AGREEMENT AND PLAN OF MERGER

         This Agreement and Plan of Merger (this "Agreement"), is made this 24th
day of October,  2002, by and between  Nor-Tex  Distributing,  Inc.  Acquisition
Corp., a Texas corporation ("Nor-Tex"), and Southwest Mortgage Corp., a Delaware
corporation   ("SMC")  (the  two  corporate   parties  hereto  being   sometimes
collectively referred to as the "Constituent Corporations"),

                              W I T N E S S E T H :

         WHEREAS,  the  proposed  merger  of  Nor-Tex  with  and  into  SMC (the
"Merger")  is  being  effected  pursuant  to  Nor-Tex's  Amended  Joint  Plan of
Reorganization  (the "Plan")  dated August 21, 2000 as confirmed by order of the
United  States  Bankruptcy  Court for the  Northern  District  of Texas,  Dallas
Division on September 27, 2000 in jointly administered Case No. 00-30768-BJH-11;

         WHEREAS, Nor-Tex has been authorized to effect the Merger in accordance
with the corporate laws of its state of incorporation;

         WHEREAS,  the  Merger has been  authorized  by SMC in  accordance  with
Section 252 of the Delaware General Corporation Law;

         WHEREAS,  under the Plan, all of Nor-Tex's outstanding  securities were
cancelled and certain of Nor-Tex's  creditors are entitled to receive  shares of
its common stock or the common stock of Nor-Tex's successor; and

         WHEREAS,  in this regard,  SMC will issue shares of its common stock to
such persons and entities in accordance with the Plan after the Merger;

         NOW, THEREFORE,  the Constituent  Corporations do hereby agree to merge
on the terms and conditions herein provided, as follows:

                                    ARTICLE I
                                     Merger

         1.1 Agreement to Merge.  The parties to this Agreement  agree to effect
the Merger herein  provided for,  subject to the terms and  conditions set forth
herein.

         1.2 Effective  Time of the Merger.  The Merger shall be effective  upon
the  acceptance  for filing of (i) the Articles of Merger with the  Secretary of
State of Texas and (ii) the Certificate of Merger with the Secretary of State of
Delaware.  The date and time the Merger becomes  effective is referred to as the
"Effective Time of the Merger."

         1.3  Surviving  Corporation.  Upon the  Effective  Time of the  Merger,
Nor-Tex  shall be  merged  with and into  SMC,  and SMC  shall be the  surviving
corporation,  governed  by  the  laws  of the  State  of  Delaware  (hereinafter
sometimes called the "Surviving Corporation").

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         1.4 Certificate of Incorporation and Bylaws. Upon the Effective Time of
the  Merger,  the  Certificate  of  Incorporation  and  Bylaws  of SMC in effect
immediately  prior to the Effective Time of the Merger shall be the  Certificate
of Incorporation and Bylaws of the Surviving Corporation,  subject always to the
right of the Surviving Corporation to amend its Certificate of Incorporation and
Bylaws in accordance  with the laws of the State of Delaware and the  provisions
of its Certificate of Incorporation and Bylaws.

         1.5 Directors and Officers. The directors and officers of SMC in office
at the Effective  Time of the Merger shall be and  constitute  the directors and
officers of the  Surviving  Corporation,  each  holding  the same office  and/or
directorship  in the  Surviving  Corporation  as they  held in SMC for the terms
elected and/or until their  respective  successors shall be elected or appointed
and qualified or until their sooner death, resignation or removal.

         1.6  Effect  of the  Merger.  On and after  the  Effective  Time of the
Merger,  subject to the terms and  conditions  of this  Agreement,  the separate
existence  of  Nor-Tex  shall  cease,  the  separate  existence  of SMC,  as the
Surviving  Corporation,  shall  continue  unaffected  by the  Merger,  except as
expressly set forth herein, and the Surviving Corporation shall succeed, without
further  action,  to all the  properties  and assets of  Nor-Tex of every  kind,
nature  and  description  and to  Nor-Tex's  business  as a going  concern.  The
Surviving  Corporation shall also succeed to all rights,  title and interests in
any real or other  property  owned by Nor-Tex  without  reversion or impairment,
without  further  act or deed,  and without any  transfer or  assignment  having
occurred,  but  subject to any  existing  liens  thereon.  All  liabilities  and
obligations of Nor-Tex that were not discharged in accordance  with the terms of
the  Plan  shall  become  the  liabilities  and  obligations  of  the  Surviving
Corporation and any proceedings pending against Nor-Tex that were not discharged
in accordance  with the terms of the Plan will be continued as if the Merger had
not occurred.

         1.7 Further Assurances. Nor-Tex hereby agrees that at any time, or from
time to time,  as and when  requested by the  Surviving  Corporation,  or by its
successors and assigns, it will execute and deliver, or cause to be executed and
delivered  in its  name by its last  acting  officers,  or by the  corresponding
officers  of the  Surviving  Corporation,  all  such  conveyances,  assignments,
transfers,  deeds or other instruments,  and will take or cause to be taken such
further or other action and give such  assurances as the Surviving  Corporation,
its  successors or assigns may deem  necessary or desirable in order to evidence
the transfer,  vesting of any property, right, privilege or franchise or to vest
or perfect  in or  confirm to the  Surviving  Corporation,  its  successors  and
assigns,  title  to and  possession  of all the  property,  rights,  privileges,
powers,  immunities,  franchises and interests referred to in this Article I and
otherwise to carry out the intent and purposes thereof.

