UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    FORM 10-Q

[X]      QUARTERLY  REPORT  PURSUANT  TO SECTION  13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

         For the quarterly period ended March 31, 2002

                                       OR

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(d) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

                  For the transition period from ______to______

                        Commission File Number 000-27437

                               PLANETRX.COM, INC.

             (Exact name of registrant as specified in its charter)

              Delaware                                           94-3227733
    (State or other jurisdiction                              (I.R.S. Employer
 of incorporation or organization)                           Identification No.)

                             6419 Shelby View Drive
                            Memphis, Tennessee 38134
                    (Address of principal executive offices)



       Registrant's telephone number, including area code: (901) 379-2310

Indicate by check mark whether the Registrant (1) has filed all reports required
by  Section  13 or 15(d)  of the  Securities  Exchange  Act of 1934  during  the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports) and (2) has been subject to such filing  requirements  for
the past 90 days: Yes [X] No [ ]

Indicate the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.


Class                                               Outstanding at May 15, 2002
Common Stock, $0.0001 par value                              6,119,115




<PAGE>




                                Table of Contents



PART I.  FINANCIAL INFORMATION

Item 1.  Condensed Financial Statements

         Condensed Balance Sheets at March 31, 2002
         (unaudited) and December 31, 2001

         Condensed Statements of Operations for the Three Months
         Ended March 31, 2002 and 2001 (unaudited)

         Condensed  Statements  of Cash  Flows for the  Three  Months
         Ended March 31, 2002 and 2001 (unaudited)

         Notes to Condensed Financial Statements

Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

PART II. OTHER INFORMATION

Item 1.  Legal Proceedings

Item 2.  Changes in Securities and Use of Proceeds

Item 3.  Defaults Upon Senior Securities

Item 4.  Submission of Matters to a Vote of Security Holders

Item 5.  Other Information

Item 6.  Exhibits, Financial Statement Schedules, and Reports on Form 8-K

Signatures



<PAGE>


                                     PART I

ITEM 1. FINANCIAL STATEMENTS

                               PLANETRX.COM, INC.
                            Condensed Balance Sheets
               (unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                                   March 31,                December 31,
                                                                                      2002                      2001
                                                                                -----------------         -----------------
ASSETS
Current assets:
<S>                                                                             <C>                       <C>
      Cash and cash equivalents                                                 $             119         $             147
      Accounts receivable, net                                                                 35                        76
      Prepaid expenses and other current assets                                               140                       154
                                                                                -----------------         -----------------
         Total current assets                                                                 294                       377
      Property and equipment, held for sale                                                    --                        12
      Intangible assets, held for sale                                                          7                        88
                                                                                -----------------         -----------------
                                                                                $             301         $             477
                                                                                =================         =================
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
      Accounts payable                                                          $              80         $             127
      Accrued expenses                                                                        111                        28
      Accrued restructuring charges                                                            44                        69
                                                                                -----------------         -----------------
         Total liabilities                                                                    235                       224

Commitments and contingencies

Stockholders' equity:
      Preferred Stock: issuable in series, $0.0001 par value;
         5,000 shares authorized; no shares issued and outstanding                             --                        --
      Common Stock: $0.0001 par value; 200,000 shares authorized;
         6,119 shares issued and outstanding                                                   --                        --
      Additional paid-in capital                                                          427,672                   427,672
      Deferred stock-based compensation                                                      (897)                   (1,149)
      Accumulated deficit                                                                (426,709)                 (426,270)
                                                                                -----------------         -----------------
         Total stockholders' equity                                                            66                       253
                                                                                -----------------         -----------------
                                                                                $             301         $             477
                                                                                =================         =================
</TABLE>

The accompanying notes are an integral part of these financial statements.



<PAGE>

                               PLANETRX.COM, INC.
                       Condensed Statements of Operations
               (unaudited, in thousands, except per share amounts)
<TABLE>
<CAPTION>
                                                                                            Three Months Ended
                                                                                                 March 31,
                                                                                ----------------------------------------
                                                                                       2002                    2001
                                                                                -------------------     ----------------
Net revenue:
<S>                                                                             <C>                     <C>
         e-commerce                                                             $            --         $          3,957
         Sponsorship                                                                         42                    1,743
                                                                                ---------------         ----------------
                                                                                             42                    5,700
                                                                                ---------------         ----------------
Cost of net revenue:
         e-commerce                                                                          --                    4,038
         Sponsorship                                                                         --                       --
                                                                                ---------------         ----------------
                                                                                             --                    4,038
                                                                                ---------------         ----------------
Gross Profit                                                                                 42                    1,662
                                                                                ---------------         ----------------
Operating expenses:
         Marketing and sales                                                                 --                      513
         Shipping, handling and related costs                                                --                    3,594
         Product development                                                                 --                    1,335
         General and administrative                                                         196                    1,795
         Stock-based compensation                                                           252                      689
         Impairment loss                                                                     43                    2,191
                                                                                ---------------         ----------------
                  Total operating expenses                                                  491                   10,117
                                                                                ---------------         ----------------
Operating loss                                                                             (449)                   8,455
Other income                                                                                 --                    1,888
Interest income                                                                              10                      124
Interest expense                                                                             --                      226
                                                                                ---------------         ----------------
Net loss available to common stockholders                                       $          (439)        $         (6,669)
                                                                                ===============         ================
Basic and diluted net loss per share                                            $         (0.07)        $          (1.09)
                                                                                ===============         ================
Weighted average shares used to
compute basic and diluted net
loss per share                                                                            6,118                    6,119
                                                                                ===============         ================
</TABLE>



The accompanying notes are an integral part of these financial statements



<PAGE>


                               PLANETRX.COM, INC.
                       Condensed Statements of Cash Flows
                            (unaudited, in thousands)
<TABLE>
<CAPTION>
                                                                                         Three Months Ended
                                                                                              March 31,
                                                                                --------------------------------------
                                                                                     2002                 2001
                                                                                -----------------   ------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                             <C>     <C>         <C>      <C>
      Net loss                                                                  $      (439)      $         (6,669)
      Adjustments to reconcile net loss to net cash used in operating
       activities:
         Depreciation and amortization                                                   --                  1,860
         Stock-based compensation                                                       252                    689
         Impairment loss                                                                 43                  2,191
         Gain on sale of intangible assets                                               --                 (1,888)
         Changes in assets and liabilities:
                  Accounts receivable                                                    41                    449
                  Inventories                                                            --                  1,557
                  Prepaid expenses and other current assets                              14                    438
                  Other assets                                                           --                    (10)
                  Accounts payable                                                      (47)                  (682)
                  Accrued expenses and restructuring charges                             58                   (562)
                                                                                -----------------   ------------------
                           Net cash used in operating activities                        (78)                (2,627)
                                                                                -----------------   ------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
      Sale of property and equipment                                                     --                     82
      Proceeds from sale of intangible assets                                            50                  2,067
                                                                                -----------------   ------------------
         Net cash provided by investing activities                                       50                  2,149
                                                                                -----------------   ------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
      Repurchase of unvested Common Stock Options                                        --                    (20)
      Principal payments on capital lease obligations                                    --                   (143)
      Principal payments on borrowings                                                   --                   (540)
                                                                                -----------------   ------------------
         Net cash used in financing activities                                           --                   (703)
                                                                                -----------------   ------------------
Decrease in cash and cash equivalents                                                   (28)                (1,181)
Cash and cash equivalents at beginning of period                                        147                  8,700
                                                                                -----------------   ------------------
Cash and cash equivalents at end of period                                              119                  7,519
                                                                                =================   ==================
</TABLE>



The accompanying notes are an integral part of these financial statements.



<PAGE>


                               PLANETRX.COM, INC.
                     Notes to Condensed Financial Statements
                                   (unaudited)

Note 1.  The Company and Basis of Presentation

The Company

PlanetRx.com,  Inc. ("PlanetRx" or the "Company"),  was incorporated in Delaware
on March 31, 1995 and was in the  development  stage through  December 31, 1998.
Until  March 12,  2001,  the Company was an online  healthcare  destination  for
commerce, content and community. As previously disclosed, the Company closed its
online health store in March 2001 and shortly  thereafter began preparing a plan
of liquidation and  dissolution of the Company.  In an effort to realize as much
value as possible for its  stockholders,  the Company has explored and evaluated
various  strategic  options,  including a possible merger or sale,  while taking
steps to  monetize  its assets and settle its  liabilities  in a manner  that is
consistent  with the  consummation of either a merger or sale or its liquidation
and dissolution. These steps have included the sale of assets such as equipment,
inventory,  facilities,  domain  names  and  other  intellectual  property;  the
assignment or negotiated  cancellation of leases,  secured obligations and other
contracts;  the payment or settlement of other liabilities and obligations;  and
the  reduction  of  personnel  to only  three  key  managers.  This  process  is
substantially complete.

On April 26, 2002,  the Company  announced that it has entered into a definitive
agreement to merge with Paragon Homefunding,  Inc. ("Paragon").  Pursuant to the
merger,  a  wholly-owned  subsidiary  of the  Company  will  merge with and into
Paragon,  and the  Company  will  issue  shares of common  stock to the  Paragon
stockholders  equaling  90% of the total  outstanding  shares  of the  Company's
common  stock  immediately  after  the  merger.  Paragon  is a  privately  held,
development stage company based in Ponte Vedra Beach,  Florida,  that intends to
enter the financial services market through a series of planned acquisitions.

The merger is expected to close in late May 2002. The consummation of the merger
is subject to various customary conditions, including the receipt by the Company
of an opinion that the merger is fair to its stockholders from a financial point
of view. Once the merger is completed,  Paragon's management will assume control
of the  Company.  As a result of the  merger,  the current  stockholders  of the
Company  will  see  their  ownership  stake  reduced  from  100%  to  10% of the
outstanding  common  stock.  There could be further  dilution  of this  interest
following the merger in the event that the Company issues  additional  shares of
common stock.

Pending the merger with Paragon, the Company intends to continue to monetize its
remaining assets and, to the extent  possible,  use the proceeds from such sales
and  available  cash  to pay  its  remaining  liabilities  and  obligations.  No
assurance can be given that available cash and amounts received from the sale of
assets will be adequate to provide for the  obligations,  liabilities,  expenses
and claims of the Company.

The  accompanying   unaudited   condensed   financial   statements  reflect  all
adjustments,  which,  in the opinion of  management,  are necessary for the fair
statement of the results of  operations  for the periods  shown.  The results of
operations for such periods are not necessarily  indicative of the results to be
expected  for  the  full  fiscal  year or any  future  period.  These  financial
statements  should be read in  conjunction  with the Company's  annual report on
Form 10-K for its fiscal year ended December 31, 2001.

Recent Accounting Pronouncements

The  Company  adopted  Statement  of  Financial  Accounting  Standards  No. 142,
"Goodwill and Other  Intangible  Assets" (SFAS 142)  effective  January 1, 2002.
SFAS  142  changed  the  accounting  for  goodwill  and  other  indefinite-lived
intangible assets from an amortization method to an impairment-only approach.

The Company's  intangible  assets  consist  solely of domain names.  The Company
ceased  amortization  of its  intangible  assets in the first quarter of 2001 in
connection with the Company's proposed plan of liquidation and dissolution,  and
each of the Company's  domain names were considered held for sale.  Consequently
the  adoption  of  SFAS  142  has not had a  material  effect  on the  Company's
financial position or results of operations.

