Indemnification Agreement

         This Agreement is entered into effective the 13th day of March, 2000 by
and  between  VERNE E.  BRAY,  a  resident  of North  Logan,  Utah  (hereinafter
"Shareholder"),  and NACO  INDUSTRIES  INC., a Utah  corporation  with principal
offices in Logan, Utah (hereinafter "NACO").

         WHEREAS,  since the time of its formation  years ago,  Shareholder  has
been a principal officer, director and shareholder of NACO, working successfully
toward its growth and expansion in the manufacture and national marketing of pvc
pipe fittings; and

         WHEREAS,  during  the  course  of  NACO's  growth  and  expansion,  the
corporation  has  employed  many people at various  levels of the  organization,
including Shareholder's son Dan Bray; and

         WHEREAS,  during the summer and fall of 1998, Dan Bray desired to leave
the  employment  of NACO and begin his own  business  operations  in the area of
manufacturing and marketing of plastic  composites,  while at the same time NACO
desired  to expand its  operations  into the  manufacture  and/or  marketing  of
plastic composites,  which NACO intended to do through a wholly owned subsidiary
known as NACO  COPOSITES,  INC.,  each party hoping to profit  through  business
transactions with each other, as well as with third parties; and

         WHEREAS,  in  November  of 1998 Dan  Bray  established  a Utah  limited
liability  company known as RIMSHOT,  L.C., in which he is believed to have been
the sole  owner  and  member,  for the  purposes  set forth  above  (hereinafter
"Rimshot"); and

         WHEREAS,  after  having  obtained  some  initial  contract  work and in
anticipation  of substantial  financing for which Dan Bray indicated that he had
applied  and with  respect  to which he was  optimistic  about  receiving,  NACO
provided  financial  accommodations to Rimshot and Dan Bray by (1) entering into
two leases,  one dated September 24, 1998 for a term of 60 Months, and the other
dated November 25, 1998, for a term of 36 Months, for certain  equipment,  which
equipment was to be used by Rimshot,  in the approximate  total principal amount
of $135,000.00  (hereinafter the "Rimshot Equipment Leases"), and (2) by issuing
NACO  purchase  orders  and  making  payments  to third  party  vendors or other
creditors of Rimshot, in the approximate amount of $311,231.02  (hereinafter the
"Rimshot  Creditor  Payments"),  all with the hope and expectation that Dan Bray
and Rimshot would soon obtain  sufficient  financing to repay NACO and hold NACO
harmless from further expense or obligation regarding such accommodations; and,

         WHEREAS,  perhaps due to a misunderstanding but in any event apparently
without  the  knowledge  of NACO,  when Dan Bray  entered  into a written  lease
agreement  dated  September  4, 1998,  for a building  located at 1055 West 2700
South,  Ogden, Utah, with WADMAN  INVESTMENTS,  a Utah limited  partnership,  as
Lessor,  for the business  operations  of Rimshot,  Dan Bray executed such lease
agreement  (hereinafter  the  "Rimshot  Building  Lease")  in the  name  of NACO
COMPOSITES, INC., as Tenant; and


                                       1
<PAGE>


         WHEREAS,  at  the  urging  and  insistence  of  NACO's  lenders,   NACO
COMPOSITES, INC. was merged up into NACO in 1999; and

         WHEREAS,  although Dan Bray is still  manufacturing  and doing business
through  Rimshot,  he has not yet been  able to  obtain  the  desired  financing
necessary to repay NACO for the Rimshot Creditor  Payments,  or for rentals paid
by NACO under the Rimshot Equipment Leases; and

         WHEREAS,  although Dan Bray and Rimshot are making rental  payments for
the Rimshot  Building  Lease,  it is likely  that  Rimshot is in arrears in such
payments,  and the lease is written to continue through  September of this year,
at the rate of $2,000.00 rental per month, for which rents the landlord may seek
recourse  against  NACO in the  event of  Rimshot's  default,  inasmuch  as NACO
COMPOSITES,  INC. is shown  under the lease as the  tenant,  and it has now been
merged into NACO, with NACO becoming  responsible for whatever  liabilities NACO
COMPOSITES, INC. had, as a result of such merger; and

         WHEREAS, NACO is now a publicly held corporation,  in which Shareholder
is the  principal  shareholder,  and  the  independent  auditors  for  NACO  are
suggesting  that on the basis of the  foregoing  facts,  it may be  necessary to
write down the NACO assets relating to Rimshot (such as the equipment  leased by
NACO, and the receivable from Rimshot for the Rimshot Creditor  Payments),  with
the resulting charge against equity in the financial statements for NACO, unless
this matter can otherwise be resolved to protect the position of NACO; and

