PLAN OF REORGANIZATION
                                       of
                                   EAFCO, INC.

      When Eafco, Inc., a Pennsylvania corporation (the "Company"), closed
its  cast  iron  soil  pipe  business,  it left  its  facilities  underutilized.
Consequently the Company sought an investor with sufficient  continuing need for
casting  products.  Pursuant to that  certain  Subscription  and Stock  Purchase
Agreement  dated  October  1,  1992,  consummated  under  that  certain  Closing
Understanding  dated April 7, 1993,  Mestek,  Inc., a  Pennsylvania  corporation
("Mestek"),  acquired a 46.8% interest in the common stock of Eafco (the "Common
Stock") - an interest equal to that of Peerless Industries, Inc., a Pennsylvania
corporation  ("Peerless").  Bona fide disputes arose between Peerless and Mestek
with  respect to the  operation  and  management  of the  Company  which  remain
unresolved  since the  Company's  fiscal year ending  October 31, 1994.  Each of
Mestek  and  Peerless  having  failed to agree to a  resolution  of the  dispute
whereby one or the other would acquire the other's interest in the Company, they
finally  agreed  that it would be  desirable  and in the  best  interest  of the
Company and its  shareholders  if the dispute were  resolved by (a) dividing the
Company into its two historic businesses - producing  ASME-approved,  thin-wall,
cored  castings and the machining and production of finished  castings  suitable
for use in the  manufacture of boilers for heating (the "Foundry  Business") and
the assembly of such finished castings and other components in the production of
fully-assembled  boilers for heating (the "Boiler Assembly  Business"),  and (b)
dividing the ownership of the respective  businesses so that the operator of the
Boiler  Assembly  Business would be a subsidiary of Peerless and the operator of
the Foundry Business would be a subsidiary of Mestek.  This Plan arises pursuant
to that certain  Settlement and Release  Agreement (the "Settlement  Agreement")
among Mestek and those of its  affiliates  having an interest in the  Settlement
Agreement, the Company, Peerless and Peerless Heater Company.

         In order to effect the  separation  of the Company into its  respective
businesses (the  "Division"),  the Company shall create a subsidiary,  Boyertown
Foundry  Company  ("  BFC"),  into  which  it  shall  transfer  the  assets  and
liabilities of the Foundry  Business.  The assets and  liabilities of the Boiler
Assembly Business shall remain in the Company . The Company shall as part of the
Plan of  Reorganization  and with  respect to certain  shareholders,  distribute
shares of the common stock of the Company ("Company Common Stock") and shares of
the common stock of its wholly owned subsidiary,  BFC ("BFC Common Stock"),  and
accept  shares of the Company  Common Stock in exchange for shares of BFC Common
Stock.  The manner,  timing and procedures of the Division are set forth in this
Plan of Reorganization (the "Plan") and the exhibits attached hereto.
The terms and conditions of the Plan are as follows:

1.       Corporate  Approvals.  The Board of Directors of the Company shall meet
         pursuant to the Notice of Special  Meeting of the Board of Directors of
         Eafco,  Inc.,  which is  attached  hereto as  Exhibit  A . The  special
         meeting  of the  Board  shall  be for the  purpose  of (a)  considering
         whether the Plan is desirable and in the best  interests of the Company
         and (b)  voting  upon the  resolutions  of the  Board  set forth in the
         Resolutions  of the Board of  Directors,  which are attached  hereto as
         Exhibit B. If the Board of Directors shall approve the Plan, the

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         Board shall cause the Secretary of the  Corporation  to deliver to each
         of the  shareholders  of the  Company  appearing  on the  books  of the
         Company  as of the  record  date  determined  by the  Board (a) the the
         Notice to  Shareholders  which (i) summarizes the terms of the Division
         and its affect upon the Company and its shareholders, and (ii) provides
         instructions and  documentation  by which the Minority  Shareholders of
         the Company (as defined in Section 5 below)  shall  return their shares
         of the Company  Common  Stock issued and  outstanding  as of the Record
         Date (as defined  below) and receive  the  distribution  of the Company
         Common  Stock and the BFC Common Stock as provided in Section 4, below,
         which  Notice to  Shareholders  is  attached  hereto  as  Exhibit C and
         incorporated herein by reference

