Document:

COMMERCIAL SECURITY AGREEMENT
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Principal       Loan Date     Maturity        Loan No     Call / Coll    Account      Officer         Initials
---------       ---------     --------        -------     -----------    -------      -------         --------
<C>             <C>           <C>             <C>         <C>            <C>          <C>             <C>
$1,200,000      10/31/2001    03/31/2003      9001        2 / 7380       6810063      6231
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References  in the shaded  area are for  Lender's  use only and do not limit the
applicability of this document to any particular loan or item.

Any item above containing "***" has been omitted due to text length limitations.
</TABLE>

Grantor:  NACO INDUSTRIES, INC.         Lender:  ZIONS FIRST NATIONAL BANK
          395 WEST 1400 NORTH                    LOGAN COMMERCIAL BANKING CENTER
          LOGAN, UT 84341                        460 NORTH MAIN STREET
                                                 LOGAN, UT 84321

THIS COMMERCIAL  SECURITY AGREEMENT dated October 31, 2001, Is made and executed
between  NACO  INDUSTRIES,  INC.  ("Grantor")  and  ZIONS  FIRST  NATIONAL  BANK
('Lender').

GRANT OF SECURITY INTEREST. For valuable consideration, Grantor grants to Lender
a security Interest in the Collateral to secure the Indebtedness and agrees that
Lender  shall  have the  rights  stated in this  Agreement  with  respect to the
Collateral, in addition to all other rights which Lender may have by law.

COLLATERAL  DESCRIPTION.  The word  "Collateral" as used in this Agreement means
the  following  described  property,  whether now owned or  hereafter  acquired,
whether now  existing or  hereafter  arising,  and  wherever  located,  in which
Grantor  is  giving  to  Lender  a  security  interest  for the  payment  of the
Indebtedness  and performance of all other  obligations  under the Note and this
Agreement:

      All Inventory, Chattel Paper, Accounts and General Intangibles

In addition, the word "Collateral" also includes all the following,  whether now
owned or hereafter  acquired,  whether now existing or  hereafter  arising,  and
wherever located:

      (A) All accessions,  attachments,  accessories,  tools,  parts,  supplies,
      replacements  and  additions to any of the  collateral  described  herein,
      whether added now or later.

      (B) All  products  and produce of any of the  property  described  in this
      Collateral section.

      (C) All  accounts,  general  intangibles,   instruments,   rents,  monies,
      payments,  and all other rights,  arising out of a sale,  lease,  or other
      disposition of any of the property described in this Collateral section.

      (D)All proceeds (including insurance proceeds) from the sale, destruction,
      loss,  or  other  disposition  of any of the  property  described  in this
      Collateral  section,  and sums due from a third  party who has  damaged or
      destroyed  the  Collateral  or from that party's  insurer,  whether due to
      judgment, settlement or other process.

      (El All records and data relating to any of the property described in this
      Collateral  section,  whether  in  the  form  of  a  writing,  photograph,
      microfilm, microfiche, or electronic media, together with all of Grantor's
      right,  title,  and interest in and to all computer  software  required to
      utilize,  create,  maintain,  and  process  any  such  records  or data on
      electronic media.

Despite any other provision of this Agreement,  Lender is not granted,  and will
not have, a  nonpurchase  money  security  interest in household  goods,  to the
extent  such a security  interest  would be  prohibited  by  applicable  law. In
addition,  if because of the type of any Property,  Lender is required to give a
notice of the right to cancel under Truth in Lending for the Indebtedness,  then
Lender  will not have a security  interest in such  Collateral  unless and until
such a notice is given.

                                       1
<PAGE>

CROSS-COLLATERALIZATION.  In addition to the Note,  this  Agreement  secures all
obligations, debts and liabilities, plus interest thereon, of Grantor to Lender,
or any one or more of them, as well as all claims by Lender  against  Grantor or
any one or more of them,  whether now  existing or  hereafter  arising,  whether
related or unrelated to the purpose of the Note, whether voluntary or otherwise,
whether due or not due, direct or indirect, determined or undetermined, absolute
or  contingent,  liquidated  or  unliquidated  whether  Grantor  may  be  liable
individually  or jointly with others,  whether  obligated as guarantor,  surety,
accommodation party or otherwise,  and whether recovery upon such amounts may be
or hereafter  may become barred by any statute of  limitations,  and whether the
obligation  to repay such  amounts  may be or  hereafter  may  become  otherwise
unenforceable.

RIGHT OF SETOFF.  To the extent  permitted by applicable  law, Lender reserves a
right of  setoff  in all  Grantor's  accounts  with  Lender  (whether  checking,
savings,  or some other  account).  This  includes  all accounts  Grantor  holds
jointly  with  someone  else and all  accounts  Grantor  may open in the future.
However,  this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Grantor  authorizes  Lender, to the
extent  permitted by  applicable  law, to charge or setoff all sums owing on the
Indebtedness against an,,, and all such accounts.

GRANTOR'S  REPRESENTATIONS  AND WARRANTIES WITH RESPECT TO THE COLLATERAL.  With
respect to the Collateral, Grantor represents and promises to Lender that:

      Perfection  of  Security  Interest.  Grantor  agrees to execute  financing
      statements  and to take whatever  other actions are requested by Lender to
      perfect and continue Lender's  security  interest in the Collateral.  Upon
      request  of  Lender,  Grantor  will  deliver to Lender any and all of the,
      documents evidencing or constituting the Collateral, and Grantor will note
      Lender's  interest  upon any and all  chattel  paper if not  delivered  to
      Lender for possession by Lender.  This is a continuing  Security Agreement
      and  will  continue  in  effect  even  though  all  or  any  part  of  the
      Indebtedness  is paid in full and even though for a period of time Grantor
      may not be indebted to Lender.

      Notices to  Lender.  Grantor  will  promptly  notify  Lender in writing at
      Lender's  address  shown  above (or such  other  addresses  as Lender  may
      designate  from time to time) prior to any (1) change in  Grantor's  name;
      (2)  change in  Grantor's  assumed  business  name(s);  (3)  change in the
      management  of the  Corporation  Grantor;  (4)  change  in the  authorized
      signer(s); (5) change in Grantor's principal office address, (6) change in
      Grantor's  state of  organization;  (7)  conversion of Grantor to a new or
      different type of business  entity;  or (8) change it, any other aspect of
      Grantor that  directly or  indirectly  relates to any  agreements  between
      Grantor and Lender.  No change in Grantor's name or state of  organization
      will take effect until after Lender has received notice

      No  Violation.  The  execution  and  delivery of this  Agreement  will not
      violate any law or agreement  governing  Grantor or to which  Grantor i@ a
      party, and its certificate or articles of incorporation  and bylaws do not
      prohibit any term or condition of this Agreement.

