERAGE MARKET PRICE USED IN THE  
EXCHANGE RATIO.                                                                 

No fractional Mueller Shares will be issued in the Merger. In lieu of   
fractional shares, each holder of Halstead Shares who would otherwise have been 
entitled to a fraction of a Mueller Share will be paid cash (without interest)  
in an amount equal to such holder's proportionate interest in the net proceeds  
from the                                                                        

S-4
3rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 3rd
sale or sales in the open market by an exchange agent, on behalf of all such    
holders, of the aggregate fractional Mueller Shares to which all such holders   
would otherwise be entitled.                                                    

THE ENCLOSED NOTICE OF SPECIAL MEETING AND PROXY STATEMENT/PROSPECTUS   
CONTAIN IMPORTANT INFORMATION CONCERNING THE SPECIAL MEETING AND THE PROPOSED   
MERGER, INCLUDING DETAILS AS TO THE DETERMINATION OF THE EXCHANGE RATIO. PLEASE 
CAREFULLY READ THESE MATERIALS AND THOROUGHLY CONSIDER THE INFORMATION CONTAINED
IN THEM.                                                                        

Whether or not you plan to attend the Special Meeting, you are urged to 
complete, sign, date, and promptly return the enclosed proxy to assure that your
Halstead Shares will be voted at the Special Meeting. If you attend the Special 
Meeting, you may vote in person, whether or not you have previously submitted a 
proxy.                                                                          

    THE BOARD OF DIRECTORS OF HALSTEAD UNANIMOUSLY APPROVED THE MERGER AGREEMENT
AND BELIEVES THAT THE PROPOSED MERGER IS FAIR TO, AND IN THE BEST INTERESTS OF, 
HOLDERS OF HALSTEAD SHARES. ACCORDINGLY, THE BOARD OF DIRECTORS OF HALSTEAD     
RECOMMENDS THAT HOLDERS OF HALSTEAD SHARES VOTE "FOR" APPROVAL OF THE MERGER    
AGREEMENT AND THE TRANSACTIONS CONTEMPLATED THEREBY.                            

              Sincerely,

                       William B. Halstead
                                        Chairman and Chief Executive Officer

S-4
4th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 4th
HALSTEAD INDUSTRIES, INC. 
300 NORTH GREENE STREET 
SUITE 1700
GREENSBORO, NORTH CAROLINA 27401

   NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON [         ], 1998 

To the Stockholders of                                                          
Halstead Industries, Inc.:                                                  

    NOTICE IS HEREBY GIVEN that Halstead Industries, Inc. ("Halstead") will hold
a special meeting of stockholders on [         ], 1998 at 10:00 a.m., local     
time, at the offices of Halstead, 300 North Greene Street, Greensboro, North    
Carolina (including any adjournment or postponement thereof, the "Special       
Meeting"), for the following purposes:                                          

1.  To consider and vote upon a proposal to approve and adopt an
Agreement and Plan of Merger, dated as of August 7, 1998 (the "Merger   
Agreement"), among Halstead, Mueller Industries, Inc., a Delaware       
corporation ("Mueller"), and Mueller Acquisition Corp., a Delaware      
    corporation and a wholly owned subsidiary of Mueller ("Merger Sub"), and the
transactions contemplated thereby. Upon the terms and subject to the    
    conditions of the Merger Agreement, Merger Sub will be merged (the "Merger")
  with and into Halstead, and Halstead will become a wholly owned subsidiary
of Mueller.                                                             

   2.  To transact such other business as may properly come before the
Special Meeting.                                                        

  Halstead has fixed the close of business on [         ], 1998 (the "Record
Date") as the record date for the determination of the stockholders entitled to 
notice of, and to vote at, the Special Meeting.                                 

THE HALSTEAD BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS
VOTE TO APPROVE AND ADOPT THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY. The affirmative vote of a majority of the outstanding shares of common 
stock of Halstead, par value $.10 per share (the "Halstead Shares") entitled to 
vote at the Special Meeting is required to approve and adopt the Merger         
Agreement. Halstead Shares are entitled to one vote per share. Holders of a     
majority of Halstead Shares have agreements with Mueller to vote their shares in
favor of the Merger Agreement. Such holders have the right to vote at the       
Special Meeting sufficient shares to approve the Merger Agreement and the       
transactions contemplated thereby without the affirmative vote of any other     
holder of Halstead Shares, thus ensuring approval of the Merger Agreement and   
the transactions contemplated thereby. FAILURE TO RETURN A PROPERLY EXECUTED    
PROXY CARD OR TO VOTE AT THE SPECIAL MEETING WILL GENERALLY HAVE THE SAME EFFECT
AS A VOTE AGAINST THE MERGER. Holders of Halstead Shares who do not vote for the
Merger may, by complying with the procedures prescribed in the Delaware General 
Corporation Law, be entitled to appraisal rights as described therein. See      
"APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF HALSTEAD SHARES" in the accompanying  
Proxy Statement/Prospectus.                                                     

  Stockholders are invited to attend the Special Meeting. Whether or not you
expect to attend, WE URGE YOU TO SIGN, DATE AND PROMPTLY RETURN THE ENCLOSED    
PROXY CARD IN THE ENCLOSED POSTAGE PREPAID ENVELOPE. If you attend the meeting, 
you may vote your shares in person, which will revoke any previously executed   
proxy.                                                                          

 If your shares are held of record by a broker, bank or other nominee, you
must instruct your broker, bank or other nominee on how to vote your shares, or 
else your shares will not be voted. If you require assistance in completing your
proxy card or if you have questions about the voting procedure, please contact  
Michael E. Stoll, Vice President & Secretary of Halstead at (336) 272-1966.     

Participants in the Halstead Employee Stock Ownership Plan ("ESOP       
Participants") will receive a letter, enclosed herewith, from the ESOP          
Administration Committee (the "ESOP Letter") that provides a                    

S-4
5th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 5th
description of the voting procedures for ESOP Participants and certain other    
matters relevant to the ESOP Participants. ESOP Participants should read the    
ESOP Letter carefully.                                                          

  Regardless of how many shares you own, your vote is very important. Please
SIGN, DATE AND RETURN THE ENCLOSED PROXY CARD TODAY.                            

                                      By Order of the Board of Directors

                            ________________________

                    Michael E. Stoll
                              Vice President & Secretary

Greensboro, North Carolina                                                      
[         ], 1998                                                               

S-4
6th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 6th
SUBJECT TO COMPLETION, DATED SEPTEMBER 30, 1998 

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.   

S-4
7th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 7th
HALSTEAD INDUSTRIES, INC. 
PROXY STATEMENT 
------------------

MUELLER INDUSTRIES, INC.
PROSPECTUS

 This Proxy Statement and Prospectus (the "Proxy Statement/Prospectus") is
being furnished to the holders of common stock, par value $.10 per share        
("Halstead Shares"), of Halstead Industries, Inc. ("Halstead") in connection    
with the solicitation of proxies by the Board of Directors of Halstead (the     
"Halstead Board") for use at the special meeting of stockholders of Halstead    
(the "Halstead Stockholders") to be held at the offices of Halstead, 300 North  
Greene Street, Greensboro, North Carolina, on [         ], 1998 commencing at   
10:00 a.m., local time, and any adjournments or postponements thereof (the      
"Special Meeting").                                                             

At the Special Meeting, the Halstead Stockholders as of the close of    
business on [          ], 1998 (the "Record Date") will consider and vote on a  
proposal to approve and adopt an Agreement and Plan of Merger, dated as of      
August 7, 1998 (the "Merger Agreement"), among Halstead, Mueller Industries,    
Inc., a Delaware corporation ("Mueller"), and Mueller Acquisition Corp., a      
Delaware corporation and a wholly owned subsidiary of Mueller ("Merger Sub"),   
and the transactions contemplated thereby. Upon the terms and subject to the    
conditions of the Merger Agreement, Merger Sub will be merged (the "Merger")    
with and into Halstead, and Halstead will become a wholly owned subsidiary of   
Mueller. If the Merger is consummated, each outstanding Halstead Share (other   
than Excluded Shares (as defined below) and shares as to which appraisal rights 
are properly exercised under Delaware law) will be converted into the right to  
receive the number of shares (the "Exchange Ratio") of common stock, par value  
$.01 per share, of Mueller (the "Mueller Shares"), determined by dividing (A)   
$92,750,000 less the Halstead Expenses (as defined below) by (B) the product of 
(i) the total number of Halstead Shares issued and outstanding immediately prior
to the date when the Merger becomes effective (the "Effective Date") (other than
Excluded Shares) and (ii) the Mueller Average Market Price (as defined below).  
Assuming Halstead Expenses of $750,000 and a Mueller Average Market Price of    
$      (the per share closing price for Mueller Shares on the NYSE (as defined  
below) on                ), the Exchange Ratio would be       . The actual      
Exchange Ratio will be determined immediately prior to the closing of the Merger
(the "Closing") and, therefore, may not be known at the time of the Special     
Meeting. No fractional Mueller Shares will be issued in the Merger. In lieu of  
fractional shares, each Halstead Stockholder who would otherwise have been      
entitled to a fraction of a Mueller Share will be paid cash (without interest)  
in an amount equal to such stockholder's proportionate interest in the net      
proceeds from the sale or sales in the open market by the Exchange Agent (as    
defined below), on behalf of all such stockholders, of the aggregate fractional 
Mueller Shares to which such stockholder would otherwise be entitled.           

For a more complete description of the terms of the Merger, including a 
description of the consideration to be received by Halstead Stockholders, see   
"THE MERGER."                                                                   

   Mueller Shares are quoted on the New York Stock Exchange, Inc. (the "NYSE")
under the symbol "MLI."                                                         

 This Proxy Statement/Prospectus also constitutes a Prospectus relating to
the Mueller Shares to be issued in connection with the proposed Merger.         

The information contained in this Proxy Statement/Prospectus relating to
Mueller has been furnished by Mueller and the information contained in this     
Proxy Statement/Prospectus relating to Halstead has been furnished by Halstead. 

 This Proxy Statement/Prospectus and the accompanying proxy card are first
being mailed to Halstead Stockholders on or about [          ], 1998.           

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 ADEQUACY OF THIS PROXY STATEMENT/ 
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL  
OFFENSE.

The date of this Proxy Statement/Prospectus is [          ], 1998 

S-4
8th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 8th
TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                                              PAGE    
                                                                                                           -----------
                                                                                                                      
QUESTIONS AND ANSWERS ABOUT THE MERGER....................................................................          1 
FORWARD-LOOKING STATEMENTS................................................................................          3 
AVAILABLE INFORMATION.....................................................................................          3 
INCORPORATION OF DOCUMENTS BY REFERENCE...................................................................          3 
SUMMARY...................................................................................................          5 
MUELLER SUMMARY SELECTED FINANCIAL DATA...................................................................         10 
HALSTEAD SUMMARY SELECTED FINANCIAL DATA..................................................................         11 
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA......................................................         13 
MARKET PRICE INFORMATION..................................................................................         14 
COMPARATIVE PER SHARE DATA................................................................................         15 
THE MERGER................................................................................................         16 
  Background of the Merger................................................................................         16 
  Reasons for the Merger..................................................................................         18 
  Opinion of the Financial Advisor to the Halstead ESOP...................................................         19 
  Accounting Treatment of the Merger......................................................................         20 
  Governmental and Regulatory Approvals...................................................................         20 
  Interests of Certain Persons in the Merger; Possible Conflicts of Interest..............................         20 
  Effect of the Merger on Employee Benefit Plans..........................................................         22 
  Certain Federal Income Tax Consequences of the Merger...................................................         22 
THE MERGER AGREEMENT AND RELATED AGREEMENTS...............................................................         25 
  General.................................................................................................         25 
  Effective Date..........................................................................................         25 
  Consideration to be Received in the Merger..............................................................         25 
  Exchange of Shares......................................................................................         25 
  Representations and Warranties..........................................................................         26 
  Conduct of Halstead's Business..........................................................................         27 
  Exclusivity.............................................................................................         28 
  Indemnification.........................................................................................         28 
  Resales of Mueller Shares...............................................................................         30 
  Conditions to the Merger................................................................................         30 
  Termination of the Merger Agreement.....................................................................         32 
  Termination Fees; Expenses of the Merger................................................................         33 
  Voting Agreements.......................................................................................         33 
APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF HALSTEAD SHARES..................................................         35 
HALSTEAD SPECIAL MEETING..................................................................................         38 
  Date, Time and Place....................................................................................         38 
  Matters to be Considered................................................................................         38 
  Record Date.............................................................................................         38 
  Quorum..................................................................................................         38 
  Required Vote...........................................................................................         38 
  Proxies and Revocation..................................................................................         38 
  Solicitation of Proxies.................................................................................         39 

i 

S-4
9th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 9th
                                                        [Enlarge/Download Table]

                                                                                                              PAGE    
                                                                                                           -----------
                                                                                                                      
INFORMATION ABOUT HALSTEAD................................................................................         40 
  General.................................................................................................         40 
  Business................................................................................................         40 
  Copper Tubing...........................................................................................         40 
  Line Sets...............................................................................................         40 
  Competition.............................................................................................         40 
  Properties and Facilities...............................................................................         41 
  Raw Materials and Supplies..............................................................................         41 
  Year 2000 Program.......................................................................................         41 
HALSTEAD MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS............         42 
  Results of Operations...................................................................................         42 
  Liquidity and Capital Resources.........................................................................         43 
  Contingencies...........................................................................................         44 
  Other Matters...........................................................................................         45 
OWNERSHIP OF HALSTEAD SHARES BY CERTAIN BENEFICIAL OWNERS AND HALSTEAD MANAGEMENT.........................         45 
INFORMATION ABOUT MUELLER.................................................................................         48 
  Acquisitions............................................................................................         48 
  Capital Projects........................................................................................         48 
  Income Taxes: Closing Agreement.........................................................................         48 
  Year 2000 Program.......................................................................................         48 
DESCRIPTION OF MUELLER CAPITAL STOCK......................................................................         49 
  General.................................................................................................         49 
  Common Stock............................................................................................         49 
  Transfer Agent..........................................................................................         50 
COMPARISON OF STOCKHOLDER RIGHTS..........................................................................         51 
  Authorized Capital......................................................................................         51 
  Election and Size of Board of Directors.................................................................         51 
  Removal of Directors....................................................................................         52 
  Vacancies on the Board of Directors.....................................................................         52 
  Amendments to Charter...................................................................................         52 
  Dividends...............................................................................................         52 
  Stockholder Meetings....................................................................................         53 
  Vote on Extraordinary Corporate Transactions; Business Combination Restrictions.........................         53 
  Rights Plan.............................................................................................         53 
  DGCL Business Combination Provisions....................................................................         54 
EXPERTS...................................................................................................         54 
LEGAL OPINIONS............................................................................................         55 
INDEX TO HALSTEAD INDUSTRIES, INC. FINANCIAL STATEMENTS...................................................        F-1 

                                                        [Enlarge/Download Table]

APPENDICES                                                                                  
                                                                                            
Appendix A  -- Agreement and Plan of Merger, dated as of August 7, 1998, among Halstead     
            Industries, Inc., Mueller Industries, Inc. and Mueller Acquisition Corp.        
Appendix B  -- Form of Amended and Restated Voting Agreement between certain stockholders of
               Halstead Industries, Inc. and Mueller Industries, Inc.                       
Appendix C  -- Opinion of Parker/Hunter Incorporated to the Trustee for the Halstead ESOP   
Appendix D  -- Section 262 of the Delaware General Corporation Law regarding Appraisal      
               Rights                                                                       

ii

S-4
10th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 10th
QUESTIONS AND ANSWERS ABOUT THE MERGER

 THE HALSTEAD BOARD UNANIMOUSLY RECOMMENDS VOTING IN FAVOR OF THE PROPOSED
MERGER AND BELIEVES IT TO BE IN THE BEST INTERESTS OF HALSTEAD AND THE HALSTEAD 
STOCKHOLDERS.                                                                   

Q: WHAT WILL HAPPEN AS A RESULT OF THE PROPOSED MERGER?                         

A: If the Merger is approved and consummated, each Halstead Share (other than   
Excluded Shares and Halstead Shares as to which appraisal rights are    
  properly exercised under Delaware law) will be converted into the right to
   receive the merger consideration described below and Halstead will become a
wholly owned subsidiary of Mueller.                                     

Q: WHAT DO I NEED TO DO NOW?                                                    

A: After you have carefully read this Proxy Statement/Prospectus, just indicate 
    on your proxy card how you want to vote, and sign and mail the proxy card in
the enclosed return envelope as soon as possible, so that your Halstead 
  Shares will be represented at the Special Meeting. If you sign and send in
    your proxy card and do not indicate how you want to vote, your proxy will be
    counted as a vote in favor of the Merger. If you do not vote or you abstain,
it will have the effect of a vote against the Merger.                   

Q: WHAT DO I DO IF MY SHARES ARE HELD BY THE HALSTEAD ESOP?                     

A: Persons ("ESOP Participants") having an account balance under the Halstead   
  Employee Stock Ownership Plan (the "Halstead ESOP") will receive a letter,
enclosed herewith, from the ESOP Administration Committee (the "ESOP    
Letter") that provides a description of the voting procedures for ESOP  
  Participants and certain other matters relevant to ESOP Participants. ESOP
Participants should read the ESOP Letter carefully.                     

Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?                                  

A: No. After the Merger is completed, former Halstead Stockholders will receive 
written instructions for exchanging their stock certificates.           

Q: WHAT WILL I RECEIVE IN THE MERGER?                                           

A: If the Merger is consummated, you will have the right to receive in exchange 
for each Halstead Share you own (other than Excluded Shares and Halstead
 Shares as to which appraisal rights are properly exercised under Delaware
    law), a number of Mueller Shares determined by dividing (A) $92,750,000 less
    the Halstead Expenses by (B) the product of (i) the total number of Halstead
Shares outstanding immediately prior to the Effective Date, other than  
Excluded Shares, and (ii) the Mueller Average Market Price.             

No fractional Mueller Shares will be issued in the Merger. In lieu of   
  fractional shares, each Halstead Stockholder who would otherwise have been
entitled to a fraction of a Mueller Share will be paid cash (without    
   interest) in an amount equal to the stockholder's proportionate interest in
  the net proceeds from the sale or sales in the open market by the Exchange
Agent, on behalf of all such stockholders, of the aggregate fractional  
Mueller Shares to which such stockholders would otherwise be entitled.  

 On the date of the Closing (the "Closing Date"), the value of the Mueller
Shares received for each Halstead Share in the Merger will equal the    
Exchange Ratio multiplied by the market price of a Mueller Share on the 
    Closing Date. The price of a Mueller Share on the Closing Date may not equal
the Mueller Average Market Price because (i) the Mueller Average Market 
  Price is calculated over the thirty trading days ending on the trading day
  immediately prior to the Closing Date and (ii) the price per Mueller Share
may fluctuate between the date the Mueller Average Market Price is      
determined and the Closing Date.                                        

Q: WHEN DO YOU EXPECT THE MERGER TO BE COMPLETED?                               

A: It is anticipated that the Merger will be completed promptly following the   
Special Meeting.                                                        

S-4
11th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 11th
Q: WHAT ARE THE FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER TO ME?            

A: The exchange of shares by Halstead Stockholders is generally intended to be  
   tax-free to Halstead Stockholders for federal income tax purposes. However,
Halstead Stockholders will be subject to taxation with respect to cash  
received for fractional shares. To review certain federal income tax    
consequences to stockholders in greater detail, see "THE MERGER--Certain
 Federal Income Tax Consequences of the Merger." Halstead Stockholders are
   urged to consult their own tax advisors as to the specific tax consequences
 to them of the Merger, including the applicable federal, state, local and
foreign tax consequences.                                               

  The federal income tax consequences of the Merger to ESOP Participants are
  as provided in "THE MERGER--Certain Federal Income Tax Consequences of the
Merger--Special Considerations for Halstead ESOP Participants."         

Q: WHO CAN HELP ANSWER YOUR QUESTIONS?                                          

A: If you have more questions about the Merger, would like additional copies of 
    this Proxy Statement/ Prospectus, or have questions regarding the procedures
for voting your shares or executing, changing or revoking a proxy, you  
should contact:                                                         

Halstead Industries, Inc.                                               

300 North Greene Street                                                 

Suite 1700                                                              

Greensboro, North Carolina 27401                                        

Attention: Michael E. Stoll, Vice President & Secretary                 

Phone Number: (336) 272-1966                                            

2 

S-4
12th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 12th
FORWARD-LOOKING STATEMENTS

   This Proxy Statement/Prospectus contains various forward-looking statements
and includes assumptions concerning Mueller's and Halstead's operations, future 
results, and prospects. These forward-looking statements are based on current   
expectations and are subject to risk and uncertainties. In connection with the  
"safe harbor" provisions of the Private Securities Litigation Reform Act of     
1995, Mueller and Halstead provide the following cautionary statement           
identifying important economic, political and technological factors, among      
others, the absence of which could cause the actual results or events to differ 
materially from those set forth or implied by the forward-looking statements and
related assumptions. Such factors include: (i) continuation of the current and  
projected future business environment, including interest rates and capital and 
consumer spending; (ii) competitive factors and competitor responses to Mueller 
and Halstead initiatives; (iii) successful completion of Mueller's major ongoing
capital projects; (iv) stability of government laws and regulations, including  
taxes; and (v) continuation of the environment to make acquisitions, domestic   
and foreign, including regulatory requirements and market values of candidates. 

AVAILABLE INFORMATION 

 Mueller files annual, quarterly and special reports, proxy statements and
other information with the Securities and Exchange Commission (the "Commission" 
or the "SEC"). You may read and copy any reports, statements or other           
information Mueller files at the SEC's public reference rooms at Room 1024, 450 
Fifth Street, N.W., Washington, D.C. 20549, 7 World Trade Center, 13th Floor,   
New York, New York 10048 and Northwestern Atrium Center, 500 West Madison       
Street, Suite 1400, Chicago, Illinois 60661. Please call the SEC at             
1-800-SEC-0330 for further information on the public reference rooms. Mueller's 
SEC filings are also available to the public from commercial document retrieval 
services and at the SEC's site on the World Wide Web at http://www.sec.gov.     

 Mueller has filed a Registration Statement on Form S-4 (together with any
amendments thereto, the "Registration Statement") under the Securities Act of   
1933 as amended (the "Securities Act"), to register with the SEC the Mueller    
Shares to be issued pursuant to the proposed Merger. As allowed by SEC rules,   
this Proxy Statement/Prospectus does not contain all the information you can    
find in the Registration Statement or the exhibits to the Registration          
Statement.                                                                      

   Mueller Shares are listed and traded on the NYSE. Reports, proxy statements
and other information concerning Mueller can be inspected at the NYSE, 20 Broad 
Street, New York, New York 10005.                                               

INCORPORATION OF DOCUMENTS BY REFERENCE 

  The SEC allows Mueller to "incorporate by reference" information into this
Proxy Statement/ Prospectus, which means that Mueller can disclose important    
information to you by referring you to another document filed separately with   
the SEC. The information incorporated by reference is deemed to be part of this 
Proxy Statement/Prospectus, except for any information superseded by information
in this Proxy Statement/ Prospectus. This Proxy Statement/Prospectus            
incorporates by reference the following documents previously filed with the SEC 
by Mueller (File No. 1-6770) pursuant to the Securities Exchange Act of 1934    
(the "Exchange Act"):                                                           

  1.  Mueller's Annual Report on Form 10-K for the fiscal year ended
December 27, 1997.                                                      

       2.  Mueller's Quarterly Report on Form 10-Q for the quarter ended March
28, 1998.                                                               

      3.  Mueller's Quarterly Report on Form 10-Q for the quarter ended June
27, 1998.                                                               

4.  The description of Mueller Shares in Mueller's Registration 
Statement on Form 8-A under the Exchange Act filed on January 22, 1991, 
   including all amendments and reports filed for the purpose of updating such
description.                                                            

3 

S-4
13th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 13th
    Mueller is also incorporating by reference additional documents that Mueller
files with the SEC between the date of this Proxy Statement/Prospectus and the  
date of the Special Meeting. Any statement contained in this Proxy              
Statement/Prospectus, in a supplement to this Proxy Statement/Prospectus or in a
document incorporated or deemed to be incorporated by reference in this Proxy   
Statement/Prospectus shall be deemed to be modified or superseded for purposes  
of this Proxy Statement/Prospectus to the extent that a statement contained in  
this Proxy Statement/Prospectus or in any subsequently filed supplement to this 
Proxy Statement/Prospectus or in any document that also is or is deemed to be   
incorporated by reference modifies or supersedes such statement. Any statement  
so modified or superseded shall not be deemed, except as so modified or         
superseded, to constitute a part of this Proxy Statement/Prospectus.            

   Mueller has supplied all information contained or incorporated by reference
in this Proxy Statement/ Prospectus relating to Mueller, and Halstead has       
supplied all information contained in this Proxy Statement/Prospectus relating  
to Halstead.                                                                    

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY    
REFERENCE IN THIS PROXY STATEMENT/PROSPECTUS TO VOTE ON THE MERGER. WE HAVE NOT 
AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT FROM WHAT IS
CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS. THIS PROXY STATEMENT/PROSPECTUS IS
DATED [         ], 1998. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED IN
THIS PROXY STATEMENT/ PROSPECTUS IS ACCURATE AS OF ANY DATE OTHER THAN SUCH     
DATE, AND NEITHER THE MAILING OF THIS PROXY STATEMENT/ PROSPECTUS TO            
STOCKHOLDERS NOR THE ISSUANCE OF ANY MUELLER SHARES IN THE MERGER SHALL CREATE  
ANY IMPLICATION TO THE CONTRARY.                                                

 THIS PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. THESE DOCUMENTS ARE AVAILABLE   
UPON REQUEST FROM MUELLER INDUSTRIES, INC., ATTENTION: WILLIAM H. HENSLEY, VICE 
PRESIDENT, GENERAL COUNSEL AND SECRETARY, 6799 GREAT OAKS ROAD, MEMPHIS,        
TENNESSEE 38138-2572, TELEPHONE NUMBER (901) 753-3200. IN ORDER TO ENSURE TIMELY
DELIVERY OF THE DOCUMENTS, ANY REQUEST SHOULD BE MADE BY [         ], 1998.     

4 

S-4
14th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 14th
SUMMARY 

   THE FOLLOWING IS A BRIEF SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE
IN THIS PROXY STATEMENT/ PROSPECTUS. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY  
BY THE MORE DETAILED INFORMATION CONTAINED IN THIS PROXY STATEMENT/PROSPECTUS,  
IN ITS APPENDICES AND IN THE DOCUMENTS REFERRED TO HEREIN, TO WHICH REFERENCE IS
MADE FOR A MORE COMPLETE STATEMENT OF THE MATTERS DISCUSSED BELOW.              

THE COMPANIES                                                                   

MUELLER                                                                 

Mueller is a leading manufacturer of copper, brass, plastic and aluminum
products. The range of these products is broad: copper tube and fittings; brass 
and copper alloy rod, bar and shapes; aluminum and brass forgings; aluminum and 
copper impact extrusions; plastic fittings and valves; refrigeration valves and 
fittings; and fabricated tubular products. These operations accounted for       
approximately 96 percent of Mueller's total net sales and 80 percent of total   
identifiable assets on a consolidated basis in 1997. Mueller sells its products 
to the heating and air-conditioning, refrigeration, plumbing, hardware and other
industries. Mueller operates eighteen factories in the United States, Canada,   
the United Kingdom, and France and has distribution facilities in each of these 
countries and sales representation worldwide.                                   

Mueller also owns a short line railroad in Utah and natural resource    
properties in the western United States.                                        

 Mueller's executive offices are located at 6799 Great Oaks Road, Memphis,
Tennessee 38138, and its telephone number is (901) 753-3200.                    

MERGER SUB                                                              

    Merger Sub is a wholly owned subsidiary of Mueller that does not conduct any
substantial business activities. Pursuant to the Merger Agreement, Merger Sub   
will be merged with and into Halstead, with the result that Halstead, as the    
surviving corporation, will become a subsidiary of Mueller.                     

    Merger Sub's executive offices are located at 6799 Great Oaks Road, Memphis,
Tennessee 38138 and its telephone number is (901) 753-3200.                     

HALSTEAD                                                                

 Halstead was founded as a Pennsylvania corporation in 1960, at which time
all of the business and assets of Halstead and Mitchell Company, a Pennsylvania 
general partnership, were transferred to Halstead. In 1993, Halstead formed a   
Delaware corporation and merged the Pennsylvania corporation into the Delaware  
corporation for the purpose of changing the state of its organization from      
Pennsylvania to Delaware. Headquartered in Greensboro, North Carolina, Halstead 
produces and distributes drawn copper tubing at its Wynne, Arkansas facility and
assembles and distributes insulated copper line sets at its facility in Clinton,
Tennessee. In 1997, net sales were $243 million, down from $275 million in 1996.
At September 1, 1998, Halstead had 39 employees in Greensboro, 749 employees in 
Wynne and 121 employees in Clinton. Halstead's executive offices are located at 
300 North Greene Street, Suite 1700, Greensboro, North Carolina and its         
telephone number is (336) 272-1966.                                             

RECOMMENDATION OF THE HALSTEAD BOARD                                            

The Halstead Board has unanimously approved the Merger Agreement and    
unanimously recommends that Halstead Stockholders vote "FOR" the proposal to    
approve and adopt the Merger Agreement and the transactions contemplated        
thereby. This recommendation is based on a number of factors described in this  
Proxy Statement/Prospectus. See "THE MERGER--Reasons for the Merger."           

Holders of a majority of Halstead Shares have agreements with Mueller to
vote their shares in favor of the Merger. Such holders have the right to vote at
the Special Meeting sufficient shares to approve the                            

5 

S-4
15th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 15th
Merger Agreement and the transactions contemplated thereby without the          
affirmative vote of any other Halstead Stockholder, thus ensuring approval of   
the Merger Agreement and the transactions contemplated thereby.                 

OPINION OF THE FINANCIAL ADVISOR TO THE HALSTEAD ESOP                           

The trustee for the Halstead ESOP (the "ESOP Trustee") has obtained a   
written opinion from Parker/Hunter Incorporated ("Parker/Hunter") that the      
consideration to be received by the Halstead ESOP pursuant to the Merger        
Agreement is fair from a financial point of view. See "THE MERGER-- Opinion of  
the Financial Advisor to the Halstead ESOP."                                    

MERGER CONSIDERATION                                                            

  If the Merger is consummated, Halstead Stockholders will have the right to
receive, in exchange for each Halstead Share they own (other than Excluded      
Shares and shares as to which appraisal rights are properly exercised under the 
Delaware General Corporation Law (the "DGCL")), the number of Mueller Shares    
equal to the Exchange Ratio. The Exchange Ratio is determined by dividing (A)   
$92,750,000 less the Halstead Expenses by (B) the product of (i) the total      
number of Halstead Shares issued and outstanding immediately prior to the       
Effective Date (other than Excluded Shares) and (ii) the Mueller Average Market 
Price.                                                                          

  "Excluded Shares" means those Halstead Shares held by Halstead or owned by
Mueller, Merger Sub or any other subsidiary of Mueller.                         

 "Halstead Expenses" means the amount of expenses incurred by Halstead for
all services rendered, and expenses advanced prior to the Closing Date, in      
connection with the Merger by the accountants, attorneys and financial advisors 
of Halstead, the Halstead ESOP and the Halstead Management Stock Ownership Plan 
(the "Halstead MSOP").                                                          

"Mueller Average Market Price" means the average per share closing sale 
price of one Mueller Share as reported on the NYSE composite transactions       
reporting system (as reported in the New York City edition of The Wall Street   
Journal or, if not reported thereby, another authoritative source) for the 30   
trading days ending on the trading day immediately prior to the Closing Date,   
rounded to the fourth decimal place.                                            

Halstead's management anticipates that the Halstead Expenses will be    
approximately $750,000. Assuming Halstead Expenses of $750,000 and a Mueller    
Average Market Price of $     (the per share closing price for Mueller Shares on
the NYSE on                ), the Exchange Ratio would be       . The actual    
Exchange Ratio will be determined immediately prior to the Closing Date and,    
therefore, may not be known at the time of the Special Meeting.                 

On the Closing Date, the value of the Mueller Shares received for each  
Halstead Share in the Merger will equal the Exchange Ratio multiplied by the    
market price of a Mueller Share on the Closing Date. The price of a Mueller     
Share on the Closing Date may not equal the Mueller Average Market Price because
(i) the Mueller Average Market Price is calculated over the 30 trading days     
ending on the trading day immediately prior to the Closing Date and (ii) the    
price per Mueller Share may fluctuate between the date the Mueller Average      
Market Price is determined and the Closing Date.                                

No fractional Mueller Shares will be issued in the Merger. In lieu of   
fractional shares, each Halstead Stockholder who would otherwise have been      
entitled to a fraction of a Mueller Share will be paid cash (without interest)  
in an amount equal to such stockholder's proportionate interest in the net      
proceeds from the sale or sales in the open market by the Exchange Agent, on    
behalf of all such holders, of the aggregate fractional Mueller Shares to which 
such stockholder would otherwise be entitled.                                   

See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Consideration to be   
Received in the Merger."                                                        

6 

S-4
16th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 16th
REQUIRED VOTE                                                                   

    The approval of a majority of the outstanding Halstead Shares is required to
approve and adopt the Merger Agreement and the transactions contemplated        
thereby.                                                                        

As of the Record Date, directors and executive officers of Halstead and 
their affiliates were beneficial owners of approximately 30.9% of the           
outstanding Halstead Shares. In order to induce Mueller to enter into the Merger
Agreement, certain Halstead Stockholders (including certain of the directors and
officers referred to above) who collectively hold approximately 52.6% of the    
outstanding Halstead Shares entered into agreements with Mueller (as amended,   
the "Voting Agreements") pursuant to which each such Halstead Stockholder has   
agreed, among other things, to vote all of the Halstead Shares beneficially     
owned by the Halstead Stockholder in favor of adoption and approval of the      
Merger Agreement and the Merger. Such stockholders have the right to vote at the
Special Meeting sufficient shares to approve the Merger Agreement and the       
transactions contemplated thereby without the affirmative vote of any other     
Halstead Stockholder, thus ensuring stockholder approval of the Merger Agreement
and the transactions contemplated thereby. See "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Voting Agreements." Attached as Appendix B is the full text of the  
form of the Amended and Restated Voting Agreement.                              

CONDITIONS TO THE MERGER                                                        

    Each party's obligation to complete the Merger is subject to the fulfillment
or waiver (where applicable) of a number of conditions, including, without      
limitation, the following:                                                      

(a) the approval of the transactions contemplated by the Merger 
Agreement by the Halstead Stockholders constituting a majority of the   
outstanding Halstead Shares;                                            

        (b) the receipt of a tax opinion from Willkie Farr & Gallagher ("Willkie
Farr"), counsel to Mueller, as to the tax-free nature of the Merger;    

   (c) the receipt of requisite governmental consents and approvals to
consummate the Merger;                                                  

   (d) the accuracy of the representations and warranties of the other
   party to the Merger Agreement and the performance of the obligations of the
other party to the Merger Agreement;                                    

     (e) the absence of an injunction or law prohibiting the Merger or any
  legal action instituted or threatened by a governmental entity which seeks
    to prevent or delay the consummation of the transactions contemplated by the
  Merger Agreement or which challenges the validity or enforceability of the
   Merger Agreement, and which in either such case has a reasonable likelihood
of success in the opinion of counsel to Mueller or Halstead; and        

      (f) the absence of a material adverse change in the other party or its
business.                                                               

   In addition, Mueller's obligation to complete the Merger is conditioned on:

(a) the receipt of certain consents from third parties;         

(b) the receipt of a letter from Halstead's independent public  
accountants as to whether or not the Merger will qualify for "pooling of
   interests" accounting treatment if it is consummated in accordance with the
Merger Agreement; and                                                   

     (c) the holders of no more than 5% of the outstanding Halstead Shares
    having exercised their appraisal rights in the Merger in accordance with the
DGCL.                                                                   

 The parties' obligations are also subject to certain other conditions set
forth in the Merger Agreement.                                                  

    See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Conditions to the Merger."

7 

S-4
17th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 17th
TERMINATION                                                                     

The Merger Agreement is subject to termination:                         

        (a) by mutual consent of the board of directors of Mueller and Halstead;
and                                                                     

        (b) by either Mueller or Halstead if (i) there is a permanent injunction
prohibiting the Merger or the transactions contemplated by the Merger   
   Agreement, (ii) the Merger is not consummated by December 23, 1998 (subject
   to extension to February 25, 1999 under certain circumstances) or (iii) the
  other party materially breaches its representations, warranties, covenants
or agreements set forth in the Merger Agreement.                        

   See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Termination of the Merger
Agreement".                                                                     

INTERESTS OF CERTAIN PERSONS IN THE MERGER; POSSIBLE CONFLICTS OF INTEREST      

In considering the Halstead Board's approval of the Merger, Halstead    
Stockholders should be aware that senior management of Halstead and certain     
members of the Halstead Board have certain interests in, and will receive       
benefits from, the Merger that are in addition to, and differ from, the         
interests of, and benefits to, Halstead Stockholders generally. As a result of  
the "change of control" resulting from the Merger, William B. Halstead,         
Chairman, Chief Executive Officer and a Director of Halstead, and William R.    
Burson, President and a Director of Halstead, will receive certain "change of   
control" and/or severance benefits of $5,668,000 and $430,000, respectively.    
LeRoy D. Lintz, Senior Vice President and a Director of Halstead, will receive  
severance benefits of $155,000. The above named members of Halstead management  
and other members of Halstead management will also receive certain cash payments
as a result of the termination of Halstead's deferred compensation arrangement. 
Mueller has agreed that following the Merger it will, and will cause Halstead,  
as the corporation surviving the Merger (the "Surviving Corporation"), to,      
indemnify the officers and directors of Halstead and any employee of Halstead   
who acts as a fiduciary under the Halstead MSOP, Halstead ESOP or any other     
qualified benefit plan of Halstead against liability for acts undertaken by such
persons during their tenure as officers, directors or plan fiduciaries and to   
maintain the current policies of directors and officers liability insurance, all
as set forth in the Merger Agreement. These interests and benefits may          
constitute potential conflicts of interest with the Halstead Stockholders in the
negotiation, approval and consummation of the Merger. See "THE MERGER--Interests
of Certain Persons in the Merger; Possible Conflicts of Interest."              

GOVERNMENTAL AND REGULATORY APPROVALS                                           

 The Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), prohibits Halstead and Mueller from completing the Merger until     
after Halstead and Mueller have furnished certain information and materials to  
the Antitrust Division of the Department of Justice (the "Antitrust Division")  
and the Federal Trade Commission (the "FTC") and a required waiting period has  
ended. The parties completed their required filings on August 25, 1998 and the  
waiting period expired on September 24, 1998. However, the Antitrust Division   
and the FTC will continue to have authority to challenge the Merger on antitrust
grounds before or after the Merger is complete. See "THE MERGER--Governmental   
and Regulatory Approvals."                                                      

APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF HALSTEAD SHARES                        

    If the Merger is consummated, Halstead Stockholders who did not vote for the
Merger may, by complying with the procedures prescribed in Section 262 of the   
DGCL, be entitled to appraisal rights as described therein. Attached as Appendix
D is the full text of Section 262 of the DGCL. Failure to comply precisely with 
the requirements of Section 262 of the DGCL will result in the loss of appraisal
rights. See "APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF HALSTEAD SHARES."         

8 

S-4
18th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 18th
EXPENSES OF THE MERGER                                                          

All fees, expenses and costs incurred in connection with the Merger     
Agreement and the transactions contemplated thereby will be paid by the party   
incurring such fees, expenses, and costs. See "THE MERGER AGREEMENT AND RELATED 
AGREEMENTS--Termination Fees; Expenses of the Merger."                          

VOTING AGREEMENTS                                                               

In order to induce Mueller to enter into the Merger Agreement, certain  
Halstead Stockholders who collectively hold approximately 52.6% of the          
outstanding Halstead Shares entered into Voting Agreements with Mueller pursuant
to which each such Halstead Stockholder has agreed, among other things, to vote 
all of the Halstead Shares beneficially owned by the Halstead Stockholder in    
favor of adoption and approval of the Merger Agreement and the Merger. Such     
stockholders have the right to vote at the Special Meeting sufficient shares to 
approve the Merger Agreement and the transactions contemplated thereby without  
the affirmative vote of any other Halstead Stockholder, thus ensuring           
stockholder approval of the Merger Agreement and the transactions contemplated  
thereby. Each such stockholder further granted to, and appointed, Mueller, the  
Chief Executive Officer of Mueller and the Chief Financial Officer of Mueller   
and their respective successors, and any other designee of Mueller, the         
stockholder's irrevocable proxy and attorney-in-fact to vote or act by written  
consent with respect to such stockholder's Halstead Shares. See "THE MERGER     
AGREEMENT AND RELATED AGREEMENTS--Voting Agreements."                           

EXCLUSIVITY                                                                     

Pursuant to the Merger Agreement, Halstead has agreed not to encourage, 
solicit, engage in discussions or negotiations with, or provide any information 
to, any person or group (other than Mueller or its representatives) concerning  
any merger, sale of substantial assets, purchase or sale of shares of capital   
stock or similar transaction involving Halstead or any other transaction        
inconsistent with the transactions contemplated by the Merger Agreement. See    
"THE MERGER AGREEMENT AND RELATED AGREEMENTS--Exclusivity."                     

ACCOUNTING TREATMENT OF THE MERGER                                              

  Mueller and Halstead believe that the Merger will qualify as a "pooling of
interests" for accounting and financial reporting purposes. The consummation of 
the Merger is subject to receipt of a letter from Arthur Andersen LLP,          
independent public accountants for Halstead, as to whether or not the Merger    
will qualify for "pooling of interests" accounting treatment if it is           
consummated in accordance with the Merger Agreement. See "THE MERGER--Accounting
Treatment of the Merger."                                                       

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER                           

  Mueller and Halstead have structured the Merger so that it will be treated
as a reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Merger is conditioned on the     
receipt of a legal opinion from Willkie Farr that such is the case. Assuming the
Merger so qualifies as a reorganization, in general, Halstead Stockholders who  
exchange their Halstead Shares for Mueller Shares pursuant to the Merger will   
not recognize any gain or loss for federal income tax purposes in the Merger    
(except for such gain or loss as may be recognized with respect to cash received
in lieu of fractional shares). The federal income tax considerations of the     
Merger to ESOP Participants are as provided in "THE MERGER--Certain Federal     
Income Tax Consequences of the Merger--Special Considerations for Halstead ESOP 
Participants."                                                                  

 Holders of Halstead Shares are urged to consult their own tax advisors to
determine the particular consequences of the Merger to them under federal,      
state, local and foreign tax laws. For a further discussion of certain federal  
income tax consequences of the Merger, see "THE MERGER--Certain Federal Income  
Tax Consequences of the Merger."                                                

9 

S-4
19th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 19th
MUELLER SUMMARY SELECTED FINANCIAL DATA 

MUELLER AND SUBSIDIARIES
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

 The following selected consolidated financial data, with the exception of
weighted average shares for basic earnings per share and basic earnings per     
share for 1994 and 1993, of Mueller as of and for the years ended December 27,  
1997, December 28, 1996, December 30, 1995, December 31, 1994 and December 25,  
1993, is derived from consolidated financial statements of Mueller. Such data is
qualified in its entirety by reference to historical financial information set  
forth in Mueller's Annual Reports on Form 10-K for the fiscal years then ended. 
The selected consolidated financial data as of and for the six months ended June
27, 1998 and June 28, 1997, is derived from unaudited consolidated financial    
statements and is qualified in its entirety by reference to historical financial
information set forth in Mueller's Quarterly Report on Form 10-Q for the period 
ended June 27, 1998. Operating results for the six months ended June 27, 1998,  
are not necessarily indicative of the results that may be expected for the      
entire fiscal year ending December 26, 1998. Presentation of share data,        
including earnings per share, has been adjusted to reflect two-for-one stock    
splits effected during 1998 and 1995.                                           

                                                        [Enlarge/Download Table]

                                              SIX MONTHS ENDED                          YEAR ENDED                      
                                            --------------------  ------------------------------------------------------
                                            JUNE 27,   JUNE 28,   DECEMBER 27,  DECEMBER 28,  DECEMBER 30,  DECEMBER 31,
                                              1998       1997         1997          1996          1995          1994    
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                                                                                                        
Income Statement Data:                                                                                                  
  Net sales................................ $ 452,519  $ 416,803   $  888,997    $  718,312    $  678,838    $  550,003 
  Cost of goods sold.......................   348,975    328,469      704,801       554,570       549,884       448,467 
  Depreciation and amortization............    11,273      9,816       20,998        18,472        15,452        12,689 
  Selling, general and administrative......    36,254     30,730       63,489        54,808        49,491        44,895 
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Operating income.........................    56,017     47,788       99,709        90,462        64,011        43,952 
  Other income (expense)...................     1,561     (1,100)       1,112        (2,050)          538        (3,128)
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Income before income taxes...............    57,578     46,688      100,821        88,412        64,549        40,824 
  Income tax expense.......................    18,603     14,591       31,051        27,239        19,726        12,898 
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Net income............................... $  38,975  $  32,097   $   69,770    $   61,173    $   44,823    $   27,926 
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Weighted average shares for basic                                                                                     
    earnings per share.....................    35,163     34,979       34,997        34,799        34,646        36,318 
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Adjusted weighted average shares for                                                                                  
    diluted earnings per share.............    39,629     39,227       39,250        38,993        38,298        39,558 
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Basic earnings per share................. $    1.11  $    0.92   $     1.99    $     1.76    $     1.29    $     0.77 
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Diluted earnings per share............... $    0.98  $    0.82   $     1.78    $     1.57    $     1.17    $     0.71 
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                            ---------  ---------  ------------  ------------  ------------  ------------
  Cash dividends declared per common                                                                                    
    share.................................. $  --      $  --       $   --        $   --        $   --        $   --     
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                            ---------  ---------  ------------  ------------  ------------  ------------


                                            JUNE 27,   JUNE 28,   DECEMBER 27,  DECEMBER 28,  DECEMBER 30,  DECEMBER 31,
                                              1998       1997         1997          1996          1995          1994    
                                            ---------  ---------  ------------  ------------  ------------  ------------
                                                                                                                        
Balance Sheet Data:                                                                                                     
  Current assets........................... $ 335,622  $ 273,292   $  309,051    $  274,712    $  211,038    $  183,551 
  Current liabilities......................   109,319     88,667      100,557        78,956        67,884        67,221 
  Working capital..........................   226,303    184,625      208,494       195,756       143,154       116,330 
  Total assets.............................   655,230    548,780      610,776       509,357       450,835       430,755 
  Long-term debt...........................    45,172     39,335       53,113        44,806        59,653        76,125 
  Stockholders' equity.....................   460,615    380,937      418,040       348,082       285,875       241,948 



                                            DECEMBER 25,                                                                
                                                1993                                                                    
                                            ------------                                                                
                                                                                                                        
Income Statement Data:                                                                                                  
  Net sales................................  $  501,885                                                                 
  Cost of goods sold.......................     403,775                                                                 
  Depreciation and amortization............      14,160                                                                 
  Selling, general and administrative......      45,923                                                                 
                                            ------------                                                                
  Operating income.........................      38,027                                                                 
  Other income (expense)...................      (4,584)                                                                
                                            ------------                                                                
  Income before income taxes...............      33,443                                                                 
  Income tax expense.......................      12,307                                                                 
                                            ------------                                                                
  Net income...............................  $   21,136                                                                 
                                            ------------                                                                
                                            ------------                                                                
  Weighted average shares for basic                                                                                     
    earnings per share.....................      38,613                                                                 
                                            ------------                                                                
                                            ------------                                                                
  Adjusted weighted average shares for                                                                                  
    diluted earnings per share.............      41,774                                                                 
                                            ------------                                                                
                                            ------------                                                                
  Basic earnings per share.................  $     0.55                                                                 
                                            ------------                                                                
                                            ------------                                                                
  Diluted earnings per share...............  $     0.51                                                                 
                                            ------------                                                                
                                            ------------                                                                
  Cash dividends declared per common                                                                                    
    share..................................  $   --                                                                     
                                            ------------                                                                
                                            ------------                                                                
                                            DECEMBER 25,                                                                
                                                1993                                                                    
                                            ------------                                                                
                                                                                                                        
Balance Sheet Data:                                                                                                     
  Current assets...........................  $  194,411                                                                 
  Current liabilities......................      47,430                                                                 
  Working capital..........................     146,981                                                                 
  Total assets.............................     369,743                                                                 
  Long-term debt...........................      54,320                                                                 
  Stockholders' equity.....................     222,114                                                                 

10

S-4
20th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 20th
HALSTEAD SUMMARY SELECTED FINANCIAL DATA

HALSTEAD
(IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) 

 The following selected financial data of Halstead as of and for the years
ended December 31, 1997, 1996, 1995, 1994 and 1993 is derived from financial    
statements of Halstead. The selected financial data as of and for the six months
ended June 26, 1998 and June 27, 1997, is derived from unaudited financial      
statements and includes, in the opinion of Halstead management, all adjustments,
consisting only of normal recurring adjustments, necessary to fairly present the
data for such periods. Operating results for the six months ended June 26, 1998,
are not necessarily indicative of the results that may be expected for the      
entire year ending December 31, 1998, or for any future period. The data        
presented below shoud be read in conjunction with the financial statements of   
Halstead and the notes thereto which are included elsewhere in this Proxy       
Statement/Prospectus and "Halstead Management's Discussion and Analysis of      
Financial Condition and Results of Operations." Presentation of share data,     
including earnings per share, has been adjusted to reflect a 1-for-10 reverse   
stock split effected April 16, 1998.                                            

11

S-4
21st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 21st
                                                        [Enlarge/Download Table]

                                                            SIX MONTHS ENDED                                                  
                                                          --------------------             YEAR ENDED DECEMBER 31,            
                                                          JUNE 26,   JUNE 27,   --------------------------------------------- 
                                                            1998       1997        1997         1996       1995       1994    
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                                                                                              
Income Statement Data:                                                                                                        
  Net sales.............................................  $ 108,045  $ 142,821  $   243,333  $  274,826  $ 302,851  $ 288,321 
  Cost of goods sold....................................     91,859    131,679      225,733     233,772    273,085    252,372 
  Depreciation and amortization.........................      1,661      1,522        2,993       3,846      3,590      3,111 
  Selling, general and administrative...................     10,385     11,822       21,086      22,594     21,841     24,136 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Operating income (loss)...............................      4,140     (2,202)      (6,479)     14,614      4,335      8,702 
  Other expense, net....................................     (1,029)      (390)        (880)       (824)      (824)      (710)
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Income (loss) from continuing operations before income                                                                      
    tax expense (benefit) and cumulative effect of                                                                            
    change in accounting principle......................      3,111     (2,592)      (7,359)     13,790      3,511      7,992 
  Income tax expense (benefit)..........................      1,244     (1,036)      (2,921)      5,047      1,250      3,269 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Income (loss) from continuing operations before                                                                             
    cumulative effect of change in accounting                                                                                 
    principle...........................................      1,867     (1,556)      (4,438)      8,743      2,261      4,723 
  Discontinued operations, net of income taxes..........     --         --          --           --           (261)     1,698 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Income (loss) before cumulative effect of change in                                                                         
    accounting principle................................      1,867     (1,556)      (4,438)      8,743      2,000      6,421 
  Cumulative effect of change in accounting principle...         --         --           --          --         --         -- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Net income (loss).....................................  $   1,867  $  (1,556) $    (4,438) $    8,743  $   2,000  $   6,421 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Weighted average shares for basic earnings per share..      3,361      3,609        3,502       3,667      4,296      6,920 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Adjusted weighted average shares for diluted earnings                                                                       
    per share...........................................      3,361      3,609        3,502       3,667      4,296      6,920 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Basic earnings per share:                                                                                                   
    Income (loss) from continuing operations before                                                                           
      cumulative effect of change in accounting                                                                               
      principle.........................................  $  555.45  $ (431.15) $ (1,267.31) $ 2,384.11  $  526.30  $  682.51 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
    Income (loss) before cumulative effect of change in                                                                       
      accounting principle..............................  $  555.45  $ (431.15) $ (1,267.31) $ 2,384.11  $  465.59  $  927.92 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
    Net income (loss)...................................  $  555.45  $ (431.15) $ (1,267.31) $ 2,384.11  $  465.59  $  927.92 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Diluted earnings per share:                                                                                                 
    Income (loss) from continuing operations before                                                                           
      cumulative effect of change in accounting                                                                               
      principle.........................................  $  555.45  $ (431.15) $ (1,267.31) $ 2,384.11  $  526.30  $  682.51 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
    Income (loss) before cumulative effect of change in                                                                       
      accounting principle..............................  $  555.45  $ (431.15) $ (1,267.31) $ 2,384.11  $  465.59  $  927.92 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
    Net income (loss)...................................  $  555.45  $ (431.15) $ (1,267.31) $ 2,384.11  $  465.59  $  927.92 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
  Cash dividends declared per common share..............  $  --      $  400.00  $    400.00  $   300.00  $  --      $  --     
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
                                                          ---------  ---------  -----------  ----------  ---------  --------- 
Balance Sheet Data:                                                                                                           
  Current assets........................................  $  47,484  $  53,680  $    41,214  $   45,418  $  52,029  $  64,498 
  Current liabilities...................................     25,358     32,791       15,996      20,541     23,161     27,043 
  Working capital.......................................     22,126     20,889       25,218      24,877     28,868     37,455 
  Total assets..........................................     90,188     93,145       83,666      84,280     93,073    102,307 
  Long-term debt........................................     22,646     16,931       27,860      16,788     32,591     13,303 
  Stockholders' equity..................................     33,710     36,005       31,691      40,914     33,855     57,203 



                                                             1993                                                             
                                                          ----------                                                          
                                                                                                                              
Income Statement Data:                                                                                                        
  Net sales.............................................  $  227,180                                                          
  Cost of goods sold....................................     181,593                                                          
  Depreciation and amortization.........................       3,458                                                          
  Selling, general and administrative...................      22,252                                                          
                                                          ----------                                                          
  Operating income (loss)...............................      19,877                                                          
  Other expense, net....................................      (5,073)                                                         
                                                          ----------                                                          
  Income (loss) from continuing operations before income                                                                      
    tax expense (benefit) and cumulative effect of                                                                            
    change in accounting principle......................      14,804                                                          
  Income tax expense (benefit)..........................       5,806                                                          
                                                          ----------                                                          
  Income (loss) from continuing operations before                                                                             
    cumulative effect of change in accounting                                                                                 
    principle...........................................       8,998                                                          
  Discontinued operations, net of income taxes..........      (2,312)                                                         
                                                          ----------                                                          
  Income (loss) before cumulative effect of change in                                                                         
    accounting principle................................       6,686                                                          
  Cumulative effect of change in accounting principle...       1,986                                                          
                                                          ----------                                                          
  Net income (loss).....................................  $    8,672                                                          
                                                          ----------                                                          
                                                          ----------                                                          
  Weighted average shares for basic earnings per share..       7,046                                                          
                                                          ----------                                                          
                                                          ----------                                                          
  Adjusted weighted average shares for diluted earnings                                                                       
    per share...........................................       7,046                                                          
                                                          ----------                                                          
                                                          ----------                                                          
  Basic earnings per share:                                                                                                   
    Income (loss) from continuing operations before                                                                           
      cumulative effect of change in accounting                                                                               
      principle.........................................  $ 1,277.04                                                          
                                                          ----------                                                          
                                                          ----------                                                          
    Income (loss) before cumulative effect of change in                                                                       
      accounting principle..............................  $   948.91                                                          
                                                          ----------                                                          
                                                          ----------                                                          
    Net income (loss)...................................  $ 1,230.76                                                          
                                                          ----------                                                          
                                                          ----------                                                          
  Diluted earnings per share:                                                                                                 
    Income (loss) from continuing operations before                                                                           
      cumulative effect of change in accounting                                                                               
      principle.........................................  $ 1,277.04                                                          
                                                          ----------                                                          
                                                          ----------                                                          
    Income (loss) before cumulative effect of change in                                                                       
      accounting principle..............................  $   948.91                                                          
                                                          ----------                                                          
                                                          ----------                                                          
    Net income (loss)...................................  $ 1,230.76                                                          
                                                          ----------                                                          
                                                          ----------                                                          
  Cash dividends declared per common share..............  $   650.00                                                          
                                                          ----------                                                          
                                                          ----------                                                          
Balance Sheet Data:                                                                                                           
  Current assets........................................  $   59,344                                                          
  Current liabilities...................................      23,990                                                          
  Working capital.......................................      35,354                                                          
  Total assets..........................................     116,780                                                          
  Long-term debt........................................      29,452                                                          
  Stockholders' equity..................................      53,499                                                          

12

S-4
22nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 22nd
SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA) 

    The following table sets forth certain selected unaudited pro forma combined
financial data for Mueller and Halstead. The pro forma amounts included in the  
table below relating to Mueller and Halstead assume the consummation of the     
Merger and are based on the "pooling of interests" method of accounting. The    
income statement data for each of the three years in the period ended December  
27, 1997, and the six months ended June 27, 1998, assumes that the Merger had   
been consummated at the beginning of the earliest period presented. The balance 
sheet data assumes that the Merger had been consummated as of each date         
presented. The unaudited pro forma combined financial data does not reflect any 
cost savings and other improvements anticipated by Mueller management as a      
result of the Merger and is not necessarily indicative of the results of        
operations or the financial position which would have occurred had the Merger   
been consummated at the beginning of the earliest period presented, nor is it   
necessarily indicative of future results of operations or financial position.   
Additionally, the unaudited pro forma combined income data excludes             
non-recurring charges directly attributable to the Merger which will be charged 
to operations in the quarter in which the charges are incurred. The following   
table should be read in conjunction with the historical financial statements of 
Mueller incorporated herein by reference and the historical financial statements
of Halstead included elsewhere in the Proxy Statement/Prospectus.               