         WHEREAS,  Shareholder does not wish to see NACO shareholders  adversely
affected by the Dan Bray and Rimshot transactions  involving NACO,  particularly
since these transactions  involve  Shareholder's son and Shareholder was serving
as an officer and director of NACO at the time when these transactions occurred,
and accordingly  Shareholder has agreed to indemnify and hold NACO harmless from
liability,  expense, and obligations pertaining to the Rimshot Equipment Leases,
the Rimshot Creditor  Payments,  and the Rimshot Building Lease, as set forth in
this agreement; and

         WHEREAS,  NACO desires to obtain such indemnity from  Shareholder,  and
hopes to avoid the charge  against equity on its financial  statements  which it
might otherwise have to accept, but for such indemnity;

         IT IS THEREFOR AGREED AS FOLLOWS:

         1.  Indemnification:  In exchange for good and valuable  consideration,
the receipt and sufficiency of which is hereby acknowledged, Shareholder agrees,
pursuant to the terms set forth herein, to indemnify and hold NACO harmless from
any and all expense or obligation  incurred as a result of the Rimshot Equipment
Leases and the Rimshot Building Lease, and by reimbursement to further indemnify
and hold NACO  harmless  from all  amounts  paid by NACO as and for the  Rimshot



                                       2
<PAGE>

Creditor Payments.  A copy of the Rimshot Equipment Leases is attached hereto as
Exhibits  "A" and "B",  and a copy of the  Rimshot  Building  Lease is  attached
hereto as Exhibit  "C",  and a detail  sheet  reflecting  the  Rimshot  Creditor
Payments  is  attached  hereto  as  Exhibit  "D",  all  of  which  Exhibits  are
incorporated by this reference as though fully set forth herein.

         2.  Payments  by   Shareholder:   Shareholder  is  presently  the  sole
shareholder of PVC, Inc., a Utah  corporation  with principal  offices in Logan,
Utah  (hereinafter  "PVC"),  which corporation is the owner of much of the land,
buildings and equipment  leased by NACO for use in its business.  Shareholder is
presently  in the process of seeking to  refinance  the debt  within PVC,  Inc.,
based  upon its  asset  values,  in  order to  obtain  funds  which  can be made
available to  Shareholder  and assist in  repayments to NACO in  fulfillment  of
Shareholder's  indemnity  hereunder.  Shareholder  shall  continue to diligently
pursue such  financing  through PVC,  Inc.,  which funds may be used in part, at
least,  to  acquire  additional  needed  equipment  for  lease to NACO,  thereby
generating  additional  rentals  which  may be  used  to  reimburse  NACO  under
Shareholder's  indemnity.   Accordingly,  the  parties  hereto  agree  upon  the
following  payment  schedule  by  Shareholder,  in  meeting  his  obligation  of
indemnity hereunder:

         a. Assumption of Prospective Leasehold Obligations: Beginning March 15,
         2000,  Shareholder  shall  assume and  perform all  obligations  of the
         Lessee  under the Rimshot  Equipment  Leases and the  Rimshot  Building
         Lease,  making  sure that NACO is not called  upon to make any  further
         such  payments.  Shareholder  shall  attempt  to  obtain  the  Lessors'
         approvals for his assumption and  substitution as the Lessee under such
         leases, but in any event,  Shareholder shall see that such payments are
         made,  even if the rents must be paid by  Shareholder as a Sublessee to
         NACO, with NACO then making payment to the Lessor(s).

         b. Rimshot Creditor Payments:  Shareholder shall reimburse NACO for the
         Rimshot  Creditor  Payments  by making  payments of TWO  THOUSAND  FIVE
         HUNDRED DOLLARS  ($2,500.00) per month,  commencing on October 1, 2000,
         and  continuing  on the  same  day of each  month  thereafter,  without
         interest,  for a period of one (1) year,  with  additional such monthly
         payments  of  principal,  without  interest,   thereafter  until  paid;
         provided, however, that:

                  1.  Shareholder   shall  attempt  to  increase  these  monthly
                  payments  upon  obtaining  the PVC financing to the sum of SIX
                  THOUSAND   DOLLARS   ($6,000.00)   per  month;   however,   if
                  Shareholder is unable to increase the monthly  payments by the
                  end of the first year of such payments,  to equal at least the
                  sum of FIVE THOUSAND  DOLLARS  ($5,000.00) per month, the then
                  remaining  balance  of the  Rimshot  Creditor  Payments  shall
                  thereafter  bear  interest  at  the  Applicable  Federal  Rate
                  designated at such time for federal tax purposes; and


                                       3
<PAGE>


                  2.  Shareholder  shall reimburse to NACO the entire balance of
                  the Rimshot Creditor  Payments,  with payments as set forth in
                  this Paragraph 2.b., subject to Shareholder's  right to prepay
                  all or part at any time  without  penalty,  and subject to the
                  addition  of  interest  after the  first  year as set forth in
                  Paragraph 2.b.1. above.