      Enforceability  of Collateral.  To the extent the  Collateral  consists of
      accounts,  chattel  paper,  or  general  intangibles,  as defined by t@)@:
      Uniform  Commercial Code, the Collateral is enforceable in accordance with
      its terms,  is genuine,  and fully complies with all  applicable  laws and
      regulations  concerning  form,  content  and  manner  of  preparation  and
      execution,  and all persons  appearing to be  obligated on the  Collateral
      have  authority and capacity to contract and are in fact obligated as they
      appear to be on the Collateral. At the time any Account becomes subject to
      a security  interest in favor of Lender,  the Account  shall be a good and

                                       2
<PAGE>

      valid account representing an undisputed,  bonafide  indebtedness incurred
      by  the  account  debtor,   for  merchandise   hold  subject  to  delivery
      instructions or previously  shipped or delivered pursuant to a contract of
      sale,  or for  services  previously  performed  by Grantor with or for the
      account debtor. So long as this Agreement remains in effect, Grantor shall
      not, without Lender's prior written consent,  compromise,  settle, adjust,
      or extend payment under or with regard to any such  Accounts.  There shall
      be no setoffs  or  counterclaims  against  any of the  Collateral,  and no
      agreement shall have been made under which any deductions or discounts may
      be claimed  concerning the Collateral  except those disclosed to Lender in
      writing.

      Location of the  Collateral.  Except in the  ordinary  course of Grantor's
      business,  Grantor  agrees to keep the  Collateral  (or to the  extent the
      Collateral  consists of  intangible  property  such as accounts or general
      intangibles,  the records  concerning the Collateral) at Grantor's address
      shown above or at such other  locations as are acceptable to Lender.  Upon
      Lender's  request,  Grantor will deliver to Lender in form satisfactory to
      Lender a schedule of real properties and Collateral  locations relating to
      Grantor's operations,  including without limitation the following: (1) all
      real property Grantor owns or is purchasing; (2) all real property Grantor
      is renting or leasing;  (3) all storage  facilities  Grantor owns,  rents,
      leases,  or uses; and (4) all other  properties where Collateral is or may
      be located.

      Removal of the  Collateral.  Except in the  ordinary  course of  Grantor's
      business,  including the sales of inventory,  Grantor shall not remove the
      Collateral  from its existing  location  without  Lender's  prior  written
      consent. To the extent that the Collateral consists of vehicles,  or other
      titled  property,  Grantor shall not take or permit any action which would
      require application for certificates of title for the vehicles outside the
      State of Utah,  without  Lender's  prior written  consent.  Grantor shall,
      whenever requested, advise Lender of the exact location of the Collateral.

      Transactions  Involving Collateral.  Except for inventory sold or accounts
      collected in the ordinary  course of Grantor's  business,  or as otherwise
      provided for in this Agreement,  Grantor shall not sell, offer to sell, or
      otherwise  transfer or dispose of the Collateral.  While Grantor is not in
      default under this Agreement,  Grantor may sell inventory, but only in the
      ordinary  course of its business and only to buyers who qualify as a buyer
      in the  ordinary  course of  business.  A sale in the  ordinary  course of
      Grantor's  business  does not  include  a  transfer  in  partial  or total
      satisfaction  of a debt  or any  bulk  sale.  Grantor  shall  not  pledge,
      mortgage, encumber or otherwise permit the Collateral to be subject to any
      lien, security interest,  encumbrance,  or charge, other than the security
      interest provided for in this Agreement, without the prior written consent
      of Lender. This includes security interests even if junior in right to the
      security interests granted under this Agreement.  Unless waived by Lender,
      all proceeds from any disposition of the Collateral (for whatever  reason)
      shall be held in trust for  Lender  and shall not be  commingled  with any
      other funds;  provided  however,  this  requirement  shall not  constitute
      consent by Lender to any sale or other disposition.  Upon receipt, Grantor
      shall immediately deliver any such proceeds to Lender.

      Title.  Grantor  represents and warrants to Lender that Grantor holds good
      and marketable  title to the  Collateral,  free and clear of all liens and
      encumbrances except for the lien of this Agreement. No financing statement
      covering any of the  Collateral is on file in any public office other than
      those which reflect the security  interest created by this Agreement or to
      which Lender has  specifically  consented.  Grantor shall defend  Lender's
      rights in the  Collateral  against  the  claims  and  demands of all other
      persons.

      Repairs and Maintenance. Grantor agrees to keep and maintain, and to cause
      others to keep and  maintain,  the  Collateral  in good order,  repair and
      condition  at all times while this  Agreement  remains in effect.  Grantor
      further  agrees to pay when due all claims  for work done on, or  services
      rendered or material  furnished in connection  with the Collateral so that
      no  lien or  encumbrance  may  ever  attach  to or be  filed  against  the
      Collateral.

                                       3
<PAGE>

      Inspection of Collateral.  Lender and Lender's designated  representatives
      and agents  shall have the right at all  reasonable  times to examine  and
      inspect the Collateral wherever located.

      Taxes,  Assessments  and  Liens.  Grantor  will pay  when  due all  taxes,
      assessments and liens upon the Collateral, its use or operation, upon this
      Agreement,  upon any promissory note or notes evidencing the Indebtedness,
      or upon any of the other Related Documents.  Grantor may withhold any such
      payment  or may elect to  contest  any lien if  Grantor  is in good  faith
      conducting an appropriate  proceeding to contest the obligation to pay and
      so long as  Lender's  interest in the  Collateral  is not  jeopardized  in
      Lender's sole opinion.  If the  Collateral is subjected to a lien which is
      not discharged within fifteen (15) days, Grantor shall deposit with Lender
      cash, a sufficient corporate surety bond or other security satisfactory to
      Lender in an amount adequate to provide for the discharge of the lien plus
      any  interest,  costs,  reasonable  attorneys'  fees or other charges that
      could accrue as a result of foreclosure or sale of the Collateral.  In any
      contest Grantor shall defend itself and Lender and shall satisfy any final
      adverse judgment before enforcement against the Collateral.  Grantor shall
      name Lender as an additional  obligee  under any surety bond  furnished in
      the contest  proceedings.  Grantor  further  agrees to furnish Lender with
      evidence that such taxes, assessments,  and governmental and other charges
      have been paid in full and in a timely  manner.  Grantor may  withhold any
      such  payment or may elect to contest any lien if Grantor is in good faith
      conducting an appropriate  proceeding to contest the obligation to pay and
      so long as Lender's interest in the Collateral is not jeopardized.