         SMC,  as the  Surviving  Corporation,  agrees  that it will  pay to any
dissenting  stockholder of SMC, in accordance with any applicable  provisions of
the laws of  Delaware,  such  amount  as such  dissenting  stockholder  shall be
entitled to receive under applicable law as a dissenting stockholder.



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<PAGE>

                                   ARTICLE II
                  Capital Stock of the Constituent Corporations

         2.1 Nor-Tex Capital Stock. By virtue of the Plan and without any action
on the part of Nor-Tex, HCC or the holders of any of the common stock of Nor-Tex
("Nor-Tex  Common  Stock"),  each  share of  Nor-Tex  Common  Stock  issued  and
outstanding  immediately  prior to the  Effective  Time of the  Merger  shall be
cancelled  without  any merger  consideration  therefore  and shall no longer be
outstanding.

         2.2  Outstanding  SMC Capital  Stock.  Each share of the common  stock,
$.0001  par  value,  of SMC (the "SMC  Common  Stock")  issued  and  outstanding
immediately  prior to the Effective Time of the Merger shall continue  unchanged
and remain issued and outstanding  and shall be retained by the  stockholders of
SMC  immediately  prior to the  Effective  Time of the  Merger  as shares of the
Surviving Corporation.

         2.3 Right to Receive SMC Capital Stock.  Upon the Effective Time of the
Merger, by virtue of the Merger and without any action on the part of Nor-Tex or
SMC,  each share of Nor-Tex  Common Stock that persons and entities are entitled
to receive in  accordance  with the Plan  shall be  converted  into the right to
receive one fully paid and nonassessable share of SMC Common Stock.

         2.4 Issuance of SMC Common Stock.  Following the Effective  Time of the
Merger, SMC shall issue shares of SMC Common Stock in accordance with the Plan.

         2.5  Dissenting  Shares.  Each  share of SMC  Common  Stock  issued and
outstanding immediately prior to the Effective Time of Merger not voted in favor
of the Merger and the holder of which has given  written  notice of the exercise
of  dissenter's  rights  as  required  by  applicable  law is  herein  called  a
"Dissenting  Share."  Dissenting Shares shall not be converted into or represent
the right to receive the merger  consideration  pursuant to this  Agreement  and
shall be entitled only to such rights as are  available to such holder  pursuant
to applicable  law unless the holder  thereof shall have  withdrawn or forfeited
his dissenter's  rights.  Each holder of Dissenting  Shares shall be entitled to
receive the value of such  Dissenting  Shares held by him in accordance with the
provisions  of  applicable  law.  If  any  holder  of  Dissenting  Shares  shall
effectively  withdraw or forfeit his  dissenter's  rights under  applicable law,
such  Dissenting  Shares shall be converted into the right to receive the merger
consideration in accordance with this Agreement.

                                   ARTICLE III
                            Termination and Amendment

         3.1 Termination.  This Agreement may be terminated and abandoned at any
time prior to the Effective Time of the Merger by the mutual written  consent of
the Boards of Directors of Nor-Tex and SMC



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<PAGE>

         3.2  Consequences of  Termination.  In the event of the termination and
abandonment of this Agreement  pursuant to the provisions of Section 3.1 hereof,
this Agreement shall be of no further force or effect.


         3.3  Modification,  Amendment,  etc. Any of the terms or  conditions of
this  Agreement may be waived at any time by the party  entitled to the benefits
thereof,  and this  Agreement may be modified or amended at any time to the full
extent permitted by all applicable  corporate laws. Any waiver,  modification or
amendment shall be effective only if reduced to writing and executed by the duly
authorized representatives of the Constituent Corporations.

                                   ARTICLE IV
                                     General

         4.1  Expenses.  The  Surviving  Corporation  shall pay all  expenses of
carrying this Agreement into effect and accomplishing the Merger herein provided
for.

         4.2 Headings.  Descriptive  headings are for convenience only and shall
not  control or affect the meaning or  construction  of any  provisions  of this
Agreement.

         4.3  Counterparts.  This  Agreement  may be  executed  in any number of
counterparts, each of which when so executed and delivered shall be deemed to be
an original instrument, and all such counterparts together shall constitute only
one original.

         IN  WITNESS  WHEREOF,  each  of the  parties  hereto  has  caused  this
Agreement to be executed on its behalf by an officer duly  authorized  thereunto
as of the date first above written.

                                    NOR-TEX DISTRIBUTING, INC. ACQUISITION CORP.



                                    By: /s/ TIMOTHY P. HALTER
                                       -----------------------------------------
                                       TIMOTHY P. HALTER,
                                       President


                                    SOUTHWEST MORTGAGE CORP.


                                    By: /s/ PAUL INTERRANTE
                                       -----------------------------------------
                                       PAUL INTERRANTE,
                                       President







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