                                                        [Enlarge/Download Table]

                                                                                      YEAR ENDED               
                                                         SIX MONTHS    ----------------------------------------
                                                            ENDED      DECEMBER 27,  DECEMBER 28,  DECEMBER 30,
                                                        JUNE 27, 1998      1997          1996          1995    
                                                        -------------  ------------  ------------  ------------
                                                                                                               
Income Statement Data:                                                                                         
  Net sales............................................  $   560,564    $1,132,330    $  993,138    $  981,689 
  Operating income.....................................       60,157        93,230       105,076        68,346 
  Net income...........................................       40,842        65,332        69,916        46,823 
  Basic earnings per share(1)..........................         1.06          1.70          1.82          1.20 
  Diluted earnings per share(2)........................         0.95          1.53          1.64          1.10 

                                                        [Enlarge/Download Table]

                                                          JUNE 27,     DECEMBER 27,  DECEMBER 28,  DECEMBER 30,
                                                            1998           1997          1996          1995    
                                                        -------------  ------------  ------------  ------------
                                                                                                               
Balance Sheet Data:                                                                                            
  Total assets.........................................  $   745,418    $  694,442    $  593,637    $  543,908 
  Long-term debt.......................................       67,818        80,973        61,594        92,244 

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

(1) Basic earnings per share is calculated by dividing net income by the        
    weighted average number of shares outstanding, as adjusted for the number of
    Mueller Shares to be issued based upon an Exchange Ratio of 989.36 (assuming
    Halstead Expenses of $750,000 and a Mueller Average Market Price of $26.50),
as though such shares were issued as of the first day presented.        

(2) Diluted earnings per share is calculated by dividing net income by the      
weighted average number of share and share equivalents outstanding, as  
adjusted for the number of Mueller Shares to be issued based upon an    
Exchange Ratio of 989.36 (assuming Halstead Expenses of $750,000 and a  
  Mueller Average Market Price of $26.50), as though such shares were issued
as of the first day presented.                                          

13

S-4
23rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 23rd
MARKET PRICE INFORMATION

   MUELLER.  Mueller Shares are listed on the NYSE under the symbol "MLI." The
following table shows the high and low sales prices of Mueller Shares on the    
NYSE for the periods presented, based on published financial sources.           

                                                                [Download Table]

                                                           PRICE PER        
                                                        MUELLER SHARE(1)    
                                                    ------------------------
                                                        HIGH         LOW    
                                                    ------------  ----------
                                                                            
1996                                                                        
  First Quarter...................................  $17    13/16  $13       
  Second Quarter..................................   22    1/8     17  3/8  
  Third Quarter...................................   21    3/16    15  11/16
  Fourth Quarter..................................   21    5/16    18  1/16 
1997                                                                        
  First Quarter...................................   22    7/8     18       
  Second Quarter..................................   22    11/16   18  1/16 
  Third Quarter...................................   24    1/8     21  1/4  
  Fourth Quarter..................................   28    11/16   21  7/32 
1998                                                                        
  First Quarter...................................   32    1/2     25  1/32 
  Second Quarter..................................   38    1/16    29  11/16
  Third Quarter (through September 25, 1998)......   40            23  13/16

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

(1) Adjusted to reflect a 2-for-1 stock split effected May 1998.                

   Mueller has paid no cash dividends on Mueller Shares and presently does not
anticipate paying any cash dividend in the near future.                         

HALSTEAD.  There is no established public trading market for Halstead   
Shares. In connection with the Halstead ESOP, the ESOP Trustee is required to   
have an annual appraisal performed by an independent appraiser for the purpose  
of determining the fair market value of the Halstead Shares. Based on each such 
appraisal, the ESOP Trustee establishes a price (the "Halstead ESOP Price") at  
which the Halstead Shares are valued for employees who withdraw from the        
Halstead ESOP and who elect to accept cash rather than Halstead Shares. The     
Halstead ESOP Price for ESOP Participant distributions from the Halstead ESOP in
1998, 1997 and 1996 was $9,000, $12,190 and $9,500, respectively, as adjusted   
for a 1-for-10 reverse stock split effected April 16, 1998.                     

The following per share cash dividends have been paid on Halstead Shares
since January 1, 1996:                                                          

                                                        [Enlarge/Download Table]

DATE                                                                                         DIVIDEND(1)
-------------------------------------------------------------------------------------------  -----------
                                                                                                        
October 25, 1996...........................................................................   $  300.00 
April 14, 1997.............................................................................   $  400.00 

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

(1) Adjusted to reflect a 1-for-10 reverse stock split effected April 16, 1998. 

    On August 7, 1998, the last trading day before Mueller and Halstead publicly
announced that they had entered into the Merger Agreement, the closing price of 
a Mueller Share on the NYSE was $33 3/8. On [         ], 1998, the last trading 
day before the date of this Proxy Statement/Prospectus, the closing price of a  
Mueller Share on the NYSE was $[      ].                                        

14

S-4
24th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 24th
COMPARATIVE PER SHARE DATA
(UNAUDITED) 

The following table presents historical and pro forma per share data for
Mueller and historical and equivalent pro forma per share data for Halstead.    
Equivalent pro forma per share amounts for Halstead were calculated by          
multiplying the relevant pro forma amounts by 989.36, the Exchange Ratio        
calculated assuming Halstead Expenses of $750,000 and a Mueller Average Market  
Price of $26.50. The information shown below should be read in conjunction with 
the consolidated historical financial statements of Mueller, which are          
incorporated by reference into this Proxy Statement/Prospectus, the accompanying
historical financial statements of Halstead and the pro forma financial data    
included herein under the caption "SELECTED UNAUDITED PRO FORMA COMBINED        
FINANCIAL DATA."                                                                

                                                        [Enlarge/Download Table]

                                                                                      YEAR ENDED               
                                                         SIX MONTHS    ----------------------------------------
                                                            ENDED      DECEMBER 27,  DECEMBER 28,  DECEMBER 30,
                                                        JUNE 27, 1998      1997          1996          1995    
                                                        -------------  ------------  ------------  ------------
                                                                                                               
MUELLER                                                                                                        
Net Income:                                                                                                    
Historical--Basic......................................  $      1.11    $     1.99    $     1.76    $     1.29 
Historical--Diluted....................................         0.98          1.78          1.57          1.17 
Pro Forma--Basic.......................................         1.06          1.70          1.82          1.20 
Pro Forma--Diluted.....................................         0.95          1.53          1.64          1.10 

Dividends:                                                                                                     
Historical.............................................      --             --            --            --     
Pro Forma..............................................      --             --            --            --     

Book Value:                                                                                                    
Historical(1)..........................................        12.93         11.94                             
Pro Forma(2)...........................................        12.52         11.68                             

                                                        [Enlarge/Download Table]

                                                         SIX MONTHS            YEAR ENDED DECEMBER 31,         
                                                            ENDED      ----------------------------------------
                                                        JUNE 26, 1998      1997          1996          1995    
                                                        -------------  ------------  ------------  ------------
                                                                                                               
HALSTEAD                                                                                                       
Net Income:                                                                                                    
Historical--Basic......................................  $    555.45    $(1,267.31)   $ 2,384.11    $   465.59 
Historical--Diluted....................................       555.45     (1,267.31)     2,384.11        465.59 
Equivalent Pro Forma--Basic............................     1,048.72      1,681.91      1,800.64      1,187.23 
Equivalent Pro Forma--Diluted..........................       939.89      1,513.72      1,622.55      1,088.30 

Dividends:                                                                                                     
Historical.............................................      --             400.00        300.00        --     
Equivalent Pro Forma(3)................................      --             --            --            --     

Book Value:                                                                                                    
Historical(1)..........................................     9,993.18      9,433.25                             
Equivalent Pro Forma...................................    12,386.89     11,555.72                             

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

(1) Historical book value per share is determined by dividing total             
shareholders' equity by the total number of outstanding shares of common
stock.                                                                  

(2) Pro forma book value per share is determined by dividing total shareholders'
 equity after giving effect to transactions consummated as a result of the
Merger Agreement. Shareholders' equity at June 27, 1998 was reduced by  
   $6,695,000 as though the transactions consummated as a result of the Merger
Agreement occurred as of June 27, 1998.                                 

(3) Equivalent pro forma dividends are assumed to be zero because Mueller has   
  paid no cash dividends on Mueller Shares and presently does not anticipate
paying cash dividends in the near future.                               

15

S-4
25th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 25th
THE MERGER

BACKGROUND OF THE MERGER                                                        

   Halstead is a privately held corporation with fewer than 60 stockholders of
record. Approximately 51.9% of the outstanding Halstead Shares are owned by     
various family members of Halstead's founders and their respective spouses and  
children, and approximately 37.6% (including 1.7% which is held by the Halstead 
ESOP for the benefit of various family members of Halstead's founders) is owned 
by the Halstead ESOP. As a result, there is no public market for its securities.
The absence of a public market has made it difficult for Halstead to obtain     
capital to satisfy the liquidity needs of Halstead and Halstead Stockholders and
for Halstead Stockholders to realize the value of their Halstead Shares.        

In recent years, Halstead has engaged in a number of transactions, the  
purpose of which was, in part, to enable the Halstead Stockholders to obtain    
liquidity and to satisfy or reduce the liquidity needs of the company. In 1990, 
Halstead closed its manufacturing facilities in Zelienople, Pennsylvania. In    
1992, Halstead sold its manufacturing operations in Pine Hall, North Carolina to
Kobe Copper Products, Inc., for approximately $34.9 million, retaining a 15%    
equity interest in Kobe Copper Products, Inc. In late 1994, Halstead sold its   
rubber and plastics operations to RBX Corporation for approximately $31.8       
million and distributed the proceeds to Halstead Stockholders in a partial      
liquidation.                                                                    

    The copper tubing business is a highly competitive business in which sellers
compete primarily on price, quality and service. As a result, it is essential   
that manufacturing costs be kept as low as practicable. For many years, Halstead
believes it has been a low-cost producer and, therefore, able to compete        
successfully in the copper tubing business. After engaging in a series of       
studies of its tubing manufacturing operations at its Wynne, Arkansas facility, 
Halstead determined that its ability to continue as a low-cost producer would   
require a substantial capital investment. In late 1997 and early 1998,          
Halstead's management explored the possibility of converting the company to an S
Corporation under the Code. Halstead's management believed that a conversion to 
an S Corporation could provide certain advantages to Halstead and to Halstead   
Stockholders and make it easier to provide for the liquidity needs of both. It  
was also determined that to qualify as an S Corporation Halstead must have no   
more than 75 eligible stockholders and meet certain other conditions. As a      
result, a reverse stock split was proposed for the purpose of reducing the      
number of stockholders and satisfying certain other conditions. At the annual   
meeting of Halstead Stockholders held on April 7, 1998, a 1-for-10 reverse stock
split was approved by the Halstead Stockholders and was effected April 16, 1998.
Following the meeting, Halstead's management continued to explore ways to       
provide financing for the needed capital investments. These investigations      
caused Halstead's management to believe that it would be difficult to obtain    
sufficient financing to provide for the needed capital investments and the      
liquidity expectations of Halstead Stockholders.                                

On April 21, 1998, Harvey L. Karp, Chairman and a Director of Mueller,  
telephoned William B. Halstead, Chairman, Chief Executive Officer and a Director
of Halstead and inquired if Mr. Halstead would be interested in discussing a    
possible merger of the two companies. As a result of that telephone call, the   
two companies agreed to exchange certain publicly available information.        

   In early June 1998, discussions were held between Messrs. Karp and Halstead
concerning the possibility of a merger of the two companies. Halstead's         
directors were notified of these discussions during the week of June 8, 1998.   
Further discussions were subsequently held between Mr. Halstead and Mr. Karp by 
telephone, and on June 16, 1998, a confidentiality agreement and a non-binding  
letter of intent were executed by Messrs. Halstead and Karp.                    

 On June 30, 1998, counsel for Halstead and counsel for Mueller met in New
York City for the purpose of discussing certain key issues that would need to be
addressed in any merger agreement. Halstead's counsel advised that, in addition 
to the price, Halstead had three major requirements for a merger of the two     
companies. Those requirements were (i) the registration of Mueller Shares to be 
exchanged in a merger to provide liquidity for Halstead Stockholders, (ii) the  
structuring of a merger in a manner that                                        

16

S-4
26th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 26th
would result in no Federal income taxes to Halstead Stockholders on the exchange
of their Halstead Shares for Mueller Shares, and (iii) the absence of any       
continuing liability on the part of Halstead Stockholders following a merger.   
Mueller counsel advised that, in addition to the price, Mueller had two major   
requirements. Those requirements were (i) the receipt of voting agreements from 
the holders of a majority of the outstanding shares of Halstead Stock agreeing  
to vote their shares for a merger and (ii) if practicable, the structuring of a 
merger in a manner that would qualify for "pooling of interests" accounting.    

On July 16, 1998, Michael E. Stoll, Vice President and Chief Financial  
Officer of Halstead, William H. Hensley, Vice President, General Counsel and    
Secretary of Mueller, Kent A. McKee, Vice President-- Business                  
Development/Investor Relations of Mueller, and counsel for Halstead and for     
Mueller met in New York for the purpose of further discussing the structure of a
merger and the principal terms of a merger agreement. During the following two  
weeks, negotiations of the principal terms and conditions of a merger continued 
to be discussed, and both companies continued to conduct certain "due diligence"
investigations.                                                                 

On July 29, 1998, meetings were held in Memphis, Tennessee, to discuss  
further the terms and conditions of the merger and certain due diligence        
matters, and to provide Mueller an opportunity to interview Halstead's          
management. These meetings were attended by (a) several Mueller participants,   
including William D. O'Hagan, President and Chief Executive Officer, William H. 
Hensley and Kent A. McKee, (b) all of the executive officers of Halstead (with  
the exception of William B. Halstead), (c) representatives of Parker/Hunter,    
financial advisor to the Halstead ESOP, and (d) Halstead's counsel.             

   A meeting of the Halstead Board was held on July 30, 1998. At that meeting,
counsel for Halstead advised the Halstead Board of their responsibilities under 
the DGCL. Following a discussion of the principal terms and conditions of the   
Merger and various materials with respect to the business and financial         
condition of Mueller which had previously been provided to directors, the       
Halstead Board agreed to proceed with the negotiations and to the engagement of 
legal counsel and accountants to assist in the negotiations. The Halstead Board 
also agreed that, as provided in the Halstead ESOP, it would pay the fees and   
expenses of an investment banking firm engaged by the ESOP Trustee to provide a 
"fairness opinion" to the ESOP Trustee and the fees of separate legal counsel to
the Halstead ESOP.                                                              

    On August 3 and 4, 1998, representatives of Halstead and Mueller and counsel
for both companies again met in New York to negotiate the terms of a definitive 
merger agreement.                                                               

 Another meeting of the Halstead Board was held on August 5, 1998. At that
meeting, the terms and conditions of the definitive Merger Agreement were       
discussed in detail. In addition, the Halstead Board discussed a number of      
matters relating to the desirability of a merger with Mueller. For a statement  
of these matters, see "Reasons for the Merger--Halstead." The Halstead Board    
unanimously approved the Merger Agreement and the transactions contemplated     
thereby and directed that the matter be submitted to the Halstead Stockholders  
for consideration.                                                              

On August 6, 1998, the Merger Agreement was unanimously approved by the 
Board of Directors of Mueller (the "Mueller Board").                            

  On Saturday, August 8, 1998, the Merger Agreement was delivered by Mueller
and Merger Sub and by Halstead, and certain Halstead Stockholders, holding more 
than a majority of the outstanding Halstead Shares, delivered agreements by     
which they agreed to vote for approval of the Merger Agreement. Those           
stockholders subsequently delivered the Voting Agreements which amend and       
restate the earlier agreements.                                                 

  The Merger was publicly announced at 7:00 a.m., EDT, on Monday, August 10,
1998, prior to the opening of the United States financial markets.              

17

S-4
27th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 27th
REASONS FOR THE MERGER                                                          

HALSTEAD.  The Halstead Board has (a) determined unanimously that the   
Merger, Merger Agreement and the transactions contemplated thereby are advisable
and fair to and in the best interests of Halstead and its stockholders, (b)     
directed that the proposed transaction be submitted for consideration by the    
Halstead Stockholders and (c) recommended that the Halstead Stockholders vote   
for approval and adoption of the Merger, the Merger Agreement and the           
transactions contemplated thereby. In reaching this conclusion, the Halstead    
Board considered and analyzed a number of factors, including, without           
limitation, the following:                                                      

     (i) The Halstead Board considered the fact that Halstead Stockholders
 currently have little or no liquidity due to the lack of a public trading
    market for the Halstead Shares; whereas, as holders of Mueller Shares, which
  are traded on the NYSE, the liquidity of their stock will be substantially
improved. See "THE MERGER AGREEMENT AND RELATED AGREEMENTS--Resales of  
Mueller Shares."                                                        

(ii) The Halstead Board analyzed information with respect to the
financial condition, results of operations, cash flow, business         
opportunities and capital investment prospects of Halstead on both a    
  stand-alone basis and as compared with those available in combination with
Mueller, and concluded that Halstead would benefit from a business      
combination with Mueller. Such benefits would include a continuity of   
   interests by Halstead Stockholders in the combined business enterprise (the
 "Combined Company"). The resulting benefits of the Combined Company would
include access to significantly enhanced financial resources and broader
  operational efficiencies and flexibility, the combination of complementary
   skills and experience, as well as the Combined Company's economic advantage
for future strategic opportunities.                                     

       (iii) The Halstead Board took into account that the sale of copper tubing
 has increasingly become a North American, and indeed a global, market and
   that the Merger should allow the Combined Company to meet the challenges of
  the increasingly competitive and expanded environment in which copper tube
is sold more effectively than Halstead could on its own.                

      (iv) Although the Halstead Board did not employ a financial advisor to
    render an opinion to or for the benefit of Halstead Stockholders who are not
participants in the Halstead ESOP, the Halstead Board did consider the  
opinion of Parker/Hunter, financial advisor to the Halstead ESOP, to the
 effect that the consideration to be received by the Halstead ESOP is fair
  from a financial point of view. See "--Opinion of the Financial Advisor to
   the Halstead ESOP" for a discussion of the Parker/Hunter opinion. A copy of
 such opinion, which is subject to certain limitations, qualifications and
assumptions, is included as Appendix C hereto.                          

        (v) The Halstead Board considered the terms of the Merger Agreement, the
   consideration to be received by Halstead Stockholders in the Merger and the
fact that the receipt of Mueller Shares by Halstead Stockholders upon   
consummation of the Merger will be a tax-free exchange (other than taxes
payable on cash received for fractional shares).                        

   In reaching the determination that the Merger, the Merger Agreement and the
transactions contemplated thereby are advisable and fair to and in the best     
interests of Halstead and the Halstead Stockholders, the Halstead Board also    
considered a number of additional factors, including its discussions with       
Halstead's management concerning the results of Halstead's "due diligence"      
investigation of Mueller, the strategic, operational and financial opportunities
available to Halstead and Mueller, the historical and current market prices of  
Mueller Shares and the proposed structure of the transaction and the other terms
of the Merger Agreement and related agreements.                                 

    The Halstead Board also considered certain risks and potential disadvantages
associated with the Merger, including (a) the risk that the business combination
might not be completed as a result of a failure to satisfy the conditions to the
Merger Agreement and (b) the volatility in the market price of the Mueller      

18

S-4
28th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 28th
Shares. In the judgment of the Halstead Board, the potential benefits of the    
Merger outweigh these considerations.                                           

The foregoing discussion of the information and factors that were given 
weight by the Halstead Board is not intended to be exhaustive, but is believed  
to include all material factors considered by the Halstead Board. In view of the
variety of factors considered in connection with its evaluation of the proposed 
Merger and the terms of the Merger Agreement, the Halstead Board did not deem it
practicable to, and did not, quantify or otherwise assign relative weights to   
the specific factors considered in reaching its conclusion, and individual      
members of the Halstead Board may have given different weights to different     
factors.                                                                        

    After considering all such factors, at a meeting held on August 5, 1998, the
Halstead Board unanimously approved the Merger Agreement and the transactions   
contemplated thereby as fair to, and in the best interests of, Halstead and its 
stockholders.                                                                   

   THE HALSTEAD BOARD UNANIMOUSLY RECOMMENDS TO THE HALSTEAD STOCKHOLDERS THAT
THEY VOTE "FOR" APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE           
TRANSACTIONS CONTEMPLATED THEREBY.                                              

   In considering the recommendation of the Halstead Board with respect to the
Merger Agreement and the transactions contemplated thereby, Halstead            
Stockholders should be aware that certain officers and directors of Halstead    
have certain interests in the proposed Merger that are different from and in    
addition to the interests of Halstead Stockholders generally. The Halstead Board
was aware of these interests and considered them in approving the Merger        
Agreement and the Merger. See "--Interests of Certain Persons in the Merger;    
Possible Conflicts of Interest."                                                

  MUELLER.  The Mueller Board believes that its merger with Halstead is fair
to and in the best interests of Mueller and its stockholders. In reaching such  
determination, the Mueller Board considered the following material factors:     

     (i) Mueller's review of Halstead, including its business, operations,
    management, earnings and financial condition on a historical and prospective
basis;                                                                  

    (ii) its belief that the Merger will add scale to Mueller's existing
business;                                                               

       (iii) the expectation that the Merger will be treated as a reorganization
  for federal income tax purposes and will be accounted for as a "pooling of
interests";                                                             

      (iv) its belief that the Merger should permit cost savings as compared
to operating the two companies independently;                           

       (v) its belief that, with appropriate capital investments, improvements
in manufacturing efficiencies could be achieved at Halstead; and        

 (vi) the terms and conditions of the Merger Agreement, including,
   without limitation, the number of Mueller Shares to be issued in the Merger
and the conditions to consummation of the Merger.                       

  After reviewing the factors described above in their totality, the Mueller
Board determined that the Merger is in the best interests of Mueller and its    
stockholders. In view of the variety of factors considered in connection with   
its evaluation of the Merger, the Mueller Board found it impractical to, and did
not, quantify or attempt to assign relative weight to the specific factors      
considered in reaching its determination. There can be no assurances that the   
expected benefits of the Merger will be realized.                               

OPINION OF THE FINANCIAL ADVISOR TO THE HALSTEAD ESOP                           

  On August 5, 1998, Parker/Hunter delivered its written opinion to the ESOP
Trustee that, as of such date, the consideration to be received by the Halstead 
ESOP pursuant to the Merger Agreement was fair,                                 

19

S-4
29th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 29th
from a financial point of view. The opinion of Parker/Hunter referred to herein 
was provided for the information and assistance of the ESOP Trustee in          
connection with its consideration of the Merger and does not constitute a       
recommendation as to how any Halstead Stockholder should vote with respect to   
the Merger.                                                                     

   The full text of the written opinion of Parker/Hunter dated August 5, 1998,
which sets forth a description of the assumptions made, matters considered and  
limitations on the review undertaken in connection with the opinion, is attached
hereto as Appendix C and is incorporated herein by reference.                   

   In connection with its opinion, Parker/Hunter reviewed, among other things,
(i) the Merger Agreement; (ii) Halstead's audited financial statements as of    
December 31, 1997 and for the five fiscal years then ended and Halstead's       
unaudited internal financial statements for the six month period ended June 26, 
1998, (iii) certain other internal Halstead information, primarily financial in 
nature, (iv) the nature and financial terms of certain recent business          
combinations, and (v) certain publicly available information regarding companies
deemed to be comparable to Halstead. Parker/Hunter also held discussions with   
members of the senior management of Halstead regarding the past and current     
business operations, financial condition and future prospects of Halstead. In   
addition, Parker/Hunter conducted such other studies and analyses as it         
considered appropriate.                                                         

Parker/Hunter relied upon the accuracy and completeness of all of the   
financial and other information reviewed by it and assumed such accuracy and    
completeness for purposes of rendering its opinion. In addition, Parker/Hunter  
has not made an independent evaluation or appraisal of the assets and           
liabilities (contingent or otherwise) of Halstead and has not been furnished    
with any such evaluation or appraisal. Parker/Hunter relied on Halstead's       
financial projections and assumed that they were reasonably prepared on bases   
reflecting the best currently available judgments of Halstead's management, and 
Parker/Hunter expresses no opinion with respect to such projections or the      
assumptions on which they are based. Parker/ Hunter was not requested to solicit
third-party indications of interest in acquiring all or part of Halstead.       

ACCOUNTING TREATMENT OF THE MERGER                                              

  Mueller and Halstead believe that the Merger will qualify as a "pooling of
interests" for accounting and financial reporting purposes. The unaudited pro   
forma financial data contained in this Proxy Statement/Prospectus has been      
prepared using the "pooling of interests" accounting method to account for the  
Merger. See "SELECTED UNAUDITED PRO FORMA COMBINED FINANCIAL DATA."             

GOVERNMENTAL AND REGULATORY APPROVALS                                           

Under the HSR Act, and the rules promulgated thereunder by the FTC, the 
Merger cannot be consummated until notifications have been given and certain    
information has been furnished to the FTC and the Antitrust Division and        
specified waiting period requirements have been satisfied. The parties completed
their required filings on August 25, 1998 and the waiting period expired on     
September 24, 1998.                                                             

At any time before or after consummation of the Merger, the Antitrust   
Division or the FTC or any state could take such action under the antitrust laws
as it deems necessary or desirable in the public interest, including seeking to 
enjoin the consummation of the Merger or seeking divestiture of substantial     
assets of Mueller or Halstead. Private parties may also seek to take legal      
action under the antitrust laws under certain circumstances.                    

INTERESTS OF CERTAIN PERSONS IN THE MERGER; POSSIBLE CONFLICTS OF INTEREST      

In considering the Halstead Board's approval of the Merger, Halstead    
Stockholders should be aware that senior management of Halstead and certain     
members of the Halstead Board have certain interests in, and will receive       
benefits from, the Merger that are in addition to, and differ from, the         
interests of, and benefits to, Halstead Stockholders generally. These interests 
are summarized below.                                                           

20

S-4
30th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 30th
EMPLOYMENT AGREEMENTS AND SEVERANCE BENEFITS                            

Mueller has agreed in the Merger Agreement that with respect to the Vice
President--Line Sets Division, Vice President--Metal Products Division, and each
Halstead employee employed by Halstead in Greensboro, North Carolina (except for
the Chairman and Chief Executive Officer, the President and the Senior Vice     
President) it will offer each such employee a comparable position at his or her 
current employment location at a comparable base rate of pay. For any such      
employee who accepts such employment and who is subsequently terminated, the    
Surviving Corporation agrees to pay to such employee severance benefits at least
equal to the severance benefits that the employee would have received under     
Halstead's existing severance policy. This agreement, however, is not to be     
construed as creating any employment contract between any Halstead employee and 
Mueller or the Surviving Corporation or to diminish or restrict in any way      
Mueller's or the Surviving Corporation's right to terminate without the payment 
of severance benefits to any employee for poor job performance, unexcused       
absences or other good cause. Mueller has also agreed to recognize the time of  
service of Halstead employees with respect to the granting of and eligibility   
for Mueller employee benefits.                                                  

Under the terms of employment agreements effective April 13, 1993 and   
January 1, 1996, respectively, William B. Halstead, Chairman, Chief Executive   
Officer and a Director of Halstead and William R. Burson, President and a       
Director of Halstead, are entitled to receive severance benefits in the event of
a "change in control" with respect to Halstead. The Merger will constitute a    
"change in control" within the terms of those employment agreements, and, as a  
result, Mr. Halstead will receive $5,668,000 in severance benefits and Mr.      
Burson will receive $430,000 in severance benefits. In addition, LeRoy D. Lintz,
Senior Vice President and a Director of the Company will receive $155,000 in    
severance benefits. Neither Mr. Halstead, Mr. Burson nor Mr. Lintz will be      
employed by the Surviving Corporation, by Mueller or by any affiliate of either 
company following the Merger.                                                   

TIER III INCENTIVE COMPENSATION PLAN                                    

 Since 1995, Halstead has maintained a non-qualified deferred compensation
arrangement (the "Tier III Incentive Compensation Plan") for executive officers.
Under the terms of this arrangement, participants are eligible, upon the        
satisfaction of certain operating and financial goals, to receive "performance  
units." Each unit emulates one Halstead Share. As a result of the Merger, the   
Halstead Board will terminate the Tier III Incentive Compensation Plan and the  
value of the units, based upon Halstead's estimate of the cash value of the per 
share Merger Consideration (as defined below), will be distributed in cash to   
the participants in the following amounts:                                      

                                                        [Enlarge/Download Table]

                                                                                                   AMOUNT OF      
EXECUTIVE OFFICER                                          TITLE                                 DISTRIBUTION     
------------------------------  -----------------------------------------------------------  ---------------------
                                                                                                                  
William B. Halstead...........  Chairman, Chief Executive Officer and Director                    $   469,605     
William R. Burson.............  President and Director                                                427,433     
LeRoy D. Lintz................  Senior Vice President and Director                                    295,022     
Charles E. Foriska............  Vice President -- Line Sets Division                                  236,153     
Michael E. Stoll..............  Vice President & Chief Financial Officer                              203,823     
David F. Arp..................  Vice President -- Metal Products Division                              62,661     
Robert A. Haskins.............  Vice President -- Sales and Distribution Division                     159,859     
Jeffrey L. Byrd...............  Vice President of Administration & Controller                          45,444     

INDEMNIFICATION OF OFFICERS AND DIRECTORS OF HALSTEAD                   

Mueller has agreed that following the Merger it will, and will cause    
Halstead, as the Surviving Corporation, to, indemnify the officers and directors
of Halstead against liability for acts undertaken by such persons during their  
tenure as officers and directors and to maintain the current policies of        
directors and officers liability insurance, all as set forth in the Merger      
Agreement. These interests and benefits may                                     

21

S-4
31st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 31st
constitute potential conflicts of interest with Halstead Stockholders in the    
negotiation, approval and consummation of the Merger.                           

EFFECT OF THE MERGER ON EMPLOYEE BENEFIT PLANS                                  

    Since 1976, Halstead has maintained the Halstead ESOP for the benefit of the
salaried and hourly administrative employees. The Halstead ESOP is administered 
by an independent trustee, First Commercial Trust Company (Little Rock,         
Arkansas) and by a committee of employees appointed by the Halstead Board. At   
August 7, 1998, the Halstead ESOP held a total of 1,320 Halstead Shares (37.6%  
of the outstanding Halstead Shares). The Halstead Shares held by the Halstead   
ESOP will be exchanged for Mueller Shares in the same manner and in accordance  
with the same Exchange Ratio as with respect to Halstead Shares held by other   
Halstead Stockholders. See "OWNERSHIP OF HALSTEAD SHARES BY CERTAIN BENEFICIAL  
OWNERS AND HALSTEAD MANAGEMENT." Presently, under the provisions of the Halstead
ESOP, Halstead is required to purchase the Halstead Shares from the ESOP        
Participants at the time of their retirement or separation from Halstead or     
within certain time periods during the two years following the distribution of  
Halstead Shares from their Halstead ESOP accounts. Since 1995, all ESOP         
Participants receiving distributions from the Halstead ESOP have either elected 
to receive cash in lieu of Halstead Shares or have exercised their right to     
receive cash for their Halstead Shares during the two-year period.              

    As of August 7, 1998, the Halstead ESOP had an outstanding principal balance
of $752,920 under a Loan Agreement dated as of June 14, 1990, as amended by the 
First Amendment thereto, dated July 10, 1996. As of the same date, the Halstead 
ESOP had a second loan under a Loan Agreement dated May 30, 1997 with an        
outstanding balance of $960,000. These Loan Agreements are collectively referred
to herein as the "ESOP Loan Agreements." In addition, in July 1998, Halstead    
advanced $950,000 to the Halstead ESOP (the "ESOP Advance"). The proceeds of the
ESOP Advance were utilized for the payment of benefits to ESOP Participants.    

  The Merger Agreement provides for the termination of the Halstead ESOP not
later than 60 days following the Closing. As soon after such termination as     
certain conditions are met, the Halstead ESOP Trust will sell, in the public    
market, a sufficient number of Mueller Shares to pay the loans under the ESOP   
Loan Agreements and the ESOP Advance in full. Promptly following the termination
of the Halstead ESOP, the Surviving Corporation will submit the Halstead ESOP to
the appropriate District Director of the Internal Revenue Service (the "IRS"),  
seeking a determination letter to the effect that the termination of the        
Halstead ESOP does not adversely affect its tax qualification and tax exemption 
under Sections 401(a) and 501(a) of the Code, respectively. Within sixty days   
following its receipt of such determination letter, the Surviving Corporation   
will provide distribution election forms to the ESOP Participants, and promptly 
thereafter distribute the assets of the Halstead ESOP, or take other appropriate
actions, in accordance with such elections.                                     

Since 1989, Halstead has also maintained the Halstead MSOP for selected 
members of management. Contributions to the Halstead MSOP are determined        
annually at the discretion of the Halstead Board. At August 7, 1998, the        
Halstead MSOP held a total of 339 Halstead Shares. The Halstead MSOP will be    
terminated prior to the Effective Date, and the shares will be distributed to   
the participants. The Halstead Shares to be distributed upon termination of the 
Halstead MSOP will be exchanged for Mueller Shares in the same manner and in    
accordance with the same Exchange Ratio as with respect to Halstead Shares held 
by other Halstead Stockholders. See "OWNERSHIP OF HALSTEAD SHARES BY CERTAIN    
BENEFICIAL OWNERS AND HALSTEAD MANAGEMENT."                                     

CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER                           

The following discussion summarizes the material federal income tax     
considerations generally applicable to Halstead Stockholders. It is a condition 
to the obligations of Mueller and Halstead to consummate                        

22

S-4
32nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 32nd
the Merger that Mueller and Halstead shall have received a favorable opinion of 
Willkie Farr, based upon certain factual representations from Mueller, Halstead 
and Merger Sub, to the effect that the Merger will be treated for Federal income
tax purposes as a reorganization within the meaning of Section 368(a) of the    
Code and that Halstead, Mueller and Merger Sub will each be a party to that     
reorganization within the meaning of Section 368(a) of the Code. The discussion 
below under "--Exchange of Halstead Shares for Mueller Shares," "--Cash Received
in Lieu of Fractional Shares" and "--Reporting Requirements" assumes that the   
Merger will be treated in accordance with the opinion of Willkie Farr described 
in the preceding sentence. There can be no assurance that the IRS will not take 
a contrary view, and no ruling from the IRS has been or will be sought.         

The discussion below is based upon the Code, the applicable Treasury    
Department regulations thereunder, judicial authority and current administrative
rulings and practice, all as in effect as of the date hereof. Future            
legislative, judicial or administrative changes or interpretations could alter  
or modify the statements and conclusions set forth herein, and any such changes 
or interpretations could have retroactive effect and could affect the federal   
income tax consequences to Halstead Stockholders.                               

The following discussion does not address the consequences of the Merger
under state, local or foreign law nor does the discussion address all aspects of
federal income taxation that may be important to a Halstead Stockholder in light
of such stockholder's particular circumstances or to stockholders subject to    
special rules including, without limitation, financial institutions, insurance  
companies, foreign individuals and entities, tax-exempt entities, dealers in    
securities, persons who acquired Halstead Shares pursuant to the exercise of an 
employee option (or otherwise as compensation) or persons holding Halstead      
Shares as part of an integrated investment (including a "straddle") comprised of
Halstead Shares and one or more other positions. This discussion assumes that   
Halstead stockholders hold their respective Halstead Shares as capital assets   
within the meaning of Section 1221 of the Code.                                 

  EXCHANGE OF HALSTEAD SHARES FOR MUELLER SHARES.  Except as discussed below
under "--Cash Received in Lieu of Fractional Shares," no gain or loss will be   
recognized for federal income tax purposes by Halstead Stockholders who exchange
their Halstead Shares for Mueller Shares pursuant to the Merger. The aggregate  
tax basis of Mueller Shares received as a result of the Merger will be the same 
as the stockholder's aggregate tax basis in the Halstead Shares surrendered in  
the exchange (reduced by any tax basis allocable to fractional shares exchanged 
for cash) and the holding period of the Mueller Shares received will include the
holding period of the Halstead Shares surrendered therefor.                     

CASH RECEIVED IN LIEU OF FRACTIONAL SHARES.  The payment of cash to a   
Halstead Stockholder in lieu of a fractional share interest in Mueller Shares   
will be treated as if the fractional share had been distributed as part of the  
exchange and then sold by Mueller on behalf of such holder. Accordingly, the    
cash payment should result in the recognition of capital gain or loss measured  
by the difference between the amount of cash received and the portion of the tax
basis of the Halstead Share allocable to such fractional share interest. In the 
case of an individual, capital gain recognized with respect to cash received in 
lieu of fractional share interests in Mueller Shares generally will be subject  
to United States federal income tax at a maximum rate of 20% if such individual 
held his or her Halstead Shares for more than one year at the Effective Date and
at ordinary income rates if such individual held his or her Halstead Shares for 
one year or less at the Effective Date. The deductibility of capital losses is  
subject to limitations.                                                         

DISSENTERS.  The tax consequences to a Halstead Stockholder who holds   
Halstead Shares and who exercises dissenter's rights with respect to such       
Halstead Shares and receives payment for such Halstead Shares in cash generally 
will not depend on the qualification of the Merger as a reorganization for      
federal income tax purposes. Such stockholder generally will recognize capital  
gain or loss for federal income tax purposes, measured by the difference between
the holder's basis in such Halstead Shares and the amount of cash received      
(other than the amount of cash received, if any, that is or is deemed to be     
interest for federal income tax purposes (which amount will be taxed as ordinary
income)). In the case of an individual, capital gain recognized with respect to 
the Halstead Shares generally will be subject to United States                  

23

S-4
33rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 33rd
federal income tax at a maximum rate of 20% if such individual held his or her  
Halstead Shares for more than one year and at ordinary income rates if such     
individual held his or her Halstead Shares for one year or less. The            
deductibility of capital losses is subject to limitations.                      

REPORTING REQUIREMENTS.  Each Halstead Stockholder that receives Mueller
Shares in the Merger will be required to retain records and file with such      
stockholder's federal income tax return a statement setting forth certain facts 
relating to the Merger.                                                         

 BACKUP WITHHOLDING.  Unless an exemption applies under applicable law and
regulations, the Exchange Agent is required to withhold, and will withhold, 31% 
of any cash payments to a Halstead Stockholder in the Merger unless the         
stockholder provides the appropriate form as described below. Each Halstead     
Stockholder should complete and sign the Substitute Form W-9 included as part of
the letter of transmittal to be sent to each Halstead Stockholder, so as to     
provide the information (including such stockholder's taxpayer identification   
number) and certification necessary to avoid backup withholding, unless an      
applicable exemption exists and is proved in a manner satisfactory to Mueller   
and the Exchange Agent.                                                         

    SPECIAL CONSIDERATIONS FOR ESOP PARTICIPANTS.  Neither the Halstead ESOP nor
ESOP Participants will be subject to federal income taxes as a result of the    
Merger. The Merger Agreement provides for the termination of the Halstead ESOP  
not later than 60 days following the Closing. Subsequent to the termination and 
the receipt of a determination letter from the IRS, the Surviving Corporation   
will provide distribution election forms to the ESOP Participants and promptly  
thereafter distribute the assets of the Halstead ESOP, or take other appropriate
actions in accordance with such elections. See "--Effect of Merger on Employee  
Benefit Plans." Distributions received by ESOP Participants pursuant to such    
elections will generally be taxed at ordinary income tax rates. In addition,    
such distributions may be subject to an additional 10% tax under Section 72(t)  
of the Code. An ESOP Participant may be able to avoid income tax (and the       
additional 10% tax) by electing to roll over the distribution received to an    
individual retirement account or another tax-qualified retirement plan. For all 
distributions other than direct transfers to an individual retirement account or
another tax qualified retirement plan, federal tax laws require the Halstead    
ESOP to withhold 20% of the distribution.                                       

THE FOREGOING GENERAL DISCUSSION OF THE MATERIAL FEDERAL INCOME TAX     
CONSEQUENCES OF THE MERGER IS WITHOUT REFERENCE TO THE FACTS AND CIRCUMSTANCES  
OF ANY PARTICULAR HALSTEAD STOCKHOLDER AND IS NOT TAX ADVICE. THE DISCUSSION    
DOES NOT ADDRESS ANY NON-INCOME TAX OR ANY FOREIGN, STATE OR LOCAL TAX          
CONSEQUENCES OF THE MERGER. MOREOVER, THE DISCUSSION DOES NOT ADDRESS THE TAX   
CONSEQUENCES OF ANY TRANSACTION OTHER THAN THE MERGER AND THE TERMINATION OF THE
ESOP PURSUANT TO MERGER AGREEMENT. ACCORDINGLY, EACH HALSTEAD STOCKHOLDER IS    
URGED AND EXPECTED TO CONSULT WITH SUCH STOCKHOLDER'S TAX ADVISOR TO DETERMINE  
THE PARTICULAR UNITED STATES FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER   
TAX CONSEQUENCES OF THE MERGER TO SUCH HALSTEAD STOCKHOLDER.                    

24

S-4
34th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 34th
THE MERGER AGREEMENT AND RELATED AGREEMENTS 

THIS PROXY STATEMENT/PROSPECTUS CONTAINS A BRIEF SUMMARY OF THE MERGER  
AGREEMENT AND THE VOTING AGREEMENTS. THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY  
BY REFERENCE TO THE FULL TEXTS OF SUCH AGREEMENTS, WHICH ARE INCLUDED AS        
APPENDICES A AND B HERETO AND WHICH ARE INCORPORATED HEREIN BY REFERENCE.       

GENERAL                                                                         

 Pursuant to the Merger Agreement, Merger Sub will be merged with and into
Halstead and Halstead will become a wholly owned subsidiary of Mueller. On the  
Effective Date, each outstanding Halstead Share (other than Excluded Shares and 
Halstead Shares as to which appraisal rights are properly exercised under the   
DGCL) will be converted into Mueller Shares (or cash in lieu of fractional      
shares) as described herein. The name of the Surviving Corporation will be      
"Halstead Industries, Inc."                                                     

EFFECTIVE DATE                                                                  

    If the conditions to the consummation of the Merger are satisfied or waived,
a certificate of merger will be filed with the Secretary of State of the State  
of Delaware and the Merger will become effective upon such filing on the        
Effective Date. The Effective Date is presently anticipated to occur promptly   
following the Special Meeting.                                                  

CONSIDERATION TO BE RECEIVED IN THE MERGER                                      

At the Effective Date, each Halstead Share issued and outstanding       
immediately prior to the Effective Date (other than Excluded Shares and Halstead
Shares as to which appraisal rights are properly exercised under the DGCL)      
shall, by virtue of the Merger and without any action on the part of the holder 
thereof, be converted into that number of Mueller Shares determined by dividing 
(A) $92,750,000 less the Halstead Expenses by (B) the product of (i) the total  
number of Halstead Shares outstanding immediately prior to the Effective Date,  
other than Excluded Shares, and (ii) the Mueller Average Market Price.          
Halstead's management anticipates that the Halstead Expenses will be            
approximately $750,000.                                                         

In the event of any stock dividend, stock split, reclassification,      
recapitalization, combination or exchange of shares, or other similar           
transaction, with respect to, or rights issued in respect of, Mueller Shares    
after the date hereof and prior to the Effective Date, the Exchange Ratio shall 
be adjusted accordingly so as to maintain the relative proportionate interests  
of the Halstead Stockholders and the holders of Mueller Shares.                 

    Each share of capital stock of Merger Sub issued and outstanding immediately
prior to the Effective Date shall be converted into and become one fully paid   
and nonassessable share of common stock, $.01 par value, of the Surviving       
Corporation.                                                                    

Each Halstead Share issued and held in Halstead's treasury or owned by  
Mueller, Merger Sub, or any other subsidiary of Mueller at the Effective Date   
shall, by virtue of the Merger, cease to exist and shall be canceled and retired
without payment of any consideration thereof.                                   

No fractional Mueller Shares will be issued in the Merger. In lieu of   
fractional shares, each Halstead Stockholder who would otherwise have been      
entitled to a fraction of a Mueller Share shall be paid cash (without interest) 
in an amount equal to such stockholder's proportionate interest in the net      
proceeds from the sale or sales in the open market by the Exchange Agent, on    
behalf of all such stockholders, of the aggregate fractional Mueller Shares to  
which such stockholder would otherwise be entitled.                             

EXCHANGE OF SHARES                                                              

   As soon as practicable after the Effective Date, Mueller will send, or will
cause Continental Stock Transfer & Trust Company (the "Exchange Agent"), to     
send, to each record Halstead Stockholder a letter                              

25

S-4
35th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 35th
of transmittal for use in the exchange of Halstead Shares. Mueller will make    
available to the Exchange Agent the aggregate consideration for the Merger (the 
"Merger Consideration") to be paid in respect of the Halstead Shares to the     
holders thereof.                                                                

Upon surrender to the Exchange Agent of a certificate or certificates   
representing Halstead Shares (a "Certificate" or "Certificates"), together with 
a letter of transmittal duly executed, the holder of such Certificate or        
Certificates shall be entitled to receive in exchange therefor that number of   
Mueller Shares which such holder has the right to receive (and any amount of    
cash payable in lieu of fractional shares), after giving effect to any required 
withholding tax.                                                                

  If any portion of the Merger Consideration is to be paid to a person other
than the registered holder of the Halstead Shares formerly represented by the   
Certificate or Certificates surrendered in exchange for the Merger              
Consideration, it shall be a condition to such payment that the Certificate or  
Certificates so surrendered shall be properly endorsed or be otherwise in proper
form for transfer and that the person requesting such exchange shall pay to the 
Exchange Agent any transfer or other taxes required as a result of such payment 
to a person other than the registered holder of such Halstead Shares or         
establish to the satisfaction of the Exchange Agent that such tax has been paid 
or is not applicable.                                                           

    Any portion of the Merger Consideration made available to the Exchange Agent
pursuant to these procedures that remains unclaimed by the Halstead Stockholders
six months after the Effective Date shall be returned to Mueller, and any such  
person who has not exchanged properly such person's Certificate or Certificates 
for the Merger Consideration prior to that time shall thereafter look only to   
Mueller for payment of the Merger Consideration. Notwithstanding the foregoing, 
neither the Exchange Agent nor Mueller shall be liable to any person for any    
amount properly delivered to a public official pursuant to any applicable       
escheat laws. If any Certificates shall not have been surrendered for such      
payment prior to such date on which any payment in respect thereof would        
otherwise escheat to or become the property of any governmental agency or other 
governmental entity, such Halstead Shares shall, to the extent permitted by     
applicable law, be deemed to be canceled and no money or other property will be 
due to the holder thereof.                                                      

No dividends or other distributions with respect to Mueller Shares      
constituting part of the Merger Consideration shall be paid to the holder of any
unsurrendered Certificates until such Certificates are properly surrendered.    
Upon such surrender, there shall be paid, without interest, to the holder of    
certificates representing whole Mueller Shares into which such Halstead Shares  
were converted, (A) at the time of such surrender, the dividends or other       
distributions with a record date after the Effective Date and a payment date on 
or prior to such time of surrender payable with respect to such whole Mueller   
Shares and not paid and (B) at the appropriate payment date, the dividends or   
other distributions payable with respect to such whole Mueller Shares with a    
record date after the Effective Date but with a payment date subsequent to      
surrender.                                                                      

   HALSTEAD STOCKHOLDERS SHOULD NOT FORWARD STOCK CERTIFICATES TO THE EXCHANGE
AGENT UNTIL THEY HAVE RECEIVED TRANSMITTAL LETTERS. HALSTEAD STOCKHOLDERS SHOULD
NOT RETURN STOCK CERTIFICATES WITH THE ENCLOSED PROXY.                          

REPRESENTATIONS AND WARRANTIES                                                  

Halstead, Mueller and Merger Sub have made representations in the Merger
Agreement relating to, among other things, the following matters (which         
representations and warranties are subject, in certain cases, to specific       
exceptions): (a) corporate organization, (b) qualification to do business, (c)  
authorization and validity, (d) no conflict or violation, (e) consents and      
approvals, (f) capital stock and related matters, and (g) absence of certain    
changes or events.                                                              

Halstead has made additional representations relating to, among other   
things, the following matters (which representations and warranties are subject,
in certain cases, to specific exceptions): (a) subsidiaries                     

26

S-4
36th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 36th
and equity investments, (b) financial statements, (c) tax matters, (d) absence  
of undisclosed liabilities, (e) owned real property, (f) leases, (g) assets of  
the company, (h) intellectual property and intangible assets, (h) licenses and  
permits, (i) compliance with law, (j) litigation, (k) contracts, (l)            
inventories, (m) employee plans, (n) small business corporation, (o) insurance, 
(p) transactions with directors, officers and affiliates, (q) receivables, (r)  
labor matters, (s) environmental matters, (t) products liability, (u) company   
action, (v) accounting and (w) tax matters.                                     

 Halstead has made additional representations, regarding the Halstead ESOP
relating to, among other things, the following matters (which representations   
and warranties are subject, in certain cases, to specific exceptions): (a) the  
ESOP Trustee, (b) legal counsel and independent financial advisor, (c) opinion  
of financial advisor and (d) the loans under the ESOP Loan Agreements.          

  Mueller has made additional representations relating to, among others, the
following matters (which representations and warranties are subject, in certain 
cases, to specific exceptions): (a) authorization and validity of the Mueller   
Shares, (b) Mueller's SEC reports, and (c) confirmation of representations and  
warranties of the Merger Sub.                                                   

Merger Sub has made additional representations relating to, among other 
things, the following matters (which representations and warranties are subject,
in certain cases, to specific exceptions): (a) corporate organization, (b)      
qualification to do business, (c) authorization and validity, (d) no conflict or
violation, (e) consents and approvals, and (f) capitalization of Merger Sub.    

   The representations and warranties of Halstead, Mueller and Merger Sub will
not survive the Effective Date.                                                 

CONDUCT OF HALSTEAD'S BUSINESS                                                  

    Without the prior written consent of Mueller, between the date of the Merger
Agreement and the Closing Date, Halstead has agreed not to: (i) make any        
material change in the conduct of the businesses of Halstead or enter into any  
transaction other than in the ordinary course of business consistent with past  
practices; (ii) make any change in its Certificate of Incorporation (the        
"Halstead Certificate") or its Bylaws (the "Halstead Bylaws"), issue any        
additional shares of capital stock or equity securities or grant any option,    
warrant or right to acquire any capital stock or equity securities or issue any 
security convertible into or exchangeable for capital stock or alter in any way 
its outstanding securities or make any change in outstanding shares of capital  
stock or other ownership interests or the capitalization of Halstead, whether by
reason of a reclassification, recapitalization, stock split or combination,     
exchange or readjustment of shares, stock dividend or otherwise; (iii) make any 
sale, assignment, transfer, abandonment or other conveyance of the assets,      
properties or rights of Halstead or any part thereof, except transactions       
pursuant to existing contracts set forth in the schedules of the Merger         
Agreement and dispositions of inventory or of worn-out or obsolete equipment for
fair or reasonable value in the ordinary course of business consistent with past
practice; (iv) subject any of the assets, properties or rights of Halstead to   
any lien or suffer any lien to exist other than such liens as may arise in the  
ordinary course of business consistent with past practice or by operation of law
and that will not, individually or in the aggregate, have a material adverse    
effect on Halstead; (v) redeem, retire, purchase or otherwise acquire, directly 
or indirectly, any shares of the capital stock of Halstead or declare, set aside
or pay any dividends or other distribution in respect of such shares; (vi)      
acquire any assets, raw materials or properties, or enter into any other        
transaction, other than in the ordinary course of business consistent with past 
practice; (vii) enter into any new (or amend any existing) employee benefit     
plan, program or arrangement or any new (or amend any existing) employment,     
severance or consulting agreement, grant any general increase in the            
compensation of officers or employees (including any such increase pursuant to  
any bonus, pension, profit-sharing or other plan or commitment) or grant any    
increase in the compensation payable or to become payable to any employee,      
except in accordance with pre-existing contractual provisions or consistent with
past practice; provided that, other than with respect to Halstead ESOP and      
Halstead MSOP contributions approved at the April 7,                            

27

S-4
37th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 37th
1998 meeting of the Halstead Board (in the amount of $1,593,000 with respect to 
the Halstead ESOP and $50,000 with respect to the Halstead MSOP), the           
immediately preceding exception shall not apply to the Halstead ESOP, the ESOP  
Trust Agreement, the Halstead MSOP or the MSOP Trust Agreement; and further     
provided that this shall not apply to any payment subject to the provisions of  
the Merger Agreement; (viii) make or commit to make any capital expenditure in  
excess of $100,000 except with respect to prior commitments and except in the   
ordinary course of business consistent with past practice; (ix) pay, lend or    
advance any amount to, or sell, transfer or lease any properties or assets to,  
or enter into any agreement or arrangement with, any of its affiliates; (x) fail
to keep in full force and effect insurance comparable in amount and scope to    
coverage maintained; (xi) take any other action that would cause any of the     
representations and warranties made by Halstead in the Merger Agreement not to  
remain true and correct; (xii) make any change in any method of accounting or   
accounting principle, method, estimate or practice except for any such change   
required by reason of a concurrent change in GAAP, or write down the value of   
any inventory or write off as uncollectible any accounts receivable except in   
the ordinary course of business consistent with past practice; (xiii) make,     
change or revoke any election or method of accounting with respect to taxes     
affecting or relating to Halstead; (xiv) enter into any closing or other        
agreement or settlement with respect to taxes affecting or relating to Halstead;
(xv) settle, release or forgive any claim or litigation or waive any right      
thereto; (xvi) except in the ordinary course of business consistent with past   
practice and except for any contract subject to the provisions of the Merger    
Agreement, make, enter into, modify, amend in any material respect or terminate 
any contract, bid or expenditure, where such contract, bid or expenditure is for
(A) a contract entailing payments in excess of $50,000 or (B) a contract having 
a term in excess of six months; (xvii) cause or allow the Halstead ESOP Trust to
incur any indebtedness other than the loans under the ESOP Loan Agreements,     
including for this purpose causing or allowing the Halstead ESOP Trust to draw  
any additional funds pursuant to the ESOP Loan Agreements; or (xviii) commit to 
do any of the foregoing.                                                        

   From and after the date of the Merger Agreement and until the Closing Date,
Halstead has agreed to: (i) continue to maintain, in all material respects, the 
assets, properties, rights and operations of Halstead in accordance with present
practice in a condition suitable for their current use; (ii) file, when due or  
required, all tax returns and other reports required to be filed and pay when   
due all taxes lawfully levied or assessed against it, unless the validity       
thereof is contested in good faith and by appropriate proceedings diligently    
conducted; (iii) continue to conduct the businesses of Halstead in the ordinary 
course consistent with past practice; (iv) keep its books of account, files and 
records in the ordinary course and in accordance with existing practice; and (v)
use commercially reasonable efforts to preserve intact the operations,          
organization and reputation of Halstead, keep available the services of         
Halstead's present officers and key employees and preserve the goodwill and     
business relationships of the suppliers and customers of Halstead.              