      Compliance with Governmental  Requirements.  Grantor shall comply promptly
      with all laws,  ordinances,  rules  and  regulations  of all  governmental
      authorities,  now or hereafter  in effect,  applicable  to the  ownership,
      production,  disposition, or use of the Collateral. Grantor may contest in
      good faith any such law,  ordinance or regulation and withhold  compliance
      during any proceeding,  including appropriate appeals, so long as Lender's
      interest in the Collateral, in Lender's opinion, is not jeopardized.

      Hazardous Substances.  Grantor represents and warrants that the Collateral
      never has been, and never will be so long as this Agreement remains a lien
      on the Collateral,  used in violation of any Environmental Laws or for the
      generation,  manufacture,  storage,  transportation,  treatment, disposal,
      release  or   threatened   release  of  any   Hazardous   Substance.   The
      representations and warranties contained herein are based on Grantor's due
      diligence  in  investigating  the  Collateral  for  Hazardous  Substances.
      Grantor  hereby (1) releases and waives any future claims  against  Lender
      for  indemnity or  contribution  in the event Grantor  becomes  liable for
      cleanup or other costs  under any  Environmental  Laws,  and (2) agrees to
      indemnify and hold harmless  Lender  against any and all claims and losses
      resulting  from a  breach  of  this  provision  of  this  Agreement.  This
      obligation to indemnify shall survive the payment of the  Indebtedness and
      the satisfaction of this Agreement.

      Maintenance of Casualty Insurance.  Grantor shall procure and maintain all
      risks insurance,  including  without  limitation fire, theft and liability
      coverage  together  with such other  insurance  as Lender may require with
      respect  to  the  Collateral,  in  form,  amounts,   coverages  and  basis
      reasonably  acceptable  to Lender  and  issued by a company  or  companies
      reasonably  acceptable to Lender.  Grantor,  upon request of Lender,  will
      deliver  to  Lender  from time to time the  policies  or  certificates  of
      insurance in form  satisfactory  to Lender,  including  stipulations  that
      coverages  will not be cancelled or  diminished  without at least ten (10)
      days' prior written  notice to Lender and not including any  disclaimer of
      the insurer's  liability for failure to give such a notice. Each insurance
      policy also shall include an endorsement  providing that coverage in favor
      of Lender will not be impaired in any way by any act,  omission or default
      of Grantor or any other person.  In connection with all policies  covering
      assets in which  Lender holds or is offered a security  interest,  Grantor
      will provide Lender with such loss payable or other endorsements as Lender
      may  require.  If  Grantor  at any time  fails to obtain or  maintain  any
      Insurance as required under this  Agreement,  Lender may (but shall not be
      obligated to) obtain such insurance as Lender deems appropriate, including
      if Lender so chooses .single  interest  insurance,'  which will cover only
      Lender's interest in the Collateral.

                                       4
<PAGE>

      Application of Insurance Proceeds. Grantor shall promptly notify Lender of
      any loss or damage to the  Collateral.  Lender  may make  proof of loss if
      Grantor  fails to do so  within  fifteen  (15) days of the  casualty.  All
      proceeds of any insurance on the Collateral,  including  accrued  proceeds
      thereon,  shall be held by  Lender  as part of the  Collateral.  If Lender
      consents to repair or replacement of the damaged or destroyed  Collateral,
      Lender shall,  upon  satisfactory  proof of expenditure,  pay or reimburse
      Grantor  from  the  proceeds  for  the   reasonable   cost  of  repair  or
      restoration.  If Lender does not consent to repair or  replacement  of the
      Collateral, Lender shall retain a sufficient amount of the proceeds to pay
      all of the  Indebtedness,  and  shall  pay the  balance  to  Grantor.  Any
      proceeds which have not been  disbursed  within six (6) months after their
      receipt and which Grantor has not  committed to the repair or  restoration
      of the Collateral shall be used to prepay the Indebtedness.

      Insurance  Reserves.  Lender may require  Grantor to maintain  with Lender
      reserves  for  payment of  insurance  premiums,  which  reserves  shall be
      created by monthly  payments  from Grantor of a sum estimated by Lender to
      be sufficient  to produce,  at least fifteen (1 5) days before the premium
      due date,  amounts at least equal to the insurance premiums to be paid. If
      fifteen  (15)  days  before   payment  is  due,  the  reserve   funds  are
      insufficient,  Grantor shall upon demand pay any deficiency to Lender. The
      reserve  funds  shall be held by  Lender as a  general  deposit  and shall
      constitute  a  non-interest-bearing  account  which  Lender may satisfy by
      payment of the 'insurance  premiums required to be paid by Grantor as they
      become due.  Lender does not hold the reserve  funds in trust for Grantor,
      and  Lender is not the  agent of  Grantor  for  payment  of the  insurance
      premiums  required  to be  paid by  Grantor.  The  responsibility  for the
      payment of premiums shall remain Grantor's sole responsibility.

      Insurance  Reports.  Grantor,  upon  request of Lender,  shall  furnish to
      Lender  reports  on  each  existing  policy  of  insurance   showing  such
      information as Lender may reasonably request including the following:  (1)
      the name of the  insurer;  (2) the risks  insured;  (3) the  amount of the
      policy; (4) the property insured;  (5) the then current value on the basis
      of which  insurance has been obtained and the manner of  determining  that
      value;  and (6) the expiration  date of the policy.  In addition,  Grantor
      shall upon request by Lender  (however not more often than  annually) have
      an independent appraiser satisfactory to Lender determine,  as applicable,
      the cash value or replacement cost of the Collateral.

GRANTOR'S RIGHT TO POSSESSION AND TO COLLECT ACCOUNTS.  Until default and except
as  otherwise  provided  below  with  respect  to  accounts,  Grantor  may  have
possession  of the  tangible  personal  property and  beneficial  use of all the
Collateral  and may use it in any  lawful  manner  not  inconsistent  with  this
Agreement or the Related Documents,  provided that Grantor's right to possession
and  beneficial use shall not apply to any  Collateral  where  possession of the
Collateral by Lender is required by law to perfect Lender's security interest in
such Collateral.  Until otherwise notified by Lender, Grantor may collect any of
the Collateral  consisting of accounts.  At any time and even though no Event of
Default  exists,  Lender may  exercise its rights to collect the accounts and to
notify account  debtors to make payments  directly to Lender for  application to
the  Indebtedness.  If  Lender  at any time has  possession  of any  Collateral,
whether  before  or after an Event of  Default,  Lender  shall be deemed to have
exercised  reasonable care in the custody and  preservation of the Collateral if
Lender takes such action for that purpose as Grantor shall request or as Lender,
in Lender's sole discretion, shall deem appropriate under the circumstances, but
failure to honor any  request  by Grantor  shall not of itself be deemed to be a
failure to exercise  reasonable  care.  Lender shall not be required to take any
steps necessary to preserve any rights in the Collateral  against prior parties,
nor to protect,  preserve or maintain any security  interest given to secure the
Indebtedness.