Note 2.  Liquidity

The  Company  has   sustained   losses  since   inception  of  $426.7   million.
Additionally,   the  Company  expects  to  continue  to  incur  losses  for  the
foreseeable future.

The Company ceased retail  operations  effective March 12, 2001.  Given that the
Company does not have any business  operations,  this raises  substantial  doubt
about the Company's ability to continue as a going concern.

As  previously  disclosed,  the Company  closed its online  health care store in
March 2001 and shortly  thereafter  began  preparing a plan of  liquidation  and
dissolution.  In an  effort  to  realize  as  much  value  as  possible  for its
stockholders,  the Company has explored and evaluated various strategic options,
including a possible  merger or sale,  while taking steps to monetize its assets
and settle its liabilities in a manner that is consistent with the  consummation
of either a merger or sale or its liquidation and dissolution.  These steps have
included the sale of assets such as  equipment,  inventory,  facilities,  domain
names and other intellectual property; the assignment or negotiated cancellation
of leases, secured obligations and other contracts; the payment or settlement of
other liabilities and obligations;  and the reduction of personnel to only three
key managers. This process is substantially complete.



<PAGE>


Note 3.  Balance Sheet Components (in thousands)
<TABLE>
<CAPTION>
                                                                       March 31,                  December 31,
                                                                         2002                         2001
                                                                ------------------------    -------------------------
Prepaid expenses and other current assets:
<S>                                                             <C>                         <C>
Prepaid business liability insurance                            $                   138     $                    144
Other                                                                                 2                           10
                                                                ------------------------    -------------------------
                                                                                    140                          154
                                                                ========================    =========================
</TABLE>

Note 4.  Net Loss per Share

Basic net loss per share is  computed  by  dividing  the net loss  available  to
common  stockholders  for the period by the weighted average number of shares of
common  stock  outstanding  during  the  period.  Diluted  net loss per share is
computed  using  the  weighted  average  number  of  common  shares  and  common
equivalent  shares  if  dilutive.   Common  equivalent  shares  consist  of  the
incremental common shares subject to issuance upon conversion of the convertible
preferred  stock (using the  if-converted  method) and shares  issuable upon the
exercise of stock options and warrants  (using the treasury stock  method),  and
the common shares outstanding subject to repurchase. The periods presented below
exclude  common  equivalent  shares as the  effect of such  shares on a weighted
average basis is anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per
share for the periods indicated (in thousands, except per share amounts):
<TABLE>
<CAPTION>

                                                                                           Three Months Ended
                                                                                                March 31,
                                                                                ------------------------------------------
                                                                                       2002                   2001
                                                                                --------------------    ------------------
Numerator:
<S>                                                                             <C>         <C>         <C>      <C>
         Net loss available to common shareholders                              $          (439)        $       (6,669)

Denominator:
         Weighted average common shares                                                   6,119                  6,146
         Weighted average unvested common shares
          subject to repurchase                                                              (1)                   (27)
                                                                                --------------------    ------------------
Denominator for basic and diluted calculation                                             6,118                  6,119
                                                                                ====================    ==================
Basic and diluted net loss per share                                            $         (0.07)        $        (1.09)
                                                                                ====================    ==================
</TABLE>

Note 5.  Commitments and Contingencies

On March 27,  2001,  SDR  Investors,  LP filed a lawsuit  against  the  Company,
certain  underwriters  of the Company's  initial public offering in October 1999
(the "IPO"),  and certain former and current directors of the Company.  Named as
additional defendants in the suit, which was filed in the United States District
Court for the Southern District of New York, are The Goldman Sachs Group,  Inc.,
BancBoston  Robertson  Stephens,  Inc., Merrill Lynch,  Pierce,  Fenner & Smith,
Incorporated,  and Salomon Smith Barney,  Inc., each of which was an underwriter
of the IPO;  William  J.  Razzouk  and  Christos  M.  Cotsakos,  who are  former
directors  of the  Company;  and David M.  Beirne and Michael  Moritz,  who were
current  directors of the Company at the time the complaint  was filed,  but are
now former  directors  of the company.  Between  April 19, 2001 and May 4, 2001,
five virtually identical additional complaints were filed. One of the additional
complaints also names as defendants  Hambrecht & Quist LLC,  William Blair & Co.
LLC,  Bear  Stearns & Co.,  Inc.,  additional  underwriters  of the IPO,  Morgan
Stanley Dean Witter & Co.  Incorporated  and Credit  Suisse First Boston  Corp.,
which were not underwriters of the IPO, and Steve  Valenzuela,  a former officer
of the Company.  The suits generally allege that the defendants violated federal
securities  laws  by not  disclosing  certain  actions  allegedly  taken  by the
underwriter defendants in connection with the IPO. The suits allege specifically
that  the  underwriter  defendants,  in  exchange  for the  allocation  to their
customers of shares of the Company's common stock sold in the IPO, solicited and
received from their customers  undisclosed  commissions on transactions in other
securities and required  their  customers to purchase  additional  shares of the
Company's  common stock in the  aftermarket at  pre-determined  prices that were
above  the  IPO  price.  The  suits  seek   unspecified   monetary  damages  and
certification of a plaintiff class consisting of all persons who acquired shares
of the Company's  common stock between  October 6, 1999, and March 24, 2001. The
complaints  have  been  consolidated  into  a  single  action,  which  is  being
coordinated  with several hundred other nearly  identical  actions filed against
other  companies  before one judge in the U.S.  District  Court for the Southern
District of New York. No date has been set for any response to the complaint. As
of the date hereof, the Company is unable to predict the outcome of the suit and
its ultimate effect, if any, on the Company's financial condition.

On June 19, 2001,  vTraction,  Inc.  filed a complaint for breach of contract in
the Chancery Court of Tennessee for the Thirtieth  Judicial  District at Memphis
alleging that the Company  entered into an oral agreement with vTraction to sell
certain  equipment  and  later  reneged,  and  claiming  damages  in  an  amount
including, but not limited to, the difference between the price agreed to in the
alleged oral  contract and the market  price of the  equipment.  The Company has
filed an answer  asserting the affirmative  defenses of failure of consideration
and statute of frauds and denying the existence of an oral  contract.  As of the
date  hereof,  the  Company is unable to predict the outcome of the suit and its
ultimate effect, if any, on the Company's financial condition.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

EXCEPT FOR THE HISTORICAL INFORMATION PRESENTED HEREIN, ALL THE DISCLOSURES MADE
IN THIS RERORT  CONSTITUTE  "FORWARD-LOOKING  STATEMENTS"  WITHIN THE MEANING OF
SECTION 27A OF THE  SECURITIES  ACT OF 1933 AND  SECTION  21E OF THE  SECURITIES
EXCHANGE ACT, AS AMENDED,  AND ARE MADE UNDER THE SAFE HARBOR  PROVISIONS OF THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. THE FORWARD-LOOKING STATEMENTS
INCLUDE THOSE RELATING TO THE COMPANY'S GOALS,  OBJECTIVES,  PLANS,  INTENTIONS,
AND EXPECTATIONS.  THE INCLUSION OF THE FORWARD-LOOKING STATEMENTS HEREIN SHOULD
NOT BE  REGARDED  AS A  REPRESENTATION  BY THE  COMPANY  THAT  ANY  SUCH  GOALS,
OBJECTIVES,   PLANS,   INTENTIONS,   AND  EXPECTATIONS  WILL  BE  ACHIEVED.  THE
FORWARD-LOOKING  STATEMENTS INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE THE
ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE DESCRIBED IN THE  FORWARD-LOOKING
STATEMENTS.  THERE CAN BE NO ASSURANCE THAT THE FORWARD-LOOKING  STATEMENTS WILL
PROVE TO BE ACCURATE.  FOR INSTANCE,  THERE CAN BE NO ASSURANCE  THAT THE MERGER
WITH PARAGON WILL BE CONSUMMATED;  THAT THE COMPANY, UNDER DIFFERENT LEADERSHIP,
WILL BE ABLE TO EXECUTE ITS NEW BUSINESS PLAN FOLLOWING THE PARAGON MERGER; THAT
THE VALUE TO THE CURRENT  STOCKHOLDERS  OF THE  COMPANY  WILL BE ENHANCED BY THE
MERGER;  OR THAT THE  COMPANY  WILL BE ABLE TO GENERATE  SUFFICIENT  CASH TO PAY
CREDITOR  OBLIGATIONS.  ALTHOUGH THE COMPANY  BELIEVES THAT THE  ASSUMPTIONS  ON
WHICH THE  FORWARD-LOOKING  STATEMENTS  CONTAINED HEREIN ARE REASONABLE,  ANY OF
THOSE ASSUMPTIONS COULD PROVE TO BE INACCURATE GIVEN THE INHERENT  UNCERTAINTIES
AS TO THE OCCURRENCE OR  NON-OCCURRENCE  OF FUTURE EVENTS.  THE  FORWARD-LOOKING
STATEMENTS  ARE MADE AS OF THE DATE OF THIS REPORT,  AND THE COMPANY  ASSUMES NO
OBLIGATION  TO UPDATE  THE  FORWARD-LOOKING  STATEMENTS  AFTER THE DATE  HEREOF,
WHETHER AS A RESULT OF NEW  INFORMATION  OR EVENTS,  CHANGED  CIRCUMSTANCES,  OR
OTHERWISE.  FOR OTHER  FACTORS OR RISKS  RELATING TO THE COMPANY AS SET FORTH IN
THIS REPORT,  SEE THE  COMPANY'S  ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR
ENDED DECEMBER 31, 2001,  INCLUDING (WITHOUT LIMITATION) UNDER THE CAPTION "RISK
FACTORS."

Overview

PlanetRx.com,  Inc. (sometimes referred to as "PlanetRx.com,"  "the Company," or
"we") was a leading  online  healthcare  destination  for commerce,  content and
community.  In October  1999,  we completed  our initial  public  offering.  Our
e-commerce  website,  www.PlanetRx.com,  launched on March 18, 1999,  provided a
convenient,  private and informative shopping experience. We offered products in
six  categories:  prescription  drugs;  non-prescription  drugs;  personal care;
beauty  and spa;  vitamins,  herbs and  nutrition;  and  medical  supplies.  Our
eCenters,  located within the PlanetRx.com  website,  incorporated  content that
addressed a variety of health-related topics. In addition, we owned and operated
a network of satellite  websites  targeting  specific  healthcare  conditions by
providing  relevant  content and a  destination  for online  communities.  These
condition-specific   websites,  which  included  diabetes.com,   depression.com,
obesity.com and alzheimers.com, were linked to the PlanetRx.com website.

In February  2001, we announced that we intended to evolve our business model to
focus  primarily  on  fulfilling  specialty  prescriptions,  and  that we  would
discontinue  the sale of retail health and beauty products as of March 12, 2001.
At that time we  anticipated  the imminent  execution a definitive  agreement to
acquire an existing  specialty pharmacy  business.  However,  those negotiations
could not be  consummated  on terms  acceptable to the Company.  On February 12,
2001, we stopped accepting new  prescriptions,  and on March 12, 2001, we closed
our on-line store.

Disposition of the Company

As  previously  disclosed,  we closed our online health care store in March 2001
and shortly thereafter began preparing a plan of liquidation and dissolution. In
an effort to realize as much value as  possible  for its  stockholders,  we have
explored and evaluated various strategic options, including a possible merger or
sale,  while taking steps to monetize our assets and settle our liabilities in a
manner that is consistent  with the  consummation  of either a merger or sale or
the liquidation  and  dissolution of the Company.  These steps have included the
sale of assets such as equipment, inventory,  facilities, domain names and other
intellectual  property;  the  assignment or negotiated  cancellation  of leases,
secured  obligations  and other  contracts;  the payment or  settlement of other
liabilities  and  obligations;  and the reduction of personnel to only three key
managers. This process is substantially complete.