EXCLUSIVITY                                                                     

 Halstead has agreed that from and after the date of the Merger Agreement,
Halstead will not, and will not permit or cause any of the officers and         
directors of Halstead, or any persons acting on behalf of Halstead to, directly 
or indirectly, encourage, solicit, engage in discussions or negotiations with,  
or provide any information to, any person or group (other than Mueller or its   
representatives) concerning any merger, sale of substantial assets, purchase or 
sale of shares of capital stock or similar transaction involving Halstead or any
other transaction inconsistent with the transactions contemplated hereby.       
Halstead shall promptly communicate to Mueller any inquiries or communications  
concerning any such transaction which Halstead may receive or of which Halstead 
may become aware.                                                               

INDEMNIFICATION                                                                 

    From and after the Effective Date, Mueller and the Surviving Corporation has
agreed to indemnify, defend and hold harmless each person who is now, or has    
been at any time prior to the date hereof, an                                   

28

S-4
38th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 38th
officer or director of Halstead or an employee of Halstead who acts as a        
fiduciary under the Halstead MSOP, Halstead ESOP or any other qualified benefit 
plan of Halstead (the "Indemnified Parties") against all losses, claims,        
damages, costs, expenses (including reasonable attorneys' fees), liabilities,   
fines, penalties or judgments or amounts that are paid in settlement with the   
approval of the indemnifying party (which approval may not be unreasonably      
withheld) of or in connection with any threatened or actual claim, action, suit,
proceeding or investigation based in whole or in part on or arising in whole or 
in part out of the fact that such person is or was a director, officer or plan  
fiduciary whether pertaining to any matter of fact existing or occurring at or  
prior to the Effective Date ("Indemnified Liabilities"), including all          
Indemnified Liabilities based in whole or in part on, or arising in whole or in 
part out of, or pertaining to the Merger Agreement or the transactions          
contemplated thereby, in each case to the full extent permitted under applicable
law (and Mueller and the Surviving Corporation will pay expenses in advance of  
the final disposition of any such action or proceeding to each Indemnified Party
to the full extent permitted by law). Without limiting the foregoing, in the    
event any such claim, action, suit, proceeding or investigation is brought      
against any Indemnified Party (whether arising before or after the Effective    
Date), (i) the Indemnified Parties may retain counsel (which shall be reasonably
acceptable to Mueller) and Mueller and the Surviving Corporation will pay all   
reasonable fees and expenses of such counsel for the Indemnified Parties        
promptly as statements therefor are received; and (ii) Mueller and the Surviving
Corporation will use all reasonable efforts to assist in the vigorous defense of
any such matter, provided that neither Mueller nor the Surviving Corporation    
will be liable for any settlement effected without its written consent, which   
consent, however, may not be unreasonably withheld. Any Indemnified Party       
wishing to claim indemnification under the Merger Agreement, upon learning of   
any such claim, action, suit, proceeding or investigation, must notify Mueller  
and the Surviving Corporation, but the failure so to notify will not relieve a  
party from any liability that it may have under the Merger Agreement, except to 
the extent such failure materially prejudices such party. The Indemnified       
Parties as a group may retain only one law firm to represent them with respect  
to each such matter in each applicable jurisdiction unless there is, under      
applicable standards of professional conduct, a conflict on any significant     
issue between the positions of any two or more Indemnified Parties. Mueller and 
Merger Sub have agreed that all rights to indemnification, including provisions 
relating to advances of expenses incurred in defense of any action or suit,     
existing in favor of the Indemnified Parties (including in the Halstead         
Certificate or the Halstead Bylaws) with respect to matters occurring through   
the Effective Date, will survive the Merger and will continue in full force and 
effect for a period of six years from the Effective Date; provided, however,    
that all rights to indemnification in respect of any Indemnified Liabilities    
asserted or made within such period will continue until the disposition of such 
Indemnified Liabilities. Mueller has agreed to cause the provisions providing   
for the exculpation of directors' and officers' liability and indemnification   
contained in the Certificate of Incorporation of the Surviving Corporation to be
substantively the same as the provisions providing for the exculpation of       
directors' and officers' liabilities and indemnification contained in the       
Halstead Certificate as in effect immediately prior to the Effective Date. The  
rights of each Indemnified Party under the Merger Agreement will be in addition 
to any other rights such Indemnified Party may have under the Halstead          
Certificate or the Halstead Bylaws, under the DGCL or otherwise.                

    For a period of six years after the Effective Date, Mueller will cause to be
maintained in effect the current policies of directors' and officers' liability 
insurance maintained by Halstead (provided that Mueller may substitute therefor 
policies of at least the same coverage and amounts containing terms and         
conditions that are no less advantageous in any material respect to the         
Indemnified Parties) with respect to matters arising before the Effective Date; 
provided, however, that Mueller will not be required to pay an annual premium   
for such insurance in excess of (i) 250% of the last annual premium paid by     
Halstead prior to the date of the Merger Agreement, for each of the first three 
annual premiums, and (ii) 200% of the last annual premium paid by Halstead prior
to the date of the Merger Agreement, thereafter; provided, further, that in the 
event such maximum amounts are applicable, Mueller must purchase as much        
coverage as possible for such amount.                                           

29

S-4
39th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 39th
 Mueller will reimburse an Indemnified Party for reasonable legal expenses
actually incurred by such Indemnified Party in enforcing the Merger Agreement if
such Indemnified Party is ultimately determined to be the prevailing party in a 
final adjudication by a court from which there is no further right of appeal (or
any such right of appeal has expired).                                          

RESALES OF MUELLER SHARES                                                       

  All Mueller Shares received by Halstead Stockholders in the Merger will be
freely transferable pursuant to the Securities Act, except that Mueller Shares  
received by persons who are deemed to be "affiliates" (as such term is defined  
under the Securities Act) of Halstead prior to the Merger may be resold by them 
only in transactions permitted by the resale provisions of Rule 145 promulgated 
under the Securities Act or as otherwise permitted under the Securities Act.    
Persons who may be deemed to be "affiliates" generally include individuals or   
entities that control, are controlled by, or are under common control with, such
company and may include certain officers and directors of such company as well  
as principal stockholders of such company. The Merger Agreement requires        
Halstead to use its best efforts to cause each of its affiliates to execute a   
written agreement to the effect that, among other things, such stockholder will 
not (i) offer to sell, sell or otherwise dispose of Mueller Shares issued to    
such stockholder in the Merger except in compliance with Rule 145 under the     
Securities Act or another exemption from the registration requirements under the
Securities Act or (ii) sell or in any other way reduce his or her risk relative 
to any such Mueller Shares or any Halstead Shares until such time as financial  
results (including combined sales and net income) covering at least 30 days of  
post-Merger operations have been published, except as permitted by Staff        
Accounting Bulletin No. 76 issued by the Commission.                            

CONDITIONS TO THE MERGER                                                        

    The respective obligations of Halstead, Mueller and Merger Sub to effect the
Merger are subject to the satisfaction or waiver at or prior to the Closing Date
of the following conditions: (a) the Merger and the transactions contemplated   
hereby shall have been duly approved by holders of the Halstead Shares, in      
accordance with applicable law and the Halstead Certificate and the Halstead    
Bylaws, constituting a majority of the outstanding Halstead Shares; (b) the     
Mueller Shares issuable to the Halstead Stockholders pursuant to the Merger     
Agreement shall have been authorized for listing on the NYSE upon official      
notice of issuance; (c) the Registration Statement shall have become effective  
under the Securities Act, no stop order suspending the effectiveness of the     
Registration Statement shall have been issued, and no proceeding for that       
purpose shall have been initiated or be threatened, by the Commission; (d) any  
applicable waiting period under the HSR Act shall have expired or been          
terminated; and (e) Mueller and Halstead shall have received a favorable opinion
of Willkie Farr, based upon certain factual representations from Halstead,      
Mueller and Merger Sub, to the effect that the Merger will be treated for       
Federal income tax purposes as a reorganization within the meaning of Section   
368(a) of the Code, and that Halstead, Mueller and Merger Sub will each be a    
party to that reorganization within the meaning of Section 368(a) of the Code.  

 The obligation of Halstead to consummate the transactions contemplated by
the Merger Agreement is subject to the fulfillment or waiver on or before the   
Closing Date of the following additional conditions: (a) all representations and
warranties made by Mueller and Merger Sub in the Merger Agreement shall be true 
and correct on and as of the Closing Date as if again made by Mueller and Merger
Sub on and as of such date (except for any representation and warranty made as  
of a specified date, which shall have been true and correct as of such date),   
and Halstead shall have received a certificate to that effect dated the Closing 
Date and signed by any Vice President of Mueller and Merger Sub; (b) Mueller and
Merger Sub shall have performed all obligations required under the Merger       
Agreement to be performed by Mueller and Merger Sub on or before the Closing    
Date, and Halstead shall have received a certificate to that effect dated the   
Closing Date and signed by any Vice President of Mueller and Merger Sub; (c) all
consents, waivers, authorizations and approvals of any governmental entities,   
and of any other person, required in                                            

30

S-4
40th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 40th
connection with the execution, delivery and performance of the Merger Agreement 
shall have been duly obtained and shall be in full force and effect on the      
Closing Date; (d) no preliminary or permanent injunction or other order issued  
by any court or other governmental or regulatory authority, domestic or foreign,
nor any statute, rule, regulation, decree or executive order promulgated or     
enacted by any governmental entity that declares the Merger Agreement invalid or
unenforceable in any respect or which prevents the consummation of the          
transactions contemplated hereby shall be in effect; and no action or proceeding
before any court or regulatory authority, domestic or foreign, shall have been  
instituted or threatened by any governmental entity, which seeks to prevent or  
delay the consummation of the transactions contemplated by the Merger Agreement 
or which challenges the validity or enforceability of the Merger Agreement, and 
which in any such case has a reasonable likelihood of success in the opinion of 
counsel to Halstead; (e) during the period from June 27, 1998 to the Closing    
Date, there shall not have been any material adverse change in the business of  
Mueller and its subsidiaries considered as one enterprise, except for any       
material adverse change resulting from general economic conditions including,   
but not limited to, reductions in product margins; (f) Halstead shall have      
received an opinion, dated as of the Closing Date, from Mueller's general       
counsel subject to customary qualifications and limitations for opinions given  
in transactions of the kind contemplated by the Merger Agreement; (g) Halstead  
shall have received such other certificates, instruments and documents in       
confirmation of the representations and warranties of Mueller and Merger Sub or 
in furtherance of the transactions contemplated by the Merger Agreement as      
Halstead or its counsel may reasonably request; and (h) all certificates,       
instruments, opinions and other documents required to be executed or delivered  
by or on behalf of Mueller and Merger Sub under the provisions of the Merger    
Agreement, and all other actions and proceedings required to be taken by or on  
behalf of Mueller and Merger Sub in furtherance of the transactions contemplated
by the Merger Agreement, shall be reasonably satisfactory in form and substance 
to counsel to Halstead.                                                         

The obligations of Mueller and Merger Sub to consummate the transactions
contemplated by the Merger Agreement are subject to the fulfillment or waiver on
or before the Closing Date of each of the following additional conditions: (a)  
all representations and warranties made by Halstead in the Merger Agreement     
shall be true and correct on and as of the Closing Date as if again made by     
Halstead on and as of such date (except for any representation and warranty made
as of a specified date, which shall have been true and correct as of such date),
and Mueller shall have received a certificate to that effect dated the Closing  
Date and signed by any Vice President of Halstead; (b) Halstead shall have      
performed all obligations required under the Merger Agreement to be performed by
it on or before the Closing Date, and Mueller shall have received a certificate 
to that effect dated the Closing Date and signed by any Vice President of       
Halstead; (c) all consents, waivers, authorizations and approvals of any        
governmental entity, and of any other person, required in connection with the   
execution, delivery and performance of the Merger Agreement shall have been duly
obtained and shall be in full force and effect on the Closing Date; (d) Halstead
shall have paid any and all payments required to be made by Halstead (i) to the 
executives and present and former employees of Halstead by reason, or as a      
result, of the Merger and Halstead shall have received a release from each such 
person of all claims against Halstead, and (ii) to its and the Halstead ESOP's  
and Halstead MSOP's accountants, attorneys and financial advisors for all       
services rendered, and expenses advanced, in connection with the Merger; (e) no 
preliminary or permanent injunction or other order issued by any court or       
governmental or regulatory authority, domestic or foreign, nor any statute,     
rule, regulation, decree or executive order promulgated or enacted by any       
governmental entity, which declares the Merger Agreement invalid in any respect 
or prevents the consummation of the transactions contemplated by the Merger     
Agreement, or which materially and adversely affects the assets, properties,    
operations, prospects, net income or financial condition of Halstead shall be in
effect; and no action or proceeding before any court or governmental or         
regulatory authority, domestic or foreign, shall have been instituted or        
threatened by any governmental entity which seeks to prevent or delay the       
consummation of the transactions contemplated by the Merger Agreement or which  
challenges the validity or enforceability of the Merger Agreement, and which in 
either such case has a reasonable likelihood of success in the opinion of       
counsel to Mueller; (f) during the period from June 26, 1998 to the Closing     
Date,                                                                           

31

S-4
41st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 41st
there shall not have been any material adverse change in Halstead or its        
business, except for any material adverse change resulting from (i) payments    
made pursuant to the Merger Agreement and (ii) general economic conditions      
including, but not limited to, reductions in product margins; (g) Mueller shall 
have received an opinion, dated as of the Closing Date, from Amos, Jeffries &   
Robinson L.L.P., subject to customary qualifications and limitations for        
opinions given in transactions of the kind contemplated by the Merger Agreement;
(h) Mueller shall have received such other certificates, instruments and        
documents in confirmation of the representations and warranties of Halstead or  
in furtherance of the transactions contemplated by the Merger Agreement as      
Mueller or its counsel may reasonably request; (i) all certificates,            
instruments, opinions and other documents required to be executed or delivered  
by or on behalf of Halstead under the provisions of the Merger Agreement, and   
all other actions and proceedings required to be taken by or on behalf of       
Halstead in furtherance of the transactions contemplated by the Merger          
Agreement, shall be reasonably satisfactory in form and substance to counsel to 
Mueller; (j) Halstead shall have received a letter from Arthur Andersen LLP,    
dated the Closing Date, as to whether or not the Merger qualifies for "pooling  
of interests" accounting treatment if it is consummated in accordance with the  
Merger Agreement; and (k) the holders of not more than 5% of the outstanding    
Halstead Shares shall have exercised their appraisal rights in the Merger in    
accordance with the DGCL.                                                       

TERMINATION OF THE MERGER AGREEMENT                                             

The Merger Agreement may be terminated at any time before the Closing:  

(a) by mutual consent of the Halstead Board and the Mueller Board;      

(b) by Mueller if Halstead has breached any representation, warranty,   
covenant or agreement contained in the Merger Agreement and has not cured such  
breach within ten business days after written notice to Halstead (provided, that
Mueller and Merger Sub are not then in material breach of the terms of the      
Merger Agreement, and provided further, that no cure period shall be required   
for a breach which by its nature cannot be cured) such that (i) all             
representations and warranties made by Halstead in the Merger Agreement shall   
not be true and correct on and as of the Closing Date as if again made by       
Halstead on and as of such date (except for any representation and warranty made
as of a specified date, which shall have been true and correct as of such date),
and (ii) Halstead shall not have performed all obligations required under the   
Merger Agreement to be performed by it on or before the Closing Date;           

 (c) by Halstead if Mueller or Merger Sub has breached any representation,
warranty, covenant or agreement contained in the Merger Agreement and has not   
cured such breach within ten business days after written notice to Mueller      
(provided, that Halstead is not then in material breach of the terms of the     
Merger Agreement, and provided further, that no cure period shall be required   
for a breach which by its nature cannot be cured) such that (i) all             
representations and warranties made by Mueller and Merger Sub in the Merger     
Agreement shall not be true and correct on and as of the Closing Date as if     
again made by Mueller and Merger Sub on and as of such date (except for any     
representation and warranty made as of a specified date, which shall have been  
true and correct as of such date), and (ii) Mueller and Merger Sub shall not    
have performed all obligations required under the Merger Agreement to be        
performed by Mueller and Merger Sub on or before the Closing Date;              

 (d) by Halstead or Mueller if: (i) there shall be a final, non-appealable
order of a federal or state court in effect preventing consummation of the      
transactions contemplated by the Merger Agreement; or (ii) there shall be any   
final action taken, or any statute, rule, regulation or order enacted,          
promulgated or issued or deemed applicable to the transactions contemplated by  
the Merger Agreement by any governmental entity which would make consummation of
the transactions contemplated by the Merger Agreement illegal; or               

    (e) by Halstead or Mueller if the Closing shall not have been consummated by
December 23, 1998, unless on or before November 13, 1998, the applicable waiting
period under the HSR Act shall not have expired or been terminated (the "HSR    
Termination Date") or the Registration Statement shall not have                 

32

S-4
42nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 42nd
been declared effective by the Commission (the "Registration Statement Effective
Date"), in which event the Merger Agreement may not be terminated until the     
earlier to occur of (x) February 25, 1999 or (y) the date which is 40 days      
following the later to occur of the HSR Termination Date and the Registration   
Statement Effective Date.                                                       

TERMINATION FEES; EXPENSES OF THE MERGER                                        

  If the Merger Agreement is terminated by any of the means described above,
the Merger Agreement shall forthwith become void and there shall be no liability
on the part of any of the parties or their respective officers, directors,      
stockholders, partners, option holders or other persons under their control;    
notwithstanding the foregoing, nothing in the Merger Agreement shall relieve any
party from liability for any willful breach of the Merger Agreement.            

All the fees, expenses and costs incurred in connection with the Merger 
Agreement and the transactions contemplated thereby shall be paid by the party  
incurring such fees, expenses and costs.                                        

VOTING AGREEMENTS                                                               

VOTING AND PROXIES                                                      

In order to induce Mueller to enter into the Merger Agreement, certain  
Halstead Stockholders who collectively hold 52.6% of the Halstead Shares have   
entered into the Voting Agreements. Such stockholders have the right to vote at 
the Special Meeting sufficient shares to approve the Merger Agreement and the   
transactions contemplated thereby without the affirmative vote of any other     
Halstead Stockholder, thus ensuring stockholder approval of the Merger Agreement
and the transactions contemplated thereby.                                      

    Pursuant to and during the term of the Voting Agreements, each such Halstead
Stockholder has agreed, among other things, to vote (or cause to be voted) all  
of the Halstead Shares beneficially owned by such stockholder and all shares    
subsequently acquired by such stockholder in favor of adoption and approval of  
the Merger Agreement and the Merger and the approval of the terms thereof and   
each of the other actions contemplated by the Merger Agreement and the Voting   
Agreement.                                                                      

  Each such Halstead Stockholder further granted to, and appointed, Mueller,
the Chief Executive Officer of Mueller and the Chief Financial Officer of       
Mueller and their respective successors, and any other designee of Mueller, the 
stockholder's irrevocable proxy and attorney-in-fact to vote or act by written  
consent with respect to such stockholder's Halstead Shares.                     

PROHIBITED ACTIONS                                                      

    Each Halstead Stockholder who has entered into a Voting Agreement has agreed
that such stockholder: (a) will not take any action that would make any         
representation or warranty of such Halstead Stockholder contained in the Voting 
Agreement untrue or incorrect or have the effect of preventing or disabling such
Halstead Stockholder from performing his obligations under the Voting Agreement;
(b) will notify promptly Mueller of the number of any new Halstead Shares       
acquired by such Halstead Stockholder, if any, after the date of the Voting     
Agreement; (c) will place a legend on any and all certificates evidencing the   
Halstead Shares stating that such Halstead Shares are subject to the terms of   
the Voting Agreement, including the granting by such Halstead Stockholder of an 
irrevocable proxy as to certain matters; and (d) will prior to, and as a        
condition to, any sale, transfer, pledge, encumbrance, assigning or other       
disposition of any of the Halstead Shares owned as of the date of the Voting    
Agreement or acquired thereafter cause the transferee to agree to be bound by   
the provisions of the Voting Agreement as if such transferee were a party       
thereto, and acknowledge the irrevocable proxy granted thereof, such agreement  
and acknowledgment to be in a form reasonably acceptable to Mueller. Such       
Halstead Stockholders have further agreed that any sale, transfer, pledge,      
encumbrance, assigning or other disposition of any Halstead                     

33

S-4
43rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 43rd
Shares in violation of the terms of the Voting Agreement shall be null and void 
and of no effect whatsoever.                                                    

OTHER PROVISIONS                                                        

The Voting Agreements also contain provisions relating to, among other  
things, representations and warranties by each Halstead Stockholder who has     
entered into a Voting Agreement and specific enforcement of the Voting          
Agreements. The Voting Agreements terminate upon termination of the Merger      
Agreement in accordance with its terms.                                         

34

S-4
44th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 44th
APPRAISAL RIGHTS AVAILABLE TO HOLDERS OF HALSTEAD SHARES

 If the Merger is consummated, dissenting Halstead Stockholders who follow
the procedures specified in Section 262 of the DGCL are entitled to have their  
Halstead Shares appraised by the Delaware Court of Chancery (the "Court") and to
receive the "fair value" of such shares ("Dissenting Shares") in cash, as       
determined by the Court, in lieu of the consideration that such stockholders    
would otherwise be entitled to receive pursuant to the Merger Agreement.        

The following is a brief summary of Section 262 of the DGCL, which sets 
forth the procedures for Halstead Stockholders dissenting from the Merger and   
demanding statutory appraisal rights, if such rights are available. This summary
does not purport to be a complete statement of the provisions of the DGCL       
relating to the rights of Halstead Stockholders to an appraisal of the value of 
their Halstead Shares and is qualified in its entirety by reference to Section  
262, the full text of which is attached as Appendix D hereto. Failure to follow 
these procedures exactly could result in the loss of appraisal rights. This     
Proxy Statement/ Prospectus constitutes notice to Halstead Stockholders         
concerning the availability of appraisal rights under Section 262. Under Section
262, a stockholder of record wishing to assert appraisal rights must hold his or
her Halstead Shares on the date of making a demand for appraisal rights with    
respect to such Halstead Shares and must continuously hold such Halstead Shares 
through the Effective Date.                                                     

Halstead Stockholders who desire to exercise their appraisal rights must
satisfy all of the conditions of Section 262. A written demand for appraisal of 
Halstead Shares must be filed with Halstead before the taking of the vote on the
Merger. This written demand for appraisal of Halstead Shares must be in addition
to, and separate from, any proxy vote abstaining from or voting against the     
Merger. Any such abstention or vote against the Merger will not constitute a    
demand for appraisal within the meaning of Section 262.                         

Halstead Stockholders electing to exercise their appraisal rights under 
Section 262 must not vote for approval of the Merger. If a stockholder returns a
signed proxy but does not specify a vote against approval of the Merger or a    
direction to abstain, the proxy will be voted for approval of the Merger, which 
will have the effect of waiving that stockholder's appraisal rights with respect
to Halstead Shares.                                                             

  A demand for appraisal must be executed by or for the Halstead Stockholder
of record, fully and correctly, as such stockholder's name appears on the       
certificates representing Halstead Shares. If the Halstead Shares are owned of  
record in a fiduciary capacity, such as by a trustee, guardian or custodian,    
such demand must be executed by or for the fiduciary. If the Halstead Shares are
owned of record by or for more than one person, as in a joint tenancy or tenancy
in common, such demand must be executed by or for all joint owners. An          
authorized agent, including an agent for two or more joint owners, may execute  
the demand for appraisal for a stockholder of record; however, the agent must   
identify the record owner and expressly disclose that, in exercising the demand,
the agent is acting as agent for the record owner. A person having a beneficial 
interest in Halstead Shares held of record in the name of another person, such  
as a broker or nominee, must act promptly to cause the record holder to follow  
the steps summarized below and in a timely manner to perfect whatever appraisal 
rights the beneficial owners may have.                                          

    A record owner, such as a broker, who holds Halstead Shares as a nominee for
others, may exercise appraisal rights with respect to the Halstead Shares held  
for all or less than all beneficial owners of Halstead Shares as to which the   
holder is the record owner. In such case the written demand must set forth the  
number of Halstead Shares covered by such demand. Where the number of Halstead  
Shares is not expressly stated, the demand will be presumed to cover all        
Halstead Shares outstanding in the name of such record owner.                   

A Halstead Stockholder who elects to exercise appraisal rights will be  
required to mail or deliver such stockholder's written demand to: Halstead      
Industries, Inc., 300 North Greene Street, Suite 1700, Greensboro, North        
Carolina 27401, Attention: Secretary. The written demand for appraisal should   
specify the stockholder's name and mailing address, the number of Halstead      
Shares owned, and that the stockholder is                                       

35

S-4
45th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 45th
thereby demanding appraisal of such stockholder's Halstead Shares. Within ten   
days after the Effective Date, Halstead must provide notice of the Effective    
Date to all Halstead Stockholders who have complied with Section 262 and have   
not voted for approval of the Merger.                                           

  Within 120 days after the Effective Date, any Halstead Stockholder who has
satisfied the requirements of Section 262 will be entitled, upon written        
request, to receive from Halstead a statement setting forth the aggregate number
of Halstead Shares not voted in favor of the Merger and with respect to which   
demands for appraisal have been received and the aggregate number of            
stockholders of such Halstead Shares.                                           

Within 120 days after the Effective Date (but not thereafter), either   
Halstead or any Halstead Stockholder who has complied with the required         
conditions of Section 262 may file a petition in the Court demanding a          
determination of the fair value of the Dissenting Shares.                       

    Upon the filing of any petition by a Halstead Stockholder in accordance with
Section 262, service of a copy must be made upon Halstead, which must, within 20
days after service, file in the office of the Register of Chancery in which the 
petition was filed, a duly verified list containing the names and addresses of  
all Halstead Stockholders who have demanded payment for their shares and with   
whom agreements as to the value of their shares have not been reached by        
Halstead. If a petition is filed by Halstead, the petition must be accompanied  
by the verified list. The Register of Chancery, if so ordered by the Court, will
give notice of the time and place fixed for the hearing of such petition by     
registered or certified mail to Halstead and to the Halstead Stockholders shown 
on the list at the addresses therein stated, and notice will also be given by   
publishing a notice at least one week before the day of the hearing in a        
newspaper of general circulation published in the City of Wilmington, Delaware, 
or such publication as the Court deems advisable. The forms of notices by mail  
and by publication must be approved by the Court, and the costs thereof shall be
borne by Halstead.                                                              

If a petition for an appraisal is timely filed, after a hearing on such 
petition, the Court will determine which Halstead Stockholders are entitled to  
appraisal rights and thereafter will appraise the stock owned by such Halstead  
Stockholders, determining the fair value of such stock, exclusive of any element
of value arising from the accomplishment or expectation of the Merger, together 
with a fair rate of interest to be paid, if any, upon the amount determined to  
be the fair value. In determining fair value, the Court is to take into account 
all relevant factors.                                                           

    Holders of Halstead Shares considering seeking appraisal should bear in mind
that the fair value of their stock determined under Section 262 could be more   
than, the same as, or less than the applicable consideration they are entitled  
to receive pursuant to the Merger Agreement if they do not seek appraisal of    
their stock. The cost of the appraisal proceeding may be determined by the Court
and taxed upon the parties as the Court deems equitable in the circumstances.   
Upon application of a Halstead Stockholder seeking appraisal rights, the Court  
may order that all or a portion of the expenses incurred by such Halstead       
Stockholder in connection with the appraisal proceeding including, without      
limitation, reasonable attorneys' fees and the fees and expenses of experts, be 
charged pro rata against the value of all Halstead Shares entitled to appraisal.
In the absence of such a determination or assessment, each party bears its own  
expenses.                                                                       

 Any Halstead Stockholder who has duly demanded an appraisal in compliance
with Section 262 will not, after the Effective Date, be entitled to vote the    
Halstead Shares subject to such demand for any purpose or be entitled to the    
payment of dividends or other distributions on those Halstead Shares (except    
dividends or other distributions, if any, payable to Halstead Stockholders of   
record at a date prior to the Effective Date).                                  

At any time within 60 days after the Effective Date, any Halstead       
Stockholder shall have the right to withdraw such stockholder's demand for      
appraisal and to accept the terms offered in the Merger Agreement. After this   
period, a Halstead Stockholder may withdraw such stockholder's demand for       

36

S-4
46th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 46th
appraisal only with the consent of Halstead. If no petition for appraisal is    
filed with the Court within 120 days after the Effective Date, Halstead         
Stockholders' rights to appraisal (if available) shall cease and all Halstead   
Stockholders shall be entitled to receive the consideration as provided for in  
the Merger Agreement. Inasmuch as Halstead has no obligation to file such a     
petition, and has no present intention to do so, any Halstead Stockholder who   
desires such a petition to be filed is advised to file it on a timely basis.    
However, no petition timely filed in the Court demanding appraisal shall be     
dismissed as to any Halstead Stockholder without the approval of the Court, and 
such approval may be conditioned upon such terms as the Court deems just.       

While each ESOP Participant may direct the ESOP Trustee how to vote ESOP
Halstead Shares allocated to such participant's account, the ESOP Trustee will  
decide whether to exercise appraisal rights with respect to any such shares that
are voted against the Merger.                                                   

37

S-4
47th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 47th
HALSTEAD SPECIAL MEETING

DATE, TIME AND PLACE                                                            

   The Special Meeting of Halstead Stockholders will be held on [  ], 1998, at
10:00 a.m. local time, at the offices of Halstead, 300 North Greene Street,     
Greensboro, North Carolina.                                                     

MATTERS TO BE CONSIDERED                                                        

    The purpose of the Special Meeting is to consider and vote upon the approval
and adoption of the Merger Agreement and to transact such other business as may 
properly come before the Special Meeting or any adjournments or postponements   
thereof. The Halstead Board knows of no such other matters except matters       
incidental to the conduct of the Special Meeting.                               

RECORD DATE                                                                     

   Halstead Stockholders of record at the close of business on [  ], 1998, the
Record Date, will be entitled to vote at the Special Meeting. On the Record     
Date, there were [  ] Halstead Shares issued and outstanding. Each issued and   
outstanding Halstead Share is entitled to one vote per share with respect to the
Merger.                                                                         

QUORUM                                                                          

The presence, in person or by proxy, of the holders of a majority of the
outstanding Halstead Shares entitled to vote shall constitute a quorum. If a    
meeting cannot be organized because of the absence of a quorum, those present   
may, except as otherwise provided by law, adjourn the meeting to such time and  
place as they may determine.                                                    

REQUIRED VOTE                                                                   

The approval of a majority of the outstanding voting power of Halstead  
Shares is required to approve and adopt the Merger Agreement.                   

As of the Record Date, directors and executive officers of Halstead and 
their affiliates were beneficial owners of approximately 30.9% of the           
outstanding Halstead Shares. In order to induce Mueller to enter into the Merger
Agreement, certain Halstead Stockholders who collectively hold approximately    
52.6% (including certain of the aforementioned directors and officers and their 
affiliates who collectively hold 29.3%) of the outstanding Halstead Shares      
entered into Voting Agreements with Mueller pursuant to which each such Halstead
Stockholder has agreed, among other things, to vote all of the Halstead Shares  
beneficially owned by the Halstead Stockholder in favor of adoption and approval
of the Merger Agreement and the Merger. Such stockholders have the right to vote
at the Special Meeting sufficient shares to approve the Merger Agreement and the
transactions contemplated thereby without the affirmative vote of any other     
Halstead Stockholder, thus ensuring stockholder approval of the Merger Agreement
and the transactions contemplated thereby. See "THE MERGER AGREEMENT AND RELATED
AGREEMENTS--Voting Agreements." Attached as Appendix B is the full text of the  
form of Voting Agreement.                                                       

PROXIES AND REVOCATION                                                          

   All Halstead Shares represented by properly executed proxies received prior
to or at the Special Meeting, and not revoked, will be voted in accordance with 
the instructions indicated in such proxies. If no instructions are indicated,   
such proxies will be voted "FOR" the Merger Agreement. Any shares held in the   
Halstead ESOP for which no instructions are timely received by the ESOP Trustee 
will be voted by the ESOP Trustee in its discretion. Shares of a Halstead       
Stockholder who abstains from voting or whose shares are not voted by reason of 
a broker non-vote (where a nominee holding shares for a beneficial owner has    

38

S-4
48th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 48th
not received voting instructions from the beneficial owner with respect to a    
particular matter and such nominee does not possess or choose to exercise       
discretionary authority with respect thereto) will be counted for purposes of   
determining whether a quorum is present at the meeting so long as the           
stockholder is present in person or represented by a proxy. An abstention from  
voting or a broker non-vote on the Merger by a Halstead Stockholder present in  
person or represented by proxy at the meeting has the same legal effect as a    
vote "AGAINST" the Merger Agreement. If any other business is properly brought  
before the Special Meeting for consideration, the persons named in the enclosed 
proxy and acting thereunder will have discretion to vote on such business in    
accordance with their best judgment. Halstead will not use its discretionary    
authority to adjourn the meeting to solicit stockholders if the Halstead        
Stockholders vote against or abstain from voting for the Merger.                

A Halstead Stockholder who executes and returns the enclosed proxy may  
revoke his or her proxy at any time prior to its use by (i) delivering to the   
Secretary of Halstead a signed notice of revocation or a later dated signed     
proxy prior to the Special Meeting, (ii) attending the Special Meeting and      
voting in person or (iii) giving notice of revocation of the proxy at the       
Special Meeting. Attendance at the Special Meeting will not in itself constitute
the revocation of a proxy. Prior to the Special Meeting, any written notice of  
revocation or subsequent proxy should be sent in a manner to be received by     
Halstead at or before the taking of the vote at the Special Meeting at: Halstead
Industries, Inc., 300 North Greene Street, Suite 1700, Greensboro, North        
Carolina 27401, Attention: Secretary, or hand delivered to the Secretary of     
Halstead at such address.                                                       

SOLICITATION OF PROXIES                                                         

Mueller will bear the cost of printing and mailing this Proxy           
Statement/Prospectus, and Halstead will bear all other costs of soliciting      
proxies. In addition to the use of the mails, proxies may be solicited          
personally or by telephone or facsimile by directors, officers, and other       
employees of Halstead, who will not be specially compensated for such           
solicitation activities. Halstead does not presently intend to utilize the      
services of a proxy soliciting firm in connection with the solicitation of      
proxies for the Special Meeting.                                                

No person is authorized to give any information or to make any          
representation not contained or incorporated by reference in this Proxy         
Statement/Prospectus and, if given or made, such information or representation  
should not be relied upon as having been authorized by Halstead, Mueller or any 
other person. The delivery of this Proxy Statement/Prospectus will not, under   
any circumstances, create any implication that there has been no change in the  
affairs of Halstead or Mueller since the date of this Proxy                     
Statement/Prospectus.                                                           

   Halstead Stockholders should not forward stock certificates to the Exchange
Agent until they have received transmittal letters. Halstead Stockholders should
not return stock certificates with the enclosed proxy.                          

39

S-4
49th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 49th
INFORMATION ABOUT HALSTEAD

GENERAL                                                                         

 Halstead was founded as a Pennsylvania corporation in 1960, at which time
all of the business and assets of Halstead and Mitchell Company, a Pennsylvania 
general partnership, were transferred to Halstead. In 1993, Halstead formed a   
Delaware corporation and merged the Pennsylvania corporation into the Delaware  
corporation for the purpose of changing the state of its organization from      
Pennsylvania to Delaware. Halstead is headquartered in Greensboro, North        
Carolina, and the mailing address and telephone number of its principal         
executive offices are 300 North Greene Street, Suite 1700, Greensboro, North    
Carolina 27401, (336) 272-1966.                                                 

BUSINESS                                                                        

Halstead produces and distributes drawn copper tubing at its Wynne,     
Arkansas, facility and assembles and distributes insulated copper line sets at  
its facility in Clinton, Tennessee. In 1997, net sales were $243 million, down  
from $275 million in 1996. At September 1, 1998, Halstead had 39 employees in   
Greensboro, 749 employees in Wynne and 121 employees in Clinton.                

COPPER TUBING                                                                   

Halstead produces and distributes drawn copper tubing at its Wynne,     
Arkansas, facility. Standard products manufactured at this facility include     
straight lengths and coils for use in water, refrigeration and automotive tubing
applications. The copper tubing is distributed primarily to plumbing and heating
and air conditioning wholesalers throughout the United States with a portion of 
Halstead's products exported to various international markets. Some tubing      
products are also manufactured to the specifications of original equipment      
manufacturers.                                                                  

The manufacturing process begins with refined and scrap copper which is 
melted in an electric-arc furnace. After being cast into copper logs, then cut  
into billets, the copper is converted into tubing through an extrusion process. 
The tube is then cold-drawn to one of hundreds of sizes to meet customer        
requirements.                                                                   

Copper tubing is used principally in the residential and commercial     
construction industry. Copper tube is also used in the air conditioning, heating
and refrigeration industry, the automobile industry, and by other original      
equipment manufacturers.                                                        

LINE SETS                                                                       

Halstead assembles and distributes insulated copper line sets at its    
facility in Clinton, Tennessee. Line sets are used in the installation of air   
conditioning and heat pump systems. The line sets are assembled using copper    
tubing principally from the Wynne metals plant and rubber insulation produced at
the Clinton facility. Production of rubber insulation at the Clinton facility   
began in January, 1998. Prior to such time, rubber insulation was purchased from
an outside supplier. Distribution of the line sets is to domestic wholesalers   
and to original equipment manufacturers of central air conditioners.            

COMPETITION                                                                     

The businesses in which Halstead is engaged are highly competitive. The 
principal methods of competition for Halstead's products are price, quality and 
service. No material portion of Halstead's business is dependent upon a single  
customer or a small group of related customers. The total amount of order       
backlog for Halstead's products at September 1, 1998 was not significant.       

 Halstead competes with various copper products companies depending on the
product line as well as a large number of manufacturers of substitute products  
made from plastic, iron and steel.                                              

40

S-4
50th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 50th
PROPERTIES AND FACILITIES                                                       

Halstead's copper tubing is manufactured in its owned Wynne, Arkansas,  
facility. Its line set products are manufactured in leased facilities in        
Clinton, Tennessee. Halstead also leases its headquarters in Greensboro, North  
Carolina.                                                                       

In addition, Halstead leases office and regional warehouse space for its
standard products distribution network. Products are shipped from manufacturing 
plants to distribution centers and customer locations primarily using common    
carriers. Halstead also owns a 44,000 square foot building in Greensboro, North 
Carolina that is leased to a third party and a 93,500 square foot building in   
Ansonia, Connecticut that is presently vacant and being offered for sale.       

RAW MATERIALS AND SUPPLIES                                                      

 The major portion of Halstead's copper requirements are normally obtained
through short-term supply contracts with competitive pricing provisions. Raw    
materials used in the production of insulation for line sets are purchased in   
the open market from major producers.                                           

YEAR 2000 PROGRAM                                                               

Halstead has evaluated, and will continue to evaluate, its information  
systems and technology infrastructure for Year 2000 compliance. During the      
normal course of business, most of the software systems used by Halstead have   
been recently upgraded or replaced and little or no additional changes are      
required to be made. For Year 2000 compliance, Halstead has expended less than  
$20,000 through June 1998 and anticipates spending no more than $200,000 through
1999 to modify its information technology infrastructure. Halstead does not     
anticipate any material disruption in its operations as a result of any failure 
by Halstead to be in compliance.                                                

 Halstead does not currently have any information concerning the Year 2000
compliance status of its suppliers and customers. In the event that any of      
Halstead's significant suppliers or customers do not successfully and timely    
achieve Year 2000 compliance, Halstead's business or operations could be        
adversely affected. However, Halstead is presently developing a program for     
contacting its major suppliers and customers to determine their Year 2000       
readiness. Following the completion of its assessment of customers and suppliers
in early 1999, Halstead will determine the level and extent of its Year 2000    
contingency plans.                                                              

41

S-4
51st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 51st
HALSTEAD MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 

RESULTS OF OPERATIONS                                                           

    SIX-MONTH PERIOD ENDED JUNE 26, 1998 COMPARED TO SIX-MONTH PERIOD ENDED JUNE
27, 1997                                                              

 Halstead net sales were $108.0 million in the first six months of 1998, a
decrease of 24.3% from net sales of $142.8 million in the first six months of   
1997. Total pounds of copper tubing shipped in the first half of 1998 decreased 
16.3% to 73.9 million pounds from 88.2 million pounds in the first half of 1997.
Net sales for the first six months of 1998 also reflect a decrease in the price 
of copper, Halstead's primary raw material which directly affects the selling   
price of its products. The average price of copper on the Commodity Exchange    
Inc. ("COMEX") for the first half of 1998 was $.78 per pound as compared with   
$1.13 during the same period in 1997. Shipments of Halstead's line sets also    
decreased by 10.8% as industry supplies far outpaced improving demand.          

   Halstead's gross profit for the first six months of 1998 increased 47.8% to
$15.1 million from $10.2 million in the prior comparable period for 1997. Gross 
margins on Halstead's products improved over the prior year due to favorable    
pricing conditions caused in part by reduced imports from foreign manufacturers.

 Selling, general and administrative expenses decreased 11.9% in the first
half of 1998 to $10.9 million as compared to $12.4 million during the first half
of 1997. The decrease in 1998 resulted primarily from a reduction in sales      
expenses and those expenses affected by the lower sales volume.                 

  Due to the improved gross margins in the first half of 1998 as well as the
reduced selling, general and administrative expenses, the operating income was  
$4.1 million as compared to the operating loss of $2.2 million in the first half
of 1997.                                                                        

   Interest expense for the first six months of 1998 was $1.2 million compared
to $.8 million in the same period of 1997 due to higher debt borrowings and     
slightly higher interest rates.                                                 

1997 COMPARED TO 1996                                                   

   Halstead net sales were $243.3 million in 1997, down $31.5 million or 11.5%
from net sales of $274.8 million in 1996. Total pounds of copper tubing shipped 
decreased 3.4% in 1997 to 156.9 million from 162.5 million pounds in 1996. Net  
sales for 1997 also reflect a slightly lower average price for copper. The      
average COMEX copper price for 1997 was $1.04 per pound (ranging from a high of 
$1.22 per pound at mid-year to a year-end low of $.77) compared with $1.06 for  
1996. Shipments of Halstead's line sets also decreased by 21.4% in 1997 due to  
new competitors entering the line sets business and lower weather-related       
demand.                                                                         

Halstead's 1997 gross profit decreased $23.9 million, or 60.4% to $15.7 
million. Overall, the gross margins on Halstead's products were significantly   
reduced in 1997 due to unfavorable pricing conditions brought about by increased
market supply of copper tubing products from foreign manufacturers as well as   
from domestic manufacturers who increased their market participation.           

Selling, general and administrative expenses decreased 11.4% to $22.2   
million in 1997 as compared to $25.0 million in 1996. The 1997 decrease resulted
from reduced expenses associated with lower sales volume ($.4 million), lower   
depreciation expense following the 1996 sale of Halstead's corporate aircraft   
($.7 million), decreased employee incentive compensation ($.8 million), and     
non-recurring costs incurred during 1996 associated with the relocation of      
Halstead's line sets operation ($.9 million).                                   

Because of the significantly reduced gross margins, Halstead incurred an
operating loss of $6.5 million in 1997 as compared to operating income of $14.6 
million in 1996. While Halstead has taken steps to lower                        

42

S-4
52nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 52nd
manufacturing costs related to its products and thereby improve its gross       
margins, the market selling price of copper tubing decreased at a much greater  
rate during 1997 than the price of the raw material copper.                     

  Interest expense was $1.6 million in 1997, down from $2.1 million in 1996.
The decrease was due almost entirely to the reduction of debt related to the    
sale/leaseback of Halstead's corporate aircraft in 1996.                        

  Other income decreased to $.7 million in 1997 from $1.4 million in 1996 as
the 1996 amount included insurance proceeds of $1.0 million received from a     
business interruption claim. In 1997 rental income from Halstead's non-operating
property increased $.2 million compared to 1996.                                

The effective tax rate on Halstead's 1997 tax loss benefit was 39.7% as 
compared to an effective tax rate of 36.6% in 1996. The greater effective tax   
rate in 1997 resulted from the carry back of Halstead's current taxable loss to 
1994, a period with higher marginal tax rates.                                  

1996 COMPARED TO 1995                                                   

  Halstead net sales were $274.8 million in 1996, down $28.0 million or 9.3%
from net sales of $302.9 million in 1995. Total pounds of copper tubing shipped 
decreased by 4.1% in 1996 to 162.5 million from 169.4 million pounds in 1995.   
Net sales for 1996 also reflect a decrease in the price of copper. The average  
COMEX copper price for 1996 was $1.06 per pound compared with $1.35 for 1995.   
Shipments of Halstead's line sets increased by 18.2% in 1996 over 1995 due to   
increased market share.                                                         

Halstead's 1996 gross profit increased $11.1 million, or 38.7% to $39.6 
million due to favorable market demand and pricing conditions which increased   
the gross margins for most of Halstead's products.                              

    Selling, general and administrative expenses increased 3.2% to $25.0 million
in 1996 compared to $24.2 million in 1995. The 1996 increase was primarily due  
to costs incurred during the relocation of Halstead's line sets operation ($.9  
million) which were partially offset by expense reductions related to sales     
volume.                                                                         

As a result of the higher margins on Halstead's products in 1996, the   
operating income increased to $14.6 million from $4.3 million in 1995.          

Interest expense was $2.1 million in 1996, only slightly increased from 
1995. While 1996 year-end borrowings were down significantly compared to 1995,  
average borrowings were approximately the same in both years and interest rates 
were not substantially changed.                                                 

   Other income increased to $1.4 million in 1996 from $.8 million in 1995 due
primarily to insurance proceeds of $1.0 million received from a business        
interruption claim in 1996.                                                     

 The effective tax rate for 1996 was 36.6% as compared with 35.6% for 1995
due to the higher marginal tax rates on taxable income in 1996.                 

LIQUIDITY AND CAPITAL RESOURCES                                                 

 Cash provided by operating activities during the first six months of 1998
totaled $7.5 million. Seasonal increases in accounts receivable were offset by  
lower inventory volumes further reduced by the lower cost of copper. Capital    
expenditures totaled approximately $2.1 million during the first half with      
annual expenditures not expected to exceed $5.5 million for the full year of    
1998. Halstead believes that it will be able to satisfy its existing working    
capital needs, interest obligations and capital expenditure requirements with   
cash flow from operations and funds available from its revolving credit         
agreement (the "Halstead Credit Agreement").                                    

In April 1998, Halstead Stockholders approved a 1-for-10 reverse stock  
split. The par value per Halstead Share was increased from $.01 to $.10 and the 
number of authorized shares was reduced from                                    

43

S-4
53rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 53rd
120,000 to 12,000. Payment of cash in lieu of fractional shares resulting from  
the reverse stock split totaled just over $.1 million.                          

 During 1997, approximately $7.5 million of cash was provided by financing
activities with cash used in investing activities and operating activities      
totaling $5.8 million and $1.6 million, respectively. Cash used in operating    
activities resulted primarily from Halstead's 1997 net loss of $4.4 million and 
was not entirely offset by the depreciation and amortization of $3.0 million.   

 Cash from financing activities in 1997 included $11.1 million of proceeds
from net debt borrowings which was used for treasury stock purchases of $2.1    
million and dividend payments of $1.5 million. The remainder provided for       
investments in property, plant and equipment which totaled $6.2 million in 1997.

Unlike 1997, Halstead's primary source of liquidity in 1996 included net
cash of $15.4 million provided by operating activities. Net income of $8.7      
million in 1996 contributed the bulk of the cash provided by operating          
activities with $3.8 million from depreciation and amortization and the         
remainder from changes in working capital requirements.                         

 Purchases of capital equipment in 1996 totaled $4.9 million. In addition,
Halstead realized proceeds of $6.1 million from the sale/leaseback of Halstead's
corporate aircraft. The proceeds from the sale were used to reduce related      
outstanding debt by $5.8 million. The remaining cash used in financing          
activities included an additional net reduction in debt of $10.2 million and the
payment of $1.1 million in dividends.                                           

In December 1997, Halstead amended and restated the Halstead Credit     
Agreement to provide for a revolving line of credit (the "Revolver"), a term    
loan (the "Term Loan"), a controlled cash flow facility (the "Cash Flow         
Facility") and a letter of credit facility (the "Letter of Credit Facility").   
Under the Halstead Credit Agreement, substantially all of the assets of Halstead
have been pledged as collateral.                                                

Halstead may borrow up to $25 million under the Revolver and $5 million 
under the Cash Flow Facility at an interest rate equal to the lender's prime    
rate or a LIBOR rate plus 1.25% to 2.75%. The interest rate adjusts quarterly   
based on Halstead's ratio of earnings before interest and taxes to interest as  
defined in the Halstead Credit Agreement. Halstead's borrowing rate at December 
31, 1997, was 8.41%. The Revolver expires on December 31, 2000 and the Cash Flow
Facility expires on December 18, 1998. The Cash Flow Facility may be extended   
for additional one-year periods with the written consent of the lender. The Term
Loan requires quarterly principal payments through the year 2000 of $357,000    
plus interest at a rate of 6.99%. The Letter of Credit Facility provides for    
letters of credit of up to $1.0 million through December 31, 2000.              

The Halstead Credit Agreement contains various covenants, the most      
restrictive of which require Halstead to maintain at all times a debt to        
capitalization ratio of not more than 60%, a minimum interest coverage and a    
minimum tangible net worth. At December 31, 1997, Halstead was in compliance    
with the covenants under its debt arrangements or had received waivers for any  
events of noncompliance. Halstead was in compliance with its debt covenants     
during the first six months of 1998, and expects to continue to be in compliance
for the remainder of 1998.                                                      

Halstead had additional borrowings available under the Halstead Credit  
Agreement of $9.5 million at June 26, 1998 and $5.0 million at December 31,     
1997.                                                                           

CONTINGENCIES                                                                   

   Halstead is involved in various claims and actions, including environmental
matters at certain of its former plants, current facilities and other locations,
which arise in the ordinary course of business. Although the final outcome of   
these legal and environmental matters cannot be determined, based on the facts  
presently known, it is Halstead management's opinion that the ultimate liability
with respect to these matters will not materially affect Halstead's financial   
position or future results of operations. However,                              

44

S-4
54th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 54th
there can be no assurance that Halstead has identified or properly assessed all 
potential legal or environmental liabilities arising from the activities or     
properties of Halstead.                                                         

OTHER MATTERS                                                                   

   During 1997, Halstead experienced margin decreases for most of its products
due to increased foreign competition and increased market participation by other
domestic manufacturers. The markets for Halstead's products have exhibited      
significant volatility and are subject to rapid change. While product margins   
have improved in 1998 and market demand has remained consistent, further margin 
decreases or extreme volatility could adversely impact Halstead's future results
of operations and financial position.                                           

Halstead has evaluated, and will continue to evaluate, its information  
systems and technology infrastructure for Year 2000 compliance. During the      
normal course of business, most of the software systems used by Halstead have   
been recently upgraded or replaced and little or no additional changes are      
required to be made. For Year 2000 compliance, Halstead has expended less than  
$20,000 through June 1998 and anticipates spending no more than $200,000 through
1999 to modify its information technology infrastructure. Halstead does not     
anticipate any material disruption in its operations as a result of any failure 
by Halstead to be in compliance.                                                

 Halstead does not currently have any information concerning the Year 2000
compliance status of its suppliers and customers. In the event that any of      
Halstead's significant suppliers or customers do not successfully and timely    
achieve Year 2000 compliance, Halstead's business or operations could be        
adversely affected. However, Halstead is presently developing a program for     
contacting its major suppliers and customers to determine their Year 2000       
readiness. Following the completion of its assessment of customers and suppliers
in early 1999, Halstead will determine the level and extent of its Year 2000    
contingency plans.                                                              

OWNERSHIP OF HALSTEAD SHARES BY CERTAIN 
BENEFICIAL OWNERS AND HALSTEAD MANAGEMENT 

  The following table sets forth for each person who beneficially owns 5% or
more of the outstanding Halstead Shares as of the Record Date and for each      
executive officer and director of Halstead and all of such executive officers   
and directors as a group, the number of Halstead Shares beneficially owned as of
the Record Date and an estimated number of Mueller Shares to be received in the 
Merger under the Merger Agreement. For the purpose of this table, beneficial    
ownership has been determined in accordance with the provisions of Rule 13d-3   
under the Exchange Act under which, in general, a person is deemed to be a      
beneficial owner of a security if the person has or shares the power to vote or 
direct the voting of the security or the power to dispose or direct the         
disposition of the security, or if the person has the right to acquire          
beneficial ownership of the security within 60 days.                            

45

S-4
55th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 55th
                                                        [Enlarge/Download Table]

                                                     HALSTEAD SHARES                                                 
                                                      BENEFICIALLY      PERCENT OF OUTSTANDING    ESTIMATED NUMBER OF
NAME                                                      OWNED             HALSTEAD SHARES        MUELLER SHARES(9) 
--------------------------------------------------  -----------------  -------------------------  -------------------
                                                                                                                     
William B. Halstead...............................         658.59                   18.8%                 651,582    
  Chairman, Chief Executive Officer and                                                                              
  Director (1)                                                                                                       
    c/o Halstead Industries, Inc.                                                                                    
    300 North Greene Street, Suite 1700                                                                              
    Greensboro, North Carolina 27401                                                                                 
William E. Rapp, Jr...............................         156                       4.4                  154,340    
  Vice Chairman (2)                                                                                                  
Jerry W. Amos.....................................          11                         *                   10,882    
  Director                                                                                                           
William R. Burson,................................          20.13                      *                   19,915    
  President and Director (3)                                                                                         
D. Hayes Clement..................................           8                         *                    7,914    
  Director                                                                                                           
John G.B. Ellison, Jr.............................          11                         *                   10,882    
  Director                                                                                                           
LeRoy D. Lintz....................................          81.5                     2.3                   80,632    
  Senior Vice President and Director (4)                                                                             
Tom S. Murphree...................................           5                         *                    4,946    
  Director                                                                                                           
Halstead ESOP.....................................       1,320                      37.6                1,305,955    
    c/o Halstead Industries, Inc.                                                                                    
    300 North Greene Street, Suite 1700                                                                              
    Greensboro, North Carolina 27401                                                                                 
Elizabeth L. Wood (5).............................         577                      16.4                  570,860    
    c/o Halstead Industries, Inc.                                                                                    
    300 North Greene Street, Suite 1700                                                                              
    Greensboro, North Carolina 27401                                                                                 
Charles E. Foriska................................          77.54                    2.2                   76,714    
  Vice President--Line Sets Division (6)                                                                             
Michael E. Stoll..................................          36.09                    1.0                   35,706    
  Vice President, Chief Financial Officer &                                                                          
  Secretary (7)                                                                                                      
All Directors and Executive Officers as a Group                                                                      
  (13 persons) (8)................................       1,083.35                   30.9%                1,071,823   

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

*   Less than 1%                                                                

(1) Includes 56.06 shares held as a participant of the Halstead ESOP, 82.53     
 shares held as a participant of the Halstead MSOP, and 76 shares owned by
Mr. Halstead's spouse and minor children.                               