LENDER'S  EXPENDITURES.  If any action or  proceeding  is  commenced  that would
materially  affect  Lender's  interest in the  Collateral or if Grantor fails to
comply with any provision of this Agreement or any Related Documents,  including
but not limited to  Grantor's  failure to  discharge or pay when due any amounts
Grantor is  required to  discharge  or pay under this  Agreement  or any Related
Documents,  Lender on Grantor's  behalf may (but shall not be obligated to) take
any  action  that  Lender  deems  appropriate,  including  but  not  limited  to
discharging or paying all taxes,  liens,  security  interests,  encumbrances and
other  claims,  at any time  levied or placed on the  Collateral  and paying all

                                       5
<PAGE>

costs  for  insuring,  maintaining  and  preserving  the  Collateral.  All  such
expenditures  incurred  or paid by  Lender  for such  purposes  will  then  bear
interest at the rate  charged  under the Note from the date  incurred or paid by
Lender to the date of repayment by Grantor. All such expenses will become a part
of the Indebtedness and, at Lender's option,  will (A) be payable on demand; (B)
be added to the balance of the Note and be apportioned among and be payable with
any  installment  payments  to  become  due  during  either  (1) the term of any
applicable  insurance  policy;  or (2) the remaining term of the Note; or (C) be
treated  as a  balloon  payment  which  will be due and  payable  at the  Note's
maturity.  The Agreement also will secure  payment of these amounts.  Such right
shall be in addition  to all other  rights and  remedies to which  Lender may be
entitled upon Default.  DEFAULT. Each of the following shall constitute an Event
of Default under this Agreement-.

      Payment  Default.  Grantor  fails to make any  payment  when due under the
      Indebtedness.

      Other Defaults. Grantor fails to comply with or to perform any other term,
      obligation, covenant or condition contained in this Agreement or in any of
      the  Related  Documents  or  to  comply  with  or  to  perform  any  term,
      obligation, covenant or condition contained in any other agreement between
      Lender and Grantor.  Default in Favor of Third Parties.  Should Grantor or
      any  Grantor  default  under  any  loan,  extension  of  credit,  security
      agreement,  purchase or sales agreement,  or any other agreement, in favor
      of any  other  creditor  or  person  that  may  materially  affect  any of
      Grantor's  property or  Grantor's  or any  Grantor's  ability to repay the
      Indebtedness or perform their respective  obligations under this Agreement
      or  any  of  the  Related  Documents.   False  Statements.  Any  warranty,
      representation  or statement  made or furnished to Lender by Grantor or on
      Grantor's behalf under this Agreement or the Related Documents is false or
      misleading  in any  material  respect,  either  now or at the time made or
      furnished or becomes false or misleading at any time thereafter.

      Defective  Collateralization.   This  Agreement  or  any  of  the  Related
      Documents ceases to be in full force and effect (including  failure of any
      collateral  document to create a valid and perfected  security interest or
      lien) at any time and for any reason.

      Insolvency.  The  dissolution or  termination of Grantor's  existence as a
      going business,  the insolvency of Grantor,  the appointment of a receiver
      for any part of  Grantor's  property,  any  assignment  for the benefit of
      creditors,  any  type of  creditor  workout,  or the  commencement  of any
      proceeding under any bankruptcy or insolvency laws by or against Grantor.

      Creditor  or  Forfeiture  Proceedings.   Commencement  of  foreclosure  or
      forfeiture  proceedings,   whether  by  judicial  proceeding,   self-help,
      repossession  or any other  method,  by any  creditor of Grantor or by any
      governmental agency against any collateral securing the Indebtedness. This
      includes a garnishment  of any of Grantor's  accounts,  including  deposit
      accounts,  with Lender.  However, this Event of Default shall not apply if
      there  is  a  good  faith  dispute  by  Grantor  as  to  the  validity  or
      reasonableness  of the  claim  which  is the  basis  of  the  creditor  or
      forfeiture  proceeding  and if Grantor gives Lender  written notice of the
      creditor or  forfeiture  proceeding  and deposits  with Lender monies or a
      surety  bond for the  creditor  or  forfeiture  proceeding,  in an  amount
      determined by Lender, in its sole discretion, as being an adequate reserve
      or bond for the dispute.

      Events  Affecting  Guarantor.  Any of the  preceding  events  occurs  with
      respect to  Guarantor  of any of the  Indebtedness  or  Guarantor  dies or
      becomes  incompetent  or revokes or disputes the validity of, or liability
      under, any Guaranty of the Indebtedness.

                                       6
<PAGE>

      Adverse Change.  A material  adverse change occurs in Grantor's  financial
      condition,  or Lender  believes the prospect of payment or  performance of
      the  Indebtedness is impaired.  Insecurity.  Lender in good faith believes
      itself insecure.

      Cure  Provisions.  If any  default,  other  than a default  in  payment is
      curable and if Grantor has not been given a notice of a breach of the same
      provision of this Agreement  within the preceding  twelve (12) months,  it
      may be cured  (and no event of default  will have  occurred)  if  Grantor,
      after receiving written notice from Lender demanding cure of such default:
      (1)  cures  the  default  within  fifteen  (15)  days;  or (2) if the cure
      requires more than fifteen (15) days,  immediately  initiates  steps which
      Lender deems in Lender's  sole  discretion  to be  sufficient  to cure the
      default  and  thereafter   continues  and  completes  all  reasonable  and
      necessary  steps  sufficient  to produce  compliance as soon as reasonably
      practical.

RIGHTS  AND  REMEDIES  ON  DEFAULT.  If an Event of  Default  occurs  under this
Agreement, at any time thereafter, Lender shall have all the rights of a secured
party  under  the  Utah  Uniform   Commercial  Code.  In  addition  and  without
limitation,  Lender may  exercise  any one or more of the  following  rights and
remedies:

      Accelerate  Indebtedness.  Lender may  declare  the  entire  Indebtedness,
      including any  prepayment  penalty which Grantor would be required to pay,
      immediately due and payable, without notice of any kind to Grantor.