On April 26, 2002, we announced that we have entered into a definitive agreement
to merge with Paragon Homefunding,  Inc. ("Paragon").  Pursuant to the merger, a
wholly-owned  subsidiary  of  PlanetRx  will  merge with and into  Paragon,  and
PlanetRx will issue shares of common stock to the Paragon stockholders  equaling
90% of the total  outstanding  shares of PlanetRx common stock immediately after
the merger.  Paragon is a privately  held,  development  stage  company based in
Ponte Vedra Beach,  Florida, that intends to enter the financial services market
through a series of planned acquisitions.

The merger is expected to close in late May 2002. The consummation of the merger
is subject to various customary conditions, including the receipt by PlanetRx of
an opinion that the merger is fair to its stockholders from a financial point of
view. Once the merger is completed,  Paragon's management will assume control of
PlanetRx.  As a result of the merger, the current  stockholders of PlanetRx will
see their  ownership  stake reduced from 100% to 10% of the  outstanding  common
stock.  There could be further dilution of this interest following the merger in
the event that PlanetRx issues additional shares of common stock.

Pending the merger with Paragon, we intend to continue to monetize our remaining
assets  and,  to the  extent  possible,  use the  proceeds  from such  sales and
available cash to pay its remaining  liabilities and  obligations.  No assurance
can be given that  available  cash and amounts  received from the sale of assets
will be adequate  to provide  for our  obligations,  liabilities,  expenses  and
claims.

Results of Operations

The following table sets forth unaudited  quarterly statement of operations data
for the five  quarters  ended  September  30,  2001.  This  unaudited  quarterly
information  has  been  derived  from our  unaudited  financial  statements  and
reflects all adjustments, which, in the opinion of management, are necessary for
the fair  presentation  of the results of operations for the periods shown.  The
results of  operations  for such periods are not  necessarily  indicative of the
results to be expected for the full fiscal year or any future period.



<PAGE>


                               PlanetRx.com, Inc.
                    Condensed Quarterly Results of Operations
                            (unaudited, in thousands)
<TABLE>
<CAPTION>
                                                                              Quarter Ended
                                    ------------------------------------------------------------------------------------------------
                                      March 31,          December 31,        September 30,          June 30,             March 31,
                                         2002                2001                2001                 2001                 2001
                                    ---------------     ---------------     ----------------    -----------------    ---------------
Net revenue:
<S>                                 <C>                 <C>                 <C>                 <C>                  <C>
    e-commerce                      $        --         $        --         $         --        $          --        $        3,957
    Sponsorship                              42                  34                   --                   40                 1,743
                                    ---------------     ---------------     ----------------    -----------------    ---------------
                                             --                  34                   --                   40                 5,700
Cost of net revenue:
    e-commerce                               --                  --                   --                    1                 4,038
    Sponsorship                              --                  --                   --                   --                    --
                                    ---------------     ---------------     ----------------    -----------------    ---------------
                                             --                  --                   --                    1                 4,038
                                    ---------------     ---------------     ----------------    -----------------    ---------------
Gross profit                                 42                  34                   --                   39                 1,662

Operating expenses:
    Marketing and sales                      --                  --                   --                   --                   513
    Shipping, handling and
     related costs                           --                  --                   --                   --                 3,594
    Product development                      --                  --                   --                   --                 1,335
    General and
     administrative                         196                 297                  647                2,625                 1,795
    Stock-based
     compensation                           252                 254                  426                  430                   689
    Impairment loss                          43                  56                   --                  141                 2,191
                                    ---------------     ---------------     ----------------    -----------------    ---------------
         Total operating
          expenses                          491                 607                1,073                3,196                10,117
                                    ---------------     ---------------     ----------------    -----------------    ---------------
Operating loss                             (449)               (573)              (1,073)              (3,157)               (8,455)
Other income                                 --                  89                   89                  137                 1,888
Interest income (expense), net               10                   1                   --                 (345)                 (102)
                                    ---------------     ---------------     ----------------    -----------------    ---------------
Net loss before extraordinary
 item                               $      (439)        $      (483)        $       (984)              (3,365)       $       (6,669)
Extraordinary gain on the early
 extinguishment of debt, net
 of taxes of $0                              --                  --                  177                   --                    --

Net loss available to common
 stockholders                       $      (439)        $      (483)        $       (807)       $      (3,365)       $       (6,669)
                                    ==============      ==============      ===============     ================     ===============
</TABLE>


Net Revenue

Net revenues  were  approximately  $42,000 and $5.7 million for the three months
ended March 31, 2002 and 2001,  respectively.  E-commerce revenues were zero and
$4.0 million for the three  months ended March 31, 2002 and 2001,  respectively.
Sponsorship  revenues were approximately  $42,000 and $1.7 million for the three
months ended March 31, 2002 and 2001,  respectively.  On February  12, 2001,  we
stopped  accepting  new  prescriptions,  and on March 12,  2001,  we closed  our
on-line store.

Cost of Net Revenue

Cost of  revenues  were  approximately  $42,000  and $4.0  million for the three
months ended March 31, 2002 and 2001,  respectively.  On February  12, 2001,  we
stopped  accepting  new  prescriptions,  and on March 12,  2001,  we closed  our
on-line store.

Operating Expenses

Marketing  and Sales.  For the three months ended March 31, 2002,  marketing and
sales  expense  was zero as  compared to  approximately  $513,000  for the three
months  ended March 31, 2001.  The  decrease is due  primarily to the absence of
marketing and promotional  campaigns and decreased headcount associated with the
closure of retail operations in 2001.

Shipping, Handling and Related Costs. For the three months ended March 31, 2002,
shipping,  handling and related  costs were zero as compared to $3.6 million for
the three months ended March 31,  2001.  This  decrease is due to the closure of
retail operations.

Product  Development.  For the  three  months  ended  March  31,  2002,  product
development  expense was zero as compared to $1.3  million for the three  months
ended  March 31,  2001.  This  decrease  is related to the closure of our retail
stores and the related  decline in  maintenance  of our  websites  and  internal
systems.

General and  Administrative.  For the three months ended March 31, 2002, general
and administrative  expenses were $196,000 as compared to $1.8 million for three
months  ended  March 31,  2001.  The  decrease  is due to the  closure of retail
operations  during the first  quarter of 2001.  For the three months ended March
31,  2002,   general  and  administrative   expenses   consisted   primarily  of
salary-related expenses and professional services fees.

Stock-Based  Compensation.  Our stock-based  compensation  expense,  net totaled
approximately  $252,000 for the three months ended March 31, 2002 as compared to
$689,000  for the three  months ended March 31,  2001.  The  remaining  deferred
stock-based  compensation  balance of  approximately  $897,000 will be amortized
through 2004.

Liquidity and Capital Resources

PlanetRx.com  invests excess cash  predominantly  in debt  instruments  that are
highly  liquid,  of  high-quality   investment  grade,  and  predominantly  have
maturities  of less than one year with the  intent  to make such  funds  readily
available  for  operating  purposes.  At March  31,  2002,  we had cash and cash
equivalents and investments in marketable debt securities totaling approximately
$119,000  compared to $147,000 at December 31, 2001 and $8.7 million at December
31, 2000.

As  previously  disclosed,  we closed our online health care store in March 2001
and shortly thereafter began preparing a plan of liquidation and dissolution. In
an effort to realize as much value as  possible  for its  stockholders,  we have
explored and evaluated various strategic options, including a possible merger or
sale,  while taking steps to monetize our assets and settle our liabilities in a
manner that is consistent  with the  consummation  of either a merger or sale or
the liquidation  and  dissolution of the Company.  These steps have included the
sale of assets such as equipment, inventory,  facilities, domain names and other
intellectual  property;  the  assignment or negotiated  cancellation  of leases,
secured  obligations  and other  contracts;  the payment or  settlement of other
liabilities  and  obligations;  and the reduction of personnel to only three key
managers. This process is substantially complete.

Net cash used in operating activities was approximately $78,000 during the three
months  ended March 31, 2002,  primarily as a result of quarterly  net losses as
well as decreases in accounts payable  partially offset by decreases in accounts
receivables,  prepaid  expenses and other current  assets,  increases in accrued
expenses,  and non-cash charges for amortization and impairment losses. Net cash
used in  operating  activities  was $2.6  million  during the three months ended
March 31, 2001,  primarily as a result of quarterly net losses  partially offset
by decreases in accounts  receivables,  inventories,  prepaid expenses and other
assets,  accounts  payable,  and  accrued  expenses  and  non-cash  charges  for
depreciation, amortization and impairment losses.

Net cash provided by investing  activities was approximately  $50,000 during the
three  months  ended March 31,  2002,  consisting  of proceeds  from the sale of
intangible assets.  Net cash provided by investing  activities was approximately
$2.1 million during the three months ended March 31, 2001,  primarily consisting
of proceeds from the sale of intangible assets and property and equipment.

No net cash was used in financing activities during the three months ended March
31,  2002.  Net cash used in financing  activities  was  approximately  $703,000
during  the  three  months  ended  March 31,  2001 and  primarily  consisted  of
principal   payments  on  borrowings  and  capital  lease  obligations  and  the
repurchase of unvested common stock options.

Recent Accounting Pronouncements

We adopted Statement of Financial  Accounting  Standards No. 142,  "Goodwill and
Other Intangible  Assets" (SFAS 142) effective January 1, 2002. SFAS 142 changed
the accounting for goodwill and other indefinite-lived intangible assets from an
amortization method to an impairment-only approach.

Our intangible assets consist solely of domain names. We ceased  amortization of
our  intangible  assets  in the first  quarter  of 2001 in  connection  with our
proposed plan of liquidation and dissolution,  and each of our domain names were
considered held for sale.  Consequently,  the adoption of SFAS 142 has not had a
material effect on the Company's financial position or results of operations.

ADDITIONAL FACTORS THAT MAY AFFECT FUTURE RESULTS

The factors  discussed in the "Overview"  and "Liquidity and Capital  Resources"
sections of this  "Management's  Discussion and Analysis of Financial  Condition
and Results of Operations"  and in our annual report on Form 10-K for our fiscal
year ended December 31, 2001, as filed with SEC, may affect our future  results.
Additionally,  for a discussion  of potential  risks  associated  with a sale or
merger  involving the Company or the  dissolution of the Company,  see the "Risk
Factors" section of Management's  Discussion and Analysis of Financial Condition
and Results of  Operations  in our Annual Report on Form 10-K for the year ended
December 31, 2001.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have assessed our vulnerability to certain market risks,  including  interest
rate  risk  associated  with  financial   instruments  included  in  cash,  cash
equivalents and short-term  investments.  Due to the short-term  nature of these
investments and our investment policies and procedures,  we have determined that
the risk associated with interest rate  fluctuations  related to these financial
instruments does not pose a material risk to us.