(2) Includes 64 shares owned by Mr. Rapp's spouse.                              

(3) Includes 5.04 shares held as a participant of the Halstead ESOP and 15.09   
shares held as a participant of the Halstead MSOP.                      

(4) Includes 35.56 shares held as a participant of the Halstead ESOP and 42.94  
shares held as a participant of the Halstead MSOP.                      

(5) Includes 5 shares owned by Ms. Wood's spouse.                               

46

S-4
56th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 56th
(6) Includes 27.61 shares held as a participant of the Halstead ESOP and 49.93  
shares held as a participant of the Halstead MSOP.                      

(7) Includes 5.03 shares held as a participant of the Halstead ESOP and 27.06   
shares held as a participant of the Halstead MSOP.                      

(8) Includes 147.51 shares held as participants of the Halstead ESOP, 217.84    
shares held as participants of the Halstead MSOP and 140 shares owned by
spouses and minor children.                                             

(9) Calculated assuming Halstead Expenses of $750,000 and a Mueller Average     
 Market Price of $26.50 (the per share closing price for Mueller Shares on
the NYSE on September 25, 1998), which results in an Exchange Ratio of  
989.36.                                                                 

47

S-4
57th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 57th
INFORMATION ABOUT MUELLER 

ACQUISITIONS                                                                    

On September 15, 1998, Mueller acquired Lincoln Brass Works, Inc.       
("Lincoln"). Lincoln operates manufacturing facilities in Jacksboro, Tennessee  
and Waynesboro, Tennessee. Lincoln produces custom control valve assemblies for 
the gas appliance market, as well as custom metal assemblies, gas delivery      
systems, and tubular products. Lincoln had net sales of approximately $35       
million in 1997. For a nominal consideration plus the assumption of Lincoln's   
debt, Mueller acquired 100 percent of the outstanding common shares of Lincoln. 
The Lincoln acquisition will be accounted for under the purchase accounting     
method.                                                                         

On August 11, 1998, Mueller completed the acquisition of B&K Industries,
Inc. ("B&K"). B&K is an import distributor of residential and commercial        
plumbing products in the United States with net sales in excess of $50 million  
in 1997. B&K sells through all major distribution channels including hardware   
co-ops, home centers, plumbing wholesalers, hardware wholesalers, OEMs and      
manufactured housing wholesalers. Its retail customers include Ace Hardware     
Corporation, Lowe's Companies, Inc., The Home Depot, Inc., and Tru*Serv         
Corporation (True Value, Servistar and Coast to Coast Hardware Stores). The     
purchase price was $33.5 million, of which ninety percent was paid in cash and  
the remainder paid in Mueller Shares. The B&K acquisition will be accounted for 
under the purchase accounting method.                                           

CAPITAL PROJECTS                                                                

   Mueller has ongoing a capital improvement project at its Fulton copper tube
mill to improve the utilization of scrap metal and enhance the mill's refining  
processes. Mueller has increased its projected cost for this project to         
approximately $33.6 million, due to (i) engineering changes in the scope of the 
project, (ii) increases resulting from changes in environmental regulations, and
(iii) additional concrete footings and related infrastructure changes           
necessitated by soil composition.                                               

INCOME TAXES: CLOSING AGREEMENT                                                 

   In August 1998, Mueller entered into a Closing Agreement with the IRS which
concluded the audit of the years 1993 through 1995. The Closing Agreement       
provides for an ordinary loss of approximately $70 million, realization of which
is dependent upon the occurrence of certain future events described in specific 
tax regulations. The Closing Agreement also specifies that the character of the 
tax loss from the 1995 "abandonment" of the Preferred Stock of Sharon Specialty 
Steel Inc. is a capital loss. Of this $49.1 million capital loss, $3.6 million  
was used in 1996 and 1997. The remaining $45.5 million of this capital loss is  
available to offset capital gains of Mueller, if any, through December 30, 2000.
For financial reporting purposes, these tax attributes may be recognized in     
future periods based upon the assessment of realization. Such assessments would 
consider relevant risks associated with realization.                            

YEAR 2000 PROGRAM                                                               

    Mueller has established a Year 2000 program to evaluate, confirm compliance,
and identify any necessary changes to its information technology ("IT") and     
non-IT (operating) systems to address Year 2000 requirements. Mueller has       
retained a consulting firm specializing in this area to assist in the program.  
To date, Mueller has expensed approximately $400,000 related to this outside    
consultant. Mueller believes that additional future expense related to the      
consultant will be approximately $500,000 over the next year. There are four    
phases to this program: assessment; inventory; test and correction; and         
certification. Assessment involves the examination of Mueller's IT and non-IT   
systems for specific date impacts, component complexity and inter-relationships.
Inventory involves the identification and categorization of Mueller's systems,  
applications, data structures, system interfaces, programmable logic            
controllers, etc., which, based on the assessment, potentially raise Year 2000  
issues. Once the assessment and inventory is completed, Mueller plans to        
determine Year 2000 compliance through a combination of testing, use            

48

S-4
58th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 58th
assessments, third party verifications and correction. Once this is completed,  
Mueller would be positioned to certify one or more of its systems or facilities 
as Year 2000 compliant.                                                         

IT SYSTEMS                                                              

   Mueller has completed its assessment and inventory of its IT systems. Based
on that assessment, Mueller has concluded that it will need to replace certain  
hardware at an estimated cost of $250,000 (which has been scheduled to be       
completed by the end of 1998), and rewrite less than 4 percent of its modified  
software code (which it anticipates will require internal IS personnel          
approximately 120 person-hours to accomplish by a scheduled completion date of  
the end of 1998).                                                               

   Certain business systems of Mueller's European businesses are not Year 2000
compliant, but this will be resolved within the context of an overall upgrade to
these information systems in order to accommodate, among other things, the Euro 
single currency. Total implementation costs for this upgrade are estimated at   
approximately $900,000.                                                         

NON-IT SYSTEMS                                                          

 Mueller has completed its assessment and inventory at over half its North
American manufacturing facilities. Mueller selected these factories for         
assessment and inventory because their importance or likelihood of Year 2000    
issues. Mueller has identified certain non-IT systems which are not Year 2000   
compliant, but which Mueller plans to replace and/or correct and certify as     
compliant in the first quarter of 1999 at an estimated cost of less than        
$50,000.                                                                        

THIRD PARTIES                                                           

Mueller is in the process of contacting its major product and service   
suppliers to determine their Year 2000 readiness, and will continue to follow up
these inquiries to ensure, to the best of its ability, that these suppliers will
be Year 2000 compliant. Nonetheless, there can be no assurance that the systems 
used by these suppliers will be remediated in a timely manner, which, if not    
remediated, may have an adverse effect on Mueller. Mueller intends to defer     
development of any Year 2000 contingency plans until it completes its assessment
of third party suppliers, which is scheduled to be completed by the end of 1998.

DESCRIPTION OF MUELLER CAPITAL STOCK

GENERAL                                                                         

The authorized capital stock of Mueller consists of 100,000,000 Mueller 
Shares, par value $.01 per share, and 5,000,000 shares of Preferred Stock, par  
value $1.00 per share ("Mueller Preferred Stock"), of which 15,000 shares have  
been designated by the Mueller Board as Series A Junior Participating Preferred 
Stock ("Mueller Participating Preferred Stock"). At September 8, 1998,          
35,750,996 Mueller Shares were issued and outstanding. The Mueller Board,       
without further action by the Mueller stockholders, is authorized to issue      
Mueller Preferred Stock in one or more series and to designate as to any such   
series the dividend rate, redemption prices, preferences on liquidation or any  
distribution of assets, sinking fund terms, conversion, voting rights,          
restrictions, preemptive rights and any other preferences or special rights and 
qualifications. As of September 1, 1998, there was no Mueller Preferred Stock   
issued or outstanding, and the Mueller Board had not authorized the issuance of 
any Mueller Preferred Stock.                                                    

COMMON STOCK                                                                    

  The Mueller Shares have no preference, conversion, exchange, preemptive or
redemptive rights. All Mueller Shares have one vote per share on any matter     
submitted to the vote of stockholders. The Mueller Shares have equal            
non-cumulative voting rights. Upon any liquidation of Mueller, the holders of   
Mueller Shares are entitled to receive, subject to any participating or similar 
rights of shares of Mueller Preferred                                           

49

S-4
59th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 59th
Stock, on a pro rata basis, all assets then legally available for distribution  
after payment of preferences on Mueller Preferred Stock, if any. Holders of     
Mueller Shares are entitled to receive dividends when and as declared by the    
Mueller Board out of funds legally available therefor (subject to the prior     
rights of preferred stock, if any). All outstanding Mueller Shares are fully    
paid and nonassessable.                                                         

TRANSFER AGENT                                                                  

Mueller's transfer agent for the Mueller Shares is Continental Stock    
Transfer & Trust Company, New York, New York.                                   

50

S-4
60th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 60th
COMPARISON OF STOCKHOLDER RIGHTS

 Mueller and Halstead are each incorporated under the laws of the State of
Delaware. The Halstead Stockholders, whose rights as stockholders are currently 
governed by Delaware law, the Halstead Certificate and the Halstead Bylaws,     
will, upon the exchange of their shares pursuant to the Merger, become holders  
of Mueller Shares, and their rights as such will be governed by Delaware law,   
Mueller's Certificate of Incorporation (the "Mueller Certificate") and the      
Bylaws of Mueller ("Mueller Bylaws"). The material differences between the      
rights of Halstead Stockholders and the rights of holders of Mueller Shares,    
which result from differences in their governing corporate documents, are       
summarized below.                                                               

    The following summary is not intended to be complete and is qualified in its
entirety by reference to the DGCL, the Halstead Certificate, the Halstead       
Bylaws, the Mueller Certificate and the Mueller Bylaws, as appropriate. The     
identification of specific differences is not meant to indicate that other      
equally or more significant differences do not exist. Copies of the Halstead    
Certificate, the Halstead Bylaws, the Mueller Certificate and the Mueller Bylaws
are incorporated by reference herein and will be sent to Halstead Stockholders  
upon request. See "INCORPORATION OF DOCUMENTS BY REFERENCE" and "AVAILABLE      
INFORMATION."                                                                   

AUTHORIZED CAPITAL                                                              

   The Halstead Certificate provides for authorized stock consisting of 12,000
Halstead Shares, $.10 par value.                                                

The Mueller Certificate provides for authorized stock consisting of     
100,000,000 Mueller Shares and 5,000,000 shares of Mueller Preferred Stock. See 
"DESCRIPTION OF MUELLER CAPITAL STOCK."                                         

ELECTION AND SIZE OF BOARD OF DIRECTORS                                         

    Under Delaware law, directors, unless their terms are staggered, are elected
at each annual stockholder meeting. Vacancies on the board of directors may be  
filled by the stockholders or directors, unless the certificate of incorporation
or a bylaw provides otherwise. The certificate of incorporation may authorize   
the election of certain directors by one or more classes or series of shares,   
and the certificate of incorporation, an initial bylaw or a bylaw adopted by a  
vote of the stockholders may provide for staggered terms for the directors. The 
certificate of incorporation or the bylaws also may allow the stockholders or   
the board of directors to fix or change the number of directors, but a          
corporation must have at least one director. Under Delaware law, stockholders do
not have cumulative voting rights unless the certificate of incorporation so    
provides.                                                                       

The Halstead Certificate and Halstead Bylaws provide that directors are 
elected by a plurality of votes cast at the annual meeting of stockholders      
sufficient in number to constitute a quorum. The Halstead Bylaws fix the number 
of directors at not less than five nor more than eleven directors. Currently,   
there are eight directors each holding office until his successor is elected and
qualified or until his death, resignation or removal. The Halstead Bylaws       
provide that the number of directors are to be fixed by resolution of the       
Halstead Board.                                                                 

   The Mueller Bylaws provide that directors are elected by a plurality of the
votes cast at the annual meeting of stockholders. The Mueller Bylaws provide for
a board of directors to consist of one or more members. The exact number shall  
be fixed by resolution of the Mueller Board. The Mueller Board is currently     
comprised of five directors, each holding office, subject to his earlier death, 
resignation or removal, until his successor shall have been elected and         
qualified. The Mueller Bylaws provide that the size of the Mueller Board may be 
reduced or increased by resolution of a majority of the entire Mueller Board but
no decrease may shorten the term of an incumbent director.                      

   Under the Mueller Bylaws, a stockholder may nominate directors for election
to the Mueller Board only if the stockholder delivers a notice containing       
specified information to Mueller's Secretary at                                 

51

S-4
61st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 61st
Mueller's principal executive offices not less than sixty days nor more than    
ninety days prior to the meeting; provided however, that in the event that the  
date of the annual meeting is advanced by more than thirty or delayed by more   
than sixty days from the date one year after the prior annual meeting, notice by
the stockholder, to be timely, must be received no later than the close of      
business on the later of the sixtieth day prior to the annual meeting or the    
tenth day following the day on which public announcement of the date of the     
meeting was made.                                                               

REMOVAL OF DIRECTORS                                                            

   Under the DGCL, a director of a corporation that does not have a classified
board of directors or cumulative voting may be removed (with or without cause)  
with the approval of a majority of the outstanding shares entitled to vote.     

   The Halstead Certificate and Halstead Bylaws do not provide for the removal
of directors.                                                                   

 The Mueller Certificate provides that a director may be removed, but only
with cause, by action of a majority of the entire Mueller Board or by a majority
of the stockholders.                                                            

VACANCIES ON THE BOARD OF DIRECTORS                                             

Under Delaware law, the board of directors of a corporation may fill any
vacancy on the board, including vacancies resulting from an increase in the     
number of directors.                                                            

  The Halstead Certificate and Halstead Bylaws provide that any vacancies on
the Halstead Board and newly created directorships resulting from any increase  
in the authorized number of directors may be filled by a majority of the        
remaining number of the Board, though less than a quorum, and a director so     
chosen will hold office until his successor is elected by the stockholders, who 
may make such election at the next annual meeting of stockholders or any special
meeting called for that purpose and held prior thereto.                         

  The Mueller Bylaws provide that any vacancy, whether caused by an increase
in the number of directors or otherwise, may be filled by a majority vote of the
remaining directors on the Mueller Board. Subject to his earlier death,         
resignation or removal, each director so elected shall hold office until his    
successor has been elected and qualified or for the unexpired term of his       
predecessor.                                                                    

AMENDMENTS TO CHARTER                                                           

  Under Delaware law, unless a higher vote is required in the certificate of
incorporation, an amendment to the certificate of incorporation of a corporation
may be approved by a majority of the outstanding shares entitled to vote upon   
the proposed amendment. Neither the Halstead Certificate nor the Mueller        
Certificate requires a higher vote for amendment.                               

DIVIDENDS                                                                       

Subject to any restrictions contained in a corporation's certificate of 
incorporation, Delaware law generally provides that a corporation may declare   
and pay dividends out of "surplus" (defined as the excess, if any, of net assets
(total assets less total liabilities) over capital) or, when no surplus exists, 
out of net profits for the fiscal year in which the dividend is declared and/or 
the preceding fiscal year, except that dividends may not be paid out of net     
profits if the capital of the corporation is less than the amount of capital    
represented by the issued and outstanding stock of all classes having a         
preference upon the distribution of assets. In accordance with the DGCL,        
"capital" is determined by the board of directors and shall not be less than the
aggregate par value of the outstanding capital stock of the corporation having  
par value.                                                                      

52

S-4
62nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 62nd
The Halstead Bylaws provide that the Halstead Board may, subject to the 
Halstead Certificate, declare dividends upon the Halstead Shares, at any regular
or special meeting, pursuant to law. Dividends may be paid in cash, property or 
its Halstead Shares subject to the provisions of the Halstead Certificate.      

  Before payment of any dividend, there may be set aside out of any funds of
Halstead available for dividends such sums as the Halstead Board, in its        
absolute discretion, thinks proper as reserves to meet contingencies or for     
repairing or maintaining any property of Halstead or for such other purpose as  
the Halstead Board may think conducive to the interests of Halstead. The        
Halstead Board may modify or abolish any such reserve in the manner in which it 
was created.                                                                    

 The Mueller Certificate and Mueller Bylaws provide that the Mueller Board
has full power and discretion, to the extent permitted by law and subject to the
Mueller Certificate or any other corporate document or instrument binding the   
corporation, to determine what, if any, dividends or distributions shall be     
declared and paid or made.                                                      

STOCKHOLDER MEETINGS                                                            

    Under the Halstead Bylaws, special meetings of stockholders may be called by
the President, a majority of the Halstead Board or Halstead Stockholders, upon  
written request delivered to Halstead's Secretary by Halstead Stockholders      
holding at least one-fifth of all the Halstead Shares issued and outstanding and
entitled to vote at the particular meeting.                                     

   Under the Mueller Bylaws, special meetings of stockholders may be called by
the Chairman, the President or a majority of the entire Mueller Board. Mueller  
stockholders may not call special meetings. For Mueller stockholders to bring   
business before the annual meeting of stockholders, stockholders must comply    
with advance notice provisions in the Mueller Bylaws that are similar to those  
described above with respect to stockholder nominations of persons for election 
to the Mueller Board. See "--Election and Size of Board of Directors."          

VOTE ON EXTRAORDINARY CORPORATE TRANSACTIONS; BUSINESS COMBINATION RESTRICTIONS 

The DGCL generally provides that, unless otherwise specified in a       
corporation's certificate of incorporation or unless the provisions of the DGCL 
relating to business combinations indicated therein are applicable, a sale or   
other disposition of all or substantially all of the corporation's assets, a    
merger or consolidation of the corporation with another corporation or a        
dissolution of the corporation requires the affirmative vote of the board of    
directors plus the affirmative vote of a majority of the outstanding stock      
entitled to vote thereon.                                                       

Neither the Halstead Certificate and the Halstead Bylaws nor the Mueller
Certificate and the Mueller Bylaws address the issue of extraordinary business  
transactions or business combinations.                                          

RIGHTS PLAN                                                                     

   Mueller has adopted a shareholders' rights plan, declared a dividend of one
preferred share purchase right (a "Right") for each outstanding Mueller Share of
record on November 21, 1994, and issued one Right with each Mueller Share issued
since such date. In general, upon becoming exercisable, each Right entitles the 
registered holder to purchase from Mueller a unit consisting of one             
one-thousandth (1/1000th) of a share (a "Unit") of Mueller Participating        
Preferred Stock at a purchase price of $80 per Unit, subject to adjustment. The 
description and terms of the Rights are set forth in a Rights Agreement, dated  
as of November 10, 1994, between Mueller and Continental Stock Transfer & Trust 
Company, as Rights Agent. The Rights will expire at the close of business on    
November 10, 2004, unless earlier redeemed by Mueller. Because of the nature of 
the Mueller Participating Preferred Stock's dividend, liquidation and voting    
rights, the value of the one one-thousandth interest in a share of Mueller      
Participating Preferred Stock purchasable upon exercise of each Right should    
approximate the value of one Mueller Share.                                     

53

S-4
63rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 63rd
The Rights have certain anti-takeover effects. The Rights will cause    
substantial dilution to a person or group that attempts to acquire Mueller      
without conditioning the offer on the Rights being rendered inapplicable.       

DGCL BUSINESS COMBINATION PROVISIONS                                            

The DGCL prohibits in certain circumstances, a "business combination"   
between the corporation and an "interested stockholder" within three years of   
the stockholder becoming an "interested stockholder." An "interested            
stockholder" is a holder who, directly or indirectly, controls 15% or more of   
the outstanding voting stock or is an affiliate of the corporation and was the  
owner of 15% or more of the outstanding voting stock at any time within the     
prior year period. A "business combination" includes a merger or consolidation, 
a sale or other disposition of assets having an aggregate market value equal to 
10% or more of the consolidated assets of the corporation or the aggregate      
market value of the outstanding stock of the corporation and certain            
transactions that would increase the interested stockholder's proportionate     
share ownership in the corporation. This provision does not apply where: (i)    
either the business combination or the transaction which resulted in the        
stockholder becoming an interested stockholder is approved by the corporation's 
board of directors prior to the date the interested stockholder acquired such   
15% interest; (ii) upon the consummation of the transaction which resulted in   
the stockholder becoming an interested stockholder, the interested stockholder  
owned at least 85% of the outstanding voting stock of the corporation excluding 
for the purposes of determining the number of shares outstanding shares held by 
persons who are directors and also officers and by employee stock plans in which
participants do not have the right to determine whether shares held subject to  
the plan will be tendered; (iii) the business combination is approved by a      
majority of the board of directors and the affirmative vote of two-thirds of the
outstanding votes entitled to be cast by disinterested stockholders at an annual
or special meeting; (iv) the corporation does not have a class of voting stock  
that is listed on a national securities exchange, authorized for quotation of an
inter-dealer quotation system of a registered national securities association,  
or held of record by more than 2,000 stockholders unless any of the foregoing   
results from action taken, directly or indirectly, by an interested stockholder 
or from a transaction in which a person becomes an interested stockholder; or   
(v) the corporation has opted out of this provision. Mueller has not opted out  
of this provision.                                                              

   Halstead does not have a class of voting stock that is listed on a national
securities exchange, authorized for quotation on an inter-dealer quotation      
system of a registered national securities association, or held of record by    
more than 2,000 stockholders; therefore, the provisions of the DGCL which       
prohibit, in certain circumstances, a "business combination" between the        
corporation and an "interested stockholder" are not applicable to Halstead.     

EXPERTS 

The audited financial statements of Halstead as of December 31, 1997 and
1996 and for each of the three years in the period ended December 31, 1997,     
included in this Proxy Statement/Prospectus, have been audited by Arthur        
Andersen LLP, independent public accountants, as indicated in their report with 
respect thereto, and are included herein in reliance upon the authority of said 
firm as experts in giving said report.                                          

  The consolidated financial statements of Mueller incorporated by reference
in Mueller's Annual Report on Form 10-K for the year ended December 27, 1997    
have been audited by Ernst & Young LLP, independent auditors as set forth in    
their report thereon incorporated by reference therein and incorporated herein  
by reference. Such consolidated financial statements are incorporated herein by 
reference in reliance upon such report given upon the authority of such firm as 
experts in accounting and auditing.                                             

54

S-4
64th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 64th
LEGAL OPINIONS

The validity of the Mueller Shares to be issued by Mueller in connection
with the Merger will be passed upon by Willkie Farr & Gallagher, New York, New  
York.                                                                           

 Certain tax matters relating to the Merger will be passed upon by Willkie
Farr & Gallagher, New York, New York.                                           

55

S-4
65th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 65th
INDEX TO HALSTEAD INDUSTRIES, INC.
FINANCIAL STATEMENTS

                                                        [Enlarge/Download Table]

                                                                                                                     
                                                                                                              PAGE   
                                                                                                            ---------
Audited Financial Statements:                                                                                        
  Report of Independent Public Accountants................................................................. F-2      
  Balance Sheets as of December 31, 1997 and 1996.......................................................... F-3      
  Statements of Operations for the years ended December 31, 1997, 1996 and 1995............................ F-4      
  Statements of Cash Flows for the years ended December 31, 1997, 1996 and 1995............................ F-5      
  Notes to Financial Statements............................................................................ F-6      

Unaudited Financial Statements                                                                                       
  Condensed Balance Sheets as of June 26, 1998 and June 27, 1997........................................... F-18     
  Condensed Statements of Operations for the Six Months Ended June 26, 1998 and June 27, 1997.............. F-19     
  Condensed Statements of Cash Flows for the Six Months Ended June 26, 1998 and June 27, 1997.............. F-20     
  Notes to Condensed Financial Statements.................................................................. F-21     

F-1 

S-4
66th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 66th
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and the Board of Directors of                               
Halstead Industries, Inc.:                                                      

We have audited the accompanying balance sheets of Halstead Industries, Inc. (a 
Delaware company) as of December 31, 1997 and 1996, and the related statements  
of operations and cash flows for each of the three years in the period ended    
December 31, 1997. 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.                                       

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.          

In our opinion, the financial statements referred to above present fairly, in   
all material respects, the financial position of Halstead Industries, Inc. as of
December 31, 1997 and 1996, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 1997, in conformity
with generally accepted accounting principles.                                  

Greensboro, North Carolina,                                                     
February 27, 1998 (except with                                                  
respect to the matter discussed                                                 
in Note 17 as to which the date                                                 
is August 7, 1998).                                                             

F-2 

S-4
67th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 67th
HALSTEAD INDUSTRIES, INC. 

BALANCE SHEETS

AS OF DECEMBER 31,

                                                        [Enlarge/Download Table]

                                                                                               1997       1996   
                                                                                             ---------  ---------
                                                                                                                 
                                                                                                (IN THOUSANDS)   
                                           ASSETS                                                                

Current assets:                                                                                                  
  Cash and cash equivalents................................................................. $     796  $     636
  Trade receivables.........................................................................    17,208     21,818
  Current portion of note receivable from officer...........................................       165        165
  Other receivables.........................................................................     3,376      4,612
  Inventories...............................................................................    16,924     16,751
  Deferred income taxes.....................................................................     2,745      1,436
                                                                                             ---------  ---------
    Total current assets....................................................................    41,214     45,418
Investments.................................................................................     4,334      4,470
Property, plant and equipment, net..........................................................    32,529     28,975
Net assets held for sale or lease...........................................................     2,107      2,419
Long-term portion of note receivable from officer...........................................       495        660
Other assets................................................................................     2,987      2,338
                                                                                             ---------  ---------
                                                                                             $  83,666  $  84,280
                                                                                             ---------  ---------
                                                                                             ---------  ---------
                            LIABILITIES AND STOCKHOLDERS' EQUITY                                                 

Current liabilities:                                                                                             
  Current portion of long-term debt......................................................... $   1,428  $   1,428
  Accounts payable..........................................................................     3,883      7,225
  Accrued liabilities.......................................................................    10,685     11,888
                                                                                             ---------  ---------
    Total current liabilities...............................................................    15,996     20,541
Long-term debt, less current portion........................................................    27,860     16,788
Obligations of Employee Stock Ownership Plan................................................     1,962        501
Deferred income and other long-term liabilities.............................................     2,783      3,404
Deferred income taxes.......................................................................     3,374      2,132
                                                                                             ---------  ---------
    Total liabilities.......................................................................    51,975     43,366
Commitments and contingencies (Note 13)                                                                          
Stockholders' equity........................................................................    31,691     40,914
                                                                                             ---------  ---------
                                                                                             $  83,666  $  84,280
                                                                                             ---------  ---------
                                                                                             ---------  ---------

The accompanying notes to financial statements are an integral part of these
balance sheets. 

F-3 

S-4
68th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 68th
HALSTEAD INDUSTRIES, INC. 

STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,

                                                        [Enlarge/Download Table]

                                                                               1997         1996        1995    
                                                                            -----------  ----------  ---------- 
                                                                                                                
                                                                              (IN THOUSANDS, EXCEPT SHARE AND   
                                                                                      PER SHARE DATA)           
Net sales.................................................................. $   243,333  $  274,826  $  302,851 
Cost of sales..............................................................     227,639     235,185     274,267 
                                                                            -----------  ----------  ---------- 
                                                                                 15,694      39,641      28,584 
Selling, general and administrative........................................      22,173      25,027      24,249 
                                                                            -----------  ----------  ---------- 
      Operating income (loss)..............................................      (6,479)     14,614       4,335 
Interest expense...........................................................      (1,603)     (2,115)     (2,084)
Other income, net..........................................................         732       1,449         750 
Gain (loss) on fixed assets, net...........................................          (9)       (158)        510 
                                                                            -----------  ----------  ---------- 
      Income (loss) before income tax provision (benefit)..................      (7,359)     13,790       3,511 
Income tax provision (benefit).............................................      (2,921)      5,047       1,250 
                                                                            -----------  ----------  ---------- 
      Income (loss) from continuing operations.............................      (4,438)      8,743       2,261 
Discontinued operations, net of income taxes (Note 14):                                                         
  Loss on disposal of discontinued operations..............................          --          --        (261)
                                                                            -----------  ----------  ---------- 
      Net income (loss).................................................... $    (4,438) $    8,743  $    2,000 
                                                                            -----------  ----------  ---------- 
                                                                            -----------  ----------  ---------- 
Weighted average shares for basic earnings per share.......................       3,502       3,667       4,296 
                                                                            -----------  ----------  ---------- 
                                                                            -----------  ----------  ---------- 
Weighted average shares for diluted earnings per share.....................       3,502       3,667       4,296 
                                                                            -----------  ----------  ---------- 
                                                                            -----------  ----------  ---------- 
Basic earnings per share:                                                                                       
  Income (loss) from continuing operations................................. $ (1,267.31) $ 2,384.11  $   526.30 
  Net income (loss)........................................................   (1,267.31)   2,384.11      465.59 
                                                                            -----------  ----------  ---------- 
                                                                            -----------  ----------  ---------- 
Diluted earnings per share:                                                                                     
  Income (loss) from continuing operations................................. $ (1,267.31) $ 2,384.11  $   526.30 
  Net income (loss)........................................................   (1,267.31)   2,384.11      465.59 
                                                                            -----------  ----------  ---------- 
                                                                            -----------  ----------  ---------- 

The accompanying notes to financial statements are an integral part of these
statements. 

F-4 

S-4
69th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 69th
HALSTEAD INDUSTRIES, INC. 

STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31,

                                                        [Enlarge/Download Table]

                                                                                  1997        1996        1995    
                                                                               ----------  ----------  ---------- 
                                                                                                                  
                                                                                         (IN THOUSANDS)           
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                             
  Net income (loss)........................................................... $   (4,438) $    8,743  $    2,000 
    Adjustments to reconcile net income (loss) to net cash (used in) provided                                     
      by operating activities -                                                                                   
        Depreciation and amortization.........................................      2,993       3,846       3,590 
        Deferred income taxes.................................................        (67)      1,432         581 
        Provision for doubtful accounts.......................................        158          84         170 
        Dividends received on cost method investment..........................       (313)       (329)       (222)
        Periodic pension expense..............................................        214         221          53 
        Deferred compensation.................................................        306         708         108 
        Payment of deferred compensation......................................        (30)       (362)       (472)
        Stock issued under stock compensation plans...........................         61          48         115 
        Loss on sale of discontinued operations...............................         --          --         428 
        Loss on fixed assets..................................................          9         158        (510)
        Increase (decrease) in cash from changes in:                                                              
            Trade receivables.................................................      4,452      11,045        (844)
            Inventories.......................................................       (173)     (1,705)      4,752 
            Accounts payable..................................................     (3,342)     (4,200)      1,640 
            Accrued liabilities and other.....................................     (1,449)     (4,308)     (5,180)
                                                                               ----------  ----------  ---------- 
              Net cash (used in) provided by operating activities.............     (1,619)     15,381       6,209 
                                                                               ----------  ----------  ---------- 
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                             
  Purchases of property, plant and equipment..................................     (6,234)     (4,920)     (6,286)
  Dividends received on cost method investment................................        313         329         222 
  Purchase of investment......................................................         --          --        (657)
  Proceeds from sale of fixed assets..........................................         15       6,125       1,775 
  Proceeds from sale of discontinued operations, net..........................         --          --       1,402 
  Proceeds from redemption of investment......................................        136          13          13 
                                                                               ----------  ----------  ---------- 
              Net cash (used in) provided by investing activities.............     (5,770)      1,547      (3,531)
                                                                               ----------  ----------  ---------- 
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                             
  Proceeds from issuance of long-term debt....................................     46,500      56,800      61,000 
  Repayments of long-term debt................................................    (35,428)    (72,804)    (41,626)
  Redemption/purchase of common stock.........................................     (2,050)       (500)    (26,649)
  Payment of dividends........................................................     (1,473)     (1,105)         -- 
                                                                               ----------  ----------  ---------- 
              Net cash provided by (used in) financing activities.............      7,549     (17,609)     (7,275)
                                                                               ----------  ----------  ---------- 
Net increase (decrease) in cash and cash equivalents..........................        160        (681)     (4,597)

Cash and cash equivalents, beginning of year..................................        636       1,317       5,914 
                                                                               ----------  ----------  ---------- 
Cash and cash equivalents, end of year........................................ $      796  $      636  $    1,317 
                                                                               ----------  ----------  ---------- 
                                                                               ----------  ----------  ---------- 
Supplemental disclosure of cash flow information:                                                                 
  Cash paid during the year for -                                                                                 
    Interest.................................................................. $    1,695  $    2,432  $    2,019 
    Income taxes.............................................................. $      611  $    3,613  $    4,303 
                                                                               ----------  ----------  ---------- 
                                                                               ----------  ----------  ---------- 

The accompanying notes to financial statements are an integral part of these
statements. 

F-5 

S-4
70th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 70th
HALSTEAD INDUSTRIES, INC. 

NOTES TO FINANCIAL STATEMENTS 

1. DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES       

DESCRIPTION OF BUSINESS                                                 

   Halstead Industries, Inc. (the Company), incorporated in Delaware, produces
and distributes drawn copper tubing at its facility in Wynne, Arkansas, and     
assembles and distributes insulated copper line sets at its facility in Clinton,
Tennessee. Standard drawn copper tubing products include straight lengths and   
coils for water, refrigeration and automotive tubing applications. Line sets are
used in the installation of air conditioning and heat pump systems. The         
principal market for the Company's products is the residential and commercial   
construction industry. Other markets include the air conditioning, heating and  
refrigeration industry; the automotive industry; and other specialized, original
equipment manufacturers. The majority of the Company's customers are located    
throughout the United States and no single customer accounts for 10% or more of 
net sales.                                                                      

USE OF 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 at the   
date of the financial statements and the reported amounts of revenues and       
expenses during the reporting period. Actual results could differ from those    
estimates.                                                                      

CASH EQUIVALENTS                                                        

    Cash equivalents include highly liquid investments with an original maturity
of three months or less at the date of purchase. The carrying amount of cash    
equivalents approximates market value.                                          

ACCOUNTS RECEIVABLE AND CONCENTRATION OF CREDIT RISK                    

    Trade accounts receivable are stated net of allowances for doubtful accounts
of $238,000 at December 31, 1997 and $265,000 at December 31, 1996. The Company 
performs on-going credit evaluations of its customers' financial condition and  
generally does not require collateral from those customers. The Company sells   
its products to a multitude of customers throughout the United States. There is 
not a disproportionate concentration of credit risk.                            

INVENTORIES                                                             

Inventories are stated at the lower of cost or market. The Company's    
products consist primarily of copper, which is purchased from several suppliers.
The cost of the copper component of inventories is determined using the last-in,
first-out (LIFO) method. All other inventories and components are valued using  
the first-in, first-out (FIFO) method.                                          

FUTURES CONTRACTS                                                       

The Company periodically takes positions in the copper futures market to
reduce its exposure to future price increases for firm sales commitments and to 
hedge a net exposure related to a portion of its inventory. Gains and losses on 
such futures contracts are deferred and recognized in cost of sales when the    
related product is sold. Cash flows from futures contracts are reported in the  
statements of cash flows as a component of the change in inventories.           

F-6 

S-4
71st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 71st
INVESTMENTS                                                             

  The Company accounts for its 15% investment in a joint venture (Note 3) by
the cost method. All other investments are also recorded at cost. These         
investments are not publicly traded nor have they been appraised or otherwise   
valued. As such, the Company cannot readily determine their fair market value.  

PROPERTY, PLANT AND EQUIPMENT                                           

  Property, plant and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the related   
assets for financial reporting purposes (40 years for buildings and 3-14 years  
for machinery and equipment). Repairs and maintenance are charged to expense as 
incurred. Major renewals and improvements which extend the useful lives of      
assets are capitalized. At the time property, plant and equipment are retired or
otherwise disposed of, the cost and the accumulated depreciation are removed    
from the accounts and any gain or loss on disposition is credited or charged to 
income.                                                                         

   The Company reviews the carrying value of property, plant and equipment for
impairment whenever events or changes in circumstances indicate that the        
carrying value may not be recoverable. Measurement of any impairment would      
include a comparison of estimated future operating cash flows anticipated to be 
generated during the remaining life of the net carrying value of the asset.     
Property, plant and equipment no longer used in operations and held for sale or 
lease are segregated in the balance sheet and reduced, where applicable, to     
their estimated fair value less cost of disposal.                               

INCOME TAXES                                                            

Deferred income tax liabilities and assets are determined based on the  
differences between the financial statement and income tax bases of assets and  
liabilities that will result in taxable or deductible amounts in the future     
using enacted income tax rates in effect for the year in which the differences  
are expected to affect taxable income. Valuation allowances are established when
necessary to reduce deferred income tax assets to the amount expected to be     
realized.                                                                       

EARNINGS PER SHARE                                                      

 During 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 128, Earnings Per Share (SFAS No. 128). SFAS 
No. 128 requires the presentation of basic and diluted earnings per share for   
all periods presented. Basic earnings per share has been determined by dividing 
the respective net income amounts by the weighted average number of shares      
outstanding during each period, excluding Employee Stock Ownership Plan (ESOP)  
shares pledged against ESOP obligations (Note 8). Diluted earnings per share    
typically reflect the potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into common stock.  
As the Company has not held any dilutive securities for any period presented,   
diluted earnings per share is the same as basic earnings per share for all      
periods presented.                                                              

ENVIRONMENTAL                                                           

    Environmental expenditures that relate to current operations are expensed or
capitalized as appropriate. Expenditures that relate to an existing condition   
caused by past operations and do not contribute to current or future revenue    
generation are expensed. Liabilities are recorded when environmental assessments
and/or remedial efforts are probable, and the costs can be reasonably estimated.
Estimates of environmental liabilities may vary subject to changing conditions  
and as additional information becomes available. Generally, the timing of these 
accruals coincides with the Company's commitment to a formal plan of action.    

F-7 

S-4
72nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 72nd
REVENUE RECOGNITION                                                     

 The Company recognizes a sale when goods are shipped or when ownership is
assumed by the customer.                                                        

RECENTLY ISSUED ACCOUNTING STANDARDS                                    

 During 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS No.
130) and Statement of Financial Accounting Standards No. 131, Disclosures about 
Segments of an Enterprise and Related Information (SFAS No. 131). Both          
statements are effective for fiscal years beginning after December 15, 1997.    
SFAS No. 130 establishes new rules for the reporting and display of             
comprehensive income and its components in financial statements. The Company is 
currently evaluating the reporting formats recommended under this statement.    
SFAS No. 131 establishes a new method by which companies report operating       
segment information. This method is based on the manner in which management     
organizes the segments within a company for making operating decisions and      
assessing performance. The Company is evaluating the provisions of this         
statement and, upon adoption, may establish different operating segments for    
reporting purposes.                                                             

2. INVENTORIES                                                                  

Inventories at December 31 are summarized as follows (in thousands):    

                                                        [Enlarge/Download Table]

                                                                           1997       1996   
                                                                         ---------  ---------
                                                                                             
Finished goods and in process........................................... $  14,653  $  15,178
Raw materials and supplies..............................................     4,980      5,709
                                                                         ---------  ---------
                                                                            19,633     20,887
Less allowance to adjust the carrying value of certain inventories to a                      
  LIFO basis............................................................     2,709      4,136
                                                                         ---------  ---------
                                                                         $  16,924  $  16,751
                                                                         ---------  ---------
                                                                         ---------  ---------

Inventories valued using the LIFO method comprised 59% and 69% of       
inventories at December 31, 1997 and 1996, respectively.                        

3. INVESTMENT IN JOINT VENTURE                                                  

The Company has a 15% ownership in Kobe Copper Products, Inc., a joint  
venture formed for the purpose of manufacturing and marketing specialized copper
tubing. As of December 31, 1997 and 1996, the Company has contributed capital   
amounting to $3.6 million. The Company purchased $3.4 million in 1997, $3.7     
million in 1996 and $9.9 million in 1995 of copper tubing products from the     
joint venture. The Company received dividends from the joint venture of $286,000
in 1997 and 1996 and $179,000 in 1995. Amounts due to the joint venture in the  
normal course of business were $0 and $286,000 at December 31, 1997 and 1996,   
respectively.                                                                   

F-8 

S-4
73rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 73rd
4. PROPERTY, PLANT AND EQUIPMENT                                                

  Property, plant and equipment at December 31 are summarized as follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                                           1997       1996   
                                                                         ---------  ---------
                                                                                             
Buildings............................................................... $  16,388  $  16,200
Machinery and equipment.................................................    47,554     41,710
                                                                         ---------  ---------
                                                                            63,942     57,910
Less accumulated depreciation...........................................    34,692     32,091
                                                                         ---------  ---------
                                                                            29,250     25,819
Land....................................................................       458        458
Construction in progress................................................     2,821      2,698
                                                                         ---------  ---------
                                                                         $  32,529  $  28,975
                                                                         ---------  ---------
                                                                         ---------  ---------

    Depreciation expense was $3.0 million in 1997, $3.8 million in 1996 and $3.5
million in 1995.                                                                

 The Company leased its plant facility located in Ansonia, Connecticut, in
1995. The lease was terminated in 1996 and the plant is currently held for sale 
and is included in net assets held for sale or lease along with other           
nonoperating property. The Ansonia plant was closed in 1989 and had a net book  
value of $1.9 million at December 31, 1997, and $2.2 million at December 31,    
1996.                                                                           

5. ACCRUED LIABILITIES                                                          

Accrued liabilities at December 31, consisted of the following:         

                                                        [Enlarge/Download Table]

                                                                           1997       1996   
                                                                         ---------  ---------
                                                                                             
Payroll and related benefits............................................ $   5,184  $   6,361
Other...................................................................     5,501      5,527
                                                                         ---------  ---------
                                                                         $  10,685  $  11,888
                                                                         ---------  ---------
                                                                         ---------  ---------

6. LONG-TERM DEBT                                                               

Long-term debt at December 31 consisted of the following (in thousands):

                                                        [Enlarge/Download Table]

                                                                           1997       1996   
                                                                         ---------  ---------
                                                                                             
Term loan............................................................... $   4,288  $   5,716
Revolving line of credit................................................    25,000     12,500
                                                                         ---------  ---------
                                                                            29,288     18,216
Less current portion....................................................     1,428      1,428
                                                                         ---------  ---------
                                                                         $  27,860  $  16,788
                                                                         ---------  ---------
                                                                         ---------  ---------

In 1997, the Company amended and restated its Revolving Credit Agreement
(the Agreement) to provide for a Revolving Line of Credit (the Revolver), a Term
Loan (Term Loan), a Controlled Cash Flow Facility (the Facility) and a Letter of
Credit Facility. Under the Agreement, substantially all of the assets of the    
Company have been pledged as collateral.                                        

  The Company may borrow up to $25 million under the Revolver at an interest
rate equal to the lender's prime rate or a LIBOR rate plus 1.25% to 2.75%. The  
interest rate adjusts quarterly based on the Company's ratio of earnings before 
interest and taxes to interest as defined in the Agreement. The Company's       
borrowing rate at December 31, 1997, was 8.41%. The Revolver expires on December
31, 2000.                                                                       

F-9 

S-4
74th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 74th
    The Term Loan requires quarterly principal payments through the year 2000 of
$357,000 plus interest at a rate of 6.99%.                                      

Under the Facility, the Company may borrow up to $5 million at the same 
interest rate as the Revolver. The Facility expires on December 18, 1998, and   
may be extended for additional one-year periods with the written consent of the 
lender. The maximum short-term borrowings under the Facility during 1997, 1996  
and 1995 were $5.0 million, $4.9 million and $4.9 million respectively; the     
average borrowings were $2.4 million, $2.3 million and $2.1 million             
respectively; and the weighted average interest rates were 7.10%, 7.36% and     
7.81% respectively. There were no borrowings outstanding under the Facility at  
December 31, 1997 and 1996.                                                     

  Under the Letter of Credit Facility, the Company may request the lender to
issue letters of credit of up to $1.0 million. The Letter of Credit Facility    
expires on December 31, 2000, and may be extended for an additional one-year    
period with the written consent of the lender. A letter of credit for $300,000  
was outstanding at December 31, 1997 and 1996.                                  

The fair value of the Company's debt approximates the carrying value at 
December 31, 1997 and 1996.                                                     

The Agreement contains various covenants, the most restrictive of which 
require the Company to maintain at all times a debt to capitalization ratio of  
not more than 60%, a minimum interest coverage and a minimum tangible net worth.
At December 31, 1997, the Company was in compliance with the covenants under its
debt arrangements or had received waivers for any events of noncompliance. Under
the Agreement, dividends may be paid by the Company upon attaining certain      
earnings requirements.                                                          

The combined aggregate amount of scheduled long-term debt maturities for
each of the three years subsequent to 1997 until the maturity of all obligations
are payable as follows (in thousands):                                          

                                                                [Download Table]
                                                              
1998...............................................  $   1,428
1999...............................................      1,429
2000...............................................     26,431
                                                     ---------
                                                     $  29,288
                                                     ---------
                                                     ---------

7. RETIREMENT PLANS                                                             

PENSION PLANS                                                           

    The Company maintains noncontributory defined benefit pension plans covering
all of its hourly paid employees. These plans provide benefits of stated amounts
for each year of service. Pension expense is determined by the plans' consulting
actuary using the benefit unit credit method. The Company's plans are fully     
funded as defined by ERISA. The Company contributed $242,000 and $195,000 to the
plans in 1997 and 1995, respectively. There were no contributions made to the   
plans in 1996.                                                                  

F-10

S-4
75th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 75th
The following table sets forth the plans' funded status and amounts     
recognized in the Company's balance sheet at December 31, 1997 and 1996, as well
as the components of net periodic pension expense included in the Company's     
income statement for 1997, 1996 and 1995 (in thousands):                        

                                                        [Enlarge/Download Table]

                                                                            1997       1996    
                                                                          ---------  --------- 
                                                                                               
Actuarial present value of benefit obligations:                                                
  Accumulated benefit obligation, including vested benefits of $8,722 in                       
    1997 and $7,551 in 1996.............................................. $   9,299  $   8,041 
                                                                          ---------  --------- 
                                                                          ---------  --------- 
  Projected benefit obligation for service rendered to date.............. $   9,299  $   8,041 
Plan assets at quoted market value, invested in a mutual fund consisting                       
  of listed stocks and U.S. Government obligations.......................    10,725      8,811 
                                                                          ---------  --------- 
Plan assets in excess of projected benefit obligation....................     1,426        770 
Unrecognized net gain from past experience different from that assumed                         
  and effects of changes in assumptions..................................      (756)       (48)
Prior service cost to be recognized in future periods....................       925        989 
Unrecognized net transition asset........................................      (978)    (1,099)
                                                                          ---------  --------- 
Prepaid pension cost included in other assets............................ $     617  $     612 
                                                                          ---------  --------- 
                                                                          ---------  --------- 

                                                        [Enlarge/Download Table]

                                                                    1997       1996       1995    
                                                                  ---------  ---------  --------- 
                                                                                                  
Net periodic pension expense included the following components:                                   
Service cost..................................................... $     246  $     249  $     189 
Interest cost....................................................       645        607        563 
Actual return on plan assets.....................................    (2,208)      (919)    (1,684)
Net amortization and deferral....................................     1,531        284        985 
                                                                  ---------  ---------  --------- 
Net periodic pension expense..................................... $     214  $     221  $      53 
                                                                  ---------  ---------  --------- 
                                                                  ---------  ---------  --------- 

    The weighted average discount rate used in determining the actuarial present
value of the projected benefit obligation was 7.25% at December 31, 1997, and   
7.75% at December 31, 1996. The expected long-term rate of return on assets was 
7.75% for 1997 and 1996. Prior service cost resulting from plan amendments is   
amortized on a straight-line basis over the average expected future service     
lives of participants.                                                          

PROFIT-SHARING                                                          

The Company has a profit-sharing plan covering all salaried employees.  
Contributions to this plan are determined annually by the Company's Board of    
Directors and are funded currently. The Company did not make a contribution to  
the plan in 1997. The total contribution made by the Company to the plan and    
charged to expense was $220,000 in 1996 and $263,000 in 1995.                   

RETIREMENT SAVINGS PLAN                                                 

  The Company maintains a 401(k) Retirement Savings Plan (the "401(k) Plan")
covering all salaried, administrative hourly and non-bargaining production      
employees. The 401(k) Plan provides for a matching contribution by the Company  
equal to a percentage of the employee's contribution to the 401(k) Plan. The    
percentage of an employee's contribution that the Company will match is         
determined annually by the Company's Board of Directors. The total contributions
made by the Company to the 401(k) Plan and charged to expense was $148,000 in   
1997, $168,000 in 1996 and $64,000 in 1995.                                     

F-11

S-4
76th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 76th
DEFERRED COMPENSATION ARRANGEMENT                                       

   The Company maintains a non-qualified deferred compensation arrangement for
benefit of its executive officers. Under the arrangement, participants are      
awarded "performance units" upon the satisfaction of certain operating and      
financial goals. Each unit emulates one share of common stock. Participants vest
over a period of time from the year of award. The Company recognized            
compensation expense of $298,000, $698,000 and $100,000 in the accompanying     
statements of income for the years ended December 31, 1997, 1996 and 1995,      
respectively. The accrual recorded at December 31, 1997 and 1996 was $500,000   
and $798,000, respectively. (See Note 17.)                                      

8. STOCK OWNERSHIP PLANS                                                        

EMPLOYEE STOCK OWNERSHIP PLAN                                           

  The Company has an Employee Stock Ownership Plan (ESOP) for the benefit of
the salaried and administrative hourly employees. The plan is administered by a 
committee of employees appointed by the Company's Board of Directors.           

   At December 31, 1997 and 1996, the trust for the ESOP held a total of 1,276
and 1,215 shares, respectively, of the Company's outstanding common stock of    
which 1,116 and 1,162 shares, respectively, were allocated to the accounts of   
the plan participants. The remaining unreleased shares have been pledged as     
collateral. The pledged shares are subject to release from collateral generally 
in proportion to payments made on the related loans. The fair values of the     
allocated and unreleased shares were $900 and $1,219 at December 31, 1997 and   
1996, respectively.                                                             

In July 1996, the ESOP obtained a line of credit to borrow up to $1.3   
million in order to purchase shares of the Company's stock. The outstanding     
balance of the loan was $882,000 at December 31, 1997, and $501,000 at December 
31, 1996. The loan is due in quarterly installments through 2001 of $65,000 plus
interest payable at 8.00%.                                                      

 In May 1997, the ESOP obtained a second loan for $1.2 million to purchase
additional shares of the Company's stock. At December 31, 1997, the outstanding 
balance of the loan was $1.08 million. The new loan is due in quarterly         
installments through 2002 of $60,000 plus interest payable at 8.00%.            

The Company has guaranteed the repayment of the loans which have been   
reflected in the accompanying balance sheet, and an unearned compensation       
balance of the same amount has been deducted from stockholders' equity.         
Dividends received on unallocated shares pledged as collateral are used for     
payments on the loans.                                                          

 The ESOP requires that the Company make a contribution to the trust in an
amount at least sufficient for the trust to repay the principal amount of the   
loans together with the related interest. Contributions are generally determined
based on a percentage of eligible employees' compensation. The total            
contribution made by the Company to the trust and charged to expense was $1.3   
million in 1997, $617,000 in 1996 and $691,000 in 1995.                         

    The plan provides that, for a two-year period subsequent to the distribution
of Company stock to plan participants, such participants have the right to      
require the Company to repurchase the Company stock distributed to them.        