      Assemble  Collateral.  Lender may require Grantor to deliver to Lender all
      or any portion of the Collateral and any and all certificates of title and
      other documents relating to the Collateral.  Lender may require Grantor to
      assemble the  Collateral  and make it available to Lender at a place to be
      designated by Lender.  Lender also shall have full power to enter upon the
      property of Grantor to take  possession of and remove the  Collateral.  If
      the  Collateral  contains other goods not covered by this Agreement at the
      time of  repossession,  Grantor  agrees  Lender may take such other goods,
      provided  that Lender makes  reasonable  efforts to return them to Grantor
      after repossession.

      Sell the  Collateral.  Lender  shall  have  full  power  to  sell,  lease,
      transfer,  or otherwise  deal with the  Collateral or proceeds  thereof in
      Lender's own name or that of Grantor.  Lender may sell the  Collateral  at
      public auction or private sale. Unless the Collateral threatens to decline
      speedily in value or is of a type customarily sold on a recognized market,
      Lender will give Grantor, and other persons as required by law, reasonable
      notice of the time and place of any public  sale,  or the time after which
      any private sale or any other disposition of the Collateral is to be made.
      However,  no notice need be  provided  to any person  who,  after Event of
      Default occurs,  enters into and  authenticates an agreement  waiving that
      person's right to  notification  of sale. The  requirements  of reasonable
      notice  shall be met if such notice is given at least ten (10) days before
      the  time  of the  sale  or  disposition.  All  expenses  relating  to the
      disposition of the Collateral,  including without  limitation the expenses
      of  retaking,  holding,  insuring,  preparing  for  sale and  selling  the
      Collateral,  shall  become  a part  of the  Indebtedness  secured  by this
      Agreement  and shall be payable on demand,  with interest at the Note rate
      from date of expenditure until repaid.

      Appoint Receiver. Lender shall have the right to have a receiver appointed
      to take possession of all or any part of the Collateral, with the power to
      protect and preserve the Collateral,  to operate the Collateral  preceding
      foreclosure  or sale,  and to collect  the Rents from the  Collateral  and
      apply the proceeds,  over and above the cost of the receivership,  against
      the Indebtedness.  Grantor hereby waives any requirement that the receiver
      be impartial  and  disinterested  as to all of the parties and agrees that
      employment  by Lender  shall not  disqualify  a person  from  serving as a
      receiver.

                                       7
<PAGE>

      Collect  Revenues,  Apply  Accounts.  Lender,  either  itself or through a
      receiver,  may collect the payments,  rents, income, and revenues from the
      Collateral.  Lender may at any time in Lender's  discretion  transfer  any
      Collateral into Lender's own name or that of Lender's  nominee and receive
      the payments,  rents,  income, and revenues therefrom and hold the same as
      security for the  Indebtedness or apply it to payment of the  Indebtedness
      in such  order of  preference  as Lender  may  determine.  Insofar  as the
      Collateral consists of accounts, general intangibles,  insurance policies,
      instruments,  chattel paper, choses in action, or similar property, Lender
      may demand,  collect,  receipt for, settle,  compromise,  adjust, sue for,
      foreclose,  or realize on the Collateral as Lender may determine,  whether
      or not Indebtedness or Collateral is then due. For these purposes,  Lender
      may, on behalf of and in the name of Grantor, receive, open and dispose of
      mail  addressed to Grantor;  change any address to which mail and payments
      are to be sent; and endorse notes, checks, drafts, money orders, documents
      of title,  instruments  and items  pertaining  to  payment,  shipment,  or
      storage of any  Collateral.  To facilitate  collection,  Lender may notify
      account  debtors and obligors on any Collateral to make payments  directly
      to Lender.

      Obtain Deficiency. If Lender chooses to sell any or all of the Collateral,
      Lender may obtain a judgment against Grantor for any deficiency  remaining
      on the  Indebtedness  due  to  Lender  after  application  of all  amounts
      received  from the  exercise  of the rights  provided  in this  Agreement.
      Grantor shall be liable for a deficiency even if the transaction described
      in this subsection is a sale of accounts or chattel paper.

      Other Rights and  Remedies.  Lender shall have all the rights and remedies
      of a secured creditor under the provisions of the Uniform Commercial Code,
      as may be amended from time to time.  In  addition,  Lender shall have and
      may exercise any or all other rights and remedies it may have available at
      law, in equity, or otherwise.

      Election of Remedies.  Except as may be prohibited by applicable  law, all
      of Lender's rights and remedies,  whether evidenced by this Agreement, the
      Related Documents, or by any other writing, shall be cumulative and may be
      exercised  singularly  or  concurrently.  Election by Lender to pursue any
      remedy shall not exclude  pursuit of any other remedy,  and an election to
      make  expenditures  or to take action to perform an  obligation of Grantor
      under this Agreement, after Grantor's failure to perform, shall not affect
      Lender's right to declare a default and exercise its remedies.

DEFINITION OF  INDEBTEDNESS  AND NOTE.  'Indebtedness'  and "Note' as referenced
herein are hereby deleted in their entirety and replaced with the following:

Indebtedness.  The word 'Indebtedness' means and includes without limitation all
Loans, together with all other obligations, debts and liabilities of Borrower to
Lender,  or any one or more of them,  as well as all  claims by  Lender  against
Borrower,  or any  one or more  of  them;  whether  now or  hereafter  existing,
voluntary or involuntary, due or not due, absolute or contingent,  liquidated or
unliquidated;  whether  Borrower  may be liable  individually  or  jointly  with
others; whether Borrower may be obligated as a guarantor,  surety, or otherwise;
whether recovery upon such indebtedness may be or hereafter may become barred by
any statute of limitations;  and whether such  indebtedness  may be or hereafter
may become otherwise unenforceable.

Note:The word 'Note" means and includes without limitation Borrower's promissory
note or  notes,  if any,  evidencing  Borrower's  Loan  obligations  in favor of
Lender,  as well as any  substitute,  replacement or  refinancing  note or notes
therefor.

MISCELLANEOUS  PROVISIONS.  The following miscellaneous provisions are a part of
this Agreement:

      Amendments.   This  Agreement,   together  with  any  Related   Documents,
      constitutes  the entire  understanding  and agreement of the parties as to
      the matters set forth in this Agreement.  No alteration of or amendment to
      this  Agreement  shall be effective  unless given in writing and signed by
      the party or parties  sought to be charged or bound by the  alteration  or
      amendment.

                                       8
<PAGE>

      Arbitration Disclosures.