                           PART II - OTHER INFORMATION


ITEM 1. LEGAL PROCEEDINGS

On March 27, 2001, SDR Investors,  LP filed a lawsuit against PlanetRx,  certain
underwriters  of the  Company's  initial  public  offering in October  1999 (the
"IPO"),  and  certain  former and current  directors  of the  Company.  Named as
additional defendants in the suit, which was filed in the United States District
Court for the Southern District of New York, are The Goldman Sachs Group,  Inc.,
BancBoston  Robertson  Stephens,  Inc., Merrill Lynch,  Pierce,  Fenner & Smith,
Incorporated,  and Salomon Smith Barney,  Inc., each of which was an underwriter
of the IPO;  William  J.  Razzouk  and  Christos  M.  Cotsakos,  who are  former
directors  of the  Company;  and David M.  Beirne and Michael  Moritz,  who were
current  directors of the Company at the time the complaint  was filed,  but are
now former  directors  of the Company.  Between  April 19, 2001 and May 4, 2001,
five virtually identical additional complaints were filed. One of the additional
complaints also names as defendants  Hambrecht & Quist LLC,  William Blair & Co.
LLC,  Bear  Stearns & Co.,  Inc.,  additional  underwriters  of the IPO,  Morgan
Stanley Dean Witter & Co.  Incorporated  and Credit  Suisse First Boston  Corp.,
which were not underwriters of the IPO, and Steve  Valenzuela,  a former officer
of the Company.  The suits generally allege that the defendants violated federal
securities  laws  by not  disclosing  certain  actions  allegedly  taken  by the
underwriter defendants in connection with the IPO. The suits allege specifically
that  the  underwriter  defendants,  in  exchange  for the  allocation  to their
customers of shares of the Company's common stock sold in the IPO, solicited and
received from their customers  undisclosed  commissions on transactions in other
securities and required  their  customers to purchase  additional  shares of the
Company's  common stock in the  aftermarket at  pre-determined  prices that were
above  the  IPO  price.  The  suits  seek   unspecified   monetary  damages  and
certification of a plaintiff class consisting of all persons who acquired shares
of the Company's  common stock between  October 6, 1999, and March 24, 2001. The
complaints  have  been  consolidated  into  a  single  action,  which  is  being
coordinated with over three hundred other nearly identical actions filed against
other  companies  before one judge in the U.S.  District  Court for the Southern
District of New York. No date has been set for any response to the complaint. As
of the date  hereof,  we are unable to predict  the  outcome of the suit and its
ultimate effect, if any, on the Company's financial condition.

On June 19, 2001,  vTraction,  Inc.  filed a complaint for breach of contract in
the Chancery Court of Tennessee for the Thirtieth  Judicial  District at Memphis
alleging that PlanetRx  entered into an oral  agreement  with  vTraction to sell
certain  equipment  and  later  reneged,  and  claiming  damages  in  an  amount
including, but not limited to, the difference between the price agreed to in the
alleged oral  contract and the market price of the  equipment.  We have filed an
answer  asserting  the  affirmative  defenses  of failure of  consideration  and
statute of frauds and denying the existence of an oral contract.  As of the date
hereof,  we are  unable to  predict  the  outcome  of the suit and its  ultimate
effect, if any, on the Company's financial condition.

ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS

         None.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

         None.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         None.

ITEM 5.  OTHER INFORMATION

         None.

ITEM 6.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

         (a) Exhibits

          The document  listed in the Exhibit Index following the signature page
          of this report is filed as part of this report.

         (b) Reports on Form 8-K

The Company  filed a current  report Form 8-K with the  Securities  and Exchange
Commission  on April 30, 2002,  reporting  that it had issued a press release on
April 26, 2002,  announcing  that it had entered into a definitive  agreement to
merge with Paragon Homefunding, Inc.



<PAGE>


                                   SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.

                                           PLANETRX.COM, INC.
                                           (Registrant)


                                           By: /s/  Paul E. Risner
                                           -------------------------------------
                                           Paul E. Risner
                                           Vice President,
                                           General Counsel and Secretary



Date: May 14, 2002



<PAGE>


                                  EXHIBIT INDEX


Exhibit
Number              Description of Exhibit
------              ----------------------
2.2                 Agreement  and Plan of Merger  dated as of April  22,  2002,
                    among PlanetRx.com, Inc., PHI Acquisition Corp., and Paragon
                    Homefunding,   Inc.  The  schedules  and  exhibits  to  this
                    document,  which are listed in the table of  contents of the
                    document,  have been omitted  from this filing.  The Company
                    will furnish,  as supplementary  information,  copies of the
                    omitted materials to the Securities and Exchange  Commission
                    upon request.


<PAGE>
EXHIBIT 2.2                                                       EXECUTION COPY









                          AGREEMENT AND PLAN OF MERGER



                                      AMONG



                               PLANETRX.COM, INC.,


                              PHI ACQUISITION CORP.


                                       AND


                            PARAGON HOMEFUNDING, INC.




                           Dated as of April 22, 2002


<PAGE>



                                TABLE OF CONTENTS

1.       AGREEMENT

2.       SCHEDULES

         R1         PLRX Plan
         3.2(a)     Target Capitalization
         3.3        Target Consents
         3.5        Target Financial Statements
         3.7        Actions Since Target Balance Sheet Date
         3.10       Contracts Required to Operate Target's Business
         3.13       Target Real Property
         3.14       Target Listed Agreements
         3.15       Target Assets
         3.16       Target Permits Required
         3.19       Target Compensation Information
         3.23       Target Employees
         4.2(a)     Purchaser Capitalization
         4.2(c)     Purchaser Investments
         4.3        Purchaser Consents
         4.6        Purchaser Liabilities
         4.7        Actions Since Purchaser Balance Sheet Date
         4.8        Adverse Developments
         4.9        Purchaser Taxes
         4.11       Purchaser Insurance
         4.12       Purchaser Litigation; Compliance with Law
         4.13       Purchaser Real Property
         4.14       Purchaser Listed Agreements
         4.16       Purchaser Intellectual Property
         4.17       Purchaser Employee Benefit Plans
         4.20       Purchaser Employees
         4.21       Purchaser Prior Names and Addresses
         4.24       Purchaser SEC Filings
         5.2(b)     Purchaser Conduct of Business
         10.3       Target's Business Development
         10.4       Post-Closing Nominees to Fill Vacancies on Purchaser Board
                    of Directors

3.       EXHIBITS

         6.4        Form of Target Counsel Opinion
         6.8        Form of Target Shareholder Investment Representation Letter
         7.4        Form of Purchaser Counsel Opinion
         10.6       Form of Assignment and Agreement and related Consent to
                    Assignment
         13.1       Form of Escrow Agreement


<PAGE>



         AGREEMENT  AND  PLAN  OF  MERGER  dated  as  of  April  22,  2002  (the
"Agreement")   by  and  among   PLANETRX.COM,   INC.,  a  Delaware   corporation
("Purchaser"),  PHI ACQUISITION CORP., a Delaware corporation and a wholly-owned
subsidiary of Purchaser  ("Acquisition Sub"), and PARAGON  HOMEFUNDING,  INC., a
Delaware corporation ("Target"),  and Purchaser,  Acquisition Sub and Target are
sometimes  collectively  referred  to as the  "Parties"  and  individually  as a
"Party".

                                    RECITALS:

         Purchaser  is  a  publicly  traded  company  which  currently  has  its
securities  traded  on  the  OTC  Bulletin  Board.  Purchaser  currently  has no
operations,  other than  ongoing  efforts to monetize  its assets and reduce its
liabilities as described on Schedule R1 attached hereto (the " PLRX Plan").

         Target is a developmental  company which plans to conduct operations in
the  residential  mortgage  business  (the  "Business")  and  currently  has  no
operations.  Target is exploring opportunities to acquire operating companies in
the residential  mortgage  business and, if it identifies  suitable  acquisition
candidates,  it  plans  to  acquire  such  candidates  who  will  agree to be so
acquired,  pursuant to structures  which are suitable  under the  circumstances.
Target also plans to have the management structure to operate such business that
Target believes to be most efficient.

         Subject to the terms and conditions hereof, Purchaser,  Acquisition Sub
and Target  deem it  desirable  and in the best  interests  of their  respective
corporations  and  shareholders  that Acquisition Sub merge with and into Target
(the "Merger") in a statutory merger in accordance with the laws of the State of
Delaware (the "Delaware Statute").

         NOW,  THEREFORE,  in consideration of the mutual benefits to be derived
hereby and the  representations,  warranties,  covenants and  agreements  herein
contained, the Parties agree as follows:

                                    ARTICLE I

                            DEFINED TERMS; SCHEDULES

1.1  Defined  Terms.  Capitalized  terms  used in this  Agreement  will have the
meanings given such terms in Article XIV hereof or elsewhere in the text of this
Agreement,  and variants and  derivatives  of such terms shall have  correlative
meanings.

1.2 Schedules.  References to a Schedule will include any applicable  disclosure
expressly  set  forth  on  the  face  of  any  other  Schedule  if  specifically
cross-referenced  to such other  Schedule.  Each  Schedule and the  information,
agreements and documents  expressly listed in each Schedule will be considered a
part of this  Agreement  as if set  forth  herein  in full and will be deemed to
constitute  representations and warranties under this Agreement,  limited as set
forth in the applicable provision of this Agreement under which such Schedule is
delivered  or on  the  face  of  such  Schedule;  provided,  however,  that  the
representations and warranties set forth in this Agreement shall not be affected
or deemed  qualified,  modified  or  limited in any  respect by the  information
provided  in  the  Schedules  except  to  the  extent  that  any  qualification,
modification or limitation to any  representation  and warranty is expressly and
conspicuously set forth on the face of such particular Schedule.

                                   ARTICLE II

                                     MERGER

2.1      Merger and Surviving Corporation.

         (a) Pursuant to the Delaware Statute,  Acquisition Sub shall merge with
and into Target, and Target shall be the surviving  corporation after the Merger
(the  "Surviving  Corporation")  and shall  continue  to exist as a  corporation
created and governed by the laws of the State of Delaware.

         (b) The Certificate of Incorporation of the Surviving Corporation, from
and after the Effective  Time,  shall be the  Certificate  of  Incorporation  of
Target.

         (c) The  By-Laws  of the  Surviving  Corporation,  from and  after  the
Effective Time, shall be the By-Laws of Target.

2.2  Effectiveness  of  Merger.  If  all  of  the  conditions  precedent  to the
obligation  of each of the Parties  hereto as  hereinafter  set forth shall have
been satisfied or shall have been waived,  a certificate  of merger  relating to
the  Merger  (the  "Certificate  of  Merger")  shall  be  delivered  as  soon as
practicable  after the Closing to the  Secretary of State of Delaware for filing
in accordance with the Delaware Statute.  The Merger shall become effective upon
the  acceptance  of such filing by the Secretary of State of Delaware or at such
later time as is specified in the  Certificate of Merger,  which  effective time
shall be the "Effective Time" of the Merger.

2.3 Shares of the Constituent and Surviving  Corporations.  The manner and basis
of  converting  and  exchanging  the  securities  of  Target  and the  status of
Acquisition Sub's securities shall be as follows:

         (a) Subject to the provisions of this  Agreement,  each share of Common
Stock,  $.001 par  value,  of Target  (the  "Target  Common  Stock")  issued and
outstanding  immediately  prior to the Effective  Time (other than Target Common
Stock to be canceled pursuant to Section 2.3(d) hereof, if any) shall, by virtue
of the Merger and  without  any  action on the part of the  holder  thereof,  be
canceled and extinguished and converted into the right to receive, in accordance
with Section 2.3(b) hereof,  shares of Common Stock, par value $.0001 per share,
of Purchaser (the "Purchaser Common Stock"). In respect of the foregoing, shares
of Target Common Stock which are restricted stock (the "Restricted Target Common
Stock")  granted  out of  Target's  2001  Equity  Participation  Plan  shall  be
converted,  in  accordance  with the formula set forth in Section  2.3(b),  into
shares of Purchaser  Common Stock which are "restricted  stock" (the "Restricted
Purchaser Common Stock") with the same rights and  restrictions  which attach to
the Restricted Target Common Stock immediately prior to the Effective Time.