MANAGEMENT STOCK OWNERSHIP PLAN                                         

The Company has established a Management Stock Ownership Plan (MSOP) for
members of management. Contributions to the plan are determined based on a      
percentage of the participant's compensation and as determined by the Company's 
Board of Directors, and are funded through either cash contributions or         
reissuance of treasury stock to the trust for the MSOP. The total contribution  
made by the Company to the MSOP was $63,000 in 1997, $23,000 in 1996 and $21,000
in 1995, which was                                                              

F-12

S-4
77th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 77th
charged to expense. At December 31, 1997, the trust for the MSOP held 332 shares
of the Company's outstanding common stock.                                      

9. INCOME TAXES                                                                 

Income tax provision (benefit) for 1997, 1996 and 1995 consists of:     

                                                        [Enlarge/Download Table]

                                                                CURRENT   DEFERRED     TOTAL   
                                                               ---------  ---------  --------- 
                                                                                               
1997-                                                                                          
  Federal..................................................... $  (2,854) $     353  $  (2,501)
  State.......................................................    --           (420)      (420)
                                                               ---------  ---------  --------- 
                                                               $  (2,854) $     (67) $  (2,921)
                                                               ---------  ---------  --------- 
                                                               ---------  ---------  --------- 
1996-                                                                                          
  Federal..................................................... $   2,839  $   1,289  $   4,128 
  State.......................................................       776        143        919 
                                                               ---------  ---------  --------- 
                                                               $3,615.... $   1,432  $   5,047 
                                                               ---------  ---------  --------- 
                                                               ---------  ---------  --------- 
1995-                                                                                          
  Federal..................................................... $     598  $     477  $   1,075 
  State.......................................................        71        104        175 
                                                               ---------  ---------  --------- 
                                                               $     669  $     581  $   1,250 
                                                               ---------  ---------  --------- 
                                                               ---------  ---------  --------- 

    The income tax provision (benefit) for income taxes differed from the amount
computed by applying the federal statutory income tax rate due to:              

                                                        [Enlarge/Download Table]

                                                                       1997       1996       1995     
                                                                     ---------  ---------  ---------  
                                                                                                      
Statutory U.S. federal income tax rate..............................     (35.0)%      35.0%      35.0%
State income taxes, net of federal income tax benefit...............      (5.5)       4.7        4.3  
Increase/(reduction) in income tax reserves.........................    --           (2.0)    --      
Other, net..........................................................       0.8       (1.1)      (3.7) 
                                                                     ---------        ---        ---  
Effective income tax rate...........................................     (39.7)%      36.6%      35.6%
                                                                     ---------        ---        ---  
                                                                     ---------        ---        ---  

Deferred income taxes reflect the net income tax effect of temporary    
differences between the bases of assets and liabilities for financial reporting 
purposes and for income tax reporting purposes. Net deferred income tax balances
are comprised of the following:                                                 

                                                        [Enlarge/Download Table]

                                                                            1997       1996    
                                                                          ---------  --------- 
                                                                                               
Deferred tax assets...................................................... $   8,036  $   6,514 
Deferred tax liabilities.................................................    (8,665)    (7,210)
                                                                          ---------  --------- 
Net deferred taxes....................................................... $    (629) $    (696)
                                                                          ---------  --------- 
                                                                          ---------  --------- 

   No valuation allowances against deferred income tax assets were recorded at
December 31, 1997 or 1996.                                                      

F-13

S-4
78th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 78th
Temporary differences which gave rise to significant deferred income tax
assets (liabilities) were as follows:                                           

                                                        [Enlarge/Download Table]

                                                                            1997       1996    
                                                                          ---------  --------- 
                                                                                               
Current deferred income taxes-                                                                 
  Accrued expenses not currently deductible for tax...................... $   1,171  $   1,062 
  Accrued payroll and related benefits...................................       928      1,008 
  State net operating loss carryforwards.................................       471     --     
  Inventory valuation differences........................................       175        206 
  Insurance claim........................................................    --           (840)
                                                                          ---------  --------- 
      Total current deferred income taxes................................ $   2,745  $   1,436 
                                                                          ---------  --------- 
                                                                          ---------  --------- 
Long-term deferred income taxes-                                                               
  Property and equipment................................................. $  (4,269) $  (3,209)
  Management Stock Ownership Plan........................................       801        892 
  Pension plans..........................................................      (324)      (245)
  Accrued expenses not currently deductible for tax......................       271        240 
  Other..................................................................       147        190 
                                                                          ---------  --------- 
      Total long-term deferred income taxes.............................. $  (3,374) $  (2,132)
                                                                          ---------  --------- 
                                                                          ---------  --------- 

The Company has recorded $471,000 for the benefit of approximately $9.4 
million in state income tax loss carryforwards which expire in varying amounts  
from 2000 to 2012.                                                              

F-14

S-4
79th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 79th
10. STOCKHOLDERS' EQUITY                                                        

   Changes in stockholders' equity for the years ended December 31, 1997, 1996
and 1995, are summarized as follows (in thousands):                             

                                                        [Enlarge/Download Table]

                                                             ADDITIONAL                                                          
                                                 COMMON        PAID-IN     RETAINED      TREASURY        UNEARNED                
                                                  STOCK        CAPITAL     EARNINGS        STOCK       COMPENSATION      TOTAL   
                                              -------------  -----------  -----------  -------------  ---------------  --------- 
                                                                                                                                 
Balance, December 31, 1994...................   $       1     $  33,910    $  24,727     $  --           $  (1,435)    $  57,203 
  Net income.................................                                  2,000                                       2,000 
  Issued 14 shares of common stock under                                                                                         
    stock compensation plans for directors                                                                                       
    and management...........................                       115                                                      115 
  Redemption of 3,238 shares of common stock                                                                                     
    at $8,230 per share (Note 14)............                   (26,648)                        (1)                      (26,649)
  Income tax benefits from distributions                                                                                         
    under the MSOP...........................                        92                                                       92 
  Reduction in borrowings by ESOP............                                                                1,094         1,094 
                                                       --                                       --                               
                                                             -----------  -----------                      -------     --------- 
Balance, December 31, 1995...................           1         7,469       26,727            (1)           (341)       33,855 
  Net income.................................                                  8,743                                       8,743 
  Purchase of 53 shares of common stock at                                                                                       
    $9,500 per share.........................                      (500)                                                    (500)
  Issued 5 shares of common stock under a                                                                                        
    stock compensation plan for directors....                        48                                                       48 
  Payment of dividend at $300 per share......                                 (1,105)                                     (1,105)
  Income tax benefits from distributions                                                                                         
    under the MSOP...........................                        33                                                       33 
  Increase in borrowings by ESOP.............                                                                 (160)         (160)
                                                       --                                       --                               
                                                             -----------  -----------                      -------     --------- 
Balance, December 31, 1996...................           1         7,050       34,365            (1)           (501)       40,914 
  Net loss...................................                                 (4,438)                                     (4,438)
  Purchase of 168 shares of common stock at                                                                                      
    $12,190 per share........................                    (2,050)                                                  (2,050)
  Issued 5 shares of common stock under a                                                                                        
    stock compensation plan for directors....                        61                                                       61 
  Payment of dividend at $400 per share......                                 (1,473)                                     (1,473)
  Income tax benefits from distributions                                                                                         
    under the MSOP...........................                       138                                                      138 
  Increase in borrowings by ESOP.............                                                               (1,461)       (1,461)
                                                       --                                       --                               
                                                             -----------  -----------                      -------     --------- 
Balance, December 31, 1997...................   $       1     $   5,199    $  28,454     $      (1)      $  (1,962)    $  31,691 
                                                       --                                       --                               
                                                       --                                       --                               
                                                             -----------  -----------                      -------     --------- 
                                                             -----------  -----------                      -------     --------- 

 At December 31, 1997 and 1996, 10,970 shares of common stock were issued.
Shares of common stock outstanding at December 31, 1997 and 1996, were 3,520 and
3,683, respectively. Treasury stock is recorded at par value and consists of    
7,450 shares at December 31, 1997, and 7,287 shares at December 31, 1996.       

 On April 16, 1998, the Company effected a 1-for-10 reverse stock split of
the authorized and outstanding shares of the Company's common stock, increased  
the par value per share of common stock from $.01 to $.10 and reduced the number
of authorized shares from 120,000 to 12,000. The effects of the 1-for-10 reverse
stock split have been applied retroactively to all common share information for 
all periods presented in these financial statements.                            

11. LEASES                                                                      

The Company leases property and equipment under various noncancelable   
arrangements. These operating leases generally expire prior to 2007, and the    
lease for certain office space has a renewal option                             

F-15

S-4
80th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 80th
of five years. Future minimum rental payments through the initial lease terms   
are as follows (in thousands):                                                  

                                                                [Download Table]
                                                              
1998...............................................  $   3,316
1999...............................................      3,303
2000...............................................      2,439
2001...............................................      1,738
2002...............................................      1,619
Thereafter.........................................     13,092
                                                     ---------
                                                     $  25,507
                                                     ---------
                                                     ---------

  Lease expense was approximately $2.5 million in 1997, $1.7 million in 1996
and $1.8 million in 1995. The Company subleases office space to a tenant under a
noncancelable arrangement. Sublease revenues were $164,000 in 1997 and $0 in    
1996. Future minimum sublease revenues are $433,000, $442,000 and $74,000 for   
1998, 1999 and 2000, respectively.                                              

12. FINANCIAL INSTRUMENTS                                                       

The Company enters into futures contracts to hedge certain copper raw   
material purchases to minimize risks due to market fluctuations. At December 31,
1997 and 1996, the Company had $295,000 and $800,000, respectively, of copper   
futures contracts that fix the price for a small portion of 1998 and 1997 copper
purchases. The market value of these copper futures contracts at December 31,   
1997 and 1996, was approximately $254,000 and $1.0 million, respectively, which 
was estimated based on market rate quotes.                                      

13. COMMITMENTS AND CONTINGENCIES                                               

The Company is subject to various claims and actions, including         
environmental matters at certain of its former plants, current facilities and   
other locations, which arise in the ordinary course of its business. Although   
the final outcome of these matters cannot be determined, based on the facts     
presently known, it is management's opinion that the amount of ultimate         
liability with respect to these actions will not materially affect the Company's
financial position or future results of operations. However, there can be no    
assurance that the Company has identified or properly assessed all potential    
legal or environmental liabilities arising from the activities or properties of 
the Company.                                                                    

On December 30, 1994, the Company entered into a supply agreement (the  
"Agreement") with the purchaser of its rubber and plastics business. Under the  
Agreement, the Company was required to purchase certain tubing insulation from  
the purchaser for a period of three years. The agreement contains certain       
termination provisions in the event of nonperformance by one or both of the     
parties. Under the Agreement, the Company purchased tubing insulation of $3.7   
million in 1997, $4.2 million in 1996 and $3.6 million in 1995. The Agreement   
expired on December 31, 1997, and has not been renewed.                         

14. DISCONTINUED OPERATIONS                                                     

On December 30, 1994, the Company sold substantially all of the assets, 
properties, business and rights of its rubber and plastics business. Gross sale 
proceeds, including assumption of a capital lease obligation by the purchaser of
$2.1 million, amounted to $33.9 million. The disposition of this business       
segment was accounted for as a discontinued operation.                          

    The net carrying value of assets sold amounted to $30.7 million which, after
reduction for related closing costs and income taxes of $24,000, resulted in a  
net gain of $39,000 in 1994. In 1995, due to various adjustments under the      
provisions of the sales agreement and additional costs associated with the sale,
net of an income tax benefit of $167,000, the Company recognized a net loss of  
$261,000.                                                                       

F-16

S-4
81st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 81st
In connection with the sale of its rubber and plastics business and in  
accordance with a Plan of Partial Liquidation adopted by the Board of Directors 
of the Company and approved by the stockholders, the Company distributed the net
proceeds of the sale, excluding taxes and expenses of the sale, to its          
stockholders in March 1995. The distribution of approximately $26.6 million was 
charged to stockholder's equity and has been effected as a pro-rata redemption  
of the Company's outstanding common stock.                                      

15. FIRE AND FURNACE DAMAGE                                                     

  On September 15, 1996, one of the Company's bullblocks and the surrounding
area of the building at the Wynne, Arkansas, facility sustained damage from a   
fire which occurred while the equipment was undergoing maintenance. On September
20, 1996, the casting furnace at the Wynne facility was damaged due to a hearth 
break-out. Property damages and business interruption losses resulting from both
instances were covered by insurance and the net insurance benefits recognized   
during 1996 were $2.6 million, including approximately $2.1 million included in 
other receivables at December 31, 1996. The Company spent approximately $700,000
in 1996 to repair capital assets which had been damaged. Insurance proceeds in  
excess of the repair costs of damaged assets were approximately $1.9 million and
are reflected in the 1996 financial statements as other income ($950,000) and a 
reduction to cost of sales ($963,000) to offset expenses and losses incurred as 
a result of the fire and hearth break-out. All damages have been repaired and   
the insurance claims have been collected from the Company's insurance carriers. 

16. NOTE RECEIVABLE FROM OFFICER                                                

At December 31, 1997 and 1996, the Company had an outstanding note      
receivable due from an officer in the amount of $660,000 and $825,000           
respectively. This note bears interest at 6.6%, matures May 1, 2001, and is     
secured by common stock of the Company. Payments of $165,000 are due annually on
May 1.                                                                          

17. SUBSEQUENT EVENT                                                            

   On August 7, 1998, the Company entered into an Agreement and Plan of Merger
(the Merger Agreement) with Mueller Industries, Inc. and its subsidiary, Mueller
Acquisition Corp. whereby the Company will be merged with Mueller Acquisition   
Corp. in a business combination that is expected to be accounted for as a       
pooling of interests. Under the terms of the Merger Agreement, all shares of the
Company's common stock shall be exchanged for approximately $92.0 million of    
Mueller Industries, Inc. common stock. The consummation of the transaction is   
subject to various conditions and certain regulatory approvals.                 

  As a consequence of the merger with Mueller Acquisition Corp., all Company
stock held by the ESOP will be exchanged for Mueller Industries, Inc. common    
stock. The Merger Agreement provides for the termination of the ESOP, payment of
ESOP obligations and distribution of participants' accounts after the merger is 
completed. Additionally, the Merger Agreement requires that the MSOP be         
terminated prior to the merger date and all Company stock held by the MSOP will 
be distributed to the MSOP participants.                                        

As a result of the merger, the non-qualified, deferred compensation     
arrangement will be terminated and the value of the performance units, based    
upon the Company's estimate of the cash value per share to be received in the   
merger, will be distributed to participants. The value of the units to be       
distributed is estimated to be approximately $1.9 million. In addition, certain 
executives will be paid severance payments of approximately $6.3 million, in    
accordance with change in control provisions as specified in their employment   
agreements.                                                                     

  For comparative purposes, certain other amounts in the 1997, 1996 and 1995
financial statements have been reclassified to conform with the presentation in 
the 1998 interim financial statements. These reclassifications include, among   
other things, the reclassification of freight out costs from cost of goods sold 
to net sales.                                                                   

F-17

S-4
82nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 82nd
HALSTEAD INDUSTRIES, INC. 

CONDENSED BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                                                  AS OF          
                                                                                        -------------------------
                                                                                                                 
                                                                                         JUNE 26,    DECEMBER 31,
                                                                                           1998          1997    
                                                                                        -----------  ------------


                                                                                        (UNAUDITED)              
                                                                                             (IN THOUSANDS)      
                                                                                                                 
                                        ASSETS                                                                   
Current assets:                                                                                                  
  Cash and cash equivalents...........................................................   $     885    $      796 
  Trade receivables...................................................................      25,234        17,208 
  Current portion of note receivable from officer.....................................         330           165 
  Other receivables...................................................................       5,527         3,376 
  Inventories.........................................................................      12,767        16,924 
  Deferred income taxes...............................................................       2,741         2,745 
                                                                                        -----------  ------------
      Total current assets............................................................      47,484        41,214 
Investments...........................................................................       4,334         4,334 
Property, plant and equipment, net of accumulated depreciation of $36,182 and $34,692,                           
  respectively........................................................................      33,100        32,529 
Net assets held for sale or lease.....................................................       1,946         2,107 
Long-term portion of note receivable from officer.....................................         330           495 
Other assets..........................................................................       2,994         2,987 
                                                                                        -----------  ------------
                                                                                         $  90,188    $   83,666 
                                                                                        -----------  ------------
                                                                                        -----------  ------------
                         LIABILITIES AND STOCKHOLDERS' EQUITY                                                    
Current liabilities:                                                                                             
  Current portion of long-term debt...................................................   $   1,428    $    1,428 
  Accounts payable....................................................................      11,212         3,883 
  Accrued liabilities.................................................................      12,718        10,685 
                                                                                        -----------  ------------
      Total current liabilities.......................................................      25,358        15,996 
Long-term debt, less current portion..................................................      22,646        27,860 
Obligations of Employee Stock Ownership Plan..........................................       1,713         1,962 
Deferred income and other long-term liabilities.......................................       2,441         2,783 
Deferred income taxes.................................................................       4,320         3,374 
                                                                                        -----------  ------------
      Total liabilities...............................................................      56,478        51,975 
Commitments and contingencies                                                                                    
Stockholders' equity..................................................................      33,710        31,691 
                                                                                        -----------  ------------
                                                                                         $  90,188    $   83,666 
                                                                                        -----------  ------------
                                                                                        -----------  ------------

The accompanying notes to condensed financial statements are an integral part of
these balance sheets. 

F-18

S-4
83rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 83rd
HALSTEAD INDUSTRIES, INC. 

CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                  FOR THE SIX MONTHS ENDED   
                                                                               ------------------------------
                                                                                                             
                                                                               JUNE 26, 1998   JUNE 27, 1997 
                                                                               --------------  --------------


                                                                                (IN THOUSANDS, EXCEPT SHARE  
                                                                                    AND PER SHARE DATA)      
                                                                                                             
Net sales.....................................................................  $    108,045    $    142,821 
Cost of sales.................................................................        92,986         132,632 
                                                                               --------------  --------------
                                                                                      15,059          10,189 
Selling, general and administrative...........................................        10,919          12,391 
                                                                               --------------  --------------
      Operating income (loss).................................................         4,140          (2,202)
Interest expense..............................................................        (1,182)           (816)
Other income, net.............................................................           153             441 
Gain (loss) on fixed assets, net..............................................       --                  (15)
                                                                               --------------  --------------
      Income (loss) before income tax provision...............................         3,111          (2,592)
Income tax provision (benefit)................................................         1,244          (1,036)
                                                                               --------------  --------------
      Net income (loss).......................................................  $      1,867    $     (1,556)
                                                                               --------------  --------------
                                                                               --------------  --------------
Weighted average shares for basic earnings per share..........................         3,361           3,609 
Weighted average shares for diluted earnings per share........................         3,361           3,609 
Basic earnings per share .....................................................  $     555.45    $    (431.15)
Diluted earnings per share....................................................  $     555.45    $    (431.15)

The accompanying notes to condensed financial statements are an integral part of
these statements. 

F-19

S-4
84th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 84th
HALSTEAD INDUSTRIES, INC. 

CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED) 

                                                        [Enlarge/Download Table]

                                                                                   FOR THE SIX MONTHS ENDED   
                                                                                ------------------------------
                                                                                                              
                                                                                JUNE 26, 1998   JUNE 27, 1997 
                                                                                --------------  --------------


                                                                                        (IN THOUSANDS)        
                                                                                                              
CASH FLOWS FROM OPERATING ACTIVITIES:                                                                         
  Net income (loss)............................................................  $      1,867    $     (1,556)
    Adjustments to reconcile net income (loss) to net cash (used in) provided                                 
      by operating activities--                                                                               
      Depreciation and amortization............................................         1,661           1,522 
      Deferred income taxes....................................................           950              (9)
      Provision for doubtful accounts..........................................            52             127 
      Dividends received on cost method investments............................           (15)           (313)
      Periodic pension expense.................................................            90              69 
      Deferred compensation....................................................           849             243 
      Payment of deferred compensation.........................................           (15)            (15)
      Stock issued under stock compensation plans..............................            45              61 
      Loss on fixed assets.....................................................            --              15 
      Increase (decrease) in cash from changes in:                                                            
        Trade receivables......................................................        (8,078)         (8,365)
        Inventories............................................................         4,157          (1,969)
        Accounts payable.......................................................         7,329          11,799 
        Accrued liabilities and other..........................................        (1,402)          1,868 
                                                                                --------------  --------------
          Net cash provided by operating activities............................         7,490           3,477 
                                                                                --------------  --------------
CASH FLOWS FROM INVESTING ACTIVITIES:                                                                         
  Purchases of property, plant and equipment...................................        (2,061)         (2,248)
  Dividends received on cost method investments................................            15             313 
  Proceeds from redemption of investment.......................................            --              13 
                                                                                --------------  --------------
    Net cash used in investing activities......................................        (2,046)         (1,922)
                                                                                --------------  --------------
CASH FLOWS FROM FINANCING ACTIVITIES:                                                                         
  Proceeds from issuance of long-term debt.....................................         8,000          26,000 
  Repayments of long-term debt.................................................       (13,214)        (25,857)
  Redemption/purchase of common stock..........................................          (141)           (210)
  Payment of dividends.........................................................            --          (1,473)
                                                                                --------------  --------------
    Net cash used in financing activities......................................        (5,355)         (1,540)
                                                                                --------------  --------------
Net increase in cash and cash equivalents......................................            89              15 

Cash and cash equivalents, beginning of period.................................           796             636 
                                                                                --------------  --------------
Cash and cash equivalents, end of period.......................................  $        885    $        651 
                                                                                --------------  --------------
                                                                                --------------  --------------
Supplemental disclosure of cash flow information:                                                             
  Cash paid during the period for--                                                                           
    Interest...................................................................  $        723    $        440 
    Income taxes...............................................................  $        631    $        548 
                                                                                --------------  --------------
                                                                                --------------  --------------

The accompanying notes to condensed financial statements are an integral part of
these statements. 

F-20

S-4
85th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 85th
HALSTEAD INDUSTRIES, INC. 

NOTES TO CONDENSED FINANCIAL STATEMENTS 
(UNAUDITED) 

1. GENERAL                                                                      

 The accompanying condensed financial statements have been prepared by the
Company, have not been audited and include all adjustments which are, in the    
opinion of management, necessary to a fair presentation of the financial        
position of the Company and the results of its operations and cash flows for the
periods presented. Certain information and footnote disclosures normally        
included in financial statements prepared in accordance with generally accepted 
accounting principles have been condensed or omitted. Results of operations for 
the interim periods presented are not necessarily indicative of results which   
may be expected for any other interim period or for the year as a whole. These  
financial statements should be read in conjunction with the Company's financial 
statements for the year ended December 31, 1997.                                

RECENTLY ISSUED ACCOUNTING STANDARDS                                    

 During 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, Accounting for Derivative Instruments   
and Hedging Activities (SFAS No. 133). The statement establishes accounting and 
reporting standards requiring that every derivative instrument be recorded on   
the balance sheet as either an asset or liability measured at its fair value.   
The statement requires that changes in the derivative's fair value be recognized
currently in earnings unless specific hedge accounting criteria are met. Special
accounting for qualifying hedges allows a derivative's gains or losses to offset
related results on the hedged item in the income statement, and requires that a 
company formally document, designate, and assess the effectiveness of           
transactions that receive hedge accounting. The statement's impact could        
increase volatility in earnings and other comprehensive income. SFAS No. 133 is 
effective for fiscal years beginning after June 15, 1999. SFAS No. 133 cannot be
applied retroactively. Management does not believe that this statement will have
a material impact on the Company's future results of operations and financial   
position.                                                                       

2. COMMITMENTS AND CONTINGENCIES                                                

The Company is subject to various claims and actions, including         
environmental matters at certain of its former plants, current facilities and   
other locations, which arise in the ordinary course of its business. Although   
the final outcome of these matters cannot be determined, based on the facts     
presently known, it is management's opinion that the amount of ultimate         
liability with respect to these actions will not materially affect the financial
position, results of operations and cash flows of the Company. However, there   
can be no assurance that the Company has identified or properly assessed all    
potential legal or environmental liabilities arising from the activities or     
properties of the Company.                                                      

F-21

S-4
86th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 86th
3. INVENTORIES                                                                  

Inventories at June 26, 1998, and December 31, 1997, are summarized as  
follows (in thousands):                                                         

                                                        [Enlarge/Download Table]

                                                                       JUNE 26,   DECEMBER 31,
                                                                         1998         1997    
                                                                       ---------  ------------
                                                                                              
Finished goods and in process........................................  $   9,342   $   14,653 
Raw materials and supplies...........................................      4,750        4,980 
                                                                       ---------  ------------
                                                                          14,092       19,633 
Less allowance to adjust the carrying value of certain inventories to                         
  a LIFO basis.......................................................      1,325        2,709 
                                                                       ---------  ------------
                                                                       $  12,767   $   16,924 
                                                                       ---------  ------------
                                                                       ---------  ------------

Inventories valued using the LIFO method comprised 59% and 69% of       
inventories at June 26, 1998, and December 31, 1997, respectively.              

4. ACCRUED LIABILITIES                                                          

   Accrued liabilities at June 26, 1998 and December 31, 1997 consisted of the
following:                                                                      

                                                        [Enlarge/Download Table]

                                                                      JUNE 26,   DECEMBER 31,
                                                                        1998         1997    
                                                                      ---------  ------------
                                                                                             
Payroll and related benefits......................................... $   6,174   $    5,184 
Other................................................................     6,544        5,501 
                                                                      ---------  ------------
                                                                      $  12,718   $   10,685 
                                                                      ---------  ------------
                                                                      ---------  ------------

5. COMPREHENSIVE INCOME                                                         

 During 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income (SFAS No.
130). The Company adopted this Statement as of the beginning of 1998. SFAS No.  
130 established new rules for the reporting and display of comprehensive income 
and its components; however, the adoption of this Statement had no impact on the
Company's net income or stockholders' equity.                                   

6. STOCKHOLDERS' EQUITY                                                         

 On April 16, 1998, the Company effected a 1-for-10 reverse stock split of
the authorized and outstanding shares of the Company's common stock, increased  
the par value per share of common stock from $.01 to $.10 and reduced the number
of authorized shares from 120,000 to 12,000. The effects of the 1-for-10 reverse
stock split have been applied retroactively to all common share information for 
all periods presented in these financial statements.                            

7. SUBSEQUENT EVENT                                                             

   On August 7, 1998, the Company entered into an Agreement and Plan of Merger
(the Merger Agreement) with Mueller Industries, Inc. and its subsidiary, Mueller
Acquisition Corp. whereby the Company will be merged with Mueller Acquisition   
Corp. in a business combination that is expected to be accounted for as a       
pooling of interests. Under the terms of the Merger Agreement, all shares of the
Company's common stock shall be exchanged for approximately $92.0 million of    
Mueller Industries, Inc. common stock. The consummation of the merger is subject
to various conditions and certain regulatory approvals.                         

F-22

S-4
87th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 87th
  As a consequence of the merger with Mueller Acquisition Corp., all Company
stock held by the ESOP will be exchanged for Mueller Industries, Inc. common    
stock. The Merger Agreement provides for the termination of the ESOP, payment of
ESOP obligations and distribution of participants' accounts after the merger is 
completed. Additionally, the Merger Agreement requires that the MSOP be         
terminated prior to the merger date and all Company stock held by the MSOP will 
be distributed to the MSOP participants.                                        

As a result of the merger, the non-qualified deferred compensation      
arrangement will be terminated and the value of the performance units, based    
upon the Company's estimate of the cash value per share to be received in the   
merger, will be distributed to participants. The value of the units to be       
distributed is estimated to be approximately $1.9 million. In addition, certain 
executives will be paid severance payments of approximately $6.3 million, in    
accordance with change in control provisions as specified in their employment   
agreements.                                                                     

F-23

S-4
88th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 88th
                                                                      APPENDIX A

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

AGREEMENT AND PLAN OF MERGER
among 
MUELLER INDUSTRIES, INC., 
MUELLER ACQUISITION CORP. 
and 
HALSTEAD INDUSTRIES, INC. 
Dated as of August 7, 1998

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

A-1 

S-4
89th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 89th
TABLE OF CONTENTS 

                                                        [Enlarge/Download Table]

                                                                                                       PAGE   
                                                                                                     ---------
                                                                                                              
ARTICLE I.    DEFINITIONS...........................................................................       A-7

ARTICLE II.   THE MERGER............................................................................      A-12

Section 2.1.  The Merger............................................................................      A-12
Section 2.2.  Effective Date of the Merger..........................................................      A-12

ARTICLE III.  THE SURVIVING CORPORATION.............................................................      A-12

Section 3.1.  Certificate of Incorporation..........................................................      A-12
Section 3.2.  By-Laws...............................................................................      A-12
Section 3.3.  Board of Directors; Officers..........................................................      A-12
Section 3.4.  Effects of Merger.....................................................................      A-12

ARTICLE IV.   CONVERSION OF SHARES..................................................................      A-12

Section 4.1.  Exchange Ratio........................................................................      A-12
Section 4.2.  Exchange of Certificates..............................................................      A-13
Section 4.3.  Dividends and Other Distributions.....................................................      A-14
Section 4.4.  No Fractional Shares..................................................................      A-15
Section 4.5.  Lost, Stolen or Destroyed Certificates................................................      A-15
Section 4.6.  Affiliates............................................................................      A-15
Section 4.7.  Closing of the Company's Transfer Books...............................................      A-15
Section 4.8.  Closing...............................................................................      A-15

ARTICLE V.    REPRESENTATIONS AND WARRANTIES OF THE COMPANY.........................................      A-16

Section 5.1.  Corporate Organization................................................................      A-16
Section 5.2.  Qualification to Do Business; Authorization and Validity of Agreement.................      A-16
Section 5.3.  No Conflict or Violation..............................................................      A-16
Section 5.4.  Consents and Approvals................................................................      A-16
Section 5.5.  Capital Stock and Related Matters.....................................................      A-16
Section 5.6.  Subsidiaries and Equity Investments...................................................      A-17
Section 5.7.  Financial Statements..................................................................      A-17
Section 5.8.  Absence of Certain Changes or Events..................................................      A-17
Section 5.9.  Tax Matters...........................................................................      A-18
Section 5.10. Absence of Undisclosed Liabilities....................................................      A-19
Section 5.11. Owned Real Property...................................................................      A-19
Section 5.12. Leases................................................................................      A-21
Section 5.13. Assets of the Company.................................................................      A-22
Section 5.14. Intellectual Property; Intangible Assets..............................................      A-22
Section 5.15. Licenses and Permits..................................................................      A-23
Section 5.16. Compliance with Law...................................................................      A-23
Section 5.17. Litigation............................................................................      A-23
Section 5.18. Contracts.............................................................................      A-24
Section 5.19. Inventories...........................................................................      A-24
Section 5.20. Employee Plans........................................................................      A-24
Section 5.21. Small Business Corporation............................................................      A-26
Section 5.22. Insurance.............................................................................      A-26
Section 5.23. Transactions with Directors, Officers and Affiliates..................................      A-26
Section 5.24. Receivables...........................................................................      A-26
Section 5.25. Labor Matters.........................................................................      A-27
Section 5.26. Environmental Matters.................................................................      A-27

A-2 

S-4
90th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 90th
                                                        [Enlarge/Download Table]

                                                                                                       PAGE   
                                                                                                     ---------
                                                                                                              
Section 5.27. Products Liability....................................................................      A-28
Section 5.28. Company Action........................................................................      A-29
Section 5.29. Accounting and Tax Matters............................................................      A-29
Section 5.30. Accuracy of Information...............................................................      A-29

ARTICLE VI.   REPRESENTATIONS AND WARRANTIES OF PARENT..............................................      A-29

Section 6.1.  Corporate Organization................................................................      A-29
Section 6.2.  Qualification to Do Business..........................................................      A-29
Section 6.3.  Authorization and Validity of Agreement...............................................      A-29
Section 6.4.  No Conflict or Violation..............................................................      A-30
Section 6.5.  Consents and Approvals................................................................      A-30
Section 6.6.  Capital Stock and Related Matters.....................................................      A-30
Section 6.7.  Authorization and Validity of Parents Common Stock....................................      A-30
Section 6.8.  Parent SEC Reports....................................................................      A-30
Section 6.9.  Absence of Certain Changes or Events..................................................      A-31
Section 6.10. Confirmation of Representations and Warranties of Merger Sub..........................      A-31

ARTICLE VII.  REPRESENTATIONS AND WARRANTIES OF MERGER SUB..........................................      A-31

Section 7.1.  Corporate Organization................................................................      A-31
Section 7.2.  Qualification to Do Business..........................................................      A-31
Section 7.3.  Authorization and Validity of Agreement...............................................      A-31
Section 7.4.  No Conflict or Violation..............................................................      A-31
Section 7.5.  Consents and Approvals................................................................      A-31
Section 7.6.  Capitalization of Merger Sub..........................................................      A-32

ARTICLE VIII. REPRESENTATIONS AND WARRANTIES OF THE COMPANY REGARDING THE ESOP......................      A-32

Section 8.1.  ESOP Trustee..........................................................................      A-32
Section 8.2.  Legal Counsel; Independent Financial Advisor..........................................      A-32
Section 8.3.  Opinion of Financial Advisor..........................................................      A-32
Section 8.4.  ESOP Loans............................................................................      A-32

ARTICLE IX.   COVENANTS OF THE COMPANY..............................................................      A-32

Section 9.1.  Conduct of Business Before the Closing Date...........................................      A-32
Section 9.2.  Consents and Approvals................................................................      A-34
Section 9.3.  Negotiations..........................................................................      A-34
Section 9.4.  Best Efforts..........................................................................      A-34
Section 9.5.  Notice of Breach......................................................................      A-35
Section 9.6.  ESOP Voting Procedures................................................................      A-35
Section 9.7.  MSOP Voting Procedures................................................................      A-35
Section 9.8.  Termination of the MSOP...............................................................      A-35
Section 9.9.  Small Business Corporation............................................................      A-35

ARTICLE X.    COVENANTS OF THE PARENT AND MERGER SUB................................................      A-35

Section 10.1. Actions Before Effective Date.........................................................      A-35
Section 10.2. Consents and Approvals................................................................      A-35
Section 10.3. Stock Exchange Listing................................................................      A-35
Section 10.4. Repayment of ESOP Advance; Termination of the ESOP....................................      A-36
Section 10.5. Benefits to Company Employees.........................................................      A-36

ARTICLE XI.   ADDITIONAL COVENANTS OF THE PARTIES...................................................      A-37

Section 11.1. Assistance in Consummation of the Merger..............................................      A-37

A-3 

S-4
91st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 91st
                                                        [Enlarge/Download Table]

                                                                                                        PAGE   
                                                                                                      ---------
                                                                                                               
Section 11.2.  Information Supplied..................................................................      A-37
Section 11.3.  Company Meeting.......................................................................      A-37
Section 11.4.  S-4 Registration Statement............................................................      A-37
Section 11.5.  Accounting Treatment..................................................................      A-37
Section 11.6.  Compliance with the Securities Act....................................................      A-38
Section 11.7.  Transfer Taxes........................................................................      A-38
Section 11.8.  Indemnification; Directors' and Officers' Insurance...................................      A-38
Section 11.9.  Access to Properties and Records; Confidentiality.....................................      A-39

ARTICLE XII.   MUTUAL CONDITIONS.....................................................................      A-40

Section 12.1.  Stockholder Approval..................................................................      A-40
Section 12.2.  NYSE Listing..........................................................................      A-40
Section 12.3.  Form S-4..............................................................................      A-40
Section 12.4.  HSR Act...............................................................................      A-40
Section 12.5.  Tax Opinion...........................................................................      A-40

ARTICLE XIII.  CONDITIONS PRECEDENT TO PERFORMANCE BY THE COMPANY....................................      A-40

Section 13.1.  Representations and Warranties of Parent and Merger Sub...............................      A-40
Section 13.2.  Performance of the Obligations of Parent and Merger Sub...............................      A-40
Section 13.3.  Consents and Approvals................................................................      A-41
Section 13.4.  No Violation of Orders................................................................      A-41
Section 13.5.  No Material Adverse Change............................................................      A-41
Section 13.6.  Opinion of Counsel....................................................................      A-41
Section 13.7.  Other Closing Documents...............................................................      A-41
Section 13.8.  Legal Matters.........................................................................      A-41

ARTICLE XIV.   CONDITIONS PRECEDENT TO PERFORMANCE BY PARENT AND MERGER SUB..........................      A-41

Section 14.1.  Representations and Warranties of the Company.........................................      A-41
Section 14.2.  Performance of the Obligations of the Company.........................................      A-41
Section 14.3.  Consents and Approvals................................................................      A-42
Section 14.4.  Company Payments......................................................................      A-42
Section 14.5.  No Violation of Orders................................................................      A-42
Section 14.6.  No Material Adverse Change............................................................      A-42
Section 14.7.  Opinion of Counsel....................................................................      A-42
Section 14.8.  Other Closing Documents...............................................................      A-42
Section 14.9.  Legal Matters.........................................................................      A-42
Section 14.10. Pooling of Interests Letter...........................................................      A-42
Section 14.11. Appraisal Rights......................................................................      A-42

ARTICLE XV.    TERMINATION...........................................................................      A-43

Section 15.1.  Conditions of Termination.............................................................      A-43
Section 15.2.  Effect of Termination.................................................................      A-43

ARTICLE XVI.   SURVIVAL..............................................................................      A-43

Section 16.1.  Survival of Representations and Warranties............................................      A-43

ARTICLE XVII.  MISCELLANEOUS.........................................................................      A-44

Section 17.1.  Successors and Assigns................................................................      A-44
Section 17.2.  Governing Law, Jurisdiction...........................................................      A-44
Section 17.3.  Expenses..............................................................................      A-44
Section 17.4.  Broker's and Finder's Fees............................................................      A-44

A-4 

S-4
92nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 92nd
                                                        [Enlarge/Download Table]

                                                                                                        PAGE   
                                                                                                      ---------
                                                                                                               
Section 17.5.  Severability..........................................................................      A-44
Section 17.6.  Notices...............................................................................      A-44
Section 17.7.  Amendments; Waivers...................................................................      A-45
Section 17.8.  Public Announcements..................................................................      A-45
Section 17.9.  Entire Agreement......................................................................      A-45
Section 17.10. Parties in Interest...................................................................      A-46
Section 17.11. Scheduled Disclosures.................................................................      A-46
Section 17.12. Section and Paragraph Headings........................................................      A-46
Section 17.13. Counterparts..........................................................................      A-46

A-5 

S-4
93rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 93rd
INDEX TO SCHEDULES

                                                                [Download Table]
                                                             
 5.2     Qualifications                                      
 5.3     Conflicts or Violations                             
 5.4     Consents, Waivers, Authorizations and Approvals     
 5.5     Share Ownership                                     
 5.6     Equity Investments                                  
 5.8     Material Changes or Events                          
 5.9     Tax Matter Exceptions                               
 5.10    Undisclosed Liabilities                             
 5.11    Owned Real Property                                 
 5.12    Leases                                              
 5.14    Intellectual Property and Intangible Assets         
 5.15    Licenses, Permits and Governmental Approvals        
 5.17    Litigation                                          
 5.18    Contracts                                           
5.20(a)  Employee Plans                                      
5.20(d)  Pension Plans                                       
5.20(g)  Post-Retirement Benefits                            
5.20(l)  Performance of Agreements                           
 5.22    Insurance                                           
 5.23    Transactions with Directors, Officers and Affiliates
 5.24    Receivables                                         
5.25(a)  Employment Agreements or Contracts                  
5.25(b)  Exceptions to Compliance with Employment Laws       
 5.26    Environmental Matters                               
 5.27    Products Liability                                  
10.5     Severance Policy                                    
13.3     Company Consents and Approvals                      
14.3     Consents and Approvals of Merger Sub                
14.4     Company Payments                                    

INDEX TO EXHIBITS 

                                                                [Download Table]
                                                      
A          Affiliate Covenant                         
B          Form of Opinion of Parent's General Counsel
C          Form of Opinion of Counsel to the Company  

A-6 

S-4
94th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 94th
AGREEMENT AND PLAN OF MERGER

   AGREEMENT AND PLAN OF MERGER (the "AGREEMENT"), dated as of August 7, 1998,
by and among Mueller Industries, Inc., a Delaware corporation ("PARENT"),       
Mueller Acquisition Corp., a Delaware corporation and a wholly owned subsidiary 
of Parent ("MERGER SUB"), and Halstead Industries, Inc., a Delaware corporation 
(the "COMPANY").                                                                

W I T N E S S E T H:

  WHEREAS, Parent and the Company desire to effect a business combination by
means of the merger of Merger Sub with and into the Company;                    

   WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company have
approved the merger of Merger Sub with and into the Company (the "MERGER"), upon
the terms and subject to the conditions set forth herein;                       

WHEREAS, for federal income tax purposes, it is intended that the Merger
shall qualify as a reorganization within the meaning of Section 368(a) of the   
Internal Revenue Code of 1986, as amended (the "CODE");                         

 WHEREAS, for accounting purposes, it is intended that the Merger shall be
accounted for as a "pooling of interests";                                      

   WHEREAS, Parent has afforded the Company, the ESOP (as defined herein), and
the representatives of the Company and the ESOP access to Parent's properties,  
books, contracts, commitments, files and records to the extent requested by such
Persons (as defined herein) for the purpose of permitting the Company, the ESOP 
and the financial advisor to the ESOP to evaluate the consideration to be       
received by the Company's stockholders, including the ESOP Participants (as     
defined herein).                                                                

WHEREAS, the Company has afforded and has agreed herein to continue to  
afford Parent, Merger Sub and their representatives access to the Company's     
properties, books, Contracts (as defined herein), commitments and files and     
records;                                                                        

NOW, THEREFORE, in consideration of the foregoing and the respective    
covenants and agreements hereinafter contained, the parties hereby agree as     
follows:                                                                        

ARTICLE I.
DEFINITIONS 

As used in this Agreement, the following terms shall have the following 
meanings:                                                                       

"AGREEMENT"--See Preamble hereto;                                       

"AFFILIATES"--See Section 11.6(a);                                      

  "BUSINESS DAY" shall mean a day other than a Saturday, Sunday or other day
on which banks in the States of New York, North Carolina or Tennessee are not   
required or authorized to close;                                                

"CERTIFICATE OF MERGER"--See Section 2.2;                               

"CERTIFICATES"--See Section 4.2(a);                                     

"CLOSING"--See Section 4.8;                                             

"CLOSING DATE"--See Section 4.8;                                        

"CODE"--See Recitals hereto;                                            

"COMMISSION"--See Section 6.8;                                          

A-7 

S-4
95th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 95th
"COMPANY"--See Preamble hereto;                                         

"COMPANY COMMON STOCK"--See Section 4.1;                                

"COMPANY MEETING"--See Section 11.3;                                    

"CONTRACTS" shall mean, collectively, the Leases, Purchase Orders, Sales
Orders and Other Contracts, including, without limitation, those described in   
Section 5.18 hereto;                                                            

"CONTROLLED GROUP"--See Section 5.20(a);                                

 "DECEMBER 31, 1997 BALANCE SHEET" shall mean the audited balance sheet of
the Company as of December 31, 1997 audited by Arthur Andersen LLP;             

"DGCL"--See Section 3.4;                                                

"DISSENTING SHARES"--See Section 4.1(e);                                

"DISSENTING STOCKHOLDER"--See Section 4.1(e);                           

"EFFECTIVE DATE"--See Section 2.2;                                      

"ENVIRONMENTAL CLAIM"--See Section 5.27(g);                             

"ENVIRONMENTAL LAWS" shall mean any federal, state, or local statute,   
regulation, ordinance, order, decree, or other requirement of law relating to   
protection of the environment or to the identification, transportation,         
handling, discharge, emission, treatment, storage, or disposal of any pollutant,
contaminant, hazardous or soiled waste, or any hazardous or toxic substance or  
material. Without limiting the generality of the foregoing, Environmental Laws  
shall include, without limitation, the Comprehensive Environmental Response,    
Compensation and Liability Act, 42 U.S.C. Section 9601 ET SEQ.; the Resource    
Conservation and Recovery Act, 42 U.S.C. Section 6901 ET SEQ.; the Federal Water
Pollution Control Act, 33 U.S.C. Section 1251 ET SEQ.; the Clean Air Act, 42    
U.S.C. Section 7401 ET SEQ.; the Toxic Substances Control Act, 15 U.S.C. Section
261 ET SEQ.; the Safe Drinking Water Act, 42 U.S.C. 43000(f) ET SEQ.; the       
Occupational Safety and Health Act, 29 U.S.C. Section 651 ET SEQ.; and the      
Hazardous Materials Transportation Act, 49 U.S.C. Section 1802 ET SEQ.; each as 
amended, together with the regulations promulgated thereunder, permits issued   
thereunder, and analogous state and local statutes, regulations and ordinances; 

"EQUIPMENT AND MACHINERY" shall mean all the equipment, machinery,      
furniture, fixtures and improvements, supplies and vehicles owned, leased or    
used by the Company;                                                            

  "ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended;                                                                        

   "ESOP" shall mean the Employee Stock Ownership Plan of Halstead Industries,
Inc., originally effective January 1, 1976 and as amended through and following 
the date of this Agreement;                                                     

"ESOP LENDER" shall mean First Union National Bank of North Carolina;   

 "ESOP LOAN AGREEMENTS" shall mean (i) the Loan Agreement dated as of June
14, 1990 and as amended by the First Amendment thereto, dated July 10, 1996, and
the Pledge Agreement, Guaranty Agreement and other ancillary documents related  
thereto and (ii) the Loan Agreement dated May 30, 1997, and the Pledge          
Agreement, Guaranty Agreement and other ancillary documents related thereto;    

  "ESOP LOANS" shall mean those outstanding loans to the ESOP Trust from the
ESOP Lender pursuant to the ESOP Loan Agreements;                               

    "ESOP PARTICIPANTS" shall mean those persons having an account balance under
the ESOP;                                                                       

  "ESOP TRUST" shall mean the trust established by the ESOP Trust Agreement;

"ESOP TRUST AGREEMENT" shall mean the Employee Stock Ownership Trust of 
Halstead Industries, Inc., dated December 30, 1994 and as amended through and   
following the date of this Agreement;                                           

A-8 

S-4
96th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 96th
"ESOP TRUSTEE" shall mean First Commercial Trust Company (Little Rock,  
Arkansas), the trustee of the ESOP Trust;                                       

"EXCESS SHARES"--See Section 4.4;                                       

"EXCHANGE ACT"--See Section 6.8;                                        

"EXCHANGE AGENT"--See Section 4.2(a);                                   

"EXCHANGE FUND"--See Section 4.2(a);                                    

"EXCHANGE RATIO"--See Section 4.1(b);                                   

"EXCLUDED SHARES"--See Section 4.1(a);                                  

"FINANCIAL STATEMENTS"--See Section 5.7;                                

"FIXED ASSET WORKPAPERS"--See Section 5.13;                             

"GAAP" shall mean generally accepted accounting principles in the United
States;                                                                         

   "GOVERNMENTAL ENTITY" shall mean any federal, state or foreign governmental
or public body, agency or authority;                                            

"HAZARDOUS SUBSTANCE"--See Section 5.26(d);                             

"HSR ACT"--See Section 6.5;                                             

"HSR TERMINATION DATE"--See Section 15.1(e);                            

"INTANGIBLE ASSETS" shall mean all intangible personal property rights, 
including, without limitation, all rights on the part of the Company to proceeds
of any insurance policies and all claims on the part of the Company for         
recoupment, reimbursement and coverage under any insurance policies and all     
goodwill of the Company, including, without limitation, those items listed in   
SCHEDULE 5.14 hereto;                                                           

   "INTELLECTUAL PROPERTY" shall mean all of the following owned by, issued to
or licensed to the Company: (i) all inventions (whether patentable or           
unpatentable and whether or not reduced to practice), all improvements thereto, 
and all patents, patent applications, and patent disclosures, together with all 
reissuances, continuations, continuations-in-part, revisions, extensions and    
reexaminations thereof; (ii) all trademarks, service marks, trade dress, logos, 
trade names, and corporate names, together with all translations, adaptations,  
derivations, and combinations thereof and including all goodwill associated     
therewith, and all applications, registrations and renewals in connection       
therewith; (iii) all copyrightable works (including, without limitation, all    
software developed by the Company), all copyrights, and all applications,       
registrations and renewals in connection therewith; (iv) all mask works and all 
applications, registrations and renewals in connection therewith; (v) all trade 
secrets and confidential business information (including ideas, research and    
development, know-how, formulas, compositions, manufacturing and production     
processes and techniques, technical data, designs, drawings, specifications,    
customer and supplier lists, pricing and cost information, and business and     
marketing plans and proposals); (vi) all computer software (including object    
code, source code, data and related documentation); (vii) all Internet Websites,
including domain name registrations and content and software included therein;  
(viii) all other proprietary rights; (ix) all rights to recover for past        
infringements of any of the foregoing; and (x) all copies and tangible          
embodiments thereof (in whatever form or medium); including, without limitation,
those items listed in SCHEDULE 5.14 hereto;                                     

"LEASED REAL PROPERTY"--See Section 5.12;                               

"LEASES"--See Section 5.12;                                             

"LICENSES AND PERMITS"--See Section 5.15;                               

A-9 

S-4
97th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 97th
    "Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien
(statutory or other), conditional sale agreement, claim, charge, limitation or  
restriction;                                                                    

    "LOAN SUSPENSE ACCOUNT" shall mean the "Loan Suspense Account" as defined in
the ESOP;                                                                       

"MERGER"--See Recitals hereto;                                          

"MERGER SUB"--See Preamble hereto;                                      

"MSOP" shall mean the Management Stock Ownership Plan of Halstead       
Industries, Inc., effective January 1, 1989 and as amended through and following
the date of this Agreement;                                                     

    "MSOP ADMINISTRATION COMMITTEE" shall mean the "Administration Committee" as
defined in the MSOP;                                                            

    "MSOP PARTICIPANTS" shall mean those persons having an account balance under
the MSOP;                                                                       

  "MSOP TRUST" shall mean the trust established by the MSOP Trust Agreement;

 "MSOP TRUST AGREEMENT" shall mean the Management Stock Ownership Trust of
Halstead Industries, Inc., originally effective January 1, 1989 and as amended  
through and following the date of this Agreement;                               

"MULTIEMPLOYER PLANS"--See Section 5.20(e);                             

"NLRB"--See Section 5.25(b);                                            

"NYSE"--See Section 4.1(b);                                             

"OCCURRENCE"--See Section 5.27(b);                                      

"OTHER CONTRACTS" shall mean all Equipment and Machinery leases, and all
indentures, loan agreements, security agreements, partnership or joint venture  
agreements, license agreements, maintenance contracts, service contracts,       
employment, commission and consulting agreements, suretyship contracts, letters 
of credit, reimbursement agreements, distribution agreements, contracts or      
commitments limiting or restraining the Company from engaging or competing in   
any lines of business or with any Person, documents granting the power of       
attorney with respect to the affairs of the Company, agreements not made in the 
ordinary course of business of the Company, options to purchase any assets or   
property rights of the Company, working capital maintenance or other form of    
guaranty agreements, and all other agreements to which the Company is a party,  
but excluding Leases, Purchase Orders, Sales Orders and Plans;                  

"OWNED REAL PROPERTY"--See Section 5.11;                                

"PARENT"--See Preamble hereto;                                          

"PARENT COMMON STOCK"--See Section 4.1(b);                              

   "PARENT SEC REPORTS" shall mean Parent's (i) Annual Report on Form 10-K for
the fiscal year ended December 27, 1997, (ii) Quarterly Reports on Form 10-Q for
the fiscal quarters ended March 28, 1998 and June 27, 1998, (iii) Proxy         
Statement, dated May 7, 1998, for the 1998 Annual Meeting of Stockholders and   
(iv) other Quarterly Reports on Form 10-Q and Current Reports on Form 8-K filed 
with the Commission after December 27, 1997 and prior to the Closing Date;      

"PARTIES" shall mean Parent, Merger Sub and the Company;                

"PENSION PLAN"--See Section 5.20(d);                                    

    "PERSON" shall mean any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or         
Governmental Entity;                                                            

A-10

S-4
98th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 98th
"PLANS"--See Section 5.20(a);                                           

"POST-RETIREMENT BENEFITS"--See Section 5.20(g);                        

"PRODUCT LIABILITY LAWSUITS"--See Section 5.27(a);                      

"PRODUCTS"--See Section 5.27(a);                                        

"PROSPECTUS/PROXY STATEMENT"--See Section 11.2;                         

   "PURCHASE ORDERS" shall mean all the Company's outstanding purchase orders,
contracts or other commitments to suppliers of goods and services for materials,
supplies or other items used in its businesses;                                 

"REGISTRATION STATEMENT EFFECTIVE DATE"--See Section 15.1(e);           

"RETROFITS"--See Section 5.27(a);                                       

"S-4 REGISTRATION STATEMENT"--See Section 11.2;                         

    "SALES ORDERS" shall mean all the Company's sales orders, contracts or other
commitments to purchasers of goods and services of its businesses;              

"SECURITIES ACT" shall mean the Securities Act of 1933, as amended;     

"SHARE CONSIDERATION"--See Section 4.2(a);                              

 "SUBSIDIARY" means, with respect to the Company, Parent or Merger Sub, as
the case may be, any entity, whether incorporated or unincorporated, of which at
least a majority of the securities or ownership interests having by their terms 
ordinary voting power to elect a majority of the board of directors or other    
persons performing similar functions is directly or indirectly owned or         
controlled by such party or by one or more of its respective Subsidiaries or by 
such party and any one or more of its respective Subsidiaries;                  

"SURVIVING CORPORATION"--See Section 2.1;                               

"TAX RETURN" shall mean any report, return, information return, filing, 
claim for refund or other information, including any schedules or attachments   
thereto, and any amendments to any of the foregoing required to be supplied to a
taxing authority in connection with Taxes;                                      

 "TAXES" shall mean all federal, state, local or foreign taxes, including,
without limitation, income, gross income, gross receipts, production, excise,   
employment, sales, use, transfer, ad valorem, profits, license, capital stock,  
franchise, severance, stamp, withholding, Social Security, employment,          
unemployment, disability, worker's compensation, payroll, utility, windfall     
profit, custom duties, personal property, real property, registration,          
alternative or add-on minimum, estimated and other taxes, governmental fees or  
like charges of any kind whatsoever, including any interest, penalties or       
additions thereto, whether disputed or not; and "TAX" shall mean any one of     
them;                                                                           

"WELFARE PLAN"--See Section 5.20(c).                                    

A-11

S-4
99th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 99th
ARTICLE II. 
THE MERGER

SECTION 2.1.  THE MERGER.   Upon the terms and subject to the conditions
hereof, on the Effective Date (as defined in Section 2.2), Merger Sub shall be  
merged with and into the Company and the separate existence of Merger Sub shall 
thereupon cease, and the Company, as the surviving corporation in the Merger    
(the "SURVIVING CORPORATION"), shall by virtue of the Merger continue its       
corporate existence under the laws of the State of Delaware.                    

SECTION 2.2.  Effective Date of the Merger.  The Merger shall become    
effective at the date and time (the "EFFECTIVE DATE") when a properly executed  
Certificate of Merger (the "CERTIFICATE OF MERGER") is duly filed with the      
Secretary of State of the State of Delaware. The Parties shall cause the        
Certificate of Merger to be executed and filed as aforesaid on the Closing Date 
upon the satisfaction or waiver of the conditions contained in Articles XII,    
XIII and XIV hereto.                                                            

ARTICLE III.
THE SURVIVING CORPORATION 

    SECTION 3.1  CERTIFICATE OF INCORPORATION.  The Certificate of Incorporation
of the Company shall be the Certificate of Incorporation of the Surviving       
Corporation after the Effective Date, and thereafter may be amended as provided 
therein or by law.                                                              

SECTION 3.2.  By-Laws.  The By-Laws of the Company as in effect on the  
Effective Date shall be the By-Laws of the Surviving Corporation, and thereafter
may be amended as provided therein or by law.                                   

SECTION 3.3.  Board of Directors; Officers.  The directors of Merger Sub
immediately prior to the Effective Date shall be the directors of the Surviving 
Corporation and the officers of Merger Sub immediately prior to the Effective   
Date shall be the officers of the Surviving Corporation, in each case until     
their respective successors are duly elected and qualified.                     

SECTION 3.4.  Effects of Merger.  The Merger shall have the effects set 
forth in Section 259 of the Delaware General Corporation Law (the "DGCL").      

ARTICLE IV. 
CONVERSION OF SHARES

SECTION 4.1.  Exchange Ratio.  On the Effective Date, by virtue of the  
Merger and without any action on the part of any holder of any common stock,    
$.10 par value, of the Company ("COMPANY COMMON STOCK"):                        

 (a) All shares of Company Common Stock issued and outstanding immediately
prior to the Effective Date which are held by the Company, and any shares of    
Company Common Stock issued and outstanding immediately prior to the Effective  
Date owned by Parent, Merger Sub or any other Subsidiary of Parent, shall cease 
to be outstanding, shall be canceled and retired without payment of any         
consideration therefor and shall cease to exist ("EXCLUDED SHARES").            

  (b) Subject to Sections 4.1(e) and 4.4, each share of Company Common Stock
issued and outstanding immediately prior to the Effective Date, other than      
Excluded Shares, shall be converted into that number of shares (the "EXCHANGE   
RATIO") of fully paid and nonassessable shares of the common stock, par value   
$.01 per share, of Parent ("PARENT COMMON STOCK") determined by dividing (A)    
$92,750,000 less the amount of expenses incurred by the Company for all services
rendered, and expenses advanced, in connection with the Merger by the Company's 
and the ESOP's and MSOP's accountants, attorneys and financial advisors prior to
the Closing Date by (B) the product of (i) the total number of shares of        

A-12

S-4
100th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 100th
Company Common Stock issued and outstanding immediately prior to the Effective  
Date, other than Excluded Shares, and (ii) the daily average per share closing  
sale price of one share of Parent Common Stock as reported on the New York Stock
Exchange, Inc. (the "NYSE") composite transactions reporting system (as reported
in the New York City edition of The Wall Street Journal or, if not reported     
thereby, another authoritative source) for each of the 30 trading days ending on
the trading day immediately prior to the Closing Date, rounded to the fourth    
decimal place.                                                                  

(c) In the event of any stock dividend, stock split, reclassification,  
recapitalization, combination or exchange of shares, or other similar           
transaction, with respect to, or rights issued in respect of, Parent Common     
Stock after the date hereof and prior to the Effective Date, the Exchange Ratio 
shall be adjusted accordingly so as to maintain the relative proportionate      
interests of the holders of Company Common Stock and the holders of Parent      
Common Stock.                                                                   

(d) Each share of capital stock of Merger Sub issued and outstanding    
immediately prior to the Effective Date shall be converted into and become one  
fully paid and nonassessable share of common stock, $.01 par value, of the      
Surviving Corporation.                                                          

  (e) Notwithstanding anything in this Agreement to the contrary, any issued
and outstanding shares of Company Common Stock held by a Person (a "DISSENTING  
STOCKHOLDER") who duly demands appraisal of his shares of Company Common Stock  
pursuant to the DGCL and complies with all the provisions of the DGCL concerning
the right of holders of Company Common Stock to demand appraisal of their shares
in connection with the Merger ("DISSENTING SHARES") shall not be converted as   
described in Section 4.1(b) but shall become the right to receive such cash     
consideration as may be determined to be due to such Dissenting Stockholder as  
provided in the DGCL. If, however, such Dissenting Stockholder withdraws his    
demand for appraisal or fails to perfect or otherwise loses his right of        
appraisal, in any case pursuant to the DGCL, his shares shall be deemed to be   
converted as of the Effective Date into the right to receive the Share          
Consideration without interest. The Company shall give Parent (i) prompt notice 
of any demands for appraisal of shares of Company Common Stock received by the  
Company and (ii) the opportunity to participate in and direct all negotiations  
and proceedings with respect to any such demands. The Company shall not, without
the prior written consent of Parent, make any payment with respect to, or       
settle, offer to settle or otherwise negotiate, any such demands.               

