AGREEMENT AND PLAN OF MERGER

         THIS  AGREEMENT  AND PLAN OF MERGER (this "Plan") is entered into as of
the  20th day of  April,  1999,  by and  among  NACO  Industries,  Inc.,  a Utah
corporation  ("Industries")  and  NACO  Composites,  Inc.,  a  Utah  corporation
("Composites").

                                    Recitals:

         A.  Industries is a corporation originally  incorporated under the laws
of the  State of  Kansas  but that has been  duly  domesticated  and is  validly
existing and in good standing under the laws of the State of Utah.

         B.  Composites is a corporation duly incorporated, validly existing and
in good standing under the laws of the State of Utah.

         C.  The  respective  Boards of Directors of Industries  and  Composites
deem it advisable  for the mutual  benefit of  Industries  and  Composites  that
Composites be merged with and into  Industries (the "Merger") upon the terms and
subject  to the  conditions  set forth  herein and in  accordance  with the Utah
Revised Business Corporation Act (the "Utah Act").

         D.  Industries and Composites and their respective  Boards of Directors
have approved this Plan.

         NOW,  THEREFORE,  in  consideration  of the foregoing  premises and the
mutual covenants contained herein, the parties hereto agree as follows:

         1.  The  Merger.  At  the  Effective  Time  (as  hereinafter  defined),
Composites  shall be merged with and into Industries in accordance with the Utah
Act, and the separate corporate existence of Composites shall cease. (Industries
and   Composites   are  sometimes   referred  to  herein  as  the   "Constituent
Corporations," and Industries,  in its capacity as the corporation surviving the
Merger, is sometimes referred to herein as the "Surviving Corporation.")

         2.  Effective Time. The Merger shall become effective  immediately upon
the filing of this Plan, together with appropriate  Articles of Merger, with the
Utah Department of Commerce,  Division of Corporations  and Commercial Code (the
?Utah  Division?),  in  accordance  with the Utah Act. The date and time of such
filing are sometimes referred to herein as the "Effective Time."

         3.  Effect of the Merger.  The Merger  shall have the effects set forth
in Section 1106 of the Utah Act.

         4.  Articles  of  Incorporation.   The  Articles  of  Incorporation  of
Industries as in effect  immediately  prior to the Effective Time shall continue
in full force and  effect as the  Articles  of  Incorporation  of the  Surviving
Corporation  until duly amended in accordance  with the  provisions  thereof and
applicable law, and shall not be affected by the Merger.



<PAGE>

         5.  Bylaws.  The Bylaws of Industries as in effect immediately prior to
the Effective  Time shall continue in full force and effect as the Bylaws of the
Surviving  Corporation  until duly  amended in  accordance  with the  provisions
thereof and applicable law.

         6.  Directors and Officers.

             (a) At the Effective  Time, the board of directors of the Surviving
     Corporation  shall  consist  of the  members of the board of  directors  of
     Industries  immediately  prior  to  the  Merger,  to  serve  thereafter  in
     accordance  with the Bylaws of the  Surviving  Corporation  and until their
     respective  successors  shall  have  been duly  elected  and  qualified  in
     accordance with such Bylaws and the laws of the State of Utah.

             (b) At  the  Effective   Time,   the  officers  of   the  Surviving
     Corporation  shall be the officers of Industries  immediately  prior to the
     Merger,  with such  officers to serve  thereafter  in  accordance  with the
     Bylaws of the Surviving  Corporation and until their respective  successors
     shall have been duly elected and qualified in  accordance  with such Bylaws
     and the laws of the State of Utah.

         7.  Cancellation of Composites Shares. At the Effective Time, by virtue
of the Merger and without any action on the part of  Composites,  or the holders
thereof,  each share of the common stock of Composites (the  "Composites  Common
Stock") issued and outstanding immediately prior to the Effective Time, shall be
cancelled and extinguished without consideration.

         8.  Industries  Shares. All of the issued and outstanding shares of the
Common Stock, $.01 par value per share, (the "Industries  Common Stock") and all
of the  issued  and  outstanding  shares of the  Series 1 Class A 7%  Cumulative
Convertible Preferred Stock, $3.00 par value, (the "Industries Preferred Stock")
of Industries  shall remain issued and  outstanding  and shall not be converted,
exchanged or cancelled.

         9.  Shareholder  Approval.  Pursuant to the provisions of the Utah Act,
this Plan is not  required  to be  submitted  to the  holders of the  Composites
Common Stock for their  approval.  Pursuant to the  provisions  of the Utah Act,
this Plan is not  required  to be  submitted  to the  holders of the  Industries
Common  Stock  nor the  holders  of the  Industries  Preferred  Stock  for their
approval.  This Plan and the Articles of Merger shall be executed and filed, and
all  required  acts shall be done in order to  accomplish  the Merger  under the
provisions of the Utah Act and all other  applicable laws and regulations of the
State of Utah.

         10. Termination  or  Abandonment.  This Plan may be terminated  and the
Merger  abandoned at any time prior to the Effective  Time by the mutual written
consent of the respective  Boards of Directors of the Constituent  Corporations.
In the event of  termination  of this Plan as herein  provided,  Industries  and
Composites and their respective  Boards of Directors and shareholders  shall not
be liable to each other or the directors or shareholders of each other.


PLAN-MERGER
                                       2

<PAGE>

         11. Other Provisions.

             (a) Governing  Law. This  Plan shall be governed in all respects by
     the laws of the State of Utah.

             (b) Counterparts.  This Plan may be executed in counterparts,  each
     of which shall be an original,  but all of which together shall  constitute
     one and the same agreement.

         IN WITNESS  WHEREOF,  the parties have executed this Plan by their duly
authorized officers as of the date first above written.


                                   NACO INDUSTRIES, INC.,
                                   a Utah corporation



                                   By: /s/ Verne E. Bray
                                      ------------------------------------------
                                           Verne E. Bray, President


                                   NACO COMPOSITES, INC.,
                                   a Utah corporation



                                   By: /s/ Jeffrey J. Kirby
                                      ------------------------------------------
                                           Jeffrey J. Kirby, President