          1. ARBITRATION IS FINAL AND BINDING ON THE PARTIES AND SUBJECT TO ONLY
             VERY LIMITED REVIEW BY A COURT.
          2. IN  ARBITRATION  THE PARTIES ARE WAIVING THEIR RIGHT TO LITIGATE IN
             COURT, INCLUDING THEIR RIGHT TO A JURY TRIAL.
          3. DISCOVERY IN ARBITRATION IS MORE LIMITED THAN DISCOVERY IN COURT.
          4. ARBITRATORS ARE NOT REQUIRED TO INCLUDE  FACTUAL  FINDINGS OR LEGAL
             REASONING IN THEIR AWARDS. THE RIGHT TO APPEAL OR SEEK MODIFICATION
             OF ARBITRATORS' RULINGS IS VERY LIMITED.
          5. A PANEL OF  ARBITRATORS  MIGHT INCLUDE AN ARBITRATOR  WHO IS OR WAS
             AFFILIATED WITH THE BANKING INDUSTRY.
          6. ARBITRATION  WILL APPLY TO ALL DISPUTES  BETWEEN THE  PARTIES,  NOT
             JUST THOSE CONCERNING THE AGREEMENT.
          7. IF YOU HAVE QUESTIONS ABOUT  ARBITRATION,  CONSULT YOUR ATTORNEY OR
             THE AMERICAN ARBITRATION ASSOCIATION.

      (a) Any claim or controversy ('Dispute')  between or among the parties and
      their  employees,  agents,  affiliates,  and assigns,  including,  but not
      limited to, Disputes  arising out of or relating to this  agreement,  this
      arbitration provision ('arbitration clause"), or any related agreements or
      instruments  relating hereto or delivered in connection herewith ("Related
      Agreements"),  and  including,  but not limited to, a Dispute  based on or
      arising  from an  alleged  tort,  shall  at the  request  of any  party be
      resolved  by  binding   arbitration  in  accordance  with  the  applicable
      arbitration   rules  of  the   American   Arbitration   Association   (the
      "Administrator").  The provisions of this arbitration clause shall survive
      any  termination,  amendment,  or expiration of this  agreement or Related
      Agreements.  The provisions of this arbitration clause shall supersede any
      prior arbitration agreement between or among the parties.

      (b) The  arbitration  proceedings  shall be conducted  in a city  mutually
      agreed by the  parties.  Absent  such an  agreement,  arbitration  will be
      conducted in Salt Lake City, Utah or such other place as may be determined
      by the Administrator. The Administrator and the arbitrators shall have the
      authority  to the extent  practicable  to take any  action to require  the
      arbitration  proceeding to be completed and the arbitrators)' award issued
      within 150 days of the filing of the Dispute with the  Administrator.  The
      arbitrators)  shall have the  authority  to impose  sanctions on any party
      that fails to comply with time periods imposed by the Administrator or the
      arbitrators),  including the sanction of summarily  dismissing any Dispute
      or defense with prejudice.  The  arbitrators)  shall have the authority to
      resolve  any  Dispute   regarding  the  terms  of  this  agreement,   this
      arbitration  clause,  or  Related  Agreements,   including  any  claim  or
      controversy  regarding the  arbitrability of any Dispute.  All limitations
      periods  applicable  to any  Dispute  or  defense,  whether  by statute or
      agreement,  shall apply to any  arbitration  proceeding  hereunder and the
      arbitrator(s)  shall have the  authority to decide  whether any Dispute or
      defense is barred by a limitations  period and, if so, to summarily  enter
      an award dismissing any Dispute or defense on that basis. The doctrines of
      compulsory counterclaim, res judicata, and collateral estoppel shall apply
      to any  arbitration  proceeding  hereunder so that a party must state as a
      counterclaim in the arbitration  proceeding any claim or controversy which
      arises out of the  transaction or occurrence that is the subject matter of
      the Dispute. The arbitrators) may in the arbitrator(s)'  discretion and at
      the  request  of  any  party:  (1)  consolidate  in a  single  arbitration
      proceeding any other claim arising out of the same  transaction  involving
      another party to that transaction  that is bound by an arbitration  clause
      with  Lender,  such as  borrowers,  guarantors,  sureties,  and  owners of
      collateral;  and (2) consolidate or administer multiple arbitration claims
      or  controversies  as a class  action  in  accordance  with Rule 23 of the
      Federal Rules of Civil Procedure.

      (c) The  arbitrator(s)  shall be selected in accordance  with the rules of
      the Administrator  from panels maintained by the  Administrator.  A single
      arbitrator  shall have  expertise  in the subject  matter of the  Dispute.
      Where three  arbitrators  conduct an arbitration  proceeding,  the Dispute
      shall be decided by a majority vote of the three arbitrators, at least one
      of whom must have  expertise  in the subject  matter of the Dispute and at
      least one of whom must be a practicing  attorney.  The arbitrators)  shall
      award to the prevailing  party  recovery of all costs and fees  (including
      attorneys' fees and costs, arbitration  administration fees and costs, and
      arbitrators)'  fees). The arbitrators),  either during the pendency of the
      arbitration proceeding or as part of the arbitration award, also may grant
      provisional or ancillary remedies including but not limited to an award of
      injunctive  relief,  foreclosure,  sequestration,   attachment,  replevin,
      garnishment, or the appointment of a receiver.

                                       9
<PAGE>

      (d) Judgement upon an arbitration award may be entered in any court having
      jurisdiction,  subject to the following limitation:  the arbitration award
      is  binding  upon the  parties  only if the amount  does not  exceed  Four
      Million Dollars  ($4,000,000.00);  if the award exceeds that limit, either
      party may demand the right to a court  trial.  Such a demand must be filed
      with the  Administrator  within thirty (30) days following the date of the
      arbitration award; if such a demand is not made with that time period, the
      amount of the arbitration  award shall be binding.  The computation of the
      total amount of an  arbitration  award shall include  amounts  awarded for
      attorneys' fees and costs, arbitration  administration fees and costs, and
      arbitrator(s)' fees.