SECTION 4.2.  Exchange of Certificates                                  

  (a) Prior to the Closing, Parent shall select Continental Stock Transfer &
Trust Co. or such other Person or Persons reasonably satisfactory to the Company
to act as Exchange Agent for the Merger (the "EXCHANGE AGENT"). As soon as      
practicable after the Effective Date, Parent shall make available, and each     
holder of Company Common Stock (other than holders of Excluded Shares) will be  
entitled to receive, upon surrender to the Exchange Agent of one or more        
certificates ("CERTIFICATES") representing such stock for cancellation, (x) (i) 
certificates representing the number of shares of Parent Common Stock into which
such shares are converted in the Merger, and (ii) cash in consideration of      
fractional shares as provided in Section 4.4 (the consideration in clauses (i)  
and (ii) collectively, the "SHARE CONSIDERATION"), and (y) after the Effective  
Date, if applicable, any dividends or other distributions with respect to Parent
Common Stock to be issued or paid pursuant to Section 4.3. The consideration in 
clauses (x) and (y) is collectively referred to hereinafter as the "EXCHANGE    
FUND."                                                                          

    (b) Promptly after the Effective Date, the Exchange Agent shall mail to each
holder of record of Company Common Stock (other than holders of Excluded Shares)
(i) a letter of transmittal specifying that delivery shall be effected, and risk
of loss and title to the Certificates shall pass, only upon delivery of the     
Certificates (or affidavits of loss in lieu thereof) to the Exchange Agent, such
letter of transmittal to be in such form and have such other provisions as      
Parent and the Company may reasonably agree prior to the Effective Date, and    
(ii) instructions for use in effecting the surrender of the Certificates in     
exchange for (A) certificates representing shares of Parent Common Stock as     
provided in Section 4.1(b) hereof, (B) any unpaid dividends and other           
distributions as provided in Section 4.3 hereof and (C) cash in lieu of         
fractional                                                                      

A-13

S-4
101st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 101st
shares as provided in Section 4.4 hereof. Upon surrender of a Certificate for   
cancellation to the Exchange Agent, together with such letter of transmittal    
duly executed the holder of such Certificate shall be entitled to receive in    
exchange therefor (x) a certificate representing that number of whole shares of 
Parent Common Stock that such holder is entitled to receive pursuant to this    
Article IV, (y) a check in the amount (after giving effect to any required tax  
withholdings) of (A) any cash in lieu of fractional shares as provided in       
Section 4.4 hereof plus (B) any unpaid dividends or other distributions that    
such holder has the right to receive pursuant to Section 4.3 hereof and the     
Certificate so surrendered shall forthwith be canceled. No interest will be paid
or accrued on any amount payable upon due surrender of the Certificates.        

    (c) In the event that any certificates for any shares of Parent Common Stock
are to be issued in a name other than that in which the Certificates            
representing shares of Company Common Stock surrendered in exchange therefor are
registered, it shall be a condition of such exchange that the certificate or    
certificates so surrendered shall be properly endorsed or be otherwise in proper
form for transfer and that the Person requesting such exchange shall pay to the 
Exchange Agent any transfer or other Taxes required by reason of the issuance of
certificates for such shares of Parent Common Stock in a name other than that of
the registered holder of the Certificate surrendered, or shall establish to the 
satisfaction of the Exchange Agent that such Tax has been paid or is not        
applicable.                                                                     

  (d) Any holder of shares of Company Common Stock who has not exchanged his
shares for Parent Common Stock in accordance with Section 4.2(b) within six     
months after the Effective Time shall have no further claim upon the Exchange   
Agent and shall thereafter look only to Parent for payment in respect of his    
shares of Company Common Stock. Any portion of the Exchange Fund (including the 
proceeds of any investments thereof and any Parent Common Stock) that remains   
unclaimed by the stockholders of the Company for six months after the Effective 
Date shall be paid to Parent. Until so surrendered, Certificates representing   
shares of Company Common Stock shall represent solely the right to receive the  
Share Consideration and after the Effective Date, if applicable, any dividends  
or other distributions with respect to Parent Common Stock to be issued or paid 
pursuant to Section 4.3, in each case, without any interest thereon. If any     
Certificates representing shares of Company Common Stock entitled to payment    
pursuant to Section 4.1(b) shall not have been surrendered for such payment     
prior to such date on which any payment in respect thereof would otherwise      
escheat to or become the property of any governmental agency or other           
Governmental Entity, such shares of Company Common Stock shall, to the extent   
permitted by applicable law, be deemed to be canceled and no money or other     
property will be due to the holder thereof. Notwithstanding the foregoing,      
neither the Exchange Agent nor any Party hereto shall be liable to a holder of  
shares of Company Common Stock for any amount properly delivered to a public    
official pursuant to any applicable escheat laws.                               

SECTION 4.3.  DIVIDENDS AND OTHER DISTRIBUTIONS.  All shares of Parent  
Common Stock to be issued pursuant to the Merger shall be deemed issued and     
outstanding on the Effective Date and whenever a dividend or other distribution 
is declared by Parent in respect of the Parent Common Stock, the record date for
which is on or after the Effective Date, that declaration shall include         
dividends or other distributions in respect of all shares issuable pursuant to  
this Agreement. No dividends or other distributions that are declared or made on
Parent Common Stock will be paid to Persons entitled to receive certificates    
representing Parent Common Stock pursuant to this Agreement until such Persons  
surrender their Certificates representing Company Common Stock. Subject to the  
effect of applicable laws, following surrender of any such Certificate, there   
shall be issued and/or paid to the holder of the certificates representing whole
shares of Parent Common Stock issued in exchange therefor, without interest, (A)
at the time of such surrender, the dividends or other distributions with a      
record date after the Effective Date and a payment date on or prior to such time
of surrender payable with respect to such whole shares of Parent Common Stock   
and not paid and (B) at the appropriate payment date, the dividends or other    
distributions payable with respect to such whole shares of Parent Common Stock  
with a record date after the Effective Date but with a payment date subsequent  
to surrender.                                                                   

A-14

S-4
102nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 102nd
  SECTION 4.4.  NO FRACTIONAL SHARES.  No certificates or scrip representing
less than one share of Parent Common Stock shall be issued upon the surrender   
for exchange of Certificates representing Company Common Stock pursuant to      
Section 4.1(b). In lieu of any such fractional share, each holder of Company    
Common Stock who would otherwise have been entitled to a fraction of a share of 
Parent Common Stock upon surrender of Certificates for exchange pursuant to     
Section 4.1(b) shall be paid upon such surrender cash (without interest) in an  
amount equal to such holder's proportionate interest in the net proceeds from   
the sale or sales in the open market by the Exchange Agent, on behalf of all    
such holders, of the aggregate fractional Parent Common Stock issued pursuant to
this Section 4.4. As soon as practicable following the Effective Date, the      
Exchange Agent shall determine the excess of (i) the number of full shares of   
Parent Common Stock delivered to the Exchange Agent by Parent over (ii) the     
aggregate number of full shares of Parent Common Stock to be distributed to     
holders of Company Common Stock (such excess being herein called the "EXCESS    
SHARES"), and the Exchange Agent, as agent for the former holders of Company    
Common Stock, shall sell the Excess Shares at the prevailing prices on the NYSE.
The sale of the Excess Shares by the Exchange Agent shall be executed on the    
NYSE through one or more member firms of the NYSE and shall be executed in round
lots to the extent practicable. The Exchange Agent shall deduct from the        
proceeds of the sale of the Excess Shares all commissions, transfer taxes and   
other out-of-pocket transaction costs, including the expenses and compensation  
of the Exchange Agent, incurred in connection with such sale of Excess Shares.  
Until the net proceeds of such sale have been distributed to the former         
stockholders of the Company, the Exchange Agent will hold such proceeds in trust
for such former stockholders. As soon as practicable after the determination of 
the amount of cash to be paid to former stockholders of the Company in lieu of  
any fractional interests, the Exchange Agent shall make available in accordance 
with this Agreement such amounts to such former stockholders.                   

SECTION 4.5.  LOST, STOLEN OR DESTROYED CERTIFICATES.  In the event any 
Certificate shall have been lost, stolen or destroyed, upon the making of an    
affidavit of that fact by the Person claiming such Certificate to be lost,      
stolen or destroyed and, if required by Parent, the posting by such Person of a 
bond in customary amount as indemnity against any claim that may be made against
it with respect to such Certificate, the Exchange Agent will issue in exchange  
for such lost, stolen or destroyed Certificate the shares of Parent Common Stock
and any cash payable and any unpaid dividends or other distributions in respect 
thereof pursuant to Section 4.3 upon the due surrender of and deliverable in    
respect of the Shares represented by such Certificate pursuant to this          
Agreement.                                                                      

   SECTION 4.6.  AFFILIATES.  Notwithstanding anything herein to the contrary,
Certificates surrendered for exchange by any Affiliate (as determined pursuant  
to Section 11.6) of the Company shall not be exchanged until Parent has received
a written agreement from such Person substantially in the form of EXHIBIT A.    

SECTION 4.7.  CLOSING OF THE COMPANY'S TRANSFER BOOKS.  At the Effective
Date, the stock transfer books of the Company shall be closed and no transfer of
shares of Company Common Stock shall be made thereafter. In the event that,     
after the Effective Date, Certificates are presented to the Surviving           
Corporation, they shall be canceled and exchanged for Parent Common Stock and/or
cash as provided in this Article IV.                                            

    SECTION 4.8.  CLOSING.  The closing of the transactions contemplated by this
Agreement (the "CLOSING") shall take place (i) at the offices of Willkie Farr & 
Gallagher, 787 Seventh Avenue, New York, New York 10019, at 9:00 A.M. local time
on the day which is the second Business Day after the day on which the last of  
the conditions set forth in Articles XII, XIII and XIV is fulfilled or waived or
(ii) at such other time and place as Parent and the Company shall agree in      
writing (the "CLOSING DATE").                                                   

A-15

S-4
103rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 103rd
ARTICLE V.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY 

The Company hereby represents and warrants to Parent and Merger Sub as  
follows:                                                                        

SECTION 5.1.  CORPORATE ORGANIZATION.  The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of 
Delaware, and has all requisite corporate power and authority to own or lease   
its properties and assets and to conduct its business as now conducted. Copies  
of the Certificate of Incorporation and By-Laws of the Company, with all        
amendments thereto to the date hereof, have been furnished to Parent or its     
representatives, and such copies are accurate and complete.                     

 SECTION 5.2.  QUALIFICATION TO DO BUSINESS; AUTHORIZATION AND VALIDITY OF
AGREEMENT.  The Company is duly qualified to do business as a foreign           
corporation and is in good standing in every jurisdiction in which the character
of the properties and assets owned or leased by it or the nature of the business
conducted by it makes such qualification necessary. SCHEDULE 5.2 sets forth all 
jurisdictions in which the Company is qualified to do business. The Company has 
all requisite corporate power and authority to enter into this Agreement and to 
carry out its obligations hereunder. The execution and delivery by the Company  
of this Agreement and the performance of the Company's obligations hereunder    
have been duly authorized by all necessary corporate action by the Board of     
Directors of the Company, and (except for the approval of the holders of the    
Company Common Stock as contemplated by Section 12.1) no other corporate        
proceedings on the part of the Company are necessary to authorize such          
execution, delivery and performance. This Agreement has been duly executed by   
the Company and constitutes the Company's valid and binding obligation,         
enforceable against the Company in accordance with its terms.                   

SECTION 5.3.  NO CONFLICT OR VIOLATION.  Except as set forth on SCHEDULE
5.3, and assuming the consents, approvals, authorizations or permits and filings
or notifications referred to in Section 5.4 are duly and timely obtained or made
and the approval of the Merger and this Agreement by the holders of Company     
Common Stock has been obtained, the execution, delivery and performance by the  
Company of this Agreement do not, and the consummation by the Company of the    
Merger and the other transactions contemplated hereby will not (i) violate or   
conflict with any provision of the Certificate of Incorporation or By-Laws of   
the Company, (ii) violate any provision of law, or any order, judgment or decree
of any court or other governmental or regulatory authority, (iii) violate or    
result in a breach of or constitute (with due notice or lapse of time or both) a
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which the Company is a party
or by which it is bound or to which any of its properties or assets is subject, 
(iv) result in the creation or imposition of any Lien upon any of the assets,   
properties or rights of the Company, or (v) result in the cancellation,         
modification, revocation or suspension of any of the Licenses and Permits, other
than, in the case of (iii), (iv) and (v) above, any such conflicts, violations, 
defaults, rights or Liens that, individually or in the aggregate, would not have
a material adverse effect on the Company or its business as now conducted,      
materially impair the ability of the Company to perform its obligations         
thereunder or have a material adverse effect on the ability of the Company to   
consummate the transactions contemplated hereby.                                

 SECTION 5.4.  CONSENTS AND APPROVALS.  SCHEDULE 5.4 sets forth a true and
complete list of each consent, waiver, authorization or approval of any         
Governmental Entity, or of any other Person, and each declaration to or filing  
or registration with any such Governmental Entity, that is required in          
connection with the execution and delivery of this Agreement by the Company or  
the performance by the Company of its obligations hereunder, except where the   
failure to obtain any such consent, waiver, authorization or approval or to make
such declaration of filing would not have a material adverse effect on the      
Company or its business as now conducted or have a material adverse effect on   
the ability of the Company to consummate the transactions contemplated hereby.  

    SECTION 5.5.  CAPITAL STOCK AND RELATED MATTERS.  As of the date hereof, the
authorized capital stock of the Company consists of 12,000 shares of Company    
Common Stock, of which 10,970 shares are issued                                 

A-16

S-4
104th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 104th
(7,461 shares of Company Common Stock are held as treasury stock and 3,509      
shares of Company Common Stock are outstanding). SCHEDULE 5.5 sets forth the    
names of the beneficial and record owners of the Company Common Stock and the   
number of shares held by each such owner. The Company Common Stock has been duly
authorized and validly issued and is fully paid and nonassessable. Except as set
forth above or on SCHEDULE 5.5, no shares of Company Common Stock are           
outstanding; the Company does not have outstanding any securities convertible   
into or exchangeable for any shares of capital stock, any rights to subscribe   
for or to purchase or any options for the purchase of, or any agreements        
providing for the issuance (contingent or otherwise) of, or any calls,          
commitments or claims of any other character relating to the issuance of, any   
capital stock, or any stock or securities convertible into or exchangeable for  
any capital stock; and the Company is not subject to any obligation (contingent 
or otherwise) to repurchase or otherwise acquire or retire, or to register under
the Securities Act, any shares of capital stock. The Company does not have      
outstanding any bonds, debentures, notes or other obligations the holders of    
which have the right to vote (or convertible into or exercisable for securities 
having the right to vote) with the stockholders of the Company on any matter.   

SECTION 5.6.  SUBSIDIARIES AND EQUITY INVESTMENTS.  The Company has no  
Subsidiaries. Except as set forth on SCHEDULE 5.6, the Company does not directly
or indirectly own any interest in any other corporation, partnership, joint     
venture or other business association or entity.                                

    SECTION 5.7.  FINANCIAL STATEMENTS.  The Company has heretofore furnished to
Parent (a) copies of the audited balance sheets of the Company as of December   
31, 1996 and 1997 audited by Arthur Andersen LLP, together with the related     
audited statements of operations and cash flows for the fiscal years then ended 
and the notes thereto, accompanied by the reports thereon of such public        
accountants, and (b) copies of the balance sheet of the Company as of June 26,  
1998, together with the related unaudited statements of operations and cash     
flows for the period then ended (all the financial statements referred to in    
clauses (a) and (b) above being hereinafter collectively referred to as the     
"FINANCIAL STATEMENTS"). The Financial Statements, including the notes thereto, 
(i) were prepared in accordance with GAAP applied on a consistent basis         
throughout the periods covered thereby, (ii) present fairly the financial       
position, results of operations and cash flows of the Company as of such dates  
and for the periods then ended (subject, in the case of the unaudited interim   
Financial Statements, to typical accrual practices consistent with past practice
and to normal year-end audit adjustments consistent with prior periods), (iii)  
are complete, correct and in accordance with the books of account and records of
the Company, (iv) can be legitimately reconciled with the financial statements  
and the financial records maintained and the accounting methods applied by the  
Company for federal income tax purposes and (v) reflect accurately in all       
material respects all costs and expenses of the Company.                        

SECTION 5.8.  ABSENCE OF CERTAIN CHANGES OR EVENTS.                     

   (a) Except as set forth on SCHEDULE 5.8, since December 31, 1997, there has
not been:                                                                       

      (i) any material adverse change in the business of the Company, or any
 event that has had a material adverse effect on the foregoing, except for
any material adverse effect resulting from general economic conditions  
including, but not limited to, reductions in product margins;           

    (ii) any material loss, damage, destruction or other casualty to the
assets or properties of the Company;                                    

      (iii) any change in any method of accounting or accounting practice of
the Company; or                                                         

(iv) any loss of the employment, services or benefits of any key
employee of the Company.                                                

    (b) Since December 31, 1997, the Company has operated in the ordinary course
of its businesses consistent with past practice and, except as set forth on     
SCHEDULE 5.8 hereto, has not:                                                   

    (i) incurred any material obligation or liability (whether absolute,
   accrued, contingent or otherwise) except in the ordinary course of business
consistent with past practice;                                          

A-17

S-4
105th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 105th
  (ii) failed to discharge or satisfy any Lien or pay or satisfy any
obligation or liability (whether absolute, accrued, contingent or       
otherwise), other than liabilities being contested in good faith and for
    which adequate reserves have been provided and Liens arising in the ordinary
   course of business that do not, individually or in the aggregate, interfere
 with the use, operation, enjoyment or marketability of any of its assets,
properties or rights;                                                   

    (iii) mortgaged, pledged or subjected to any Lien any of its assets,
 properties or rights, except for mechanics' Liens and Liens for Taxes not
yet due and payable and Liens arising in the ordinary course of business
that do not, individually or in the aggregate, interfere with the use,  
 operation, enjoyment or marketability of any of its assets, properties or
rights;                                                                 

   (iv) sold or transferred any of its assets or canceled any debts or
claims or waived any rights, except in the ordinary course of business  
consistent with past practice;                                          

    (v) disposed of any patents, trademarks or copyrights or any patent,
trademark or copyright applications;                                    

(vi) defaulted on any material obligation;                      

      (vii) entered into any transaction material to its business, except in
the ordinary course of business consistent with past practice;          

(viii) written down the value of any inventory or written off as
uncollectible any of its accounts receivable or any portion thereof not 
reflected in the December 31, 1997 Balance Sheet;                       

(ix) granted any increase in the compensation or benefits of its
  employees other than increases in accordance with past practice or entered
   into any employment or severance agreement or arrangement with any of them;

      (x) made any capital expenditure in excess of $25,000, or additions to
property, plant and equipment used in its operations other than ordinary
repairs and maintenance;                                                

(xi) laid off any of its employees;                             

       (xii) incurred any obligation or liability for the payment of severance
benefits;                                                               

     (xiii) declared, paid, or set aside for payment any dividend or other
   distribution in respect of shares of its capital stock or other securities,
 or redeemed, purchased or otherwise acquired, directly or indirectly, any
shares of its capital stock or other securities, or agreed to do so; or 

        (xiv) entered into any agreement or made any commitment to do any of the
foregoing.                                                              

 SECTION 5.9.  TAX MATTERS.  Except as disclosed on SCHEDULE 5.9., (i) the
Company has filed when due all Tax Returns required by applicable law to be     
filed and the Company has paid all Taxes required to be paid in respect of the  
periods covered by such Tax Returns; (ii) the information contained in such Tax 
Returns is true, complete and accurate; (iii) Taxes of the Company for periods  
ending on or before the Closing Date (whether or not shown on any Tax Return),  
if required to have been paid, have been paid (except for Taxes which are being 
contested in good faith); (iv) there is no action, suit, proceeding,            
investigation, audit or claim now pending against, or with respect to, the      
Company in respect of any Tax or assessment, nor, to the knowledge of the       
Company, is there any claim for additional Tax or assessment asserted by any Tax
authority; (v) any liability of the Company for Taxes that are not yet due and  
payable, or which are being contested in good faith, have been provided for in  
the financial statements of the Company in accordance with GAAP; (vi) to the    
knowledge of the Company, since January 1, 199 , no claim has been made by any  
Tax authority in a jurisdiction where the Company does not currently file a Tax 
Return that either it is or may be subject to Tax by such jurisdiction, nor to  
the knowledge of the Company, is any such assertion threatened; (vii) there is  
no outstanding request for any extension of time within which to pay any Taxes  
or file any Tax Returns; (viii) there has been no waiver or extension of any    
applicable statute of limitations for                                           

A-18

S-4
106th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 106th
the assessment or collection of any Taxes of the Company; (ix) none of the      
assets, properties or rights of the Company are "tax-exempt use property" within
the meaning of Section 168(h) of the Code; (x) none of the assets, properties or
rights of the Company include any lease made pursuant to former Section         
168(f)(8) of the Internal Revenue Code of 1954; (xi) there is no Lien affecting 
any of the assets, properties or rights of the Company that arose in connection 
with any failure or alleged failure to pay any Tax; (xii) the Company has not   
filed any agreement or consent under Section 341(f) of the Code; (xiii) the     
Company is not a party to any agreement, whether written or unwritten, providing
for the payment of Taxes, payment for Tax losses, entitlements to refunds or    
similar Tax matters; (xiv) no ruling with respect to Taxes (other than a request
for determination of the status of a qualified pension plan) has been requested 
by or on behalf of the Company; (xv) the Company has not been a United States   
real property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii) of the  
Code; and (xvi) the Company has withheld and paid all material Taxes required to
be withheld in connection with any amounts paid or owing to any employee,       
creditor, independent contractor or other third party.                          

  SECTION 5.10.  ABSENCE OF UNDISCLOSED LIABILITIES.  Except as set forth on
SCHEDULE 5.10, to its knowledge, the Company has no indebtedness or liability,  
absolute or contingent, which is not shown or provided for on the December 31,  
1997 Balance Sheet other than liabilities as shall have been incurred or accrued
in the ordinary course of business since December 31, 1997. Except as shown in  
the December 31, 1997 Balance Sheet or on SCHEDULE 5.10, the Company is not     
directly or indirectly liable upon or with respect to (by discount, repurchase  
agreements or otherwise), or obliged in any other way to provide funds in       
respect of, or to guarantee or assume, any debt, obligation or dividend of any  
Person, except endorsements in the ordinary course of business in connection    
with the deposit, in banks or other financial institutions, of items for        
collection.                                                                     

SECTION 5.11.  OWNED REAL PROPERTY.                                     

    (a) SCHEDULE 5.11 sets forth a complete and accurate description of all real
property owned by the Company (the "OWNED REAL PROPERTY"), including the        
recorded metes and bounds or other recorded description of each land parcel.    

(b) The Company has good and marketable title in fee simple to the Owned
Real Property and the Owned Real Property is not subject to any Liens (other    
than the Lien of current property Taxes and assessments not in default); and    
none of such real properties is subject to any easements, rights of way,        
licenses, grants, building or use restrictions, exceptions, reservations,       
limitations or other impediments that materially and adversely affect the value 
thereof or that materially interfere with or impair the present and continued   
use thereof in the usual and normal conduct of the Company's businesses. Except 
as set forth on SCHEDULE 5.11, none of the Owned Real Property is subject to any
lease, license or other agreement granting to any Person or entity any right to 
the use, occupancy or enjoyment of such property or any portion thereof.        

  (c) All improvements on the Owned Real Property and the operations therein
conducted conform to all applicable health, fire, environmental, safety, zoning 
and building laws, ordinances and administrative regulations, Permits and other 
regulations (including, without limitation, the Americans with Disabilities     
Act), except for possible nonconforming uses or violations that do not and will 
not materially interfere with the present use, operation or maintenance thereof 
by the Company as now used, operated or maintained or access thereto, and that  
do not and will not materially affect the value thereof, and the Company has not
received any notice to the contrary. To the knowledge of the Company, all       
buildings, structures, improvements and fixtures owned, leased or used by the   
Company conform to all applicable codes and rules adopted by national, state and
local associations and boards of insurance underwriters and the Company has not 
received any notice to the contrary.                                            

   (d) The buildings, driveways and all other structures and improvements upon
the Owned Real Property are all within the boundary lines of such property or   
have the benefit of valid, perpetual and non-                                   

A-19

S-4
107th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 107th
terminable easements and there are no encroachments thereon that would          
materially affect the use thereof. To the knowledge of the Company, there are no
outstanding requirements or recommendations by any insurance company that has   
issued a policy covering the Owned Real Property, or by any board of fire       
underwriters or other body exercising similar functions, requiring or           
recommending any repairs or work to be done on any such property.               

(e) The Company has not received any notice from any utility company or 
municipality of any fact or condition which could result in the discontinuation 
of presently available or otherwise necessary sewer, water, electric, gas,      
telephone or other utilities or services for any of the Owned Real Property.    

   (f) There are no actions, suits, proceedings or governmental investigations
pending or, to the knowledge of the Company, threatened against the Owned Real  
Property. The Company does not have any knowledge of, and the Company has not   
received any notice of, any pending or contemplated (i) rezoning or condemnation
proceeding affecting the Owned Real Property; (ii) special assessment against   
the Owned Real Property; or (iii) litigation against the Company with respect to
the Owned Real Property, the use thereof, or agreements affecting the same.     

    (g) To the knowledge of the Company, each parcel of real property comprising
any part of the Owned Real Property, including without limitation all buildings 
and improvements thereon, and the present use, operation or condition thereof:  
(i) is assessed as one or more separate tax lots and no part of such property is
part of a tax lot which includes other property which is not a part of the Owned
Real Property; (ii) is not located in an area designated as a flood zone; and   
(iii) is not subject to any purchase option, right of first refusal or first    
offer or other similar right.                                                   

    (h) All brokerage commissions and other compensation and fees payable by the
Company by reason of the Company's acquisition of the Owned Real Property have  
been paid in full.                                                              

 (i) Except for defects and deferred maintenance items which do not have a
material adverse effect on the use of the Owned Real Estate for the purposes for
which they are currently being used in connection with the business of the      
Company, (x) the buildings, structures, improvements and fixtures at the Owned  
Real Properties are all in good operating condition and repair and are fully    
usable for their intended purposes in connection with the business of the       
Company (y) the plumbing, electrical, heating, air conditioning, elevator,      
ventilating and all other mechanical or structural systems in such buildings or 
improvements located at the Owned Real Property are in good working order and   
condition, and the roof, basement and foundation walls of such buildings and    
improvements are in good condition and free of leaks and other defects and (z)  
there are no physical defects or deferred maintenance items at the Owned Real   
Property that interfere with or impede the Company's use of the Owned Real      
Property in the ordinary course of its business.                                

 (j) To the Company's knowledge, each parcel of the Owned Real Property is
occupied and used by the Company pursuant to and in conformity with a validly   
issued final certificate of occupancy which currently remains in effect. Except 
as set forth on SCHEDULE 5.11, there is currently no construction or development
activity at or affecting the Owned Real Property and, except as set forth on    
SCHEDULE 5.11, there has been no such activity during 1998.                     

(k) Except as set forth on SCHEDULE 5.11, each parcel of the Owned Real 
Property is used and occupied by the Company solely in the pursuit of its       
business and no portion thereof is leased or licensed to, or used or occupied   
by, any Person other than the Company.                                          

    (l) True and complete copies of all existing policies of title insurance for
all parcels of the Owned Real Property for which such policies exist, together  
with all surveys referred to in such title insurance policies or otherwise in   
the Company's possession, have been delivered to Parent and are identified on   
SCHEDULE 5.11 hereto.                                                           

A-20

S-4
108th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 108th
(m) To the knowledge of the Company, access from public streets and     
provision for parking and loading/unloading at each parcel of the Owned Real    
Property conforms to all applicable legal requirements and is adequate for the  
conduct of the business of the Company in the normal course. To the knowledge of
the Company, there is no pending or threatened governmental action to modify    
such access from public streets into the Owned Real Property.                   

SECTION 5.12.  LEASES.                                                  

(a) SCHEDULE 5.12 sets forth a list of all leases, licenses, permits,   
subleases and occupancy agreements, together with all amendments and supplements
thereto, with respect to all properties in which the Company has a leasehold    
interest, whether as lessor or lessee (each, a "LEASE" and collectively, the    
"LEASES"; the property covered by Leases under which the Company is a lessee is 
referred to herein as the "LEASED REAL PROPERTY"). The Company has furnished    
true, correct and complete copies of all Leases to Parent or its                
representatives. No option has been exercised under any of such Leases, except  
options whose exercise has been evidenced by a written document, a true,        
complete and accurate copy of which has been delivered to Parent or its         
representatives with the corresponding Lease. Except as set forth on SCHEDULE   
5.12, the transactions contemplated by this Agreement do not require the consent
or approval of the other party to the Leases, nor will such transactions violate
any Lease or cause the Company to be in default under any Lease.                

    (b) Each Lease is in full force and effect and no Lease has been modified or
amended except pursuant to an amendment referred to on SCHEDULE 5.12. Neither   
the Company nor any other party to a Lease has given to the other party written 
notice of or has made a claim with respect to any breach or default. The Company
is not in default under any Lease and, to the knowledge of the Company, no other
party to a Lease is in default.                                                 

  (c) Except as set forth on SCHEDULE 5.12, none of the Leased Real Property
is subject to any sublease, license or other agreement granting to any Person or
entity any right to the use, occupancy or enjoyment of such property or any     
portion thereof. The Company has not received any notice from any utility       
company or municipality of any fact or condition which could result in the      
discontinuation of presently available or otherwise necessary sewer, water,     
electric, gas, telephone or other utilities or services for any of the Leased   
Real Property. The Leased Real Property, all improvements thereon and thereto,  
and the operations therein conducted conform to all applicable health, fire,    
insurance, environmental, safety, zoning and building laws, ordinances and      
administrative regulations, Permits and other regulations (including, without   
limitation, the Americans with Disabilities Act) except for possible            
nonconforming uses or violations that do not and will not materially interfere  
with the present use, operation or maintenance thereof by the Company as now    
used, operated or maintained or access thereto, and that do not and will not    
materially affect the value thereof, and the Company has not received any notice
to the contrary.                                                                

 (d) Except for defects which do not have a material adverse effect on the
use of the Leased Real Property for the purposes for which it is currently being
used in connection with the business of the Company, (x) the plumbing,          
electrical, heating, air conditioning, elevator, ventilating and all other      
mechanical or structural systems for which the Company is responsible under the 
Leases in the buildings or improvements are in good working order and condition,
and the roof, basement and foundation walls of such buildings and improvements  
for which the Company is responsible under the Leases are in good condition and 
free of leaks and other defects, (y) all such mechanical and structural systems 
and such roofs, basement and foundation walls for which others are responsible  
under said Leases are in good working order and condition and free of leaks and 
other defects and (z) there are no other physical defects or deferred           
maintenance items at any Leased Real Property that interfere with or impede the 
Company's use of such properties in the ordinary course of its business or that 
the Company is obligated under any of the Leases to repair or otherwise correct.

(e) There are no guaranties (from the Company or from other Persons) in 
favor of the lessors of any of the Leased Real Property.                        

A-21

S-4
109th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 109th
  (f) The Company has not sold, assigned, transferred, pledged or encumbered
all or any part of its leasehold interests in the Leased Real Property.         

(g) To the knowledge of the Company, access from public streets and     
provision for parking and loading/unloading at any Leased Real Property conforms
to all applicable legal requirements and is adequate for the conduct of the     
business of the Company in the normal course.                                   

  (h) Except as set forth on SCHEDULE 5.12, to the knowledge of the Company,
there is no pending or threatened: (i) condemnation of any part of the Leased   
Real Property by any governmental authority; (ii) special assessment against any
part of the Leased Real Property; or (iii) litigation against the Company or any
lessor for breach of any restrictive covenant affecting any part of the Leased  
Real Property.                                                                  

SECTION 5.13.  ASSETS OF THE COMPANY.                                   

(a) The assets, properties and rights of the Company (i) acquired as of 
December 31, 1997 are set forth in the book depreciation workpapers as of       
December 31, 1997 and (ii) acquired since December 31, 1997 and on or prior to  
June 26, 1998 are listed on the capital expense rollforward ((i) and (ii) being 
referred to collectively as the "FIXED ASSET WORKPAPERS"), furnished to Parent  
constitute all of the assets and rights which are used in the operation of the  
businesses of the Company immediately prior to Closing and which are necessary  
or required for the conduct of such businesses as currently conducted. There are
no material assets, properties, rights or interests of any kind or nature that  
the Company has been using, holding or operating in its businesses prior to the 
Closing that will not be used, held or owned by the Company immediately         
following the Closing.                                                          

   (b) The Company has good and marketable title, free and clear of any Liens,
to, or a valid leasehold interest under enforceable leases in, all of the       
assets, properties and rights of the Company reflected in the Company's         
Financial Statements, except (i) Liens for current Taxes not yet delinquent or  
which are being contested in good faith by appropriate proceedings; (ii) such   
secured indebtedness as is disclosed in the Company's Financial Statements;     
(iii) Liens and imperfections of title which do not individually or in the      
aggregate materially detract from the value, or impair the use, of the          
properties as currently used; (iv) inchoate mechanics and materialmen's Liens   
for construction in progress; (v) Liens of workmen, repairmen, warehousemen and 
carriers arising in the ordinary course of business which are not, either       
individual or in the aggregate, material in amount; and (vi) in the case of     
leased property, Liens arising as a result of actions or inactions of the lessor
or owner of such properties unrelated to any default by the Company.            

(c) A complete and correct list and brief description of each item of   
Equipment and Machinery having an original purchase cost or aggregate lease cost
exceeding $25,000 is included in the Fixed Asset Workpapers, other than fixed   
assets acquired subsequent to June 26, 1998. The Equipment and Machinery is in  
good operating condition and repair (normal wear and tear excepted).            

   SECTION 5.14.  INTELLECTUAL PROPERTY; INTANGIBLE ASSETS.  (a) SCHEDULE 5.14
sets forth a complete and correct listing of all applications, registrations and
patents included in the Intellectual Property. The Company owns, or has a valid 
license or otherwise has the right to use, in all jurisdictions in which it     
carries on business, all Intellectual Property without violating or conflicting 
with the rights of others. Except as set forth on SCHEDULE 5.14, all            
Intellectual Property is owned by the Company, free and clear of all Liens,     
except (i) such secured indebtedness as is disclosed in the Company's Financial 
Statements and (ii) in the case of licensed Intellectual Property, Liens arising
as a result of actions or inactions of the licensee or owner of such            
Intellectual Properties unrelated to any default by the Company. There has not  
been communicated to the Company the threat of any claim that the holder of such
Intellectual Property is in violation or infringement of any service mark,      
patent, trademark, trade name, trademark or trade name registration, copyright  
or copyright registration of any other Person. To the Company's knowledge, the  
consummation of the transactions contemplated by this Agreement will not        
prohibit the Company from                                                       

A-22

S-4
110th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 110th
using any of the Intellectual Property in a manner substantially similar to its 
current use of such Intellectual Property in its businesses.                    

(b) SCHEDULE 5.14 sets forth a true and complete list of all of the     
Intangible Assets and a summary description of each such item. There is no      
restriction affecting the use of any of the Intangible Assets, and no license   
has been granted with respect thereto. To the knowledge of the Company, each of 
the Intangible Assets is valid and in good standing, is not currently being     
challenged, is not involved in any pending or threatened administrative or      
judicial proceeding, and does not conflict with any rights of any other Person. 
The Company's rights in and to the Intangible Assets are sufficient and adequate
in all material respects to permit the conduct of the businesses of the Company 
as now conducted and none of the products or operations of the businesses of the
Company involves any infringement of any proprietary right of any other Person. 

 SECTION 5.15.  LICENSES AND PERMITS.  SCHEDULE 5.15 sets forth a true and
complete list of all licenses, permits, franchises, authorizations and approvals
issued or granted to the Company by any Governmental Entity (the "LICENSES AND  
PERMITS"), and all pending applications therefor. To the knowledge of the       
Company, each License and Permit has been duly obtained, is valid and in full   
force and effect, and is not subject to any pending or threatened administrative
or judicial proceeding to revoke, cancel, suspend or declare such License and   
Permit invalid in any respect. The Licenses and Permits are sufficient and      
adequate in all material respects to permit the continued lawful conduct of the 
businesses of the Company in the manner now conducted and, to the knowledge of  
the Company, none of the operations of the Company are being conducted in a     
manner that violates any of the terms or conditions under which any License and 
Permit was granted. To the knowledge of the Company, the consummation of the    
transactions contemplated by this Agreement will not result in the termination  
or suspension of any License or Permit.                                         

    SECTION 5.16.  COMPLIANCE WITH LAW.  The operations of the businesses of the
Company have been conducted in accordance with all applicable laws, regulations,
orders and other requirements of all courts and other governmental or regulatory
authorities having jurisdiction over the Company and its assets, properties and 
operations, except for possible violations which have not had and will not have 
a material adverse effect on the Company or its business as now conducted. The  
Company has not received notice of any violation of any such law, regulation,   
order or other legal requirement, and is not in default with respect to any     
order, writ, judgment, award, injunction or decree of any national, state or    
local court or governmental or regulatory authority or arbitrator, domestic or  
foreign, applicable to the Company or any of its assets, properties or          
operations except for possible defaults which have not had and will not have a  
material adverse effect on the Company or its business as now conducted. This   
Section 5.16 does not apply to laws, regulations, order and other requirements  
relating to employee plans (which are covered by Section 5.20 hereof), labor    
matters (which are covered by Section 5.25 hereof) and environmental matters    
(which are covered by Section 5.26 hereof).                                     

  SECTION 5.17  LITIGATION.  Except as set forth on SCHEDULE 5.17, there are
no claims, actions, suits, proceedings, labor disputes or investigations pending
or, to the knowledge of the Company, threatened, before any national, state or  
local court or governmental or regulatory authority, domestic or foreign, or    
before any arbitrator of any nature, brought by or against the Company or, to   
the knowledge of the Company, any of its officers, directors, employees, agents 
or Affiliates involving, affecting or relating to the Company, the assets,      
properties or rights of the Company or the transactions contemplated by this    
Agreement, nor is any basis known to the Company for any such action, suit,     
proceeding or investigation. SCHEDULE 5.17 sets forth a list and a summary      
description of all such pending actions, suits, proceedings, disputes or        
investigations. Neither the Company nor its assets, properties or rights are    
subject to any order, writ, judgment, award, injunction or decree of any        
national, state or local court or governmental or regulatory authority or       
arbitrator, domestic or foreign, that affects or might affect the businesses,   
assets, properties or rights of the Company, or that would or might materially  
interfere with the transactions contemplated by this Agreement.                 

A-23

S-4
111th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 111th
SECTION 5.18  CONTRACTS.                                                

   (a) Except for employment contracts deemed to have been created by conduct,
oral statements, written rules or policies or other publications, none of which 
were published or stated intending to create an employment contract nor, to the 
knowledge of the Company, has been asserted as the basis for the claimed        
existence of an employment contract, SCHEDULE 5.18 sets forth a complete and    
correct list and, if such contract is not in writing, a summary description of  
all Contracts (as in effect on the date hereof). To the extent that the items   
listed in SCHEDULES 5.4, 5.8, 5.10, 5.11, 5.12, 5.14 and 5.15 may be considered 
Contracts, such items need not be included on the list set forth on SCHEDULE    
5.18.                                                                           

  (b) Each Contract is valid, binding and enforceable against the Company in
accordance with its terms and is in full force and effect on the date hereof.   
The Company is not in default or delinquent in performance, status or any other 
respect (claimed or actual) in connection with, any Contract, and no event has  
occurred which, with due notice or lapse of time or both, would constitute such 
a default, except in each such case, possible defaults as to which the Company  
has no knowledge and which would not have a material adverse effect on the      
Company or its business as now conducted. To the knowledge of the Company, no   
other party to any Contract is in default in respect thereof, and no event has  
occurred which, with due notice or lapse of time or both, would constitute such 
a default, except for possible defaults which would not have a material adverse 
effect on the Company or its business as now conducted. The Company has         
delivered to Parent or its representatives true and complete originals or copies
of all the Contracts.                                                           

SECTION 5.19.  INVENTORIES.  The inventories of the Company (including  
tooling, spare parts and supplies) reflected on the December 31, 1997 Balance   
Sheet, or acquired by the Company after the date thereof and prior to the       
Closing Date, are carried at not more than the lower of cost or market, and the 
Company has no reason to believe that such inventories include any obsolete     
inventory or surplus inventory for which adequate reserves have not been        
established on the Financial Statements. As used herein, "obsolete inventory" is
inventory which, at December 31, 1997, was not usable or salable in the lawful  
and ordinary course of business of the Company as now conducted because of legal
restrictions, failure to meet specifications, loss of market, damage, physical  
deterioration or for any other cause, in each case net of reserves provided     
therefor on the December 31, 1997 Balance Sheet; and "surplus inventory" is     
inventory that, at December 31, 1997, exceeded known or anticipated requirements
in the reasonable business judgment of the Company.                             

SECTION 5.20.  EMPLOYEE PLANS.                                          

 (a) SCHEDULE 5.20(A) sets forth all pension, savings, retirement, health,
insurance, severance and other employee benefit or fringe benefit plans         
maintained or sponsored by the Company and any trade or business (whether or not
incorporated) under common control with the Company within the meaning of       
Sections 414(b), (c), (m) or (o) of the Code (the "Controlled Group"), or with  
respect to which the Company has any responsibility or liability (collectively  
referred to herein as the "PLANS"). Notwithstanding the foregoing, "Plans" shall
not include employment related contracts deemed to have been created by conduct,
oral statements, written rules or policies or other publications, none of which 
were published or stated intending to create an employment related contract nor,
to the knowledge of the Company, has been asserted as the basis for the claimed 
existence of an employment related contract. With respect to the Plans, the     
Company and any member of the Controlled Group have delivered to Parent or its  
representatives current copies of: (i) the Plan documents, and, where           
applicable, related trust agreements, and any related agreements which are in   
writing; (ii) summary Plan descriptions; (iii) the most recent Internal Revenue 
Service determination letter relating to each Plan for which a letter of        
determination was obtained; (iv) to the extent required to be filed, the most   
recent Annual Report (Form 5500 Series and accompanying schedules of each Plan  
and applicable financial statements) as filed with the Internal Revenue Service;
and (v) audited financial statements, if any.                                   

   (b) In all material respects, each Plan conforms to, and its administration
is in substantial compliance with, all applicable requirements of law,          
including, without limitation, ERISA and the Code and all of the                

A-24

S-4
112th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 112th
Plans are in full force and effect as written, and all premiums, contributions  
and other payments required to be made by the Company or any member of the      
Controlled Group under the terms of any Plan have been made or accrued.         

(c) Each Plan maintained by the Company or any member of the Controlled 
Group that is intended to be qualified under Section 401(a) of the Code and each
trust maintained pursuant thereto has been determined to be exempt from Federal 
taxation by the Internal Revenue Service and has a favorable determination      
letter from the Internal Revenue Service with respect to each such Plan, and, to
the knowledge of the Company, nothing has occurred since the date of such letter
which could adversely impact such qualification and tax exemption. No Plan      
maintained by the Company or any member of the Controlled Group that is an      
employee welfare benefit plan as defined in Section 3(1) of ERISA (the "WELFARE 
PLAN") is funded through a voluntary employees' beneficiary association as      
defined in Section 501(c)(9) of the Code.                                       

(d) Except as set forth in SCHEDULE 5.20(D) neither the Company nor any 
member of the Controlled Group has maintained, contributed to or incurred any   
liability with respect to any Plan subject to Title IV of ERISA or Section 412  
of the Code (a "Pension Plan") within the six-year period ending on the date of 
this Agreement. There is no "amount of unfunded benefit liabilities," as defined
in Section 4001(a)(18) of ERISA, in any of the Pension Plans. The "benefit      
liabilities", as defined in Section 4001(a)(16) of ERISA, of each of the Pension
Plans do not exceed the fair market value of the assets of such Pension Plan.   
Neither the Company nor any member of the Controlled Group has incurred any     
material liability under Section 4062 of ERISA to the Pension Benefit Guaranty  
Corporation or to a trustee appointed under Section 4042 of ERISA which remains 
unsatisfied. Neither the Company nor any member of the Controlled Group has     
engaged in any transaction described in Section 4069 of ERISA.                  

(e) There are no multiemployer plans (as defined in Subsection 3(37) of 
ERISA) ("MULTIEMPLOYER PLANS") to which the Company or any other member of the  
Controlled Group is, or has been within the six-year period ending on the date  
of this Agreement, required to make a contribution or other payment. Neither the
Company nor any member of the Controlled Group has incurred any withdrawal      
liability on account of a complete or partial withdrawal from any Multiemployer 
Plan, nor has any of them incurred any liability due to the termination or      
reorganization of such a Multiemployer Plan, in either case which remains       
unsatisfied.                                                                    

   (f) There has been no non-exempt prohibited transaction (within the meaning
of Section 4975 of the Code or Part 4 of Subtitle B of Title I of ERISA) with   
respect to any Plan or penalty incurred with respect to any Plan under Section  
502(i) of ERISA.                                                                

  (g) Except as set forth on SCHEDULE 5.20(G), the Company does not maintain
any Plan providing post-retirement benefits other than Plans qualified under    
Section 401(a) of the Code ("POST-RETIREMENT BENEFITS"). The Company is not     
liable for Post-Retirement Benefits under any plan not maintained by the        
Company. The Company has complied in all material respects with the requirements
of Section 4980B of the Code and Sections 601 et seq. of ERISA relating to      
continuation coverage for group health plans.                                   

  (h) There has been no material violation of ERISA or the Code with respect
to the filing of applicable reports, documents and notices regarding the Plans  
with the Secretary of Labor or the Secretary of the Treasury or the furnishing  
of required reports, documents or notices to the participants or beneficiaries  
of the Plans.                                                                   

(i) There are no pending actions, claims or lawsuits which have been    
asserted, instituted or, to the knowledge of the Company, threatened, against   
the Plans, the assets of any of the trusts under such Plans or the Plan sponsor 
or the Plan administrator, or, to the knowledge of the Company, against any     
fiduciary of the Plans with respect to the operation of such Plans (other than  
routine benefit claims).                                                        

   (j) The Plans have been maintained, in all material respects, in accordance
with their terms and with all provisions of ERISA and the Code (including rules 
and regulations thereunder) and other applicable federal and state laws and     
regulations.                                                                    

A-25

S-4
113th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 113th
   (k) There has been no mass layoff or plant closing as defined by the Worker
Adjustment and Retraining Notification Act or any similar state or local "plant 
closing" law with respect to the employees of the Company which resulted in any 
liability of the Company which remains unsatisfied.                             

 (l) To the knowledge of the Company, the execution of, and performance of
the transactions contemplated in, this Agreement will not, either alone or upon 
the occurrence of events occurring subsequent to the date hereof and up to and  
including the Closing Date, result in (i) except as set forth on SCHEDULE       
5.20(L), any payment (whether of severance pay or otherwise), acceleration,     
forgiveness of indebtedness, vesting, distribution, increase in benefits or     
obligation to fund benefits with respect to any employee or (ii) the Company's  
failing to be able to deduct for Federal income tax purposes any items on       
account of Section 280G of the Code.                                            

SECTION 5.21.  SMALL BUSINESS CORPORATION.  Immediately following the   
termination of the MSOP in accordance with Section 9.8, to the knowledge of the 
Company, the Company shall qualify as a "small business corporation" within the 
meaning of Section 1361(b) of the Code, but without regard to paragraph (1)(C)  
thereof.                                                                        

 SECTION 5.22.  INSURANCE.  SCHEDULE 5.22 lists the fidelity bonds and the
aggregate coverage amount and type and generally applicable deductibles of all  
policies of title, liability, fire, casualty, business interruption, workers'   
compensation and other forms of insurance insuring the Company and its assets,  
properties and operations. The Company has furnished a true, complete and       
accurate copy of all such policies and bonds to Parent or its representatives.  
Except as set forth on SCHEDULE 5.22, all such policies and bonds are in full   
force and effect. The Company shall maintain the coverage under all policies and
bonds listed on SCHEDULE 5.22 in full force and effect through the Closing Date.
To the knowledge of the Company, the Company is not in default under any        
provisions of any such policy of insurance nor has the Company received notice  
of cancellation of any such insurance. There is no claim by the Company pending 
under any of such policies or bonds as to which coverage has been questioned,   
denied or disputed by the underwriters of such policies or bonds. The insurance 
maintained by the Company in connection with its business is adequate in        
accordance with industry standards and the requirements of any applicable       
Leases.                                                                         

    SECTION 5.23.  TRANSACTIONS WITH DIRECTORS, OFFICERS AND AFFILIATES.  Except
as set forth on SCHEDULE 5.23, the Company is not a party to any agreement or   
arrangement with any of the directors, officers or stockholders of the Company  
or any Affiliate or family member of any of the foregoing under which they: (i) 
lease any real or personal property (either to or from such Person), (ii)       
license technology (either to or from such Person), (iii) are obligated to      
purchase any tangible or intangible asset from or sell such asset to such       
Person, (iv) purchase products or services from such Person, (v) pay or receive 
commissions, rebates or other payments or (vi) provide or receive any other     
material benefit. The Company does not employ as an employee or engage as a     
consultant any family member of any of the directors, officers or stockholders  
of the Company. Except as set forth on SCHEDULE 5.23, to the knowledge of the   
Company, during the past three years none of the directors, officers or         
stockholders of the Company, or any family member of any of such Persons, has   
been a director or officer of, or has had any direct or indirect interest in,   
any Person which during such period has been a supplier, customer or sales agent
of the Company or has competed with or been engaged in any business of the kind 
being conducted by the Company. No Affiliate of the Company owns or has any     
rights in or to any of the assets, properties or rights used by the Company in  
the ordinary course of its businesses.                                          

    SECTION 5.24.  RECEIVABLES.  Except as set forth on SCHEDULE 5.24, all notes
and accounts receivable payable to or for the benefit of the Company reflected  
on the December 31, 1997 Balance Sheet, or acquired by the Company after the    
date thereof and before the Closing Date, have been collected or are (or will   
be) current and collectible in amounts not less than the aggregate amount       
thereof (net of reserves established in accordance with prior practice) carried 
(or to be carried) on the books of the Company, and are not subject to any      
counterclaims or set-offs.                                                      

A-26

S-4
114th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 114th
SECTION 5.25.  LABOR MATTERS.                                           

   (a) Except as set forth on SCHEDULE 5.25(A): (i) the Company is not a party
to any outstanding employment agreements or contracts with officers or employees
of the Company that are not terminable at will, or that provide for the payment 
of any bonus or commission; (ii) the Company is not a party to any agreement,   
policy or practice that requires it to pay termination or severance pay to      
salaried, non-exempt or hourly employees of the Company (other than as required 
by law); (iii) the Company is not a party to any collective bargaining agreement
or other labor union contract applicable to employees of the Company nor does   
the Company know of any activities and proceedings of any labor union to        
organize any such employees; and (iv) the Company is not a party to any         
consulting agreements.                                                          

(b) Except as set forth on SCHEDULE 5.25(B): (i) to the knowledge of the
Company, the Company is in compliance with all applicable laws relating to      
employment and employment practices, wages, hours, and terms and conditions of  
employment; (ii) to the knowledge of the Company, there is no unfair labor      
practice charge or complaint pending before the National Labor Relations Board  
("NLRB") relating to the Company; (iii) to the knowledge of the Company, there  
is no labor strike, material slowdown or material work stoppage or lockout      
pending or threatened against or affecting the Company, and the Company has not 
experienced any strike, material slowdown or material work stoppage, lockout or 
other collective labor action by or with respect to employees of the Company    
since 1995; (iv) to the knowledge of the Company, there is no representation    
claim or petition pending before the NLRB or any similar foreign agency and no  
question concerning representation exists relating to the employees of the      
Company; (v) to the knowledge of the Company, there are no charges with respect 
to or relating to the Company pending before the Equal Employment Opportunity   
Commission or any state, local or foreign agency responsible for the prevention 
of unlawful employment practices; and (vi) the Company has received no notice   
from any national, state, local or foreign agency responsible for the           
enforcement of labor or employment laws of an intention to conduct an           
investigation of the Company and no such investigation is in progress.          

  (c) The Company has heretofore delivered to Parent or its representative a
list dated as of August 5, 1998 containing the name, position, starting         
employment date, current annual salary and bonus and commissions in 1997 of each
current employee of the Company.                                                

    SECTION 5.26.  ENVIRONMENTAL MATTERS.  Except as set forth on SCHEDULE 5.26:

    (a) The operations of the Company are, and have been, in compliance with all
applicable Environmental Laws and permits issued thereunder.                    

    (b) The Company does not reasonably expect that material expenditures are or
will be necessary for the Company to maintain full compliance with Environmental
Laws currently in effect or proposed or anticipated to be adopted.              

 (c) The Company has obtained, or has made timely and complete application
for or for renewal of, all permits required under Environmental Laws for the    
operation of the Company's business, except where the failure to do so would not
have a material adverse effect on the Company or its business as now conducted. 

   (d) No substance identified or regulated pursuant to any Environmental Law,
including, without limitation, any hazardous substance, hazardous waste, toxic  
substance, pollutant, contaminant or petroleum or any fraction thereof          
("HAZARDOUS SUBSTANCE"), has come to be located on, at, beneath, or near any    
real property currently or, to the knowledge of the Company, formerly owned,    
operated, leased, or used by the Company, except where the presence of such     
Hazardous Substance would not have a material adverse effect on the Company or  
its business as now conducted.                                                  

   (e) To the knowledge of the Company, no real property currently or formerly
owned, operated, leased, or used by the Company contains or formerly contained  
any underground or aboveground storage                                          

A-27

S-4
115th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 115th
tank, surface impoundment, landfill, land disposal area, polychlorinated        
biphenyls, asbestos or urea formaldehyde insulation.                            

(f) The Company has not disposed of, transported, or arranged for the   
disposal or transportation of any Hazardous Substance at or to any facility at  
which, to the knowledge of the Company, there has been a release or threatened  
release of a Hazardous Substance.                                               

   (g) The Company has not received notice of, nor is there pending or, to the
knowledge of the Company, threatened against the Company, any claim,            
investigation, order, decree or lawsuit pursuant to any Environmental Law       
arising out of the operation of the Company's business ("ENVIRONMENTAL CLAIM"). 