         (b) The  number  of  shares  of  Purchaser  Common  Stock to be  issued
pursuant  to  Section  2.3(a)  hereof  for each  share of  Target  Common  Stock
(including each share of Restricted  Target Common Stock) issued and outstanding
immediately  prior to the  Effective  Time (other than Target Common Stock to be
canceled pursuant to Section 2.3(d) hereof, if any) (the "Merger Consideration")
shall be equal to a number of shares of  Purchaser  Common Stock such that after
giving  effect to the Merger and the issuance of the Merger  Consideration,  the
aggregate  Merger  Consideration  shall equal Ninety Percent (90%) of the issued
and outstanding shares of Purchaser Common Stock immediately after the Effective
Time, subject to adjustment as set forth in Section 2.3(c) hereof.

         (c) The  allocation  of  shares  of  Purchaser  Common  Stock  shall be
adjusted  after the Closing as follows:  In the event that shares of  Restricted
Target Common Stock are converted into Restricted  Purchaser Common Stock in the
Merger, and all or some of such shares of Restricted Purchaser Common Stock (the
number of which may be adjusted as a result of stock splits, stock dividends and
the like) are forfeited  pursuant to the terms of the grant  thereof,  Purchaser
shall issue to the persons who were holders of Target  Common Stock  immediately
prior to the Effective Time,  other than the holder of the Restricted  Purchaser
Common  Stock  which was  forfeited  to the extent of such  forfeited  shares of
Restricted  Purchaser Common Stock, a number of shares of Purchaser Common Stock
equal to the number of shares of  Restricted  Purchaser  Common  Stock which was
forfeited,  on a pro rata basis  based on the number of shares of Target  Common
Stock such holders owned immediately prior to the Effective Time. If a Person is
entitled to receive fractional  shares,  such Person will be treated in the same
manner as set forth in Section  2.3(d)  hereof with  respect to such  fractional
shares.

         (d) If any  holder  of  Target  Common  Stock is  entitled  to  receive
fractional shares of Purchaser Common Stock pursuant to the Merger,  such holder
instead  will be entitled to receive  (i) one whole  share of  Purchaser  Common
Stock in lieu of such fractional  share if such holder would have otherwise been
entitled to receive or purchase  one-half or more of a share of Purchaser Common
Stock and (ii)  otherwise  such  holder  shall not be  entitled  to  receive  or
purchase any additional shares or fractional shares.

         (e) Any share of Target  Common Stock held in the treasury of Target at
the  Effective  Time  shall be  canceled  and  retired,  and no  shares or other
securities  of  Purchaser  or  Acquisition  Sub shall be issuable  with  respect
thereto.

         (f) Each  share of  Common  Stock,  par  value  $.0001  per  share,  of
Acquisition Sub (the "Acquisition Sub Common Stock") shall be converted into and
become one (1) validly  issued,  fully paid and  non-assessable  share of Target
Common Stock.

         (g) Subject to the  provisions  hereof,  each holder of an  outstanding
certificate or  certificates  theretofore  representing  shares of Target Common
Stock,  and theretofore  surrendered by such holder to Purchaser or its transfer
agent for cancellation, shall be entitled to receive in exchange therefor (i) as
promptly as practicable after the Effective Time, certificates representing that
holder's proportionate number of shares of Purchaser Common Stock for each share
of Target Common Stock surrendered, as is specified in Section 2.3(b) hereof. If
the  shares  of  Purchaser  Common  Stock  (or any  portion  thereof)  are to be
delivered to any person other than the person in whose name the  certificate  or
certificates  representing  the Target  Common  Stock  surrendered  in  exchange
therefor are  registered,  in addition to any other  requirements  of applicable
law,  it  shall  be a  condition  to  such  exchange  that  the  certificate  or
certificates so surrendered shall be properly endorsed or otherwise be in proper
form for  transfer and that the person  requesting  such  exchange  shall pay to
Purchaser or its transfer  agent any transfer or other taxes  required by reason
of the  delivery  of the  Purchaser  Common  Stock  to a person  other  than the
registered  holder of the  certificate  or  certificates  surrendered,  or shall
establish to the  satisfaction  of Purchaser or its transfer agent that such tax
has been paid or is not applicable.

         (h) The Purchaser  Common Stock is being issued  hereunder in a private
transaction  exempt from  registration  under Section 5 of the  Securities  Act,
pursuant to Section 4(2) of the Securities Act, and  accordingly  such shares of
Purchaser  Common Stock may not be sold or otherwise  transferred or disposed of
by the holders  thereof unless they are  registered  under the Securities Act or
unless  an  exemption  from  such  registration  is  available.  Accordingly,  a
restrictive  legend  will be placed on any  instruments,  certificates  or other
documents  evidencing such shares of Purchaser Common Stock in, or substantially
in, the following form:

                  "The securities  represented by this certificate have not been
                  registered  under the Securities Act of 1933. These securities
                  have been acquired for investment and not for  distribution or
                  resale. They may not be sold,  assigned,  mortgaged,  pledged,
                  hypothecated  or otherwise  transferred or disposed of without
                  an effective  registration statement for such securities under
                  the  Securities  Act of 1933 or an  opinion  of counsel to the
                  Company that registration is not required under such Act."

         (i) Unless and until outstanding  certificates  representing  shares of
Target Common Stock prior to the Effective Time shall be surrendered as provided
in Section 2.3(f) hereof, dividends and other distributions,  if any (including,
without  limitation,  any shares  issuable in connection with stock split-ups or
other  recapitalizations),  payable as of any date  subsequent  to the Effective
Time to the holders of record of shares of  Purchaser  Common Stock shall not be
paid  to the  holders  of  such  certificates,  but in the  case  of  each  such
certificate  which shall be so  surrendered:  (i) there shall be paid, upon such
surrender,  to the record  holder of the  certificate  for  shares of  Purchaser
Common Stock issued in exchange therefor,  the full amount, without any interest
thereon,  of the  dividends  and any  other  distributions  (including,  without
limitation,  any  shares  issued in  connection  with stock  split-ups  or other
recapitalizations)  referred  to above which  theretofore  became  payable  with
respect to the number of shares of Purchaser  Common Stock  represented  by such
certificate;  and (ii) there shall be paid to such record holder, on the payment
date  therefor,  the  amount of any such  dividend  or other  distribution  with
respect to such number of shares,  if the record date for the  determination  of
the stockholders  entitled to such dividend or other distribution shall be prior
to the surrender of such certificate but the payment date of such dividend shall
be subsequent to such surrender.

         (j) Promptly after the Effective Time, Purchaser's transfer agent shall
mail to each holder of certificates that immediately prior to the Effective Time
represented Target Common Stock a form of letter of transmittal and instructions
for use in surrendering  such  certificates  and receiving the Purchaser  Common
Stock in exchange therefor.

         (k) No holder of the Target  Common  Stock shall have any of the rights
of a stockholder of Purchaser  with respect to the Purchaser  Common Stock to be
issued in the Merger until the Effective Time.

2.4      Effect of Merger.
         ----------------

         (a) Except as herein  otherwise  specifically  set forth, the identity,
existence,  purposes, powers, franchises,  rights and immunities of Target shall
continue  unaffected and unimpaired by the Merger,  and the corporate  identity,
existence,  purposes, powers, franchises and immunities of Acquisition Sub shall
be  merged  into  Target,  and  Target,  as  the  Surviving  Corporation  and  a
wholly-owned  subsidiary  of  Purchaser,  shall be fully vested  therewith.  The
separate existence and corporate organization of Acquisition Sub (except insofar
as they may be continued by statute) shall cease as of the Effective Time.

         (b)      At the Effective Time:

                  (i) All rights, privileges, goodwill, franchises and property,
real,  personal and mixed,  and all debts due on whatever  account and all other
things in action,  belonging to  Acquisition  Sub shall be, and they hereby are,
bargained, conveyed, granted, confirmed,  transferred,  assigned and set over to
and  vested in Target  as the  Surviving  Corporation  by  operation  of law and
without  further act or deed,  and all  property  and rights,  and all and every
other interest of Acquisition Sub shall be the property, rights and interests of
Target as the Surviving Corporation as they were of Acquisition Sub;

                  (ii) No  action  or  proceeding,  whether  civil or  criminal,
pending at the Effective Time by or against either Acquisition Sub or Target, or
any shareholder,  officer or director thereof, shall abate or be discontinued by
the Merger,  but may be enforced,  prosecuted,  settled or compromised as if the
Merger had not occurred, or the Surviving Corporation may be substituted in such
action or proceeding in place of Acquisition Sub; and

                  (iii) All rights of employees and creditors and all Liens upon
the property of Acquisition  Sub shall be preserved  unimpaired,  limited to the
property  affected  by such  Liens at the  Effective  Time,  and all the  debts,
liabilities  and  duties  of  Acquisition  Sub  shall  attach  to  Target as the
Surviving Corporation and shall be enforceable against the Surviving Corporation
to the same  extent  as if all  such  debts,  liabilities  and  duties  had been
incurred or contracted by it.

2.5 Further  Assurances.  Acquisition Sub agrees that, from time to time,  after
the  Closing,  as and when  requested  by the  Surviving  Corporation  or by its
successors and assigns, officers of the Surviving Corporation shall, in the name
of Acquisition Sub, execute and deliver,  or cause to be executed and delivered,
at the sole expense of the Surviving  Corporation,  all deeds,  assignments  and
other instruments and shall take or cause to be taken all such other and further
actions as the Surviving  Corporation may deem necessary or appropriate in order
more fully to vest in and  confirm  to the  Surviving  Corporation  title to and
possession  of  all  the  property,  rights,  privileges,   immunities,  powers,
purposes,  franchises  and all and  every  other  interest  of  Acquisition  Sub
referred  to in Section  2.4 hereof  and  otherwise  to carry out the intent and
purposes of this Agreement.

2.6  Directors of Surviving  Corporation.  The persons  comprising  the Board of
Directors of the Surviving Corporation, who shall hold office from the Effective
Time  in  accordance   with  its  By-Laws  until  the  next  annual  meeting  of
shareholders and until their  respective  successors shall have been elected and
shall have qualified,  shall be the directors of Target immediately prior to the
Effective Time, subject to the terms hereof.

2.7  Officers  of  Surviving   Corporation.   The  officers  of  the   Surviving
Corporation,  who shall hold office from the Effective  Time in accordance  with
its  By-Laws  until  the next  annual  meeting  of  directors  and  until  their
respective  successors  shall  have been  elected  or  appointed  and shall have
qualified,  shall be the officers of Target  immediately  prior to the Effective
Time, subject to the terms hereof.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF TARGET

         Target makes the following representations and warranties to Purchaser,
each of which shall be deemed material, and Purchaser, in executing,  delivering
and   consummating   this  Agreement,   has  relied  upon  the  correctness  and
completeness,  in all material  respects,  of each of such  representations  and
warranties:

3.1 Valid  Existence;  Qualification.  Target is a corporation  duly  organized,
validly  existing and. in good standing under the laws of the State of Delaware.
Target has the power to carry on its  business as now  conducted  and to own its
assets. Target is qualified to do business as a foreign corporation in the State
of Florida,  and is not required to be so qualified in any other jurisdiction in
order to own its assets or carry on its business as now conducted, and there has
not been any claim by any other  jurisdiction  to the effect that  Purchaser  is
required  to qualify or  otherwise  be  authorized  to do  business as a foreign
corporation  therein.  The copies of Target's  Certificate of Incorporation,  as
amended to date,  certified by the  Secretary of State of the State of Delaware,
and By-Laws,  as amended to date  (certified by the Secretary of Target),  which
have  been  delivered  to  Purchaser,  are true  and  complete  copies  of those
documents as in effect on the date hereof.