         3.  Naco's  Assignment  of  Interest to  Shareholder:  In exchange  for
Shareholder's indemnity as set forth herein, NACO hereby assigns to Shareholder,
with  recourse,  its entire  right,  title and  interest  in and to the  Rimshot
Equipment Leases, the Rimshot Building Lease, and the account or note receivable
from Rimshot for the Rimshot Creditor Payments.

         4.  Mutual Release: In consideration of the terms set forth herein, and
contingent upon the timely performance thereof,  Shareholder  expressly releases
NACO, and NACO expressly releases Shareholder and all other members of its Board
of Directors and Officers,  from any further  claim,  obligation or liability of
any kind,  known or  unknown,  arising  from or in  connection  with the Rimshot
Equipment Leases, the Rimshot Creditor Payments and the Rimshot Building Lease.

         5.  Enforcement:  If any  legal  action  or any  arbitration  or  other
proceeding is brought for the  enforcement of this  agreement,  or because of an
alleged dispute, breach, default, or misrepresentation in connection with any of
the provisions of this agreement,  the successful or prevailing party or parties
shall be entitled to recover reasonable attorney's fees and other costs incurred
in that action or  proceeding,  in  addition to any other  relief to which it or
they may be entitled.

         6.  Corporate  Authorization:  The party  executing  this  Agreement on
behalf of NACO  represents  and warrants that the Board of Directors of NACO has
duly  authorized  and approved the execution and delivery of this  agreement and
all corporate  action  necessary or proper to fulfill the obligations of NACO to
be performed under this agreement.

         7.  Effect of Headings:  The subject headings of the paragraphs of this
agreement are included for purposes of  convenience  only,  and shall not affect
the construction or interpretation of any of its provisions.

         8.  Entire Agreement;  Modification; Waiver: This agreement constitutes
the entire  agreement  between the  parties  pertaining  to the  subject  matter
contained  in it  and  supersedes  all  prior  and  contemporaneous  agreements,
representations, and understandings of the parties. No supplement, modification,
or amendment of this agreement  shall be binding  unless  executed in writing by
all the parties.  No waiver of any of the provisions of this agreement  shall be
deemed,  or shall  constitute,  a waiver of any other provision,  whether or not
similar, nor shall any waiver constitute a continuing waiver. No waiver shall be
binding unless executed in writing by the party making the waiver.


                                       4
<PAGE>


         9.  Parties in Interest: Nothing in this agreement,  whether express or
implied, is intended to confer any rights or remedies under or by reason of this
agreement  on any  persons  other than the  parties  to it and their  respective
successors and assigns, nor is anything in this agreement intended to relieve or
discharge the  obligation or liability of any third persons to any party to this
agreement,  nor  shall  any  provisions  give any  third  persons  any  right of
subrogation or action over against any party to this agreement.

         10. Assignment:  This agreement shall be binding on, and shall inure to
the  benefit  of,  the  parties  to  it  and  their  respective   heirs,   legal
representatives,  successors, and assigns; provided, however, that neither party
hereunder may assign their rights or delegate their duties hereunder without the
express prior written consent of the other party.

         11. Governing  Law:  This  agreement  shall be construed in  accordance
with,  and  governed  by,  the laws of the State of Utah,  and in the event of a
dispute hereunder, the parties hereto consent to jurisdiction and venue in Cache
County, State of Utah.

         12. Further Assurances:  The parties mutually  acknowledge their intent
to accomplish the assumption of the various  Rimshot  liabilities by Shareholder
and  reimbursement and indemnity of NACO pursuant to the terms set forth herein.
Each party agrees to take whatever  steps or further  assurances,  including the
execution of documents,  are  reasonably  necessary in order to accomplish  this
objective.

         13. Pledge of PVC Lease  Receivables:  In consideration of the terms of
this agreement, Shareholder shall, as the sole shareholder, officer and director
of PVC, cause PVC to convey to NACO a security  interest in all of the PVC lease
receivables  from NACO,  whether from real or personal  property  leases,  which
security interest shall remain effective during the period in which there remain
balances unpaid hereunder with respect to the Rimshot Equipment Leases,  Rimshot
Building Lease,  or the Rimshot  Creditor  Payments.  Upon the expiration of the
initial term of the present  lease of real  property  from PVC to NACO,  if such
lease  is not  renewed  by  NACO  pursuant  to  its  option  therein  contained,
Shareholder shall at such time pledge additional  collateral,  which may include
Shareholder's  stock in PVC and/or NACO, of  sufficient  value to at least equal
the remaining balance owed by Shareholder hereunder at such time.

         IN WITNESS WHEREOF, the parties hereto have set their hands,  effective
the date and year first set forth above.

NACO INDURSTRIES, INC.



By:/s/Vernie E. Bray
--------------------
VERNE E. BRAY



                                       5