 (h) To the knowledge of the Company, no other party with whom the Company
has contracted for environmental matters is or has been the subject of any      
claim, action or proceeding arising out of the violation or alleged violation of
any Environmental Law or the disposal, arrangement for the disposal, release or 
threatened release of any Hazardous Substance generated by the Company.         

    (i) The Company has not, by agreement or otherwise, assumed any liability of
or duty to indemnify any other party for any claim, damage or loss arising out  
of the use, treatment, storage or disposal of any Hazardous Substance.          

(j) To the knowledge of the Company, no Hazardous Substance has migrated
from any real property currently or formerly owned, operated, leased or used by 
the Company to any other real property, nor, to the knowledge of the Company,   
has any Hazardous Substance migrated from any other real property onto any real 
property owned, operated, leased or used by the Company.                        

   (k) In connection with the operation of its businesses, the Company has not
committed any act or omission which could reasonably be expected to give rise to
liability under any Environmental Law, except for any such act or omission which
would not have a material adverse effect on the Company or its business as now  
conducted.                                                                      

(l) There is no condition in existence on, at, beneath or near any real 
property owned, leased or used by the Company which could give rise to any claim
against, liability of, or loss by, Parent pursuant to Environmental Laws, except
for conditions which would not have a material adverse effect on the Company or 
its business as now conducted.                                                  

 (m) The Company has provided Parent or its representatives with copies of
all (i) permits held by the Company pursuant to Environmental Law, (ii) notices,
demands, claims or actions against the Company pursuant to Environmental Law,   
and (iii) reports, data or other documentation of which it has knowledge related
to all investigations, audits or assessments of environmental conditions at     
property owned, leased or used by the Company and the Company's compliance with 
Environmental Law.                                                              

SECTION 5.27.  PRODUCTS LIABILITY.  (a) Except as set forth on SCHEDULE 
5.27, to the knowledge of the Company, (i) there is no notice, demand, claim,   
action, suit, inquiry, hearing, proceeding, notice of violation or investigation
of a civil, criminal or administrative nature before any court or governmental  
or other regulatory or administrative agency, commission or authority, domestic 
or foreign, against or involving any products manufactured, produced,           
distributed or sold by or on behalf of the Company (including any parts or      
components) (collectively, "PRODUCTS"), or class of claims or lawsuits involving
the same or similar Product which is pending or threatened, resulting from an   
alleged defect in design, manufacture, materials or workmanship of any Product, 
or any alleged failure to warn, or from any breach of implied warranties or     
representations (collectively, "PRODUCT LIABILITY LAWSUITS"); (ii) there has not
been any OCCURRENCE (as hereinafter defined); and (iii) there has not been,     
within the past 12 months, nor is there under consideration or investigation by 
the Company, any Product rework or retrofit (collectively, "RETROFITS")         
conducted by or on behalf of the Company.                                       

   (b) For purposes of this Section 5.27, the term "OCCURRENCE" shall mean any
accident, happening or event which takes place at any time which is caused or   
allegedly caused by any alleged hazard or alleged                               

A-28

S-4
116th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 116th
defect in manufacture, design, materials or workmanship including, without      
limitation, any alleged failure to warn or any breach of express or implied     
warranties or representations with respect to, or any such accident, happening  
or event otherwise involving any Product that can reasonably be expected to     
result in a claim or loss.                                                      

   SECTION 5.28.  COMPANY ACTION.  The Board of Directors of the Company (at a
meeting duly called and held) has by the requisite vote of all directors present
(a) determined that the Merger is advisable and fair and in the best interests  
of the Company and its stockholders, (b) approved the Merger in accordance with 
the provisions of Section 251 of the DGCL, (c) recommended the approval of this 
Agreement and the Merger by the holders of the Company Common Stock and directed
that the Merger be submitted for consideration by the Company's stockholders at 
the Company Meeting, (d) taken all necessary steps to render Section 203 of the 
DGCL inapplicable to the Merger and the transactions contemplated by this       
Agreement and the Voting Agreement, and (e) adopted a resolution having the     
effect of causing the Company not to be subject, to the extent permitted by     
applicable law, to any state takeover law that may purport to be applicable to  
the Merger and the transactions contemplated by this Agreement.                 

    SECTION 5.29.  ACCOUNTING AND TAX MATTERS.  To the knowledge of the Company,
neither the Company nor any of its Affiliates has taken or agreed to take any   
action, nor does the Company have any knowledge of any fact or circumstance,    
that would prevent Parent from accounting for the business combination to be    
effected by the Merger as a "pooling-of-interests" or prevent the Merger and the
other transactions contemplated by this Agreement from qualifying as a          
"reorganization" within the meaning of Section 368(a) of the Code. The foregoing
is subject to the qualification that the applicability of "pooling of interests"
accounting may depend upon actions taken by other Persons whose actions may not 
be known by the Company.                                                        

SECTION 5.30.  ACCURACY OF INFORMATION.  None of the representations,   
warranties or statements of the Company contained in this Agreement, or in the  
exhibits hereto, contains any untrue statement of a material fact.              

ARTICLE VI. 

REPRESENTATIONS AND WARRANTIES OF PARENT. 

Parent hereby represents and warrants to the Company as follows:        

SECTION 6.1.  CORPORATE ORGANIZATION.  Parent is a corporation duly     
organized, validly existing and in good standing under the laws of the State of 
Delaware, and has all requisite corporate power and authority to own its        
properties and assets and to conduct its businesses as now conducted. Copies of 
the Certificate of Incorporation and By-Laws of the Parent, with all amendments 
thereto, have been furnished to the Company or its representatives, and such    
copies are accurate and complete. Each Parent Subsidiary is duly organized,     
validly existing and in good standing under the laws of its respective          
jurisdiction of incorporation except where the failure to be so organized,      
existing and in good standing would not have a material adverse effect on the   
business of Parent and its Subsidiaries considered as one enterprise.           

   SECTION 6.2.  QUALIFICATION TO DO BUSINESS.  Parent is duly qualified to do
business as a foreign corporation and is in good standing in every jurisdiction 
in which the character of the properties owned or leased by it or the nature of 
the business conducted by it makes such qualification necessary. Each Parent    
Subsidiary is duly qualified to do business as a foreign corporation and is in  
good standing in every jurisdiction in which the character of the properties    
owned or leased by it or the nature of the business conducted by it makes such  
qualification necessary except where the failure to be so qualified and in good 
standing would not have a material adverse effect on the business of Parent and 
its Subsidiaries considered as one enterprise.                                  

SECTION 6.3.  AUTHORIZATION AND VALIDITY OF AGREEMENT.  Parent has all  
requisite corporate power and authority to enter into this Agreement and to     
carry out its obligations hereunder. The execution and                          

A-29

S-4
117th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 117th
delivery by Parent of this Agreement and the performance of Parent's obligations
hereunder have been duly authorized by all necessary corporate action by the    
Board of Directors of Parent, and no other corporate proceedings on the part of 
Parent are necessary to authorize such execution, delivery and performance. This
Agreement has been duly executed by Parent and constitutes Parent's valid and   
binding obligation, enforceable against Parent in accordance with its terms.    

SECTION 6.4.  NO CONFLICT OR VIOLATION.  The execution, delivery and    
performance by Parent of this Agreement does not and will not (i) violate or    
conflict with any provision of the Certificate of Incorporation or By-Laws of   
Parent, (ii) violate any provision of law, or any order, judgment or decree of  
any court or other governmental or regulatory authority, (iii) violate or result
in a breach of or constitute (with due notice or lapse of time or both) a       
default under any contract, lease, loan agreement, mortgage, security agreement,
trust indenture or other agreement or instrument to which Parent is a party or  
by which it is bound or to which any of its properties or assets is subject,    
(iv) result in the creation or imposition of any Lien upon any of the assets,   
properties or rights of Parent, or (v) result in the cancellation, modification,
revocation or suspension of any license or permit material to the business of   
the Parent, other than, in case of (iii), (iv) and (v) above, any such          
conflicts, violations, defaults, rights or Liens that, individually or in the   
aggregate, would not have a material adverse effect on the business of Parent   
and its Subsidiaries considered as one enterprise, materially impair the ability
of Parent to perform its obligations thereunder or prevent the consummation of  
any of the transactions contemplated hereby.                                    

SECTION 6.5.  CONSENTS AND APPROVALS.  The execution, delivery and      
performance of this Agreement by Parent does not require the consent or approval
of, or filing with, any Governmental Entity or any other Person, except for (i) 
the filing of a pre-merger notification report under the Hart-Scott-Rodino      
Antitrust Improvement Act of 1976, as amended (the "HSR ACT") and (ii) such     
consents, approvals and filings, of which the failure to obtain or make would   
not, individually or in the aggregate, have a material adverse effect on the    
business of Parent and its Subsidiaries considered as one enterprise or have a  
material adverse effect on the ability of Parent to consummate the transactions 
contemplated hereby.                                                            

  SECTION 6.6.  CAPITAL STOCK AND RELATED MATTERS.  As of June 27, 1998: (i)
Parent's authorized capital stock consisted of 100,000,000 shares of Parent     
Common Stock and 5,000,000 shares of preferred stock, par value $1.00 per share,
of which 35,613,294 shares of Parent Common Stock were outstanding; (ii) except 
pursuant to the employee benefit plans of Parent or as set forth in the Parent  
SEC Reports, neither Parent nor any of its Subsidiaries has outstanding any     
stock or other securities convertible into or exchangeable for any shares of    
capital stock, any rights to subscribe for or to purchase or any options for the
purchase of, or any agreements providing for the issuance (contingent or        
otherwise) of, or any calls, commitments or claims of any other character       
relating to the issuance of, any capital stock, or any stock or securities      
convertible into or exchangeable for any capital stock; and (iii) except        
pursuant to the employee benefit plans of Parent or as set forth in the Parent  
SEC Reports, neither Parent nor any of its Subsidiaries is subject to any       
obligation (contingent or otherwise) to repurchase or otherwise acquire or      
retire any shares of capital stock.                                             

    SECTION 6.7.  AUTHORIZATION AND VALIDITY OF PARENT COMMON STOCK.  The Parent
Common Stock, when issued in accordance with the terms of this Agreement, will  
be validly issued, fully paid and nonassessable and not subject to any          
preemptive right.                                                               

   SECTION 6.8.  PARENT SEC REPORTS.  As of their respective dates, the Parent
SEC Reports complied in all material respects with the requirements of the      
Securities Exchange Act of 1934 (the "EXCHANGE ACT") and the rules and          
regulations of the Securities and Exchange Commission (the "COMMISSION")        
thereunder applicable to such Parent SEC Reports. As of their respective dates, 
the Parent SEC Reports did not contain any untrue statement of a material fact  
or omit to state a material fact required to be stated therein or necessary to  
make the statements therein, in light of the circumstances under which they were
made, not misleading. The audited consolidated financial statements and         
unaudited interim financial statements of Parent included in the Parent SEC     
Reports comply as to form in all material respects with applicable              

A-30

S-4
118th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 118th
accounting requirements and with the published rules and regulations of the     
Commission with respect thereto. The financial statements included in the Parent
SEC Reports: have been prepared in accordance with GAAP applied on a consistent 
basis (except as may be indicated therein or in the notes thereto); and present 
fairly, in all material respects, the financial position of Parent and its      
Subsidiaries as at the dates thereof and the results of their operations and    
cash flow for the periods then ended subject, in the case of the unaudited      
interim financial statements, to normal year-end audit adjustments and any other
adjustments described therein and the fact that certain information and notes   
have been condensed or omitted in accordance with the Exchange Act and the rules
promulgated thereunder.                                                         

   SECTION 6.9.  ABSENCE OF CERTAIN CHANGES OR EVENTS.  There has not been any
material adverse change in the business of Parent and its Subsidiaries          
considered as one enterprise since June 27, 1998, or any event that has had a   
material adverse effect on the foregoing, except for any material adverse effect
resulting from general economic conditions including, but not limited to,       
reductions in product margins.                                                  

SECTION 6.10.  CONFIRMATION OF REPRESENTATIONS AND WARRANTIES OF MERGER 
SUB.  Parent represents and warrants that each of the representations and       
warranties of Merger Sub contained in Article VII hereof are true and correct in
all material respects.                                                          

ARTICLE VII.
REPRESENTATIONS AND WARRANTIES OF MERGER SUB. 

Merger Sub hereby represents and warrants to the Company as follows:    

SECTION 7.1.  CORPORATE ORGANIZATION.  Merger Sub is a corporation duly 
organized, validly existing and in good standing under the laws of the State of 
Delaware, and has all requisite corporate power and authority to own its        
properties and assets and to conduct its businesses as now conducted. Copies of 
the Certificate of Incorporation and By-Laws of Merger Sub, with all amendments 
thereto, have been furnished to the Company or its representatives, and such    
copies are accurate and complete.                                               

    SECTION 7.2.  QUALIFICATION TO DO BUSINESS.  Merger Sub is duly qualified to
do business as a foreign corporation and is in good standing in every           
jurisdiction in which the character of the properties owned or leased by it or  
the nature of the business conducted by it makes such qualification necessary.  

  SECTION 7.3.  AUTHORIZATION AND VALIDITY OF AGREEMENT.  Merger Sub has all
requisite corporate power and authority to enter into this Agreement and to     
carry out its obligations hereunder. The execution and delivery by Merger Sub of
this Agreement and the performance by Major Sub of its obligations hereunder    
have been duly authorized by all necessary corporate action by the Board of     
Directors of Merger Sub, and no other corporate proceedings on the part of      
Merger Sub are necessary to authorize such execution, delivery and performance. 
This Agreement has been duly executed by Merger Sub and constitutes Merger Sub's
valid and binding obligation, enforceable against Merger Sub in accordance with 
its terms.                                                                      

SECTION 7.4.  NO CONFLICT OR VIOLATION.  The execution, delivery and    
performance by Merger Sub of this Agreement does not and will not violate or    
conflict with any provision of the Certificate of Incorporation or By-Laws of   
Merger Sub and does not and will not violate any provision of law, or any order,
judgment or decree of any court or other governmental or regulatory authority,  
nor violate nor will result in a breach of or constitute (with due notice or    
lapse of time or both) a default under any contract, lease, loan agreement,     
mortgage, security agreement, trust indenture or other agreement or instrument  
to which Merger Sub is a party or by which it is bound or to which any of its   
properties or assets is subject.                                                

SECTION 7.5.  CONSENTS AND APPROVALS.  The execution, delivery and      
performance of this Agreement by Merger Sub does not require the consent or     
approval of, or filing with, any Governmental Entity or any other Person, except
for (i) the filing of a pre-merger notification report under the HSR Act and    
(ii) such consents, approvals and filings, of which the failure to obtain or    
make would not, individually or in the                                          

A-31

S-4
119th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 119th
aggregate, have a material adverse effect on the ability of Merger Sub to       
consummate the transactions contemplated hereby.                                

   SECTION 7.6.  CAPITALIZATION OF MERGER SUB.  The authorized stock of Merger
Sub consists of 100 shares of common stock, par value $.01 per share, all of    
which are validly issued and outstanding. All of the issued and outstanding     
stock of Merger Sub is, and at the Effective Date will be, owned by Parent, and 
there are (i) no other shares of stock or voting Securities of Merger Sub, (ii) 
no securities of Merger Sub convertible into or exchangeable for shares of stock
or voting securities of Merger Sub and (iii) no options or other rights to      
acquire from Merger Sub, and no obligations of Merger Sub to issue or deliver,  
any stock, voting securities or securities convertible into or exchangeable for 
stock or voting securities of Merger Sub. Merger Sub has not conducted any      
business prior to the date hereof and has no, and prior to the Effective Date   
will have no, assets, liabilities or obligations of any nature other than those 
incident to its formation and pursuant to this Agreement and the Merger and the 
other transactions contemplated by this Agreement.                              

ARTICLE VIII. 
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY REGARDING THE ESOP 

The Company represents and warrants to Parent and Merger Sub as follows:

    SECTION 8.1.  ESOP TRUSTEE.  The ESOP Trustee has been properly appointed as
trustee of the ESOP Trust. The Company has delivered to the ESOP Trustee        
complete, current and accurate copies of the ESOP plan document and the ESOP    
Trust Agreement. The ESOP Trustee is independent of the Company.                

SECTION 8.2.  LEGAL COUNSEL; INDEPENDENT FINANCIAL ADVISOR.  The ESOP   
Trustee, at the expense of the Company, has retained independent legal counsel  
knowledgeable in matters regarding ERISA and Code fiduciary responsibilities and
has retained an independent financial advisor to advise the ESOP Trustee        
regarding the transactions contemplated by this Agreement.                      

    SECTION 8.3.  OPINION OF FINANCIAL ADVISOR.  The ESOP has received the final
opinion of Parker/Hunter Incorporated, financial advisor to the ESOP Trustee, to
the effect that (i) the consideration to be received by the ESOP Trust in the   
Merger is not less than "adequate consideration," as defined in Section 3(18)(B)
of ERISA and Department of Labor Proposed Regulation Section 2510.3-18(b) and   
(ii) the Merger is fair to the ESOP from a financial point of view.             

 SECTION 8.4.  ESOP LOANS.  The ESOP Trust has no outstanding indebtedness
other than the ESOP Loans.                                                      

ARTICLE IX. 
COVENANTS OF THE COMPANY. 

The Company hereby covenants as follows:                                

   SECTION 9.1.  CONDUCT OF BUSINESS BEFORE THE CLOSING DATE.  (a) Without the
prior written consent of Parent, between the date hereof and the Closing Date,  
the Company shall not, except as required or expressly contemplated by this     
Agreement or as required by applicable laws or regulations or orders of a       
Governmental Entity:                                                            

    (i) make any material change in the conduct of the businesses of the
  Company or enter into any transaction other than in the ordinary course of
business consistent with past practices;                                

    (ii) make any change in its Certificate of Incorporation or By-Laws;
  issue any additional shares of capital stock or equity securities or grant
any option, warrant or right to acquire any capital stock or            

A-32

S-4
120th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 120th
    equity securities or issue any security convertible into or exchangeable for
capital stock or alter in any way its outstanding securities or make any
  change in outstanding shares of capital stock or other ownership interests
or the capitalization of the Company, whether by reason of a            
   reclassification, recapitalization, stock split or combination, exchange or
readjustment of shares, stock dividend or otherwise;                    

(iii) make any sale, assignment, transfer, abandonment or other 
 conveyance of the assets, properties or rights of the Company or any part
    thereof, except transactions pursuant to existing Contracts set forth in the
 Schedules hereto and dispositions of inventory or of worn-out or obsolete
 equipment for fair or reasonable value in the ordinary course of business
consistent with past practice;                                          

       (iv) subject any of the assets, properties or rights of the Company, or
   any part thereof, to any Lien or suffer such to exist other than such Liens
as may arise in the ordinary course of business consistent with past    
practice by operation of law and that will not, individually or in the  
aggregate, have a material adverse effect on the Company;               

(v) redeem, retire, purchase or otherwise acquire, directly or  
  indirectly, any shares of the capital stock of the Company or declare, set
   aside or pay any dividends or other distribution in respect of such shares;

       (vi) acquire any assets, raw materials or properties, or enter into any
   other transaction, other than in the ordinary course of business consistent
with past practice;                                                     

       (vii) enter into any new (or amend any existing) employee benefit plan,
program or arrangement or any new (or amend any existing) employment,   
severance or consulting agreement, grant any general increase in the    
   compensation of officers or employees (including any such increase pursuant
   to any bonus, pension, profit-sharing or other plan or commitment) or grant
any increase in the compensation payable or to become payable to any    
  employee, except in accordance with pre-existing contractual provisions or
consistent with past practice; provided that, other than with respect to
ESOP and MSOP contributions approved at the April 7, 1998 meeting of the
 Company's Board of Directors (in the amount of $1,593,000 with respect to
 the ESOP and $50,000 with respect to the MSOP), the immediately preceding
    exception shall not apply to the ESOP, the ESOP Trust Agreement, the MSOP or
    the MSOP Trust Agreement; and further provided that this Section 9.1(a)(vii)
 shall not apply to any payment subject to the provisions of Section 14.4.

   (viii)  make or commit to make any capital expenditure in excess of
    $100,000 except with respect to prior commitments and except in the ordinary
course of business consistent with past practice;                       

       (ix) pay, lend or advance any amount to, or sell, transfer or lease any
 properties or assets to, or enter into any agreement or arrangement with,
any of its Affiliates;                                                  

        (x) fail to keep in full force and effect insurance comparable in amount
and scope to coverage maintained;                                       

      (xi) take any other action that would cause any of the representations
   and warranties made by the Company in this Agreement not to remain true and
correct;                                                                

(xii) make any change in any method of accounting or accounting 
   principle, method, estimate or practice except for any such change required
by reason of a concurrent change in GAAP, or write down the value of any
 inventory or write off as uncollectible any accounts receivable except in
the ordinary course of business consistent with past practice;          

        (xiii)  make, change or revoke any election or method of accounting with
respect to Taxes affecting or relating to the Company;                  

   (xiv)  enter into any closing or other agreement or settlement with
respect to Taxes affecting or relating to the Company;                  

    (xv) settle, release or forgive any claim or litigation or waive any
right thereto;                                                          

A-33

S-4
121st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 121st
     (xvi)  except in the ordinary course of business consistent with past
 practice and except for any Contract subject to the provisions of Section
  14.4, make, enter into, modify, amend in any material respect or terminate
    any Contract, bid or expenditure, where such Contract, bid or expenditure is
    for (A) a Contract entailing payments in excess of $50,000 or (B) a Contract
having a term in excess of six months;                                  

     (xvii)  cause or allow the ESOP Trust to incur any indebtedness other
    than the ESOP Loans, including for this purpose causing or allowing the ESOP
   Trust to draw any additional funds pursuant to the ESOP Loan Agreements; or

(xviii)  commit to do any of the foregoing.                     

  (b) From and after the date hereof and until the Closing Date, the Company
shall:                                                                          

(i) continue to maintain, in all material respects, the assets, 
   properties, rights and operations of the Company in accordance with present
practice in a condition suitable for their current use;                 

  (ii) file, when due or required, all Tax Returns and other reports
   required to be filed and pay when due all Taxes lawfully levied or assessed
 against it, unless the validity thereof is contested in good faith and by
appropriate proceedings diligently conducted;                           

       (iii) continue to conduct the businesses of the Company in the ordinary
course consistent with past practice;                                   

        (iv) keep its books of account, files and records in the ordinary course
and in accordance with existing practice; and                           

(v) use commercially reasonable efforts to preserve intact the  
  operations, organization and reputation of the Company, keep available the
 services of the Company's present officers and key employees and preserve
 the goodwill and business relationships of the suppliers and customers of
the Company.                                                            

SECTION 9.2.  CONSENTS AND APPROVALS.  The Company shall (a) use        
commercially reasonable efforts to obtain all necessary consents, waivers,      
authorizations and approvals of all Governmental Entities, and of all other     
Persons, required in connection with the execution, delivery and performance by 
the Company of this Agreement, and (b) diligently assist and cooperate with     
Parent and Merger Sub in preparing and filing all documents required to be      
submitted by Parent and Merger Sub to any Governmental Entities, in connection  
with such transactions and in obtaining any governmental consents, waivers,     
authorizations or approvals which may be required to be obtained by Parent and  
Merger Sub in connection with such transactions (which assistance and           
cooperation shall include, without limitation, timely furnishing to Parent and  
Merger Sub all information concerning the Company that counsel to Parent        
reasonably determines is required to be included in such documents or could     
reasonably be expected to be helpful in obtaining any such required consent,    
waiver, authorization or approval).                                             

 SECTION 9.3.  NEGOTIATIONS.  From and after the date hereof and until the
earlier to occur of the Closing Date or the termination of this Agreement       
pursuant to Article XV hereof, the Company shall not, and shall not permit or   
cause any of the officers and directors of the Company, or any Persons acting on
behalf of the Company to, directly or indirectly, encourage, solicit, engage in 
discussions or negotiations with, or provide any information to, any Person or  
group (other than Parent or its representatives) concerning any merger, sale of 
substantial assets, purchase or sale of shares of capital stock or similar      
transaction involving the Company or any other transaction inconsistent with the
transactions contemplated hereby. The Company shall promptly communicate to     
Parent any inquiries or communications concerning any such transaction which the
Company may receive or of which the Company may become aware.                   

    SECTION 9.4.  BEST EFFORTS.  Upon the terms and subject to the conditions of
this Agreement, the Company shall use its best efforts to take, or cause to be  
taken, all action, and to do, or cause to be done,                              

A-34

S-4
122nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 122nd
all things necessary, proper or advisable consistent with applicable law to     
consummate and make effective in the most expeditious manner reasonably         
practicable the transactions contemplated hereby.                               

    SECTION 9.5.  NOTICE OF BREACH.  Through the Closing Date, the Company shall
promptly give written notice with particularity upon having knowledge of any    
matter that may constitute a breach of any representation, warranty, agreement  
or covenant contained in this Agreement.                                        

SECTION 9.6.  ESOP VOTING PROCEDURES.  The Company shall ensure that the
procedures used by the ESOP Trustee to solicit voting instructions from ESOP    
Participants in connection with approving the Merger comply with the            
requirements of ERISA and the guidelines established by the Department of Labor 
for participant pass-through votes, including but not limited to the            
requirements that (i) the voting instructions of individual ESOP Participants   
not be disclosed to the Company or any officer, director or employee thereof,   
(ii) ESOP Participants receive full and accurate information regarding the      
Merger, including a copy of the Prospectus/Proxy Statement, (iii) any           
misinformation regarding the Merger which to the knowledge of the Company is    
disseminated to the ESOP Participants is promptly corrected and (iv) the ESOP   
Participants not be subject to undue influence.                                 

SECTION 9.7.  MSOP VOTING PROCEDURES.  The Company shall ensure that the
procedures used by the MSOP Administration Committee to solicit voting          
instructions from MSOP Participants in connection with approving the Merger     
comply with (i) the procedures described in Section 13.05 of the MSOP (except to
the extent required by applicable law) and (ii) any applicable law.             

   SECTION 9.8.  TERMINATION OF THE MSOP.  At least ten Business Days prior to
the Closing Date, the Company shall terminate the MSOP. Coincident with such    
termination, the shares of Company Common Stock and all other assets held in the
MSOP Trust accounts of each MSOP Participant shall be distributed to such MSOP  
Participant, provided that each MSOP Participant timely satisfies any tax       
withholding obligation in cash upon such distribution.                          

   SECTION 9.9.  SMALL BUSINESS CORPORATION.  Following the termination of the
MSOP in accordance with Section 9.8, the Company shall take no action which     
could cause it to cease to qualify as a "small business corporation" within the 
meaning of Section 1361(b) of the Code, but without regard to paragraph (1)(C)  
thereof.                                                                        

ARTICLE X.
COVENANTS OF THE PARENT AND MERGER SUB. 

    SECTION 10.1.  ACTIONS BEFORE EFFECTIVE DATE.  Neither Parent nor Merger Sub
shall take any action which shall cause it to be in breach of any of its        
representations, warranties, covenants or agreements contained in this          
Agreement. Each of Parent and Merger Sub shall use commercially reasonable      
efforts to perform and satisfy all conditions to Closing to be performed or     
satisfied by it under this Agreement as soon as possible, but in no event later 
than the Closing Date.                                                          

   SECTION 10.2.  CONSENTS AND APPROVALS.  Each of Parent and Merger Sub shall
use commercially reasonable efforts to obtain all consents and approvals of     
third parties required to be obtained by it to effect the transactions          
contemplated by this Agreement. Notwithstanding anything in this Agreement to   
the contrary, in connection with any filing or submission or other action       
required to be made or taken by any party to this Agreement to effect the Merger
and the transactions contemplated hereby, the Company shall not without the     
prior written consent of Parent commit to any divestiture transaction and Parent
shall not be required to divest or hold separate or otherwise take or commence  
to take any action that, in the reasonable discretion of Parent, limits in any  
material respect its freedom of action with respect to, or its ability to       
retain, the Company or any material portion of the assets of the Company.       

    SECTION 10.3.  STOCK EXCHANGE LISTING.  Parent shall use its best efforts to
list on the NYSE, upon official notice of issuance, the Parent Common Stock to  
be issued pursuant to the Merger.                                               

A-35

S-4
123rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 123rd
  SECTION 10.4.  REPAYMENT OF ESOP ADVANCE; TERMINATION OF THE ESOP.  (a) As
soon following the Closing as (i) legally allowable under the Securities Act and
(ii) allowed without disqualifying the Merger as a "pooling of interests" for   
accounting purposes, the Surviving Corporation shall cause the ESOP Trust to    
sell, in the public market, that number of shares of Parent Common Stock        
allocated to the accounts of ESOP Participants which are attributable to        
distributions made to ESOP Participants with the proceeds of a $950,000 advance 
made by the Company to the ESOP Trust in July 1998, the net proceeds of which   
sale shall be adequate to repay such advance. Immediately following the         
completion of such sale, the Surviving Corporation shall cause the ESOP Trust to
repay such advance to the Surviving Corporation; [provided that if the net      
proceeds of such sale are less than $950,000, the Surviving Corporation shall   
forgive the balance of the advance.]*                                           

(b) No later than sixty days following the Closing, the Surviving       
Corporation shall terminate the ESOP. As soon following such termination as (i) 
legally allowable under the Securities Act and (ii) allowed without             
disqualifying the Merger as a "pooling of interests" for accounting purposes,   
the Surviving Corporation shall cause the ESOP Trust to sell in the public      
market, from the Loan Suspense Account, shares of Parent Common Stock sufficient
to generate proceeds equal to the sum of (i) the unpaid principal on the ESOP   
Loans, (ii) any accrued interest on the ESOP Loans and (iii) any prepayment     
penalty and other fees and payments required to be paid to the ESOP Lender upon 
the complete prepayment of the ESOP Loans. Immediately following the completion 
of such sale, the Surviving Corporation shall cause the ESOP Trust to prepay the
ESOP Loans in full, including any accrued interest, prepayment penalties and    
other fees and payments required to be paid to the ESOP Lender in connection    
therewith. The Surviving Corporation shall cause any assets remaining in the    
Loan Suspense Account after such prepayment to be allocated to the ESOP accounts
of those Persons who were ESOP Participants on the Closing Date, based on the   
relative ESOP account balances of such ESOP Participants as of the Closing Date.
The Surviving Corporation's obligation to cause those actions described in this 
Section 10.4 is subject to (i) the requirements of ERISA and the Code, (ii)     
obtaining any necessary consents from the ESOP Lender and (iii) the agreement of
the ESOP Trustee, to the extent necessary. If one or more of such actions cannot
occur because of the limitations described in the preceding sentence, the       
Surviving Corporation shall cause to be taken such actions which may be taken   
which as closely as possible accomplish the purpose and intent of this Section  
10.4. Promptly following the termination of the ESOP, the Surviving Corporation 
shall submit the ESOP to the appropriate District Director of the Internal      
Revenue Service, seeking a determination letter to the effect that the          
termination of the ESOP does not adversely effect its tax qualification and tax 
exemption under Sections 401(a) and 501(a) of the Code, respectively. Within    
sixty days following its receipt of such determination letter, the Surviving    
Corporation shall provide distribution election forms to the ESOP Participants, 
and promptly thereafter distribute the assets of the ESOP, or take other        
appropriate actions, in accordance with such elections.                         

  SECTION 10.5.  BENEFITS TO COMPANY EMPLOYEES.  Parent shall or shall cause
the Surviving Corporation to take the following action with respect to each     
Company employee (other than any Person listed on Schedule 14.4) employed in    
Greensboro, North Carolina or as President of the Line Set Division or as       
President of the Mill Division on the Closing Date: offer a comparable position 
at their current employment location at a comparable base rate of pay. For any  
employee who accepts such employment and who is subsequently terminated, the    
Surviving Corporation agrees to pay to such employee severance benefits at least
equal to the severance benefits that the employee would have received under the 
existing severance policy of the Company attached hereto as Schedule 10.5.      
Nothing in this Section 10.5 shall be construed as creating any employment      
contract between any employee of the Company and Parent or the Surviving        
Corporation or to diminish or restrict in any way Parent's or the Surviving     
Corporation's right to terminate without the payment of severance benefits any  
employee for poor job performance, unexcused                                    

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

*   Each of the parties to the Merger Agreement has waived the requirement that 
the Surviving Corporation forgive the balance of the advance if the net 
proceeds of such sale are less than $950,000.                           

A-36

S-4
124th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 124th
absences or other good cause. Parent will recognize the time of service of the  
Company's employees with respect to the granting of and eligibility for Parent  
benefits.                                                                       

ARTICLE XI. 
ADDITIONAL COVENANTS OF THE PARTIES.

 SECTION 11.1.  ASSISTANCE IN CONSUMMATION OF THE MERGER.  Each of Parent,
Merger Sub and the Company shall provide all reasonable assistance to, and shall
cooperate with, each other to bring about the consummation of the Merger as soon
as possible in accordance with the terms and conditions of this Agreement.      
Parent shall cause Merger Sub to perform all of its obligations in connection   
with this Agreement. Parent, as the sole stockholder of Merger Sub, shall       
approve, and hereby approves, this Agreement and the Merger.                    

    SECTION 11.2.  INFORMATION SUPPLIED.  The Company and Parent each agrees, as
to itself and, in the case of Parent, its Subsidiaries, that to their respective
knowledge, none of the information supplied or to be supplied by it or, in the  
case of Parent, its Subsidiaries for inclusion or incorporation by reference in 
(i) the Registration Statement on Form S-4 to be filed with the Commission by   
Parent in connection with the issuance of shares of Parent Common Stock in the  
Merger (including the proxy statement and prospectus (the "PROSPECTUS/PROXY     
STATEMENT") constituting a part thereof) (the "S-4 REGISTRATION STATEMENT")     
will, at the time the S-4 Registration Statement becomes effective under the    
Securities Act, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the        
statements therein not misleading, and (ii) the Prospectus/Proxy Statement and  
any amendment or supplement thereto will, at the date of mailing to stockholders
and at the time of the Company Meeting, contain any untrue statement of a       
material fact or omit to state any material fact required to be stated therein  
or necessary in order to make the statements therein, in light of the           
circumstances under which they were made, not misleading.                       

  SECTION 11.3.  COMPANY MEETING.  The Company will take, in accordance with
its Certificate of Incorporation and By-Laws, all action necessary to convene a 
meeting of holders of Company Common Stock (the "COMPANY MEETING") as promptly  
as practicable after the S-4 Registration Statement is declared effective by the
Commission to consider and vote upon the approval of the Merger and the         
transactions contemplated hereby and the Company's board of directors will      
recommend such approval by the holders of Company Common Stock, will not        
withdraw or modify such recommendation and shall use all commercially reasonably
efforts to solicit such approval.                                               

    SECTION 11.4.  S-4 REGISTRATION STATEMENT.  (a) Parent and the Company shall
promptly prepare and file with the Commission the Prospectus/Proxy Statement,   
and Parent shall prepare and file with the Commission the S-4 Registration      
Statement as promptly as practicable. Each of Parent and the Company shall use  
its reasonable best efforts to have the S-4 Registration Statement declared     
effective by the Commission under the Securities Act as promptly as practicable 
after such filing, and promptly thereafter the Company shall mail the           
Prospectus/Proxy Statement to the holders of Company Common Stock. Parent shall 
also use its reasonable best efforts to obtain prior to the effective date of   
the S-4 Registration Statement all necessary state securities law or "blue sky" 
permits and approvals required in connection with the Merger and to consummate  
the other transactions contemplated by this Agreement.                          

 (b) The Company and Parent each shall, upon request by the other, furnish
the other with all information concerning itself, its Subsidiaries, directors,  
executive officers and stockholders and such other matters as may be reasonably 
necessary or advisable in connection with the Prospectus/Proxy Statement, the   
S-4 Registration Statement or any other statement, filing, notice or application
made by or on behalf of Parent, the Company or any of Parent's Subsidiaries to  
any third party and/or any Governmental Entity in connection with the Merger and
the transactions contemplated by this Agreement.                                

A-37

S-4
125th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 125th
  SECTION 11.5.  ACCOUNTING TREATMENT.  Neither Parent nor the Company shall
take or cause to be taken any action, whether before or after the Effective     
Date, that would disqualify the Merger as a "pooling of interests" for          
accounting purposes or as a "reorganization" within the meaning of Section      
368(a) of the Code. Each of Parent and the Company agrees to use its reasonable 
best efforts to cure any impediment to the qualification of the Merger as a     
"pooling of interests" for accounting purposes or as a "reorganization" within  
the meaning of Section 368(a) of the Code.                                      

SECTION 11.6.  COMPLIANCE WITH THE SECURITIES ACT.  (a) At least 45 days
prior to the Effective Date, the Company shall cause to be delivered to Parent  
an opinion (satisfactory to counsel for Parent) of Amos, Jeffries & Robinson,   
L.L.P. identifying all Persons who may be deemed to be, in its opinion, at the  
time of the Company Meeting convened in accordance with Section 11.3,           
"affiliates" of the Company as that term is used in paragraphs (c) and (d) of   
Rule 145 under the Securities Act (the "AFFILIATES"). The certificates          
representing Parent Common Stock received by such Affiliates shall bear a       
customary legend regarding applicable Securities Act restrictions and "pooling  
restrictions."                                                                  

(b) The Company shall use its best efforts to cause each Person who is  
identified as an Affiliate in such opinion to deliver to Parent at least 30 days
prior to the Effective Date a written agreement, substantially in the form of   
EXHIBIT A, that he or she will not (i) offer to sell, sell or otherwise dispose 
of any of the Parent Common Stock issued to him or her pursuant to the Merger,  
except in compliance with Rule 145 or another exemption from the registration   
requirements of the Securities Act or (ii) sell or in any other way reduce his  
or her risk relative to any such Parent Common Stock or any Company Common Stock
until such time as financial results (including combined sales and net income)  
covering at least 30 days of post-Merger operations have been published, except 
as permitted by Staff Accounting Bulletin No. 76 issued by the Commission.      

 SECTION 11.7.  TRANSFER TAXES.  Parent and the Company shall cooperate in
the preparation, execution and filing of all returns, applications or other     
documents regarding any real property transfer, stamp, recording, documentary or
other taxes (including, without limitation, any New York State Real Estate      
Transfer Tax) and any other fees and similar taxes which become payable in      
connection with the Merger.                                                     

SECTION 11.8.  INDEMNIFICATION; DIRECTORS' AND OFFICERS' INSURANCE.  (a)
From and after the Effective Date, Parent and the Surviving Corporation shall   
indemnify, defend and hold harmless each Person who is now, or has been at any  
time prior to the date hereof, an officer or director of the Company or an      
employee of the Company who acts as a fiduciary under the MSOP, ESOP or any     
other qualified benefit plan of the Company (the "INDEMNIFIED PARTIES") against 
all losses, claims, damages, costs, expenses (including reasonable attorneys'   
fees), liabilities, fines, penalties or judgments or amounts that are paid in   
settlement with the approval of the indemnifying party (which approval shall not
be unreasonably withheld) of or in connection with any threatened or actual     
claim, action, suit, proceeding or investigation based in whole or in part on or
arising in whole or in part out of the fact that such person is or was a        
director, officer or such employee of the Company whether pertaining to any     
matter of fact existing or occurring at or prior to the Effective Date          
("INDEMNIFIED LIABILITIES"), including all Indemnified Liabilities based in     
whole or in part on, or arising in whole or in part out of, or pertaining to    
this Agreement or the transactions contemplated hereby, in each case to the full
extent permitted under applicable law (and Parent and the Surviving Corporation 
will pay expenses in advance of the final disposition of any such action or     
proceeding to each Indemnified Party to the full extent permitted by law).      
Without limiting the foregoing, in the event any such claim, action, suit,      
proceeding or investigation is brought against any Indemnified Parties (whether 
arising before or after the Effective Date), (i) the Indemnified Parties may    
retain counsel (which shall be reasonably acceptable to Parent) and Parent and  
the Surviving Corporation shall pay all reasonable fees and expenses of such    
counsel for the Indemnified Parties promptly as statements therefor are         
received; and (ii) Parent and the Surviving Corporation will use all reasonable 
efforts to assist in the vigorous defense of any such matter, provided that     
neither Parent nor the Surviving Corporation shall be liable for any settlement 
effected without its written consent, which consent, however, shall not be      
unreasonably withheld. Any Indemnified Party wishing to claim indemnification   
under this                                                                      

A-38

S-4
126th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 126th
Section 11.8, upon learning of any such claim, action, suit, proceeding or      
investigation, shall notify Parent and the Surviving Corporation, but the       
failure so to notify shall not relieve a party from any liability that it may   
have under this Section 11.8, except to the extent such failure materially      
prejudices such party. The Indemnified Parties as a group my retain only one law
firm to represent them with respect to each such matter in each applicable      
jurisdiction unless there is, under applicable standards of professional        
conduct, a conflict on any significant issue between the positions of any two or
more Indemnified Parties. Parent and Merger Sub agree that all rights to        
indemnification, including provisions relating to advances of expenses incurred 
in defense of any action or suit, existing in favor of the Indemnified Parties  
(including in the Certificate of Incorporation or Bylaws of the Company) with   
respect to matters occurring through the Effective Date, shall survive the      
Merger and shall continue in full force and effect for a period of six years    
from the Effective Date; provided, however, that all rights to indemnification  
in respect of any Indemnified Liabilities asserted or made within such period   
shall continue until the disposition of such Indemnified Liabilities. Parent    
shall cause the provisions providing for the exculpation of directors and       
officers liability and indemnification contained in the Certificate of          
Incorporation of the Surviving Corporation to be substantively the same as the  
provisions providing for the exculpation of directors and officers liabilities  
and indemnification contained in the Certificate of Incorporation of the Company
in effect immediately prior to the Effective Date. The rights of each           
Indemnified Party hereunder shall be in addition to any other rights such       
Indemnified Party may have under the Certificate of Incorporation or Bylaws of  
the Company, under the DGCL or otherwise. The provisions of this Section 11.8   
shall survive the consummation of the Merger and expressly are intended to      
benefit each of the Indemnified Parties.                                        

  (b) For a period of six years after the Effective Date, Parent shall cause
to be maintained in effect the current policies of directors' and officers'     
liability insurance maintained by the Company (provided that Parent my          
substitute therefor policies of at least the same coverage and amounts          
containing terms and conditions that are no less advantageous in any material   
respect to the Indemnified Parties) with respect to matters arising before the  
Effective Date; provided, however, that Parent shall not be required to pay an  
annual premium for such insurance in excess of (i) 250% of the last annual      
premium paid by the Company prior to the date hereof, for each of the first     
three annual premiums, and (ii) 200% of the last annual premium paid by the     
Company prior to the date hereof, thereafter; provided, further, that in the    
event such maximum amounts are applicable, Parent shall purchase as much        
coverage as possible for such amount.                                           

(c) Parent shall reimburse an Indemnified Party for reasonable legal    
expenses actually incurred by such Indemnified Party in enforcing the provisions
of this Section 11.8 if such Indemnified Party is ultimately determined to be   
the prevailing party in a final adjudication by a court from which there is no  
further right of appeal (or any such right of appeal has expired).              

  SECTION 11.9.  ACCESS TO PROPERTIES AND RECORDS; CONFIDENTIALITY.  (a) The
Company shall afford to Parent, and to the accountants, counsel and             
representatives of Parent, full access during normal business hours through the 
period prior to the Closing Date (or the earlier termination of this Agreement  
pursuant to Article XV) to all properties, books, Contracts, commitments and    
files and records (including, but not limited to, Tax Returns and correspondence
with accountants) of the Company and, during such period, shall furnish promptly
to Parent all other information concerning the Company and its properties and   
personnel as Parent may reasonably request, provided that no investigation or   
receipt of information pursuant to this Section 11.9 shall qualify any          
representation or warranty of the Company or the conditions or the obligations  
of Parent and Merger Sub. The Company also shall afford to Parent full access to
all assets and operations of the Company throughout the period prior to the     
Closing Date.                                                                   

   (b) Parent shall cause its officers, employees and other representatives to
hold in confidence all confidential information obtained under (a) above, other 
than any information (i) that is or becomes publicly known to Parent or such    
Persons otherwise than in violation of this Agreement, (ii) known to the party  
to whom disclosed prior to such disclosure, or disclosed to such party by a     
third party not under an obligation of confidentiality to the Party to this     
Agreement disclosing the same, (iii) developed by the party                     

A-39

S-4
127th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 127th
to whom disclosed independently of the information so disclosed, or (iv)        
required to be disclosed by law. Parent shall not (and shall insure that such   
other Persons do not), without the prior written consent of the Company use such
information other than in connection with this Agreement and the Merger or      
disclose such information to others. To the extent that any such confidential   
information relates to the customers of the Company, such information shall not 
be disclosed, directly or indirectly, to any employee of Parent who is directly,
or indirectly, involved in selling to or setting prices for the sale to         
customers in competing transactions.                                            

   (c) If this Agreement is terminated, Parent shall, and each shall cause its
representatives to, promptly return or cause to be destroyed all copies of      
confidential information furnished to it and its representatives and all notes  
and summaries of the confidential information.                                  

ARTICLE XII.
MUTUAL CONDITIONS 

  The respective obligation of each Party to effect the Merger is subject to
the satisfaction or waiver at or prior to the Closing Date of each of the       
following conditions:                                                           

SECTION 12.1.  STOCKHOLDER APPROVAL.  The Merger and the transactions   
contemplated hereby shall have been duly approved by holders of the Company     
Common Stock, in accordance with applicable law and the Company's Certificate of
Incorporation and By-Laws, constituting a majority of the outstanding shares of 
Company Common Stock.                                                           

   SECTION 12.2.  NYSE LISTING.  The shares of Parent Common Stock issuable to
the holders of Company Common Stock pursuant to this Agreement shall have been  
authorized for listing on the NYSE upon official notice of issuance.            

  SECTION 12.3.  FORM S-4.  The S-4 Registration Statement shall have become
effective under the Securities Act. No stop order suspending the effectiveness  
of the S-4 Registration Statement shall have been issued, and no proceeding for 
that purpose shall have been initiated or be threatened, by the Commission.     

SECTION 12.4.  HSR ACT.  Any applicable waiting period under the HSR Act
shall have expired or been terminated.                                          

 SECTION 12.5.  TAX OPINION.  Parent and the Company shall have received a
favorable opinion of Willkie Farr & Gallagher, based upon certain factual       
representations from the Company, Parent and Merger Sub, to the effect that the 
Merger will be treated for Federal income tax purposes as a reorganization      
within the meaning of Section 368(a) of the Code, and that the Company, Parent  
and Merger Sub will each be a party to that reorganization within the meaning of
Section 368(a) of the Code.                                                     

ARTICLE XIII. 
CONDITIONS PRECEDENT TO PERFORMANCE BY THE COMPANY. 

  The obligations of the Company to consummate the transactions contemplated
by this Agreement are subject to the fulfillment, at or before the Closing Date,
of the following conditions, any one or more of which may be waived by the      
Company in its sole discretion:                                                 

    SECTION 13.1.  REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB.  All
representations and warranties made by Parent and Merger Sub in this Agreement  
shall be true and correct on and as of the Closing Date as if again made by     
Parent and Merger Sub on and as of such date (except for any representation and 
warranty made as of a specified date, which shall have been true and correct as 
of such date), and the Company shall have received a certificate to that effect 
dated the Closing Date and signed by any Vice President of Parent and Merger    
Sub.                                                                            

A-40

S-4
128th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 128th
SECTION 13.2.  PERFORMANCE OF THE OBLIGATIONS OF PARENT AND MERGER      
SUB.  Parent and Merger Sub shall have performed all obligations required under 
this Agreement to be performed by Parent and Merger Sub on or before the Closing
Date, and the Company shall have received a certificate to that effect dated the
Closing Date and signed by any Vice President of Parent and Merger Sub.         

SECTION 13.3.  CONSENTS AND APPROVALS.  All consents, waivers,          
authorizations and approvals of any Governmental Entities, and of any other     
Person, required in connection with the execution, delivery and performance of  
this Agreement and set forth on SCHEDULE 13.3 shall have been duly obtained and 
shall be in full force and effect on the Closing Date.                          

SECTION 13.4.  NO VIOLATION OF ORDERS.  No preliminary or permanent     
injunction or other order issued by any court or other governmental or          
regulatory authority, domestic or foreign, nor any statute, rule, regulation,   
decree or executive order promulgated or enacted by any Governmental Entity that
declares this Agreement invalid or unenforceable in any respect or which        
prevents the consummation of the transactions contemplated hereby shall be in   
effect; and no action or proceeding before any court or regulatory authority,   
domestic or foreign, shall have been instituted or threatened by any            
Governmental Entity, which seeks to prevent or delay the consummation of the    
transactions contemplated by this Agreement or which challenges the validity or 
enforceability of this Agreement, and which in any such case has a reasonable   
likelihood of success in the opinion of counsel to the Company.                 

   SECTION 13.5.  NO MATERIAL ADVERSE CHANGE.  During the period from June 27,
1998 to the Closing date, there shall not have been any material adverse change 
in the business of Parent and its Subsidiaries considered as one enterprise,    
except for any material adverse change resulting from general economic          
conditions including, but not limited to, reductions in product margins.        

SECTION 13.6.  OPINION OF COUNSEL.  The Company shall have received an  
opinion, dated as of the Closing Date, from Parent's general counsel, covering  
the matters set forth on EXHIBIT B, subject to customary qualifications,        
limitations and qualifications for opinions given in transactions of the kind   
contemplated hereby.                                                            

SECTION 13.7.  OTHER CLOSING DOCUMENTS.  The Company shall have received
such other certificates, instruments and documents in confirmation of the       
representations and warranties of Parent and Merger Sub or in furtherance of the
transactions contemplated by this Agreement as the Company or its counsel may   
reasonably request.                                                             

  SECTION 13.8.  LEGAL MATTERS.  All certificates, instruments, opinions and
other documents required to be executed or delivered by or on behalf of Parent  
and Merger Sub under the provisions of this Agreement, and all other actions and
proceedings required to be taken by or on behalf of Parent and Merger Sub in    
furtherance of the transactions contemplated hereby, shall be reasonably        
satisfactory in form and substance to counsel to Company.                       

ARTICLE XIV.
CONDITIONS PRECEDENT TO PERFORMANCE BY PARENT AND MERGER SUB. 

The obligations of Parent and Merger Sub to consummate the transactions 
contemplated by this Agreement are subject to the fulfillment, at or before the 
Closing Date, of the following conditions, any one or more of which may be      
waived by Parent and Merger Sub in their sole discretion:                       

SECTION 14.1.  REPRESENTATIONS AND WARRANTIES OF THE COMPANY.  All      
representations and warranties made by the Company in this Agreement shall be   
true and correct on and as of the Closing Date as if again made by the Company  
on and as of such date (except for any representation and warranty made as of a 
specified date, which shall have been true and correct as of such date), and    
Parent shall have received a certificate to that effect dated the Closing Date  
and signed by any Vice President of the Company.                                

A-41

S-4
129th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 129th
  SECTION 14.2.  PERFORMANCE OF THE OBLIGATIONS OF THE COMPANY.  The Company
shall have performed all obligations required under this Agreement to be        
performed by it on or before the Closing Date, and Parent shall have received a 
certificate to that effect dated the Closing Date and signed by any Vice        
President of the Company.                                                       

SECTION 14.3.  CONSENTS AND APPROVALS.  All consents, waivers,          
authorizations and approvals of any Governmental Entity and of any other Person,
required in connection with the execution, delivery and performance of this     
Agreement and set forth on SCHEDULE 14.3 shall have been duly obtained and shall
be in full force and effect on the Closing Date.                                

 SECTION 14.4.  COMPANY PAYMENTS.  The Company shall have paid any and all
payments required to be made by the Company (i) to the executives and present   
and former employees of the Company by reason, or as a result of, the Merger in 
the amounts set forth next to such Person's name on SCHEDULE 14.4, and the      
Company shall have received a release from each such Person of all claims       
against the Company, and (ii) to its and the ESOP's and MSOP's accountants,     
attorneys and financial advisors for all services rendered, and expenses        
advanced, in connection with the Merger.                                        

SECTION 14.5.  NO VIOLATION OF ORDERS.  No preliminary or permanent     
injunction or other order issued by any court or governmental or regulatory     
authority, domestic or foreign, nor any statute, rule, regulation, decree or    
executive order promulgated or enacted by any Governmental Entity, which        
declares this Agreement invalid in any respect or prevents the consummation of  
the transactions contemplated hereby, or which materially and adversely affects 
the assets, properties, operations, prospects, net income or financial condition
of the Company shall be in effect; and no action or proceeding before any court 
or governmental or regulatory authority, domestic or foreign, shall have been   
instituted or threatened by any Governmental Entity which seeks to prevent or   
delay the consummation of the transactions contemplated by this Agreement or    
which challenges the validity or enforceability of this Agreement, and which in 
either such case has a reasonable likelihood of success in the opinion of       
counsel to Parent.                                                              

   SECTION 14.6.  NO MATERIAL ADVERSE CHANGE.  During the period from June 26,
1998 to the Closing Date, there shall not have been any material adverse change 
in the Company or its business, except for any material adverse change resulting
from (i) payments made pursuant to Section 14.4 and (ii) general economic       
conditions including, but not limited to, reductions in product margins.        

  SECTION 14.7.  OPINION OF COUNSEL.  Parent shall have received an opinion,
dated as of the Closing Date, from Amos, Jeffries & Robinson L.L.P., covering   
the matters set forth on EXHIBIT C, subject to customary qualifications,        
limitations and qualifications for opinions given in transactions of the kind   
contemplated hereby.                                                            

SECTION 14.8.  OTHER CLOSING DOCUMENTS.  Parent shall have received such
other certificates, instruments and documents in confirmation of the            
representations and warranties of the Company or in furtherance of the          
transactions contemplated by this Agreement as Parent or its counsel may        
reasonably request.                                                             

  SECTION 14.9.  LEGAL MATTERS.  All certificates, instruments, opinions and
other documents required to be executed or delivered by or on behalf of the     
Company under the provisions of this Agreement, and all other actions and       
proceedings required to be taken by or on behalf of the Company in furtherance  
of the transactions contemplated hereby, shall be reasonably satisfactory in    
form and substance to counsel to Parent.                                        

SECTION 14.10.  POOLING OF INTERESTS LETTER.  The Company shall have    
received a letter from Arthur Andersen LLP, dated the Closing Date, as to       
whether or not the Company qualifies for "pooling of interests" accounting      
treatment if the Merger is consummated in accordance with this Agreement.       

 SECTION 14.11.  APPRAISAL RIGHTS.  The holders of not more than 5% of the
outstanding shares of Company Common Stock shall have exercised their appraisal 
rights in the Merger in accordance with the DGCL.                               

A-42

S-4
130th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 130th
ARTICLE XV. 
TERMINATION.