      (e) No  provision  of this  arbitration  clause,  nor the  exercise of any
      rights hereunder, shall limit the right of any party to: (1) judicially or
      non-judicially  foreclose against any real or personal property collateral
      or other  security;  (2) exercise  self-help  remedies,  including but not
      limited to  repossession  and setoff  rights;  or (3) obtain  from a court
      having  jurisdiction  thereover  any  provisional  or  ancillary  remedies
      including   but   not   limited   to   injunctive   relief,   foreclosure,
      sequestration,  attachment, replevin, garnishment, or the appointment of a
      receiver.  Such  rights  can be  exercised  at any  time,  before or after
      initiation of an arbitration proceeding,  except to the extent such action
      is contrary to the  arbitration  award.  The exercise of such rights shall
      not constitute a waiver of the right to submit any Dispute to arbitration,
      and any claim or controversy  related to the exercise of such rights shall
      be a Dispute  to be  resolved  under the  provisions  of this  arbitration
      clause. Any party may initiate arbitration with the Administrator.  If any
      party  desires to  arbitrate a Dispute  asserted  against  such party in a
      complaint, counterclaim, cross-claim, or third-party complaint thereto, or
      in an answer or other reply to any such pleading,  such party must make an
      appropriate motion to the trial court seeking to compel arbitration, which
      motion  must be filed  with the  court  within 45 days o'  service  of the
      pleading, or amendment thereto, setting forth such Dispute. If arbitration
      is compelled  after  commencement  of litigation  of a Dispute,  the party
      obtaining an order compelling  arbitration shall commence  arbitration and
      pay the  Administrator's  filing fees and costs within 45 days of entry of
      such order. Failure to do so shall constitute an agreement to proceed with
      litigation  and  waiver  of the  right to  arbitrate.  In any  arbitration
      commenced by a consumer regarding a consumer Dispute, Lender shall pay one
      half of the Administrator's filing fee, up to $250.

      (f) Notwithstanding the applicability of any other law to this  agreement,
      the  arbitration  clause,  or  Related  Agreements  between  or among  the
      parties,  the Federal  Arbitration Act, 9 U.S.C.  Section 1 et seq., shall
      apply to the construction and  interpretation of this arbitration  clause.
      If any  provision of this  arbitration  clause  should be determined to be
      unenforceable,  all other  provisions  of this  arbitration  clause  shall
      remain in full force and effect.

      Attorneys'  Fees;  Expenses.  Grantor  agrees  to pay upon  demand  all of
      Lender's costs and expenses, including Lender's reasonable attorneys' fees
      and Lender's legal  expenses,  incurred in connection with the enforcement
      of this  Agreement.  Lender may hire or pay someone  else to help  enforce
      this  Agreement,  and  Grantor  shall pay the costs and  expenses  of such
      enforcement.  Costs and expenses  include Lender's  reasonable  attorneys'
      fees and legal  expenses  whether or not  Lender's  salaried  employee and
      whether or not there is a lawsuit,  including  reasonable  attorneys' fees
      and legal expenses for bankruptcy proceedings (including efforts to modify
      or vacate any automatic stay or injunction),  appeals, and any anticipated
      post-judgment collection services.  Grantor also shall pay all court costs
      and such additional fees as may be directed by the court.

      Caption  Headings.  Caption headings in this Agreement are for convenience
      purposes only and are not to be used to interpret or define the provisions
      of this Agreement.

      Governing Law. This Agreement will be governed by,  construed and enforced
      in  accordance  with  federal law and the laws of the State of Utah.  This
      Agreement has been accepted by Lender in the State of Utah.

                                       10
<PAGE>

      Choice of Venue.  If there is a  lawsuit,  Grantor  agrees  upon  Lender's
      request to submit to the  jurisdiction  of the courts of Salt Lake County,
      State of Utah.

      No Waiver by Lender.  Lender shall not be deemed to have waived any rights
      under this Agreement  unless such waiver is given in writing and signed by
      Lender. No delay or omission on the part of Lender in exercising any right
      shall  operate as a waiver of such right or any other  right.  A waiver by
      Lender of a provision of this Agreement  shall not prejudice or constitute
      a waiver of Lender's right otherwise to demand strict compliance with that
      provision  or any other  provision of this  Agreement.  No prior waiver by
      Lender,  nor any  course of dealing  between  Lender  and  Grantor,  shall
      constitute  a waiver  of any of  Lender's  rights  or of any of  Grantor's
      obligations as to any future transactions.  Whenever the consent of Lender
      is required under this  Agreement,  the granting of such consent by Lender
      in any instance  shall not  constitute  continuing  consent to  subsequent
      instances where such consent is required and in all cases such consent may
      be granted or withheld in the sole discretion of Lender.

      Notices.  Unless otherwise provided by applicable law, any notice required
      to be given  under this  Agreement  or  required  by law shall be given in
      writing, and shall be effective when actually delivered in accordance with
      the law or with this Agreement,  when actually  received by  telefacsimile
      (unless  otherwise  required by law),  when  deposited  with a  nationally
      recognized  overnight courier, or, if mailed, when deposited in the United
      States mail, as first class, certified or registered mail postage prepaid,
      directed to the addresses shown near the beginning of this Agreement.  Any
      party may change its address for notices  under this  Agreement  by giving
      formal written notice to the other parties, specifying that the purpose of
      the notice is to change the party's address. For notice purposes,  Grantor
      agrees to keep Lender informed at all times of Grantor's  current address.
      Unless  otherwise  provided by  applicable  law, if there is more than one
      Grantor,  any notice given by Lender to any Grantor is deemed to be notice
      given to all Grantors.

      Power of Attorney. Grantor hereby appoints Lender as Grantor's irrevocable
      attorney-in-fact  for the -purpose of executing any documents necessary to
      perfect,  amend,  or to continue  the  security  interest  granted in this
      Agreement or to demand  termination  of filings of other secured  parties.
      Lender may at any time, and without  further  authorization  from Grantor,
      file a  carbon,  photographic  or  other  reproduction  of  any  financing
      statement or of this Agreement for use as a financing  statement.  Grantor
      will  reimburse  Lender  for  all  expenses  for  the  perfection  and the
      continuation  of the  perfection  of  Lender's  security  interest  in the
      Collateral.

      Severability.  If a court of competent jurisdiction finds any provision of
      this  Agreement  to be  illegal,  invalid,  or  unenforceable  as  to  any
      circumstance, that finding shall not make the offending provision illegal,
      invalid, or unenforceable as to any other circumstance.  If feasible,  the
      offending provision shall be considered modified so that it becomes legal,
      valid and enforceable.  If the offending  provision cannot be so modified,
      it shall be  considered  deleted  from this  Agreement.  Unless  otherwise
      required by law, the illegality,  invalidity,  or  unenforceability of any
      provision of this  Agreement  shall not affect the  legality,  validity or
      enforceability of any other provision of this Agreement.