3.2      Capitalization.
         --------------

         (a) (i) The  authorized  capital  stock of  Target  consists  of Twenty
Million (20,000,000) shares of Common Stock, $.001 par value per share, of which
Three  Million   Ninety-Five   Thousand   (3,095,000)   shares  are  issued  and
outstanding,  and Five Hundred  Thousand  (500,000)  shares of Preferred  Stock,
$.001 par value per share, none of which are issued and outstanding,  subject to
adjustment  as set  forth in  Schedule  3.2(a).  The  number of shares of Target
Common  Stock  outstanding  may change prior to Closing as set forth on Schedule
3.2(a)  attached  hereto.  All of such issued and  outstanding  shares of Target
Common  Stock,  as of the date hereof are,  and as of the Closing Date shall be,
duly authorized,  validly issued,  fully paid and  nonassessable.  Except as set
forth on Schedule  3.2(a),  there are no  outstanding  Derivative  Securities of
Target that are convertible  into or  exchangeable  for any securities of Target
and there are no outstanding subscriptions,  options, warrants, rights, calls or
other  commitments  or  agreements  to which Target is a party or by which it is
bound calling for the issuance,  transfer, sale or disposition of any securities
of Target or Derivative Securities.

                  (ii) The number of shares of Target Common Stock may, prior to
the  Effective  Time,  be increased  by up to One Million  Three  Hundred  Fifty
Thousand (1,350,000) shares which may be issued by Target in a private placement
pursuant to an Offering  Memorandum  dated October 22, 2001, and decreased by up
to One Million  Eight Hundred Sixty  Thousand  (1,860,000)  shares of Restricted
Target Common Stock which are subject to forfeiture.

         (b) Target has not made any  investments  in, and does not own,  any of
the capital stock of, or any other equity interest in, any other Person.

3.3 Consents. Except as set forth on Schedule 3.3 attached hereto, no consent of
any Body or other  Person is required to be received by or on the part of Target
to enable Target to enter into and carry out this Agreement and the Transaction.

3.4      Authority; Binding Nature of Agreement.
         --------------------------------------

          (a) Target has the  corporate  power and  authority to enter into this
Agreement and carry out its obligations hereunder. The execution and delivery of
this Agreement and the consummation of the Transaction have been duly authorized
by the  directors of Target and no other  corporate  proceedings  on the part of
Target are necessary to authorize  the execution and delivery of this  Agreement
and the  consummation  of the  Transaction  except for the  approval of Target's
shareholders.

         (b) This  Agreement  constitutes  the valid and binding  obligation  of
Target and is enforceable against it in accordance with its terms.

3.5 Financial Statements.  The Target Financial  Statements,  a copy of which is
set forth in Schedule  3.5, (i) are true and  complete,  (ii) are in  accordance
with the Books and  Records  of  Target,  (iii)  fairly  present  the  financial
position of Target as of the Target  Balance Sheet Date and the results of their
operations  for the year ended  December  31,  2001,  and (iv) were  prepared in
conformity with generally accepted accounting  principles  consistently  applied
throughout the periods covered thereby.

3.6 Liabilities. As at the Target Balance Sheet Date, Target had no Liabilities,
other than those Liabilities reflected or reserved against in the Target Balance
Sheet, and there was no basis for the assertion  against Target of any Liability
not so reflected or reserved against therein.

3.7 Actions Since the Target Balance Sheet Date.  Except as otherwise  expressly
provided or set forth in, or required  by,  this  Agreement,  or as set forth in
Schedule 3.7 attached  hereto,  since the Target Balance Sheet Date,  Target has
not (i) incurred any material  Liability or other  Liability not in the ordinary
and usual course of business and consistent  with past  practice,  (ii) made any
wage or salary  increases or granted any bonuses;  (iii)  mortgaged,  pledged or
subjected to any Lien any of its assets,  or  permitted  any of its assets to be
subjected to any Lien;  (iv) sold,  assigned or  transferred  any of its assets,
except  in the  ordinary  and  usual  course of  business  consistent  with past
practice;  (v) changed its  accounting  methods,  principles or practices;  (vi)
revalued  any of its assets,  including,  without  limitation,  writing down the
value of inventory or writing off notes or accounts  receivable;  (vii) incurred
any damage,  destruction or loss (whether or not covered by insurance) adversely
affecting its assets or business  which has had or could be reasonably  expected
to have a Material Adverse Effect; (viii) canceled any indebtedness or waived or
released  any right or claim;  (ix)  incurred  any  Material  Adverse  Change in
employee relations;  (x) amended,  canceled or terminated any Contract or Permit
or entered  into any  Contract or Permit which was not in the ordinary and usual
course of business consistent with past practice;  (xi) increased or changed its
assumptions  underlying,  or  methods  of  calculating,   any  doubtful  account
contingency  or  other  reserves;   (xii)  paid,  discharged  or  satisfied  any
Liabilities  other than the payment,  discharge or  satisfaction in the ordinary
and usual  course of business of  Liabilities  set forth or reserved  for on the
Target Balance Sheet, as the case may be, or thereafter incurred in the ordinary
and usual  course of business  consistent  with past  practice;  (xiii) made any
capital  expenditure,  entered into any lease or incurred any obligation to make
any capital expenditure;  (xiv) failed to pay or satisfy when due any Liability;
(xv)  failed  to  carry  on its  business  in the  ordinary  and  usual  course,
consistent  with the past  practice,  so as to  reasonably  keep  available  the
services of its  employees,  and to  preserve  its assets and  business  and the
goodwill of its suppliers,  customers,  distributors  and others having business
relations  with it;  (xvi)  disposed of or allowed the lapse of any  Proprietary
Rights or  disclosed  to any Person any  Proprietary  Rights not  theretofore  a
matter of public  knowledge;  (xvii) issued or sold, or agreed to issue or sell,
any of its  capital  stock or shares of  capital,  as the case may be,  options,
warrants,  rights or calls to  purchase  such  stock or shares,  any  securities
convertible  into or exchangeable  for such capital stock,  shares of capital or
other   corporate   securities,   or   effected   any   subdivision   or   other
recapitalization  affecting its capital stock or shares of capital,  as the case
may be; (xviii) declared, paid or set aside any dividends or other distributions
or payments on its  capital  stock or shares of capital,  as the case may be, or
redeemed or repurchased, or agreed to redeem or repurchase, any of its shares of
its capital stock or shares of capital, as the case may be; (xix) made any loans
or advances to any Person, or assumed, guaranteed,  endorsed or otherwise became
responsible  for the obligations of any Person;  (xx) incurred any  indebtedness
for borrowed  money (except as a result of its  endorsement,  for  collection or
deposit, of negotiable  instruments received in the ordinary and usual course of
business);  or (xxi) other than this Agreement or the  Transaction  contemplated
hereby,  entered into any  transaction  or course of conduct not in the ordinary
and usual course of business and consistent with past practice.

3.8 Adverse Developments.  Since the Target Balance Sheet Date there has been no
Material  Adverse  Change in the  assets,  business,  operations  (financial  or
otherwise),  or  prospects  of Target,  there has been no act or omission on the
part of Target or others  which would form the basis for the  assertion  against
Target of any material  Liability,  no other event has  occurred  which could be
reasonably  expected to have a Material  Adverse Effect and Target does not know
of any  development  or  threatened  development  of a  nature  which  could  be
reasonably expected to have a Material Adverse Effect.

3.9 Taxes. All taxes, including,  without limitation,  income, property,  sales,
use,  utility,  franchise,   capital  stock,  excise,  value  added,  employees'
withholding,  social  security  and  unemployment  taxes  imposed  by the United
States,  any state,  locality or any foreign  country and any and all  political
subdivisions  thereof and localities  therein, or by any other taxing authority,
which have or may become due or payable by Target and all interest and penalties
thereon,  whether disputed or not, have been paid in full or adequately provided
for by reserves shown in the Books and Records;  all deposits required by law to
be made by Target with respect to estimated  income,  franchise  and  employees'
withholding taxes have been duly made; and all tax returns,  including estimated
tax returns,  required to be filed have been duly and timely filed. No extension
of time  for the  assessment  of  deficiencies  for any  year is in  effect.  No
deficiency  notice is  proposed,  or, to the  knowledge  of  Target,  threatened
against Target. The tax returns of Target have never been audited.

3.10 Ownership of Assets; Assets Generally.  Target owns no assets. No Contracts
are required by Target to organize,  implement,  and operate the Business except
as set forth on Schedule 3.10 attached hereto.

3.11 Insurance. Target holds no insurance.

3.12 Litigation; Compliance with Law. There are no Actions relating to Target or
any of its  assets or the  Business  pending  or, to the  knowledge  of  Target,
threatened,  or any  order,  injunction,  award or decree  outstanding,  against
Target or against or  relating to any of its assets or the  Business;  and there
exists no basis for any such  Action.  Target  is not in  violation  of any law,
regulation, ordinance, order, injunction, decree, award, or other requirement of
any governmental or other regulatory Body, court or arbitrator relating to their
respective assets or the Business.

3.13 Real Property. Except as set forth on Schedule 3.13 attached hereto, Target
does not own or lease, or use under license or the like, any real property.

3.14 Agreements and  Obligations;  Performance.  Except for the Contracts listed
and briefly  described in Schedule  3.14  attached  hereto (the  "Target  Listed
Agreements"),  Target is not a party to, or bound by, any:  (i)  Contract  which
involves  aggregate  payments  or  receipts  in excess of $5,000  that cannot be
terminated at will without penalty or premium or any continuing Liability;  (ii)
Contract of any kind with any  officer,  director,  employee or  shareholder  of
Target;  (iii) Contract  which is in violation of applicable  law; (iv) Contract
for the purchase, sale or lease of any materials, products, supplies or services
which  contains,  or which  commits  or will  commit it for, a fixed  term;  (v)
Contract of employment not terminable at will without  penalty or premium or any
continuing  Liability;  (vi) deferred  compensation,  bonus or incentive plan or
Contract not  cancelable  at will without  penalty or premium or any  continuing
obligation or Liability;  (vii) management or consulting Contract not terminable
at will without  penalty or premium or any  continuing  obligation or Liability;
(viii) license or royalty  Contract;  (ix) Contract relating to indebtedness for
borrowed money; (x) union or other collective bargaining Contract; (xi) Contract
which,  by  its  terms,  requires  the  consent  of  any  party  thereto  to the
consummation of the Transaction;  (xii) Contract  containing  covenants limiting
the  freedom of  Target,  or any  shareholder,  director,  officer  or  employee
thereof,  to engage or compete in any line of business,  or with any Person,  in
any geographical  area; (xiii) Contract or option relating to the acquisition or
sale of any business;  (xiv) voting agreement or similar  Contract;  (xv) option
for the purchase of any asset, tangible or intangible;  (xvi) franchise, license
or advertising Contract; (xvii) Contract with the United States government,  any
state,  local or foreign  government,  or any political  subdivision,  agency or
department  thereof;  or (xviii) other Contract which materially  affects any of
their  assets or the  Business  whether  directly  or  indirectly,  or which was
entered into other than in the ordinary and usual course of business  consistent
with past practice. A true and correct copy of each of the written Target Listed
Agreements  has been  delivered,  or made  available,  to Purchaser.  The Target
Listed  Agreements  are valid,  in full force and effect and are  enforceable by
Target, as the case may be, in accordance with the terms thereof.  Target has in
all material respects  performed all obligations  required to be performed by it
to date under all of the Target Listed  Agreements,  is not in Default under any
of the Target  Listed  Agreements  and has  received  no notice of any  dispute,
Default or alleged  Default  thereunder  which has not heretofore  been cured or
which  notice has not  heretofore  been  withdrawn.  Target does not know of any
Default under any of the Target Listed  Agreements by any other party thereto or
by any other Person bound thereunder.