  SECTION 15.1.  CONDITIONS OF TERMINATION.  Notwithstanding anything to the
contrary contained herein, this Agreement may be terminated at any time before  
the Closing:                                                                    

    (a) By mutual consent of the board of directors of the Company and the board
of directors of Parent;                                                         

(b) By Parent if the Company has breached any representation, warranty, 
covenant or agreement contained in this Agreement and has not cured such breach 
within ten (10) business days after written notice to the Company (provided,    
that Parent and Merger Sub are not then in material breach of the terms of this 
Agreement, and provided further, that no cure period shall be required for a    
breach which by its nature cannot be cured) such that the conditions set forth  
in Section 14.1 or Section 14.2 hereof, as the case may be, will not be         
satisfied;                                                                      

   (c) By the Company if Parent or Merger Sub has breached any representation,
warranty, covenant or agreement contained in this Agreement and has not cured   
such breach within ten (10) business days after written notice to Parent        
(provided, that the Company is not then in material breach of the terms of this 
Agreement, and provided further, that no cure period shall be required for a    
breach which by its nature cannot be cured) such that the conditions set forth  
in Section 13.1 or Section 13.2 hereof, as the case may be, will not be         
satisfied;                                                                      

   (d) By the Company or Parent if: (i) there shall be a final, non-appealable
order of a federal or state court in effect preventing consummation of the      
transactions contemplated hereby; or (ii) there shall be any final action taken,
or any statute, rule, regulation or order enacted, promulgated or issued or     
deemed applicable to the transactions contemplated hereby by any Governmental   
Entity which would make consummation of the transactions contemplated hereby    
illegal; or                                                                     

   (e) By the Company or Parent if the Closing shall not have been consummated
by December 23, 1998, unless on or before November 13, 1998, the applicable     
waiting period under the HSR Act shall not have expired or been terminated (the 
"HSR TERMINATION DATE") or the S-4 Registration Statement shall not have been   
declared effective by the Commission (the "REGISTRATION STATEMENT EFFECTIVE     
DATE"), in which event this Agreement may not be terminated pursuant to this    
Section 15.1(e) until the earlier to occur of (x) February 25, 1999 or (y) the  
date which is 40 days following the later to occur of the HSR Termination Date  
and the Registration Statement Effective Date.                                  

 SECTION 15.2.  EFFECT OF TERMINATION.  In the event of the termination of
this Agreement as provided in Section 15.1 hereof, this Agreement shall         
forthwith become void and there shall be no liability or obligation on the part 
of the Company, Parent or Merger Sub, or their respective officers, directors,  
stockholders, partners, option holders or other Persons under their control,    
except to the extent that such termination results from the willful breach by a 
party hereto of any of its representations, warranties, covenants or agreements 
set forth in this Agreement, and provided that the provisions of Articles XV,   
XVI and XVII hereof shall remain in full force and effect and survive any       
termination of this Agreement.                                                  

ARTICLE XVI.
SURVIVAL. 

SECTION 16.1.  SURVIVAL OF REPRESENTATIONS AND WARRANTIES.  No          
representations or warranties contained in this Agreement shall survive the     
Effective Date. The covenants made by the parties in this Agreement with respect
to action to be taken or omitted after the Closing Date shall survive the       
Closing and the consummation of the transactions contemplated by this Agreement.

A-43

S-4
131st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 131st
ARTICLE XVII. 
MISCELLANEOUS.

    SECTION 17.1.  SUCCESSORS AND ASSIGNS.  Except as otherwise provided in this
Agreement, no party hereto shall assign this Agreement or any rights or         
obligations hereunder without the prior written consent of the other parties    
hereto and any such attempted assignment without such prior written consent     
shall be void and of no force and effect. This Agreement shall inure to the     
benefit of and shall be binding upon the successors and permitted assigns of the
parties hereto.                                                                 

SECTION 17.2.  GOVERNING LAW, JURISDICTION.  This Agreement shall be    
construed, performed and enforced in accordance with, and governed by, the laws 
of the State of Delaware, without giving effect to the principles of conflicts  
of laws thereof. The parties hereto irrevocably elect as the sole judicial forum
for the adjudication of any matters arising under or in connection with this    
Agreement, and consent to the jurisdiction of, the courts of the State of       
Delaware or the United States of America for the District of Delaware.          

SECTION 17.3.  EXPENSES.  All the fees, expenses and costs incurred in  
connection with this Agreement and the transactions contemplated hereby shall be
paid by the party incurring such fees, expenses and costs.                      

  SECTION 17.4.  BROKER'S AND FINDER'S FEES.  Parent represents and warrants
that it has dealt with no broker or finder in connection with any of the        
transactions contemplated by this Agreement. The Company represents and warrants
that neither the Company nor the ESOP Trustee has dealt with any broker or      
finder in connection with any of the transactions contemplated by this          
Agreement.                                                                      

  SECTION 17.5.  SEVERABILITY.  In the event that any part of this Agreement
is declared by any court or other judicial or administrative body to be null,   
void or unenforceable, said provision shall survive to the extent it is not so  
declared, and all of the other provisions of this Agreement shall remain in full
force and effect so long as, and only so long as, the economic or legal         
substance of the transactions contemplated hereby is not affected in any manner 
materially adverse to any party hereto or to the stockholders of the Company or 
Parent. Upon a determination that any provision is invalid, illegal or incapable
of being enforced and does not adversely affect the substance of these          
transactions in a material way, the Parties will negotiate in good faith to     
modify this Agreement so as to effect the original intent of the Parties as     
closely as possible in an acceptable manner to the end that the transactions    
contemplated by this Agreement are consummated to the extent possible.          

SECTION 17.6.  NOTICES.  All notices, requests, demands and other       
communications under this Agreement shall be in writing and shall be deemed to  
have been duly given (i) on the date of service if served personally on the     
party to whom notice is to be given; (ii) on the day of transmission if sent via
facsimile transmission to the facsimile number given below, and telephonic      
confirmation of receipt is obtained promptly after completion of transmission;  
(iii) on the day after delivery to Federal Express or similar overnight courier 
or the Express Mail service maintained by the United States Postal Service; or  
(iv) on the fifth day after mailing, if mailed to the party to whom notice is to
be given, by first class mail, registered or certified, postage prepaid and     
properly addressed, to the party as follows:                                    

A-44

S-4
132nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 132nd
If to the Company:                                                      

                             Halstead Industries, Inc.
                           300 North Greene Street
              Suite 1700
                                    Greensboro, North Carolina 27401
                          Attn: Michael E. Stoll
                            Telecopy: (336) 274-5619

Copy to:                                                                

                                     Amos, Jeffries & Robinson, L.L.P.
                        230 North Elm Street
                                    Greensboro, North Carolina 27401
                             Attn: Jerry W. Amos, Esq.
                            Telecopy: (336) 273-2435

If to Parent or Merger Sub:                                             

                      Mueller Industries
                                   6799 Great Oaks Road, Suite 200
                            Memphis, Tennessee 38138
                                  Attn: William H. Hensley, Esq.
                            Telecopy: (901) 753-3251

Copy to:                                                                

                            Willkie Farr & Gallagher
                      787 Seventh Avenue
                            New York, New York 10019
                             Attn: Neil Novikoff, Esq.
                            Telecopy: (212) 728-8111

  Any party may change its address for the purpose of this Section by giving
the other party written notice of its new address in the manner set forth above.

SECTION 17.7.  AMENDMENTS; WAIVERS.  This Agreement may be amended or   
modified, and any of the terms, covenants, representations, warranties or       
conditions hereof may be waived, only by a written instrument executed by the   
parties hereto, or in the case of a waiver, by the party waiving compliance. Any
waiver by any party of any condition, or of the breach of any provision, term,  
covenant, representation or warranty contained in this Agreement, in any one or 
more instances, shall not be deemed to be nor construed as a further or         
continuing waiver of any such condition, or of the breach of any other          
provision, term, covenant, representation or warranty of this Agreement.        

    SECTION 17.8.  PUBLIC ANNOUNCEMENTS.  No Party shall issue any press release
or make any public announcement relating to the subject matter of this Agreement
without the prior written approval of the other Party; provided, however, that  
any Party may make any public disclosure it believes in good faith is required  
by applicable law or any listing or trading agreement concerning its            
publicly-traded securities (in which case the disclosing Party will use its     
reasonable efforts to advise the other Party prior to making the disclosure).   

SECTION 17.9.  ENTIRE AGREEMENT.  This Agreement contains the entire    
understanding among the parties hereto with respect to the transactions         
contemplated hereby and supersedes and replaces all prior and contemporaneous   
agreements and understandings, oral or written, with regard to such             
transactions. All Exhibits and Schedules hereto and any documents and           
instruments delivered pursuant to any provision hereof are expressly made a part
of this Agreement as fully as though completely set forth herein.               

A-45

S-4
133rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 133rd
   SECTION 17.10.  PARTIES IN INTEREST.  Nothing in this Agreement is intended
to confer any rights or remedies under or by reason of this Agreement on any    
Persons other than parties hereto and their respective successors and permitted 
assigns. Nothing in this Agreement is intended to relieve or discharge the      
obligations or liability of any third Persons to the Company or Parent. No      
provision of this Agreement shall give any third parties any right of           
subrogation or action over or against the Company or Parent.                    

 SECTION 17.11.  SCHEDULED DISCLOSURES.  Unless otherwise provided in this
Agreement, disclosure of any matter, fact or circumstance in a Schedule to this 
Agreement shall not be deemed to be disclosure thereof for purposes of any other
Schedule hereto.                                                                

  SECTION 17.12.  SECTION AND PARAGRAPH HEADINGS.  The section and paragraph
headings in this Agreement are for reference purposes only and shall not affect 
the meaning or interpretation of this Agreement.                                

SECTION 17.13.  COUNTERPARTS.  This Agreement may be executed in        
counterparts, each of which shall be deemed an original, but all of which shall 
constitute the same instrument.                                                 

A-46

S-4
134th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 134th
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be 
executed as of the date first above written.                                    

                                                                [Download Table]
                                              
MUELLER INDUSTRIES, INC.                      

By:  /s/ WILLIAM D. O'HAGAN                   
     -----------------------------------------
     William D. O'Hagan                       
     President and Chief                      
     Executive Officer                        

MUELLER ACQUISITION CORP.                     

By:  /s/ WILLIAM H. HENSLEY                   
     -----------------------------------------
     William H. Hensley                       
     President                                

HALSTEAD INDUSTRIES, INC.                     

By:  /s/ WILLIAM B. HALSTEAD                  
     -----------------------------------------
     William B. Halstead                      
     Chief Executive Officer and              
     Chairman of the Board                    

A-47

S-4
135th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 135th
                                                                      APPENDIX B

FORM OF AMENDED AND RESTATED VOTING AGREEMENT 

   AMENDED AND RESTATED VOTING AGREEMENT, dated as of August   , 1998, between
MUELLER INDUSTRIES, INC., a Delaware corporation ("Parent"), and the stockholder
of HALSTEAD INDUSTRIES, INC., a Delaware corporation (the "Company"), whose name
and signature is set forth on the signature page hereof (the "Stockholder").    

RECITALS

 The Company, Parent and Mueller Acquisition Corp., a Delaware corporation
and a wholly owned subsidiary of Parent ("Merger Sub"), are entering into an    
Agreement and Plan of Merger dated as of the date hereof (the "Merger           
Agreement"; capitalized terms used but not defined herein shall have the        
meanings set forth in the Merger Agreement), pursuant to which, subject to the  
terms and conditions of the Merger Agreement, Merger Sub will merge with and    
into the Company (the "Merger"), and each outstanding share of Company Common   
Stock, other than shares owned by the Company or Parent or their respective     
Subsidiaries and other than Dissenting Shares, will be converted into the right 
to receive shares of common stock, $.01 par value per share, of Parent, all as  
more fully set forth in the Merger Agreement.                                   

  As of the date hereof, the Stockholder is the beneficial owner and, except
as set forth on the signature page hereof, the record owner of the number of    
shares of Company Common Stock set forth on the signature page hereof (the      
"Existing Shares" and, together with any shares of Company Common Stock acquired
after the date hereof, whether upon the exercise of warrants, options,          
conversion of convertible securities or otherwise, the "Shares").               

  As an inducement and a condition to its entering into the Merger Agreement
and incurring the obligations set forth therein, Parent has required that the   
Stockholder enter into this Agreement.                                          

   The Stockholder and Parent desire to set forth their agreement with respect
to the voting of the Shares in connection with the Merger, upon the terms and   
subject to the conditions set forth herein.                                     

AGREEMENT 

To implement the foregoing and in consideration of the mutual agreements
contained herein, the parties agree as follows:                                 

  1.  AGREEMENT TO VOTE.  The Stockholder hereby agrees that, from and after
the date hereof and until the Expiration Date (as defined in Section 3), at any 
meeting of the stockholders of the Company, however called, or in connection    
with any solicitation of written consents of the stockholders of the Company,   
the Stockholder shall vote (or cause to be voted) or act by written consent with
respect to the Shares in favor of adoption and approval of the Merger Agreement 
and the Merger and the approval of the terms thereof and each of the other      
actions contemplated by the Merger Agreement and this Agreement                 

    2.  PROXY.  THE STOCKHOLDER HEREBY GRANTS TO, AND APPOINTS, PARENT, AND EACH
OF THE CHIEF EXECUTIVE OFFICER AND THE CHIEF FINANCIAL OFFICER OF PARENT, IN    
THEIR RESPECTIVE CAPACITIES AS OFFICERS OF PARENT, AND ANY INDIVIDUAL WHO SHALL 
HEREAFTER SUCCEED TO ANY SUCH OFFICE OF PARENT, AND ANY OTHER DESIGNEE OF       
PARENT, EACH OF THEM INDIVIDUALLY, THE STOCKHOLDER'S PROXY AND ATTORNEY-IN-FACT 
(WITH FULL POWER OF SUBSTITUTION) TO VOTE OR ACT BY WRITTEN CONSENT WITH RESPECT
TO THE SHARES IN ACCORDANCE WITH SECTION 1 HEREOF. THIS PROXY IS COUPLED WITH AN
INTEREST AND SHALL BE IRREVOCABLE, AND THE STOCKHOLDER WILL TAKE SUCH FURTHER   
ACTION OR EXECUTE SUCH OTHER INSTRUMENTS AS MAY BE NECESSARY TO EFFECTUATE THE  
INTENT OF                                                                       

B-1 

S-4
136th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 136th
THIS PROXY AND HEREBY REVOKES ANY PROXY PREVIOUSLY GRANTED BY HIM WITH RESPECT  
TO THE SHARES.                                                                  

3.  EXPIRATION OF PROXY.  The proxy set forth in Section 2 hereof shall 
terminate on the Expiration Date. As used herein, the term "Expiration Date"    
means the earlier of (i) the Effective Date and (ii) the termination of the     
Merger Agreement pursuant to Article XV thereof (unless either such date shall  
be extended by the mutual written consent of Parent and the Stockholder).       

    4.  REPRESENTATION AND WARRANTIES OF PARENT.  Parent represents and warrants
to the Stockholder as follows:                                                  

        (a) Parent is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware.                       

        (b) Parent has the requisite corporate power and authority to enter into
    this Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions     
    contemplated hereby have been duly authorized by Parent's Board of Directors
 and no other corporate proceedings on the part of Parent are necessary to
authorize this Agreement and the consummation of the transactions       
   contemplated hereby. This Agreement has been duly executed and delivered by
    Parent and (assuming the valid authorization, execution and delivery of this
  Agreement by the Stockholder) is a valid and binding obligation of Parent,
   enforceable in accordance with its terms, except as affected by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other  
similar laws relating to or affecting creditors' rights generally and   
  general equitable principles (whether considered in a proceeding in equity
or at law).                                                             

      (c) The execution and delivery of this Agreement by Parent do not, and
  the performance of this Agreement by Parent will not, (i) conflict with or
   violate the Certificate of Incorporation or By-Laws of Parent or any of its
subsidiaries, (ii) conflict with or violate any federal, state, local or
  foreign law, statute, ordinance, rule, regulation, permit, order, judgment
or decree (collectively, "Laws") applicable to Parent or any of its     
subsidiaries or by which any of their respective properties is bound, or
   (iii) conflict with, result in any breach of or constitute a default (or an
event that with notice or lapse of time or both would become a default) 
   under, or give to others any rights of termination, amendment, acceleration
  or cancellation of, or require payment under, or result in the creation of
any lien, claim, security interest or other charge or encumbrance       
   (collectively, "Encumbrances") on any of the properties or assets of Parent
    or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
  contract, agreement, lease, license, permit, franchise or other instrument
or obligation to which Parent or any of its subsidiaries or any of their
respective properties is bound, except for any thereof that could not   
    reasonably be expected to materially impair the ability of Parent to perform
its obligations hereunder or to consummate the transactions contemplated
hereby.                                                                 

 (d) The execution and delivery of this Agreement by Parent do not
   require Parent to obtain any consent, approval, authorization or permit of,
or to make any filing with or notification to, any governmental or      
   regulatory authority, domestic or foreign ("Governmental Entity"), based on
    the Laws of any Governmental Entity, except where the failure to obtain such
  consents, approvals, authorizations or permits, or to make such filings or
notifications, could not reasonably be expected to materially impair the
   ability of Parent to perform its obligations hereunder or to consummate the
transactions contemplated hereby.                                       

        (e) There is no suit, action, investigation or proceeding pending or, to
    the knowledge of the executive officers of Parent, threatened against Parent
or any of its subsidiaries at law or in equity before or by any federal,
state, municipal or other governmental department, commission, board,   
bureau, agency or instrumentality, domestic or foreign, or before any   
arbitrator of any kind, that could reasonably be expected to materially 
impair the ability of Parent to perform its obligations hereunder or to 
  consummate the transactions contemplated hereby, and there is no judgment,
decree, injunction,                                                     

B-2 

S-4
137th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 137th
rule or order of any court, governmental department, commission, board, 
   bureau, agency, instrumentality or arbitrator to which Parent or any of its
subsidiaries is subject that could reasonably be expected to materially 
impair the ability of Parent to perform its obligations hereunder or to 
consummate the transactions contemplated hereby.                        

5.  REPRESENTATION AND WARRANTIES OF THE STOCKHOLDER.  The Stockholder  
represents and warrants to Parent as follows:                                   

  (a) If the Stockholder is a corporation, partnership or trust, the
Stockholder has been duly organized and is validly existing and in good 
standing under the laws of the jurisdiction of its organization.        

  (b) If the Stockholder is a corporation, partnership or trust, the
Stockholder has all necessary corporate, partnership or trust power and 
    authority (including, if necessary, authority of the beneficial owner of the
   Existing Shares or the Shares) to enter into this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated   
hereby. If the Stockholder is a corporation, partnership or trust, the  
    execution, delivery and performance of this Agreement by the Stockholder and
   the consummation by the Stockholder of the transactions contemplated hereby
  have been duly authorized by all necessary corporate, partnership or trust
action on the part of the Stockholder and, if necessary, the beneficial 
owner of the Existing Shares or the Shares.                             

(c) This Agreement has been duly executed and delivered by the  
    Stockholder and (assuming the valid authorization, execution and delivery of
this Agreement by Parent) is a valid and binding obligation of the      
  Stockholder and, if necessary, the beneficial owner of the Existing Shares
   or the Shares, enforceable in accordance with its terms, except as affected
    by bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
  or other similar laws relating to or affecting creditors' rights generally
and general equitable principles (whether considered in a proceeding in 
equity or at law).                                                      

      (d) The execution and delivery of this Agreement by the Stockholder do
  not, and the performance of this Agreement by the Stockholder will not, if
the Stockholder is a corporation, partnership or trust, conflict with or
    violate the Certificate of Incorporation or By-Laws, or other organizational
documents, of the Stockholder.                                          

        (e) There is no suit, action, investigation or proceeding pending or, to
   the knowledge of the Stockholder, threatened against the Stockholder at law
or in equity before or by any federal, state, municipal or other        
governmental department, commission, board, bureau, agency or           
   instrumentality, domestic or foreign, or before any arbitrator of any kind,
 that could reasonably be expected to materially impair the ability of the
Stockholder to perform its obligations hereunder or to consummate the   
transactions contemplated hereby, and there is no judgment, decree,     
    injunction, rule or order of any court, governmental department, commission,
board, bureau, agency, instrumentality or arbitrator to which the       
Stockholder is subject that could reasonably be expected to materially  
  impair the ability of the Stockholder to perform its obligations hereunder
or to consummate the transactions contemplated hereby.                  

      (f) The Existing Shares are owned beneficially (unless the Stockholder
    is a trust) and, except as set forth on the signature page hereof, of record
by the Stockholder. The Existing Shares constitute all of the shares of 
Company Common Stock owned of record or (except as set forth on the     
signature page hereof) beneficially by the Stockholder (or, if the      
Stockholder is a trust, owned in its capacity as trustee). All of the   
  Existing Shares are issued and outstanding and, except as indicated on the
signature page hereto, the Stockholder does not own, of record or       
    beneficially, any warrants, options or other rights to acquire any shares of
Company Common Stock. The Stockholder has (except as set forth on the   
   signature page hereof) sole voting power and sole power of disposition with
respect to all of the Existing Shares with no restrictions, subject to  
applicable federal securities laws, on the                              

B-3 

S-4
138th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 138th
   Stockholder's rights of disposition pertaining thereto. The Stockholder has
good and valid title to the Existing Shares free and clear of all       
Encumbrances.                                                           

6.  INVESTMENT REPRESENTATIONS OF THE STOCKHOLDER.  The Stockholder     
represents and warrants to, and agrees with, Parent that the Stockholder has    
reviewed the Merger Agreement and has been given the opportunity to obtain any  
additional information or documents and to ask questions and receive answers    
about such document, the Company, Parent and the business and prospects of the  
Company and Parent which the Stockholder deems necessary to evaluate the merits 
and risks related to the Stockholder's determination to enter into this         
Agreement and to consummate the transactions contemplated hereby.               

7.  AGREEMENTS OF THE STOCKHOLDER.  The Stockholder hereby agrees as    
follows:                                                                        

     (a) The Stockholder hereby agrees, while this Agreement is in effect,
  and except as contemplated hereby or except with the prior written consent
of Parent, not to take any action that would make any representation or 
    warranty of the Stockholder contained herein untrue or incorrect or have the
effect of preventing or disabling the Stockholder from performing his   
obligations under this Agreement.                                       

        (b) The Stockholder hereby agrees, while this Agreement is in effect, to
notify promptly Parent of the number of any new shares of Company Common
Stock acquired by the Stockholder, if any, after the date hereof.       

        (c) Such Stockholder agrees to place the following legend on any and all
certificates evidencing the Shares:                                     

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO THE TERMS OF THAT CERTAIN AMENDED AND RESTATED VOTING  
AGREEMENT, DATED AS OF AUGUST 6, 1998, BY AND BETWEEN     
MUELLER INDUSTRIES, INC. AND SUCH STOCKHOLDER, INCLUDING  
THE GRANTING BY SUCH STOCKHOLDER OF AN IRREVOCABLE PROXY  
AS TO CERTAIN MATTERS PURSUANT TO SECTION 2 OF SUCH       
AGREEMENT.                                                

     (d) Such Stockholder agrees that prior to any sale, transfer, pledge,
encumbrance, assigning or other disposition (a "Transfer") of any of the
Existing Shares or any Shares acquired after the date hereof, such      
Stockholder will as a condition to such Transfer cause the transferee to
   agree to be bound by the provisions of this Agreement as if such transferee
   were a party hereto, and acknowledge the irrevocable proxy granted pursuant
to Section 2 hereof, such agreement and acknowledgment to be in a form  
reasonably acceptable to Parent. Any Transfer of such Existing Shares or
 Shares in violation of the terms of this Agreement shall be null and void
and of no effect whatsoever.                                            

 8.  ADJUSTMENT.  If, between the date of this Agreement and the Effective
Date, the Company declares, pays or makes any dividend or other distribution of 
any kind of cash or property on the Company Common Stock, the Stockholder shall 
receive and hold such cash or property for the benefit of Parent and shall      
deliver such cash or property, with appropriate instruments of transfer, if     
necessary, to Parent on the Effective Date.                                     

   9.  FURTHER ASSURANCES.  From time to time, at the other party's reasonable
request and without further consideration, each party hereto shall execute and  
deliver such additional documents and take all such further action as may be    
reasonably necessary or desirable to consummate and make effective, in the most 
expeditious manner practicable, the transactions contemplated by this Agreement.

    10.  SURVIVAL.  The covenants of the parties hereto, and the representations
and warranties of the parties hereto, shall survive until the Expiration Date.  

    11.  MISCELLANEOUS.  (a) This Agreement (i) constitutes the entire agreement
between the parties with respect to the subject matter hereof and supersedes all
other prior agreements and understandings,                                      

B-4 

S-4
139th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 139th
both written and oral, between the parties with respect to the subject matter   
hereof and (ii) shall not be assigned by operation of law or otherwise.         

      (b) This Agreement may not be amended or supplemented, except upon the
execution and delivery of a written agreement executed by the parties   
hereto. Parent or the Stockholder may, from time to time, waive, on such
  terms and conditions as Parent or the Stockholder, as the case may be, may
  specify in such instrument, any of the requirements of this Agreement. Any
    such amendment shall be binding upon the parties thereto and any such waiver
shall be binding upon Parent or the Stockholder, as the case may be,    
  executing the same. No such waiver shall extend to any subsequent or other
event or circumstance or impair any right consequent thereon.           

      (c) All notices and other communications hereunder shall be in writing
and shall be deemed given (i) on the date delivered, if delivered       
personally, (ii) on the first business day following the deposit thereof
 with Federal Express, if sent by Federal Express, and (iii) on the fourth
  business day following the mailing thereof with postage prepaid, if mailed
   by registered or certified mail (return receipt requested), in each case to
    the parties at the following addresses (or at such other address for a party
as shall be specified by like notice):                                  

(i) if to the Stockholder, to it at its address set forth on the
signature page hereof; and                                              

(ii) if to Parent, to it at:                                    

Mueller Industries, Inc.                                  

6799 Great Oaks Road                                        
Suite 200                                                 
Memphis, Tennessee 38138                                  
Attention: William H. Hensley, Esq.                       
     Vice President, General Counsel and Secretary

with copies to:                                           

Willkie Farr & Gallagher                                    
787 Seventh Avenue                                        
New York, New York 10019-6099                             
Attention: Neil Novikoff, Esq.                            

B-5 

S-4
140th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 140th
        (d) This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware, regardless of the laws that might    
  otherwise govern under applicable principles of conflicts of laws thereof.

      (e) The parties agree that irreparable damage would occur in the event
that any of the provisions of this Agreement were not performed in      
accordance with their specific terms or were otherwise breached. It is  
 accordingly agreed that the parties shall be entitled to an injunction or
injunctions to prevent breaches of this Agreement and to enforce        
   specifically the terms and provisions of this Agreement in any court of the
  United States located in the Chancery Courts of the State of Delaware (and
any appellate courts therefrom).                                        

     (f) This Agreement may be executed in two counterparts, each of which
 shall be deemed to be an original, but both of which shall constitute one
and the same Agreement.                                                 

        (g) The descriptive headings used herein are inserted for convenience of
  reference only and are not intended to be part of or to affect the meaning
or interpretation of this Agreement.                                    

        (h) If any term or other provision of this Agreement is invalid, illegal
or incapable of being enforced by any rule of law or public policy, all 
   other conditions and provisions of this Agreement shall nevertheless remain
  in full force and effect so long as the economic or legal substance of the
 transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is  
 invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the    
original intent of the parties as closely as possible in an acceptable  
    manner to the end that the transactions contemplated hereby are fulfilled to
the fullest extent possible.                                            

   [Signatures appear on next page.]

B-6 

S-4
141st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 141st
    IN WITNESS WHEREOF, Parent and the Stockholder have caused this Agreement to
be duly executed as of the day and year first above written.                    

                                                                [Download Table]
                                              
MUELLER INDUSTRIES, INC.                      

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

THE STOCKHOLDER:                              

 ---------------------------------------------
                 (Print Name)                 

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

Number of Existing Shares:                    

Number of shares of Company Common Stock owned
of record by the Employee Stock Ownership Plan
of Halstead Industries, Inc. that are         
beneficially owned by the Stockholder:        

Number of shares of Company Common Stock owned
of record by the Management Stock Ownership   
Plan of Halstead Industries, Inc. that are    
beneficially owned by the Stockholder:        

Address:                                      

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

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

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

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

B-7 

S-4
142nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 142nd
                                                                      APPENDIX C

August 5, 1998                                                                  

First Commercial Trust Company as trustee for the                               
Employee Stock Ownership Plan of Halstead Industries, Inc.                      
400 West Capital Avenue                                                         
Little Pock, Arkansas 72201                                                     

Ladies and Gentlemen:                                                           

    You have requested our opinion as to the fairness, from a financial point of
view, to the Employee Stock Ownership Plan of Halstead Industries, Inc. (the    
"Plan") of the consideration to be paid to the Plan pursuant to the Agreement   
and Plan of Merger (the "Agreement") among Mueller Industries, Inc. ("Mueller") 
and its subsidiaries and Halstead Industries, Inc. (the "Company") pursuant to  
which a Mueller subsidiary will merge into the Company (the "Merger") with the  
Company surviving the Merger. The Agreement provides, among other things, that  
each share of Common Stock, par value $0.10 per share, of the Company will be   
converted into that number of shares of the common stock, par value $0.01 per   
share, of Mueller ("Mueller Common Stock") equal to the "Exchange Ratio" as     
defined in the Agreement. The terms and conditions of the Merger are more fully 
set forth in the Agreement.                                                     

  Parker/Hunter Incorporated, as part of its investment banking business, is
regularly engaged in the valuation of businesses and their securities in        
connection with mergers and acquisitions, negotiated underwritings, the purchase
and sale of listed and unlisted securities, private placements and valuations   
for estate, corporate and other purposes. We are familiar with the Company      
having acted as financial advisor to the Plan in connection with the valuation  
of the Company's stock held by the Plan.                                        

 In connection with our opinion, we have reviewed, among other things, the
following: (i) the draft of the Agreement dated August 4, 1998; (ii) the        
Company's audited financial statements as of December 31, 1997 and for the five 
fiscal years then ended and the Company's unaudited internal financial          
statements for the six month period ended June 26, 1998; (iii) certain other    
internal Company information, primarily financial in nature, including financial
projections for the Company prepared by the management of the Company; (iv) the 
nature and financial terms of certain recent business combinations which we     
believe to be relevant; and (v) certain publicly available information regarding
companies that we believe to be comparable to the Company as well as trading    
market information for certain of such other companies' securities. We have also
met with certain senior officers of the Company to discuss the foregoing as well
as the operations, financial condition, history and prospects of the Company and
other matters we believe relevant. We have taken into account our assessment of 
general economic, market and financial conditions and our experience in         
securities valuation generally. We have also considered such other information, 
financial studies, analyses, investigations and financial, economic, market and 
trading criteria which we deemed relevant. The amount of consideration was      
determined pursuant to negotiations between the Company and Mueller and not     
pursuant to recommendations of Parker/Hunter. We have not been requested to and 
did not solicit third party indications of interest in acquiring all or any part
of the Company.                                                                 

C-1 

S-4
143rd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 143rd
                                                  First Commercial Trust Company
                                                                  August 5, 1998
                                                                          Page 2

  In rendering this opinion, we relied, without independent verification, on
the accuracy and completeness of all financial and other information that was   
publicly available or furnished or otherwise communicated to us by the Company. 
We have not made an independent evaluation or appraisal of the assets or        
liabilities of the Company, nor have we been furnished with any such evaluations
or appraisals. With respect to the Company's financial projections, we have     
assumed that they have been reasonably prepared on bases reflecting the best    
currently available estimates and good faith judgments of the Company's         
management and we express no opinion with respect to such projections or the    
assumptions on which they are based. Our opinion is necessarily based upon the  
business, market, monetary, economic, and other conditions as they exist on, and
can be evaluated as of, the date of this letter and does not predict or take    
into account any changes which may occur, or information which may become       
available, after the date hereof. Further, our opinion does not address the     
relative merits of the merger and any other potential transactions or business  
strategies considered by the Company's Board of Directors, and does not         
constitute a recommendation to any holder of Common Stock as to how such holder 
should vote with respect to the Merger. In the past, we have provided investment
banking services to the Plan for which we have received customary compensation. 

   It is understood that this letter is for the information of the Trustee for
the Plan and may not be used for any other purpose without our prior written    
consent, except that this opinion may be included only in its entirety in any   
proxy, information statement, prospectus or other materials mailed to Plan      
participants in connection with the Merger and this opinion may be made         
available to the Securities and Exchange Commission or any state securities     
regulators or any other governmental authority.                                 

Based upon and subject to the foregoing, it is our opinion as investment
bankers that, as of the date hereof, the consideration is fair, from a financial
point of view, to the Plan.                                                     

Very truly yours,                                                               

PARKER/HUNTER INCORPORATED                                                      

C-2 

S-4
144th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 144th
                                                                      APPENDIX D

DELAWARE GENERAL CORPORATION LAW

SECTION 262. APPRAISAL RIGHTS                                                   

    (a) Any stockholder of a corporation of this State who holds shares of stock
on the date of the making of a demand pursuant to subsection (d) of this section
with respect to such shares, who continuously holds such shares through the     
effective date of the merger or consolidation, who has otherwise complied with  
subsection (d) of this section and who has neither voted in favor of the merger 
or consolidation nor consented thereto in writing pursuant to Section 228 of    
this title shall be entitled to an appraisal by the Court of Chancery of the    
fair value of the stockholder's shares of stock under the circumstances         
described in subsections (b) and (c) of this section. As used in this section,  
the word "stockholder" means a holder of record of stock in a stock corporation 
and also a member of record of a nonstock corporation; the words "stock" and    
"share" mean and include what is ordinarily meant by those words and also       
membership or membership interest of a member of a nonstock corporation, and the
words "depository receipt" mean a receipt or other instrument issued by a       
depository representing an interest in one or more shares, or fractions thereof,
solely of stock of a corporation, which stock is deposited with the depository. 

(b) Appraisal rights shall be available for the shares of any class or  
series of stock of a constituent corporation in a merger or consolidation to be 
effected pursuant to Section 251 (other than a merger effected pursuant to      
Section 251(g) of this title), 252, 254, 257, 258, 263 or 264 of this title:    

        (1) Provided, however, that no appraisal rights under this section shall
    be available for the shares of any class or series of stock, which stock, or
depository receipts in respect thereof, at the record date fixed to     
   determine the stockholders entitled to receive notice of and to vote at the
meeting of stockholders to act upon the agreement of merger or          
  consolidation, were either (i) listed on a national securities exchange or
   designated as a national market system security on an interdealer quotation
    system by the National Association of Securities Dealers, Inc., or (ii) held
    of record by more than 2,000 holders; and further provided that no appraisal
rights shall be available for any shares of stock of the constituent    
corporation surviving a merger if the merger did not require for its    
approval the vote of the stockholders of the surviving corporation as   
provided in subsection (f) of Section 251 of this title.                

      (2) Notwithstanding paragraph (1) of this subsection, appraisal rights
   under this section shall be available for the shares of any class or series
    of stock of a constituent corporation if the holders thereof are required by
the terms of an agreement of merger or consolidation pursuant to Section
   251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock
anything except:                                                        

       a. Shares of stock of the corporation surviving or resulting from
      such merger or consolidation, or depository receipts in respect thereof;

         b. Shares of stock of any other corporation, or depository receipts
  in respect thereof, which shares of stock (or depository receipts in
  respect thereof) or depository receipts at the effective date of the
    merger or consolidation will be either listed on a national securities
exchange or designated as a national market system security on an 
    interdealer quotation system by the National Association of Securities
Dealers, Inc. or held of record by more than 2,000 stockholders;  

   c. Cash in lieu of fractional shares or fractional depository
 receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or                                                     

        d. Any combination of the shares of stock, depository receipts and
 cash in lieu of fractional shares or fractional depository receipts
       described in the foregoing subparagraphs a., b. and c. of this paragraph.

D-1 

S-4
145th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 145th
      (3) In the event all of the stock of a subsidiary Delaware corporation
  party to a merger effected under Section 253 of this title is not owned by
the parent corporation immediately prior to the merger, appraisal rights
 shall be available for the shares of the subsidiary Delaware corporation.

(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any    
class or series of its stock as a result of an amendment to its certificate of  
incorporation, any merger or consolidation in which the corporation is a        
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision, 
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.                   

(d) Appraisal rights shall be perfected as follows:                     

        (1) If a proposed merger or consolidation for which appraisal rights are
   provided under this section is to be submitted for approval at a meeting of
  stockholders, the corporation, not less than 20 days prior to the meeting,
 shall notify each of its stockholders who was such on the record date for
    such meeting with respect to shares for which appraisal rights are available
pursuant to subsections (b) or (c) hereof that appraisal rights are     
   available for any or all of the shares of the constituent corporations, and
shall include in such notice a copy of this section. Each stockholder   
electing to demand the appraisal of his shares shall deliver to the     
    corporation, before the taking of the vote on the merger or consolidation, a
  written demand for appraisal of his shares. Such demand will be sufficient
   if it reasonably informs the corporation of the identity of the stockholder
and that the stockholder intends thereby to demand the appraisal of his 
shares. A proxy or vote against the merger or consolidation shall not   
    constitute such a demand. A stockholder electing to take such action must do
    so by a separate written demand as herein provided. Within 10 days after the
  effective date of such merger or consolidation, the surviving or resulting
 corporation shall notify each stockholder of each constituent corporation
who has complied with this subsection and has not voted in favor of or  
consented to the merger or consolidation of the date that the merger or 
consolidation has become effective; or                                  

       (2) If the merger of consolidation was approved pursuant to Section 228
 or Section 253 of this title, each constituent corporation, either before
the effective date of the merger or consolidation or within ten days    
    thereafter, shall notify each of the holders of any class or series of stock
   of such constituent corporation who are entitled to appraisal rights of the
approval of the merger or consolidation and that appraisal rights are   
available for any or all shares of such class or series of stock of such
constituent corporation, and shall include in such notice a copy of this
section; provided that, if the notice is given on or after the effective
date of the merger or consolidation, such notice shall be given by the  
surviving or resulting corporation to all such holders of any class or  
   series of stock of a constituent corporation that are entitled to appraisal
    rights. Such notice may, and, if given on or after the effective date of the
merger or consolidation, shall, also notify such stockholders of the    
  effective date of the merger or consolidation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of such  
 notice, demand in writing from the surviving or resulting corporation the
appraisal of such holder's shares. Such demand will be sufficient if it 
 reasonably informs the corporation of the identity of the stockholder and
that the stockholder intends thereby to demand the appraisal of such    
    holder's shares. If such notice did not notify stockholders of the effective
date of the merger or consolidation, either (i) each such constituent   
corporation shall send a second notice before the effective date of the 
    merger or consolidation notifying each of the holders of any class or series
of stock of such constituent corporation that are entitled to appraisal 
rights of the effective date of the merger or consolidation or (ii) the 
 surviving or resulting corporation shall send such a second notice to all
such holders on or within 10 days after such effective date; provided,  
   however, that if such second notice is sent more than 20 days following the
 sending of the first notice, such second notice need only be sent to each
stockholder who is entitled to appraisal rights and who has demanded    
appraisal of such holder's shares in accordance with this subsection. An
affidavit of the secretary or                                           

D-2 

S-4
146th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 146th
assistant secretary or of the transfer agent of the corporation that is 
    required to give either notice that such notice has been given shall, in the
  absence of fraud, be prima facie evidence of the facts stated therein. For
   purposes of determining the stockholders entitled to receive either notice,
  each constituent corporation may fix, in advance, a record date that shall
 be not more than 10 days prior to the date the notice is given, provided,
   that if the notice is given on or after the effective date of the merger or
 consolidation, the record date shall be such effective date. If no record
date is fixed and the notice is given prior to the effective date, the  
    record date shall be the close of business on the day next preceding the day
on which the notice is given.                                           

    (e) Within 120 days after the effective date of the merger or consolidation,
the surviving or resulting corporation or any stockholder who has complied with 
subsections (a) and (d) hereof and who is otherwise entitled to appraisal       
rights, may file a petition in the Court of Chancery demanding a determination  
of the value of the stock of all such stockholders. Notwithstanding the         
foregoing, at any time within 60 days after the effective date of the merger or 
consolidation, any stockholder shall have the right to withdraw his demand for  
appraisal and to accept the terms offered upon the merger or consolidation.     
Within 120 days after the effective date of the merger or consolidation, any    
stockholder who has complied with the requirements of subsections (a) and (d)   
hereof, upon written request, shall be entitled to receive from the corporation 
surviving the merger or resulting from the consolidation a statement setting    
forth the aggregate number of shares not voted in favor of the merger or        
consolidation and with respect to which demands for appraisal have been received
and the aggregate number of holders of such shares. Such written statement shall
be mailed to the stockholder within 10 days after his written request for such a
statement is received by the surviving or resulting corporation or within 10    
days after expiration of the period for delivery of demands for appraisal under 
subsection (d) hereof, whichever is later.                                      

    (f) Upon the filing of any such petition by a stockholder, service of a copy
thereof shall be made upon the surviving or resulting corporation, which shall  
within 20 days after such service file in the office of the Register in Chancery
in which the petition was filed a duly verified list containing the names and   
addresses of all stockholders who have demanded payment for their shares and    
with whom agreements as to the value of their shares have not been reached by   
the surviving or resulting corporation. If the petition shall be filed by the   
surviving or resulting corporation, the petition shall be accompanied by such a 
duly verified list. The Register in Chancery, if so ordered by the Court, shall 
give notice of the time and place fixed for the hearing of such petition by     
registered or certified mail to the surviving or resulting corporation and to   
the stockholders shown on the list at the addresses therein stated. Such notice 
shall also be given by one or more publications at least one week before the day
of the hearing, in a newspaper of general circulation published in the City of  
Wilmington, Delaware or such publication as the Court deems advisable. The forms
of the notices by mail and by publication shall be approved by the Court, and   
the costs thereof shall be borne by the surviving or resulting corporation.     

(g) At the hearing on such petition, the Court shall determine the      
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an   
appraisal for their shares and who hold stock represented by certificates to    
submit their certificates of stock to the Register in Chancery for notation     
thereon of the pendency of the appraisal proceedings; and if any stockholder    
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.                                                               

  (h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or        
consolidation, together with a fair rate of interest, if any, to be paid upon   
the amount determined to be the fair value. In determining such fair value, the 
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of 
interest which the surviving or resulting corporation would have had to pay to  
borrow money during the pendency of the proceeding. Upon application by the     
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion,                  

D-3 

S-4
147th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 147th
permit discovery or other pretrial proceedings and may proceed to trial upon the
appraisal prior to the final determination of the stockholder entitled to an    
appraisal. Any stockholder whose name appears on the list filed by the surviving
or resulting corporation pursuant to subsection (f) of this section and who has 
submitted his certificates of stock to the Register in Chancery, if such is     
required, may participate fully in all proceedings until it is finally          
determined that he is not entitled to appraisal rights under this section.      

(i) The Court shall direct the payment of the fair value of the shares, 
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court 
may direct. Payment shall be so made to each such stockholder, in the case of   
holders of uncertificated stock forthwith, and the case of holders of shares    
represented by certificates upon the surrender to the corporation of the        
certificates representing such stock. The Court's decree may be enforced as     
other decrees in the Court of Chancery may be enforced, whether such surviving  
or resulting corporation be a corporation of this State or of any state.        

(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon        
application of a stockholder, the Court may order all or a portion of the       
expenses incurred by any stockholder in connection with the appraisal           
proceeding, including, without limitation, reasonable attorney's fees and the   
fees and expenses of experts, to be charged pro rata against the value of all   
the shares entitled to an appraisal.                                            

(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d) 
of this section shall be entitled to vote such stock for any purpose or to      
receive payment of dividends or other distributions on the stock (except        
dividends or other distributions payable to stockholders of record at a date    
which is prior to the effective date of the merger or consolidation); provided, 
however, that if no petition for an appraisal shall be filed within the time    
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60 
days after the effective date of the merger or consolidation as provided in     
subsection (e) of this section or thereafter with the written approval of the   
corporation, then the right of such stockholder to an appraisal shall cease.    
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery 
shall be dismissed as to any stockholder without the approval of the Court, and 
such approval may be conditioned upon such terms as the Court deems just.       

    (l) The shares of the surviving or resulting corporation to which the shares
of such objecting stockholders would have been converted had they assented to   
the merger or consolidation shall have the status of authorized and unissued    
shares of the surviving or resulting corporation.                               

D-4 

S-4
148th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 148th
PART II 
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.                             

   Section 145 of the Delaware General Corporation Law (the "DGCL") empowers a
Delaware corporation to indemnify any person who was or is a party or is        
threatened to be made a party to any threatened, pending or completed action,   
suit or proceeding, whether civil, criminal, administrative or investigative    
(other than an action by or in the right of such corporation) by reason of the  
fact that such person is or was a director, officer, employee or agent of such  
corporation, or is or was serving at the request of such corporation as a       
director, officer, employee or agent of another corporation or enterprise. A    
corporation may, in advance of the final action of any civil, criminal,         
administrative or investigative action, suit or proceeding, pay the expenses    
(including attorneys' fees) incurred by any officer, director, employee or agent
in defending such action, provided that the director or officer undertakes to   
repay such amount if it shall ultimately be determined that he or she is not    
entitled to be indemnified by the corporation. A corporation may indemnify such 
person against expenses (including attorneys' fees), judgments, fines and       
amounts paid in settlement actually and reasonably incurred by such person in   
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to the    
best interests of the corporation, and, with respect to any criminal action or  
proceeding, had no reasonable cause to believe his or her conduct was unlawful. 

   A Delaware corporation may indemnify officers and directors in an action by
or in the right of the corporation to procure a judgment in its favor under the 
same conditions, except that no indemnification is permitted without judicial   
approval if the officer or director is adjudged to be liable to the corporation.
Where an officer or director is successful on the merits or otherwise in the    
defense of any action referred to above, the corporation must indemnify him or  
her against the expenses (including attorneys' fees) which he or she actually   
and reasonably incurred in connection therewith. The indemnification provided is
not deemed to be exclusive of any other rights to which an officer or director  
may be entitled under any corporation's by-law, agreement, vote or otherwise.   

   In accordance with Section 145 of the DGCL, the Mueller Certificate and the
Mueller Bylaws provide that Mueller shall, to the fullest extent permitted by   
the DGCL, as the same exists or may be hereafter amended or supplemented, or by 
any successor thereto, indemnify each person made or threatened to be made a    
party to an action or proceeding, whether criminal, civil or investigative, by  
reason of fact that such person is or was an officer or employee or agent of    
Mueller (including such person's testator or intestate) or is or was serving at 
the request of Mueller as a director, officer, employee, agent or trustee of    
another corporation, partnership, joint venture, trust or other enterprise. The 
indemnification provided by the Mueller Bylaws shall not be deemed exclusive of 
any other rights to which any of those seeking indemnification may be entitled  
under the Mueller Certificate, any agreement, vote of stockholders or           
disinterested directors or otherwise, 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. The Mueller
Certificate further provides that a director of Mueller shall not be personally 
liable to Mueller or its stockholders for monetary damages for breach of        
fiduciary duty as a director, except for liability (i) for any breach of the    
director's duty of loyalty to Mueller or its stockholders, (ii) for acts or     
omissions not in good faith or which involve intentional misconduct or a knowing
violation of law, (iii) under Section 174 of the DGCL, or (iv) for any          
transaction from which the director derived an improper personal benefit.       

   The Mueller Bylaws provide that Mueller may purchase and maintain insurance
on behalf of its directors, officers, employees and agents or is or was         
otherwise serving at the request of Mueller as a director, officer, employee or 
agent of another corporation, partnership, joint venture, trust or other        
enterprise, against any liabilities asserted against such persons arising out of
such capacities, whether or                                                     

II-1

S-4
149th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 149th
not Mueller would have the power to indemnify him against such liability under  
the provisions of Mueller's Bylaws or under Section 145 of the DGCL or any other
provision of law.                                                               

ITEM 21. EXHIBITS.                                                              

(a) The following Exhibits are filed as part of this report:            

                                                        [Enlarge/Download Table]
                                                                                            
  2   Agreement and Plan of Merger, dated as of August 7, 1998, among Halstead Industries,  
      Inc., Mueller Industries, Inc., and Mueller Acquisition Corp. (included as Appendix A 
      to the Proxy Statement/Prospectus).                                                   

 3.1  Certificate of Incorporation of Mueller Industries, Inc., as amended.*                

 3.2  Bylaws of Mueller Industries, Inc., as amended and restated, effective November 10,   
      1994 (incorporated herein by reference to Exhibit 3(ii) of the Registrant's Current   
      Report on Form 8-K dated November 14, 1994).                                          

 4.1  Common Stock Specimen (incorporated herein by reference to Exhibit 4.1 of the         
      Registrant's Current Report on Form 8-K dated December 28, 1990).                     

 4.2  Rights Agreement, dated as of November 10, 1994, between the Registrant and           
      Continental Stock Transfer and Trust Company, as Rights Agent, which includes the Form
      of Certificate of Designation, Preferences and Rights of Series A Junior Participating
      Preferred Stock of the Registrant, as Exhibit A, the Form of Rights Certificate, as   
      Exhibit B, and the Summary of Rights to Purchase Preferred Stock, as Exhibit C        
      (incorporated by reference to Exhibit 99.1 of the Registrant's Current Report on Form 
      8-K, dated November 14, 1994).                                                        

  5   Opinion of Willkie Farr & Gallagher with respect to the legality of Mueller Shares    
      being registered.*                                                                    

  8   Opinion of Willkie Farr & Gallagher with respect to certain tax matters.*             

23.1  Consent of Ernst and Young LLP.                                                       

23.2  Consent of Arthur Andersen LLP.                                                       

23.3  Consent of Willkie Farr & Gallagher (included in its opinions filed as Exhibits 5 and 
      8).*                                                                                  

 24   Power of Attorney (included on the signature pages hereto).                           

99.1  Form of Halstead Proxy.                                                               

99.2  Letter to Participants in the Halstead Industries, Inc. Employee Stock Ownership      
      Program.                                                                              

99.3  Consent of Parker/Hunter Incorporated.                                                

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

*   To be filed by amendment.                                                   

(b) Financial Schedules                                                 

None.                                                                   

ITEM 22. UNDERTAKINGS.                                                          

(a) The undersigned Registrant hereby undertakes:                       

       (1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement:              

         (i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;                                           

           (ii) To reflect in the prospectus any facts or events arising after
  the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually             

II-2

S-4
150th Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 150th
    or in the aggregate, represent a fundamental change in the information
      set forth in this registration statement. Notwithstanding the foregoing,
    any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
     registered) and any deviation from the low or high end of the estimated
     maximum offering range may be reflected in the form of prospectus filed
   with the Commission pursuant to Rule 424(b) if, in the aggregate, the
    changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of 
Registration Fee" table in the effective registration statement;  

           (iii) To include any material information with respect to the plan of
     distribution not previously disclosed in this registration statement or
     any material change to such information in this registration statement;
    PROVIDED, HOWEVER, that subparagraphs (i) and (ii) do not apply if the
  information required to be included in a post-effective amendment by
     those paragraphs is contained in registration statements on Form S-3 or
   Form S-8 and the periodic reports filed by the Registrant pursuant to
     Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that
are incorporated by reference in this registration statement.     

(2) That for the purpose of determining any liability under the 
  Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the Securities offered   
   herein, and the offering of such Securities at that time shall be deemed to
be the initial bona fide offering thereof.                              

      (3) To remove from registration by means of a post-effective amendment
any of the Securities being registered which remain unsold at the       
termination of the offering.                                            

(b) The undersigned Registrant hereby further undertakes that, for the  
purposes of determining any liability under the Securities Act of 1933, each    
filing of the Registrant's annual report pursuant to section 13(a) or section   
15(d) of the Securities Exchange Act of 1934 that is incorporated by reference  
in this registration statement shall be deemed to be a new registration         
statement relating to the Securities offered herein, and the offering of such   
Securities at that time shall be deemed to be the initial bona fide offering    
thereof.                                                                        

     (c) (1) The undersigned registrant hereby undertakes as follows: that
prior to any public reoffering of the securities registered hereunder   
   through use of a prospectus which is a part of this registration statement,
  by any person or party who is deemed to be an underwriter with the meaning
  of Rule 145(c), the issuer undertakes that such reoffering prospectus will
   contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in    
   addition to the information called for by the other Items of the applicable
form.                                                                   

     (2) The registrant undertakes that every prospectus (i) that is filed
 pursuant to paragraph (1) immediately preceding, or (ii) that purports to
meet the requirements of section 10(a)(3) of the Act and is used in     
connection with an offering of securities subject to Rule 415           
    (Section230.415 of this chapter), will be filed as a part of an amendment to
the registration statement and will not be used until such amendment is 
effective, and that, for purposes of determining any liability under the
  Securities Act of 1933, each such post-effective amendment 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.                              

   (d) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of  
the Registrant pursuant to the provisions described under Item 15 of this       
registration statement, or otherwise (other than insurance), the Registrant has 
been advised that in the opinion of the Securities and Exchange Commission such 
indemnification is against public                                               

II-3

S-4
151st Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 151st
policy as expressed in such 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 such Act and
will be governed by the final adjudication of such issue.                       

II-4

S-4
152nd Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 152nd
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 Memphis, State of        
Tennessee on September 30, 1998.                                                

                            MUELLER INDUSTRIES, INC.
                      /s/ HARVEY L. KARP
       -------------------------------------------------------------------------
                  Harvey L. Karp
                         Chairman of the Board

POWER OF ATTORNEY 

 The undersigned officers and directors of the Registrant hereby severally
constitute and appoint Earl W. Bunkers, Kent A. McKee and William H. Hensley,   
and each of them, attorney-in-fact for the undersigned, in any and all          
capacities, with the power of substitution, to sign any amendments to this      
Registration Statement (including post-effective amendments) and any subsequent 
registration statement for the same offering which may be filed under Rule      
462(b) under the Securities Act of 1933, as amended, and to file the same with  
exhibits thereto and other documents in connection therewith, with the          
Securities and Exchange Commission, granting unto said attorneys-in-fact, and   
each of them, full power and authority to do and perform each and every act and 
thing requisite and necessary to be done in and about the premises, as fully and
to all interests and purposes as he might or could do in person, hereby         
ratifying and confirming all that each said attorney-in-fact, or his substitute 
or substitutes, may do or cause to be done by virtue thereof.                   

    Pursuant to the requirements of the Securities Act of 1933, as amended, this
Registration Statement has been signed below by the following persons, in the   
capacities and on the dates indicated:                                          

     NAME                          TITLE                    DATE
------------------------------  ---------------------------  -------------------

/s/ HARVEY L. KARP        Chairman of the Board and                 
------------------------------    Director                   September 30, 1998 
Harvey L. Karp                                                  

/s/ ROBERT B. HODES        Director                                   
------------------------------                               September 30, 1998 
Robert B. Hodes                                                   

Director        
------------------------------                               September   , 1998 
Allan Mactier                                                   

/s/ WILLIAM D. O'HAGAN      President, Chief Executive                  
------------------------------    Officer, Director          September 30, 1998 
William D. O'Hagan                                                  

Director        
------------------------------                               September   , 1998 
Robert J. Pasquarelli                                                   

/s/ EARL W. BUNKERS        Executive Vice President,                  
------------------------------    Chief Financial Officer    September 30, 1998 
Earl W. Bunkers                                                   

II-5

S-4
Last Page of 153
TOC
1st
Previous
Next
↓Bottom
Just 153rd
EXHIBIT INDEX 

                                                        [Enlarge/Download Table]

                                                                                                             SEQUENTIAL  
                                                                                                                PAGE     
  EXHIBIT                                             DESCRIPTION                                              NUMBER    
-----------  ---------------------------------------------------------------------------------------------  -------------
                                                                                                                         

        2    Agreement and Plan of Merger, dated as of August 7, 1998, among Halstead Industries, Inc.,                  
             Mueller Industries, Inc., and Mueller Acquisition Corp. (included as Appendix A to the Proxy                
             Statement/Prospectus).                                                                                      

       23.1  Consent of Ernst and Young LLP.                                                                             

       23.2  Consent of Arthur Andersen LLP.                                                                             

       24    Power of Attorney (included on the signature pages hereto).                                                 

       99.1  Form of Halstead Proxy.                                                                                     

       99.2  Letter to Participants in the Halstead Industries, Inc. Employee Stock Ownership Program.                   

       99.3  Consent of Parker/Hunter Incorporated.