2.       Creation of Subsidiary.   The Company shall create the subsidiary BFC 
         under the laws of
         ----------------------
         the Commonwealth of Pennsylvania to facilitate the Division, which 
         shall be governed by
         Articles of Incorporation to be filed with the Secretary of State of 
         the Commonwealth of
         Pennsylvania, which are attached hereto as Exhibit D  and incorporated
         herein by reference.
                                                    ----------
         Immediately following the Special Meeting of the Board of Directors  
         of the Company, the
         Board of Directors named within such Articles of Incorporation shall 
         adopt (a) the
         resolutions set forth in the Consent In Lieu of Organizational Meeting 
         of the Board of
         Directors of BFC, which is attached hereto as Exhibit E ,  and (b) the 
         resolutions effecting
                                                       ----------
         this Plan and the Division pursuant to the Unanimous Written Consent of
         the Board of
         Directors of BFC, which are attached hereto as Exhibit F .
                                                        ----------

3.       Transfer of Assets and Liabilities.  To effect the Division,  the 
         Company shall transfer or
         ----------------------------------
         assign to BFC all of the assets and liabilities and take all actions as
         required under the
         Division Agreement,  attached hereto as Exhibit G.  All assets and 
         liabilities of the
                                                 ---------
         Company not transferred to or assumed by BFC pursuant to the Division 
         Agreement shall
         remain the property of the Company.  The Division Agreement also sets 
         forth the terms and
         conditions of the division of the Foundry Business and the Boiler 
         Assembly Business  and
         methods of valuation whereby after the Division, the underlying net 
         value of the assets and
         liabilities in the Company and in BFC shall be proportionate to the 
         respective underlying
         stock interests.

4.       Exchange with Mestek.  Pursuant to and in  furtherance  of the terms of
         the Settlement Agreement,  Mestek shall exchange the 3,931.75 shares of
         the  Company  Common  Stock  owned by Mestek as of the Record  Date (as
         defined  below) for 3,931.75  newly issued  shares of BFC Common Stock.
         The Company shall,  simultaneously  with the above exchange,  surrender
         the one (1) share of BFC Common Stock for which it  subscribed  as part
         of the organization of BFC to the Secretary of BFC for cancellation.

5.       Distribution to Minority  Shareholders.  Upon the approval of this Plan
         by the Board of  Directors  of the  Company,  the 529.25  shares of the
         Company Common Stock held by the  shareholders of the Company set forth
         in Exhibit 2.5 of the Division Agreement (the "Minority  Shareholders")
         shall be immediately canceled.  The Minority Shareholders shall receive
         a distribution  from the Company and from its wholly owned  subsidiary,
         BFC, in the form of the Company  Common  Stock and the BFC Common Stock
         which shall be

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         distributed  on the basis of (a)  one-half  (1/2) newly issued share of
         the Company Common Stock,  and (b) one-half (1/2) newly issued share of
         the BFC Common  Stock,  for each  issued and  outstanding  share of the
         shares of the Company Common Stock owned by such  Shareholder as of the
         record date established by the Board of Directors for  determination of
         the Minority  Shareholders  eligible to receive such  distribution (the
         "Record Date").

6.       Effect of Plan on Peerless and Mestek.  Pursuant to and in  furtherance
         of the terms of the Settlement  Agreement,  Peerless has elected not to
         receive a distribution of the BFC Common Stock,  and Mestek has elected
         not to receive a  distribution  of the Company  Common Stock under this
         Plan.  Peerless  shall  retain all of the shares of the Company  Common
         Stock  owned by  Peerless  which are issued and  outstanding  as of the
         Record Date, which shall not be canceled.

7.       Shareholder  Agreement.  In connection with the transactions  described
         above, each of the Company,  Peerless, Mestek and BFC shall be required
         to execute  and  deliver the  Shareholder  Agreement  which is attached
         hereto as  Exhibit H and  incorporated  herein by this  reference.  The
         Shareholder   Agreement   contains   those   certain   representations,
         warranties  and covenants of the parties  executing  such  Agreement in
         connection with the treatment of the transactions described herein as a
         "tax-free",  divisive  reorganization under Section 355 of the Internal
         Revenue Code of 1986, as amended.

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