3.15 Condition of Assets.  Target has no tangible  assets except as set forth in
Schedule 3.15 attached hereto.

3.16 Permits and  Licenses.  Target holds no Permits from any Bodies.  Except as
set forth on Schedule 3.16 attached hereto,  Target does not require any Permits
to carry on the  Business.  No notice to,  declaration,  filing or  registration
with,  or Permit  from,  any Body or any other  Person is required to be made or
obtained by Target in connection with the execution,  delivery or performance of
this Agreement and the consummation of the Transaction.

3.17 Occupational Heath and Safety and Environmental  Matters. The operations of
the  Business  do not,  and will not,  require,  and  Target  does not have any,
Permits  from  any  Bodies  relating  to  occupational   health  and  safety  or
environmental matters to lawfully conduct the Business.  There is no litigation,
investigation  or other  proceeding  pending  or, to the  knowledge  of  Target,
threatened or known to be  contemplated by any Body in respect of or relating to
the  Business  of Target  with  respect  to  occupational  health  and safety or
environmental  matters.  All  operations of the Business have been  conducted in
compliance  with all, and Target is not liable in any respect for any  violation
of any,  applicable  United  States  federal,  state,  local or foreign  laws or
regulations,  pertaining  to  occupational  health and safety and  environmental
matters,  including,   without  limitation,  those  relating  to  the  emission,
discharge,  storage,  release or disposal of Materials of Environmental  Concern
into ambient air,  surface  water,  ground water or land surface or  sub-surface
strata or otherwise relating to the manufacture,  processing, distribution, use,
handling,  disposal or transport of Materials of Environmental  Concern.  Target
has not  received  any  notice of a  possible  claim or  citation  against or in
respect  of any  real  property  leased  by  Target,  or with  regard  to  their
respective assets or the Business, relating to occupational health and safety or
environmental matters and Target is not aware of any basis for any such Action.

3.18 Intellectual  Property.  Target owns no Proprietary Rights. Target is not a
party to, or bound by, any contract  requiring  the payment to any Person of any
royalty.  Target is not infringing upon any  Proprietary  Rights or is otherwise
violating the rights of any third party with respect thereto, and no proceedings
have been  instituted,  and no claim has been received by Target,  and Target is
not  aware of any  claim  alleging  any such  violation.  There  are no  pending
applications with regard to any Proprietary Right.

3.19 Compensation Information. Schedule 3.19 attached hereto contains a true and
complete list of the names and current  salary rates of, bonus  commitments  to,
and other  compensatory  arrangements  with,  all officers,  directors and other
persons employed and/or retained by Target.

3.20 Employee Benefit Plans.  Target does not maintain and has never maintained,
nor does Target make or has ever made employer contributions with respect to its
employees  to, any "pension" or "welfare"  benefit plans (within the  respective
meanings of sections 3(2) and 3(1) of the Employee  Retirement  Income  Security
Act of 1974,  as amended  ("ERISA"),  and Target has no Liability in  connection
therewith or with regard thereto.

3.21 No Breach.  Neither  the  execution  and  delivery  of this  Agreement  nor
compliance by Target with any of the provisions  hereof nor the  consummation of
the Transaction will:

         (a)  violate or  conflict  with any  provision  of the  Certificate  of
Incorporation, By-Laws or other organizational document of Target;

         (b) violate or conflict with or, alone or with notice or the passage of
time, or both,  result in the breach or  termination  of, or otherwise  give any
party the right to  terminate,  or  declare  a Default  under,  the terms of any
Contract  to which  Target is a party or by which  any of them may be bound,  or
otherwise violate or conflict with any Permit of any Body;

         (c)  result  in the  creation  of any Lien  upon any of the  assets  of
Target;

         (d) violate any judgment,  order, injunction,  decree or award against,
or binding upon Target or upon any of the assets of Target; or

         (e)  violate  any law or  regulation  of any  jurisdiction  relating to
Target or the Business.

3.22 Brokers.  Target has not engaged,  consented to, or authorized  any broker,
finder,  investment  banker or other  third  party to act on its or his  behalf,
directly  or  indirectly,   as  a  broker  or  finder  in  connection  with  the
Transaction.

3.23 Employment  Relations.  Target has never had any employees other than those
set forth on Schedule  3.23  attached  hereto.  In the past, to the knowledge of
Target,  Target has  complied  with all United  States  federal,  state,  local,
foreign, and other applicable laws, rules and regulations  respecting employment
and  employment  practices,  terms and  conditions of  employment  and wages and
hours,  and has not engaged in any unfair labor  practice  which,  in any of the
foregoing cases, could have a Material Adverse Effect. There is not pending, or,
to the  knowledge  of Target  threatened,  any unfair labor  practice  charge or
complaint  against Target by or before the United States Federal  National Labor
Relations Board or any comparable  state,  local or foreign agency or authority.
No   litigation,   arbitration,   administrative   proceeding  or   governmental
investigation is now pending, and, to the knowledge of Target no Person has made
any claim or has threatened litigation,  arbitration,  administrative proceeding
or governmental investigation, against Target arising out of any law relating to
discrimination against employees or employment practices.

3.24  Prior  Names  and  Addresses.  Since  inception,  Target  has not used any
business  name or had any  business  address  other  than its  current  name and
business address.

3.25 Books and Records. Target has made and kept (and given Purchaser access to)
its Books and Records and accounts,  which, in reasonable detail, accurately and
fairly reflect the activities of Target and the Business. Target has not engaged
in any material  transaction,  maintained any bank account or used any corporate
or company  funds except for  transactions,  bank  accounts and funds which have
been and are reflected in the normally maintained Books and Records of Target.

3.26 Payments. Target has not, directly or indirectly paid or delivered any fee,
commission or other sum of money or item or property, however characterized,  to
any finder,  agent,  client,  customer,  supplier,  government official or other
Person,  in the United States or any other  country,  which is illegal under any
federal,  state  or  local  laws  of  the  United  States  (including,   without
limitation, the U.S. Foreign Corrupt Practices Act) or such other country.

3.27 Sales of Securities. No communication made by Target in connection with the
sale  of  its  securities  to  investors  (including,  without  limitation,  any
statement  made in the Private  Offering  Memorandum  dated October 22, 2001, as
amended)  contains any untrue  statement of a material  fact or omits to state a
material fact necessary in order to make the statements made not misleading.

3.28 Untrue or Omitted Facts. No representation, warranty or statement by Target
in this Agreement  contains any untrue statement of a material fact, or omits to
state  a  material  fact  necessary  in  order  to  make  such  representations,
warranties or statements not misleading.  Without limiting the generality of the
foregoing,  there is no fact  known to  Target  that  has had,  or which  may be
reasonably  expected  to  have,  a  Material  Adverse  Effect  that has not been
disclosed in this Agreement.

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

         Purchaser makes the following  representations and warranties to Target
each of which shall be deemed material, and Target in executing,  delivering and
consummating  this Agreement,  has relied upon the correctness and completeness,
in all material respects, of each of such representations and warranties:

4.1 Valid Existence;  Qualification.  Each of Purchaser and Acquisition Sub is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware. Each of Purchaser and Acquisition Sub has the power to
carry on its  business  as now  conducted  and to own its assets.  Purchaser  is
qualified to do business as a foreign  corporation in the State of Tennessee and
is not required to be so qualified in any other jurisdiction in order to own its
assets or carry on its  business  as now  conducted,  and there has not been any
claim by any other  jurisdiction  to the effect  that  Purchaser  is required to
qualify or  otherwise  be  authorized  to do business  as a foreign  corporation
therein. The copies of Purchaser's and Acquisition Sub's respective Certificates
of Incorporation, as amended to date, certified by the Secretary of State of the
State of Delaware,  and their respective  By-Laws, as amended to date (certified
by the Secretary of Purchaser and  Acquisition  Sub,  respectively),  which have
been delivered to Target,  are true and complete copies of those documents as in
effect on the date hereof.

4.2 Capitalization.

         (a) The authorized  capital stock of Purchaser  consists of Two Hundred
Million  (200,000,000)  shares of Common Stock,  $.0001 par value per share,  of
which  Six  Million  One  Hundred   Seventy-Three   Thousand  Four  Hundred  Two
(6,173,402)  shares are issued and  outstanding,  and Five  Million  (5,000,000)
shares of Preferred Stock,  $.0001 par value per share, none of which are issued
and outstanding.  All of such issued and outstanding  shares of Purchaser Common
Stock are duly authorized, validly issued, fully paid and nonassessable.  Except
as set forth on Schedule 4.2(a), there are no outstanding  Derivative Securities
of Purchaser that are  convertible  into or  exchangeable  for any securities of
Purchaser and there are no outstanding subscriptions, options, warrants, rights,
calls or other  commitment  or  agreements  to which  Purchaser is a party or by
which it is bound calling for the issuance, transfer, sale or disposition of any
securities of Purchaser or Derivative Securities.

         (b) The  authorized  capital stock of  Acquisition  Sub consists of One
Hundred (100) shares of Common Stock,  $.0001 par value per share,  of which Ten
(10) shares are issued,  outstanding and owned by Purchaser. All such issued and
outstanding  shares  of Common  Stock of  Acquisition  Sub are duly  authorized,
validly  issued,  fully  paid  and  nonassessable.   There  are  no  outstanding
Derivative   Securities  of  Acquisition  Sub  that  are  convertible   into  or
exchangeable  for any securities of Acquisition Sub and there are no outstanding
subscriptions,   options,   warrants,  rights,  calls  or  other  commitment  or
agreements to which  Acquisition  Sub is a party or by which it is bound calling
for the issuance, transfer, sale or disposition of any securities of Acquisition
Sub or Derivative Securities.

         (c)  Except as set forth in  Schedule  4.2(c),  neither  Purchaser  nor
Acquisition  Sub has  made any  investments  in,  and  does not own,  any of the
capital stock of, or any other equity interest in, any other Person.

4.3 Consents. Except as set forth on Schedule 4.3 attached hereto, no consent of
any  Body or  other  Person  is  required  to be  received  by or on the part of
Purchaser or Acquisition  Sub to enable  Purchaser or  Acquisition  Sub to enter
into and carry out this Agreement and the Transaction.