                                       11
<PAGE>

      Successors  and  Assigns.  Subject  to  any  limitations  stated  in  this
      Agreement  on transfer of  Grantor's  interest,  this  Agreement  shall be
      binding upon and inure to the benefit of the parties, their successors and
      assigns.  If ownership of the Collateral  becomes vested in a person other
      than Grantor,  Lender,  without notice to Grantor, may deal with Grantor's
      successors with reference to this Agreement and the Indebtedness by way of
      forbearance or extension without releasing Grantor from the obligations of
      this Agreement or liability under the Indebtedness.

      Survival  of   Representations   and  Warranties.   All   representations,
      warranties, and agreements made by Grantor in this Agreement shall survive
      the  execution  and delivery of this  Agreement,  shall be  continuing  in
      nature,  and shall  remain in full  force and  effect  until  such time as
      Grantor's Indebtedness shall be paid in full.

      Time is of the Essence.  Time is of the essence in the performance of this
      Agreement.

DEFINITIONS.  The following capitalized words and terms shall have the following
meanings  when  used  in  this  Agreement.  Unless  specifically  stated  to the
contrary, all references to dollar amounts shall mean amounts in lawful money of
the United States of America. Words and terms used in the singular shall include
the  plural,  and the plural  shall  include  the  singular,  as the context may
require.  Words and terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code:

      Account.  The word "Account'  means a trade account,  account  receivable,
      other  receivable,  or other  right to payment  for goods sold or services
      rendered  owing to Grantor  (or to a third  party  grantor  acceptable  to
      Lender).

      Agreement.  The word 'Agreement' means this Commercial Security Agreement,
      as this Commercial Security Agreement may be amended or modified from time
      to time,  together  with  all  exhibits  and  schedules  attached  to this
      Commercial Security Agreement from time to time.

      Borrower.  The word "Borrower' means NACO INDUSTRIES,  INC., and all other
      persons and entities signing the Note in whatever capacity.

      Collateral.  The word 'Collateral' means all of Grantor's right, title and
      interest  in and to all the  Collateral  as  described  in the  Collateral
      Description section of this Agreement.

      Default.  The word "Default" means the Default set forth in this Agreement
      in the section titled 'Default".

      Environmental Laws. The words "Environmental Laws' mean any and all state,
      federal and local  statutes,  regulations  and ordinances  relating to the
      protection  of  human  health  or  the  environment,   including   without
      limitation the Comprehensive  Environmental  Response,  Compensation,  and
      Liability  Act of 1980,  as  amended,  42  U.S.C.  Section  9601,  et seq.
      ("CERCLA'), the Superfund Amendments and Reauthorization Act of 1986, Pub.
      L. No. 99-499 ('SARA'),  the Hazardous  Materials  Transportation  Act, 49
      U.S.C. Section 1801, et seq., the Resource  Conservation and Recovery Act,
      42 U.S.C.  Section  6901, et seq.,  or other  applicable  state or federal
      laws, rules, or regulations adopted pursuant thereto.

      Event of Default.  The words 'Event of Default'  mean any of the events of
      default  set  forth  in this  Agreement  in the  default  section  of this
      Agreement.

      Grantor. The word 'Grantor' means NACO INDUSTRIES, INC..

                                       12
<PAGE>

      Guarantor.   The  word  'Guarantor'   means  any  guarantor,   surety,  or
      accommodation party of any or all of the Indebtedness.

      Guaranty. The word 'Guaranty' means the guaranty from Guarantor to Lender,
      including without limitation a guaranty of all or part of the Note.

      Hazardous  Substances.  The words  'Hazardous  Substances'  mean materials
      that,  because of their quantity,  concentration or physical,  chemical or
      infectious  characteristics,  may  cause or pose a  present  or  potential
      hazard to human health or the environment when improperly  used,  treated,
      stored,  disposed of,  generated,  manufactured,  transported or otherwise
      handled. The words "Hazardous  Substances" are used in their very broadest
      sense  and  include  without  limitation  any and all  hazardous  or toxic
      substances,  materials  or  waste  as  defined  by  or  listed  under  the
      Environmental Laws. The term 'Hazardous Substances' also includes, without
      limitation,  petroleum and petroleum  by-products or any fraction  thereof
      and asbestos.

      Indebtedness.  The word 'Indebtedness' means the indebtedness evidenced by
      the Note or  Related  Documents,  including  all  principal  and  interest
      together  with all other  indebtedness  and costs and  expenses  for which
      Grantor is  responsible  under this  Agreement or under any of the Related
      Documents.

      Lender.  The word 'Lender' means ZIONS FIRST NATIONAL BANK, its successors
      and assigns.

      Note. The word 'Note' means the Note executed by NACO INDUSTRIES,  INC. in
      the principal  amount of  $1,200,000.00  dated October 31, 2001,  together
      with all renewals of, extensions of,  modifications  of,  refinancings of,
      consolidations of, and substitutions for the note or credit agreement.

      Related  Documents.  The words  'Related  Documents'  mean all  promissory
      notes,  credit  agreements.,  loan agreements,  environmental  agreements,
      guaranties,  security  agreements,  mortgages,  deeds of  trust,  security
      deeds,  collateral  mortgages,  and all other instruments,  agreements and
      documents,  whether now or hereafter existing, executed in connection with
      the Indebtedness.

GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS  COMMERCIAL  SECURITY
AGREEMENT AND AGREES TO ITS TERMS. THIS AGREEMENT IS DATED OCTOBER 31, 2001.

      GRANTOR:

      NACO INDUSTRIES, INC.

      By:
         -------------------
          W. MICHAEL HOPKINS
          President of NACO INDUSTRIES, INC.

                                       13EXHIBIT 10.01
swissfirst
--------------------------------------------------------------------------------
swissfirst Bank AG

                               OTC Contract Note

Seller:                          Roche Holdings, Inc.
                                 Herrn M.F. Kohler

Buyer:                           swissfirst Bank AG
                                 Herrn T. Maag
                                 Fax 01 204 81 81

Number of Contracts:             50,000

Call/Put:                        Call

Option Style:                    European

Underlying:                      Laboratory Corp of America Holdings

Security Number:                 US50540R4092

Multiplier                       1

Trade Date:                      December 18, 2001

Value Date:                      December 21, 2001

Expiration Date:                 June 21, 2002

Strike Price:                    USD 75.

Price Per Option:                USD 10.06

Total Premium:                   USD 503,000

Total Underlying Value:          USD 3,750,000

Payment Instructions:
--------------------------------------------------------------------------------
To be transmitted by telefax to swissfirst Bank AG:
                                                Telefax Number +4441-1-204 81 81
Acknowledged by: Roche Holdings, Inc.

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