4.4 Authority; Binding Nature of Agreement.

         (a)  Each  of  Purchaser  and  Acquisition  Sub  respectively  has  the
corporate  power and  authority to enter into this  Agreement  and carry out its
obligations  hereunder.  Except for the execution,  delivery and  performance by
Purchaser of the Assignment and Agreement and the related  Consent to Assignment
referred to in Section 10.6 hereof, the execution and delivery of this Agreement
and the  consummation of the Transaction have been duly authorized by the boards
of  directors  of  Purchaser  and  Acquisition  Sub,  and  Purchaser as the sole
shareholder of Acquisition  Sub, and no other corporate  proceedings on the part
of Purchaser or  Acquisition  Sub are  necessary to authorize  the execution and
delivery of this Agreement and the consummation of the Transaction.

         (b) This Agreement constitutes the valid and binding obligation of each
of Purchaser and  Acquisition  Sub and is  enforceable  against it in accordance
with its terms.

4.5  Financial  Statements.  The  Purchaser  Financial  Statements  included  in
Purchaser's  Annual  Report on Form 10-K for the fiscal year ended  December 31,
2001 (i) are true  and  complete,  (ii) are in  accordance  with the  Books  and
Records of Purchaser,  (iii) fairly present the financial  position of Purchaser
as of the Purchaser  Balance Sheet Date and the results of their  operations for
the year ended  December 31,  2001,  and (iv) are  prepared in  conformity  with
generally  accepted  accounting  principles,   consistently  applied,  and  with
Regulation S-X or Regulation S-B Item 310, as applicable,  promulgated under the
Securities Act, throughout the periods covered thereby.

4.6 Liabilities.  Except as set forth in Schedule 4.6 attached hereto, as of the
Purchaser  Balance Sheet Date,  Purchaser had no  Liabilities,  other than those
Liabilities  reflected or reserved  against in the  Purchaser  Balance  Sheet or
Liabilities  which  do  not or  will  not  have a  Material  Adverse  Effect  on
Purchaser,  and there was no basis for the  assertion  against  Purchaser of any
Liability not so reflected or reserved against in the Purchaser Balance Sheet or
which does not and will not have a Material Adverse Effect on Purchaser.

4.7  Actions  Since the  Purchaser  Balance  Sheet  Date.  Except  as  otherwise
expressly  provided or set forth in, or required by, this  Agreement,  or as set
forth in Schedule 4.7 attached hereto,  since the Purchaser  Balance Sheet Date,
Purchaser  has not (i)  incurred  any  material  Liability  except as  generally
consistent with the PLRX Plan; (ii) made any wage or salary increases or granted
any bonuses except as generally  consistent with the PLRX Plan; (iii) mortgaged,
pledged or  subjected  to any Lien any of its assets,  or  permitted  any of its
assets to be subjected to any Lien except as generally  consistent with the PLRX
Plan;  (iv) sold,  assigned or transferred any of its assets except as generally
consistent with the PLRX Plan; (v) changed its accounting methods, principles or
practices;  (vi)  revalued  any of its assets,  including,  without  limitation,
writing down the value of inventory or writing off notes or accounts  receivable
except  as  generally   consistent  with  the  PLRX  Plan;  (vii)  canceled  any
indebtedness  or waived or  released  any right or claim;  (viii)  incurred  any
Material  Adverse  Change in  employee  relations;  (ix)  amended,  canceled  or
terminated  any Contract or Permit or entered into any Contract or Permit except
as  generally  consistent  with the PLRX Plan;  (x)  increased  or  changed  its
assumptions  underlying,  or  methods  of  calculating,   any  doubtful  account
contingency or other reserves except as generally consistent with the PLRX Plan;
(xi)  paid,   discharged  or  satisfied  any  Liabilities  except  as  generally
consistent with the PLRX Plan; (xii) made any capital expenditure,  entered into
any lease or incurred any obligation to make any capital  expenditure  except as
generally  consistent  with the PLRX Plan;  (xiii) failed to pay or satisfy when
due any  Liability,  (A)  unless  such  failure  has  not had and is  reasonably
expected not to have a Material Adverse Effect on Purchaser,  and (B) except for
such  Liabilities that Purchaser does not believe in good faith are owed, do not
exceed  $50,000  in the  aggregate,  and were  included  as  liabilities  in the
Purchaser  Balance Sheet;  (xiv) issued or sold, or agreed to issue or sell, any
of its capital stock, options, warrants, rights or calls to purchase such stock,
any securities  convertible into or exchangeable for such capital stock or other
corporate  securities,  or effected any  subdivision  or other  recapitalization
affecting its capital stock;  (xv) declared,  paid or set aside any dividends or
other   distributions   or  payments  on  its  capital  stock,  or  redeemed  or
repurchased, or agreed to redeem or repurchase, any shares of its capital stock;
(xvi) made any loans or advances to any Person, or assumed, guaranteed, endorsed
or  otherwise  became  responsible  for the  obligations  of any Person;  (xvii)
incurred  any  indebtedness  for  borrowed  money  (except  as a  result  of its
endorsement,  for collection or deposit, of negotiable  instruments  received in
the ordinary and usual course of business); or (xviii) other than this Agreement
or the  Transaction  entered into any transaction or course of conduct except as
generally consistent with the PLRX Plan.

4.8  Adverse  Developments.  Except  as set  forth on  Schedule  4.8,  since the
Purchaser  Balance Sheet Date,  there has been no Material Adverse Change in the
assets,  business,   operations  (financial  or  otherwise),   or  prospects  of
Purchaser,  there has been no act or omission on the part of Purchaser or others
which would form the basis for the assertion  against  Purchaser of any material
Liability,  no other event has occurred  which could be  reasonably  expected to
have a Material  Adverse Effect,  and Purchaser does not know of any development
or threatened development of a nature which could be reasonably expected to have
a Material Adverse Effect.

4.9 Taxes. All taxes, including,  without limitation,  income, property,  sales,
use,  utility,  franchise,   capital  stock,  excise,  value  added,  employees'
withholding,  social  security  and  unemployment  taxes  imposed  by the United
States,  any state,  locality or any  foreign  country,  or by any other  taxing
authority, which have or may become due or payable by Purchaser and all interest
and penalties thereon, whether disputed or not, have been paid in full or if not
paid,  disclosed  in the Books and Records;  all deposits  required by law to be
made by Purchaser  with respect to estimated  income,  franchise and  employees'
withholding taxes have been duly made; and all tax returns,  including estimated
tax returns, required to be filed have been duly and timely filed. Except as set
forth on Schedule 4.9 attached  hereto,  no extension of time for the assessment
of deficiencies for any year is in effect. No deficiency notice is proposed, or,
to the knowledge of Purchaser,  threatened against Purchaser. The tax returns of
Purchaser have never been audited.

4.10 Ownership of Assets. Purchaser does not warrant that it owns any particular
assets.

4.11  Insurance.  Schedule 4.11  attached  hereto sets forth a true and complete
list and brief  description  of all policies of fire,  liability,  political and
other forms of insurance  held by Purchaser  and the names and  addresses of the
insurers which are the issuers of such insurance  policies.  Except as set forth
in Schedule 4.11, such policies are valid, outstanding and enforceable policies,
as to which  premiums have been paid  currently.  To the knowledge of Purchaser,
there  exists  no state  of  facts,  and no  event  has  occurred,  which  might
reasonably (i) form the basis for any claim against  Purchaser not fully covered
by  insurance  for  liability  on account of any express or implied  warranty or
tortious  omission or  commission,  or (ii) result in any  material  increase in
insurance premiums.

4.12  Litigation;  Compliance  with Law.  Except as set forth on  Schedule  4.12
attached hereto, there are no Actions relating to Purchaser or any of its assets
or business,  pending or, to the  knowledge  of  Purchaser,  threatened,  or any
order,  injunction,  award or decree outstanding against Purchaser or against or
relating to any of its assets or business;  and to the  knowledge of  Purchaser,
there exists no basis for any such Action.  Purchaser is not in violation of any
law,  regulation,   ordinance,  order,  injunction,   decree,  award,  or  other
requirement of any  governmental or other  regulatory  Body, court or arbitrator
relating to its assets.

4.13 Real  Property.  Except  as set forth on  Schedule  4.13  attached  hereto,
Purchaser  does not own or lease,  or use under  license  or the like,  any real
property.

4.14 Agreements and  Obligations;  Performance.  Except for the Contracts listed
and briefly  described in Schedule 4.14 attached hereto (the  "Purchaser  Listed
Agreements"), Purchaser is not a party to, or is not bound by, any: (i) Contract
which involves aggregate payments or receipts in excess of $5,000 that cannot be
terminated at will without penalty or premium or any continuing Liability;  (ii)
Contract of any kind with any officer, shareholder, director, or employee of the
Purchaser; (iii) Contract which is in violation of applicable law; (iv) Contract
for the purchase, sale or lease of any materials, products, supplies or services
which  contains,  or which  commits  or will  commit it for, a fixed  term;  (v)
Contract of employment not terminable at will without  penalty or premium or any
continuing  Liability;  (vi) deferred  compensation,  bonus or incentive plan or
Contract not  cancelable  at will without  penalty or premium or any  continuing
obligation or Liability;  (vii) management or consulting Contract not terminable
at will without penalty or premium or any continuing  Liability;  (viii) license
or royalty Contract;  (ix) Contract relating to indebtedness for borrowed money;
(x) union or other collective  bargaining Contract;  (xi) Contract which, by its
terms,  requires  the consent of any party  thereto to the  consummation  of the
Transaction  contemplated  hereby;  (xii) Contract containing covenants limiting
the  freedom of  Purchaser,  or any officer or  employee  thereof,  to engage or
compete in any line of business,  or with any Person, in any geographical  area;
(xiii)  Contract or option  relating to the acquisition or sale of any business;
(xiv) voting agreement or similar Contract;  (xv) option for the purchase of any
asset, tangible or intangible; (xvi) franchise, license or advertising Contract;
(xvii) Contract with the United States  government,  any state, local or foreign
government,  or (xviii)  other  Contract  which  materially  affects  any of its
assets, whether directly or indirectly,  or which was entered into other than in
the ordinary and usual course of business  consistent with the PLRX Plan. A true
and correct copy of each of the written  Purchaser  Listed  Agreements  has been
delivered, or made available, to Target. Except as is described in Schedule 4.14
attached hereto,  the Purchaser  Listed  Agreements are valid, in full force and
effect and are  enforceable  by Purchaser in accordance  with the terms thereof.
Purchaser has in all material respects performed all obligations  required to be
performed by it to date under all of the Purchaser Listed Agreements,  is not in
Default under any of the Purchaser Listed  Agreements and has received no notice
of any dispute,  Default or alleged Default  thereunder which has not heretofore
been  cured or which  notice has not  heretofore  been  withdrawn.  Except as is
described  in  Schedule  4.14,  Purchaser  knows of no Default  under any of the
Purchaser  Listed  Agreements  by any other party thereto or by any other Person
bound thereunder.

4.15 Occupational Heath and Safety and Environmental  Matters.  Purchaser has no
operations as of the date hereof except as contemplated in the PLRX Plan.  There
is no litigation, investigation or other proceeding pending or, to the knowledge
of Purchaser,  threatened or known to be  contemplated by any Body in respect of
or  relating  to  the  most  recent  operations  of  Purchaser  (the  "Purchaser
Business")  with  respect to  occupational  health  and safety or  environmental
matters. To Purchaser's knowledge, all previous operations of the Purchaser were
conducted in compliance with all, and Purchaser is not liable in any respect for
any violation of any, applicable United States federal,  state, local or foreign
laws  or  regulations,   pertaining  to  occupational   health  and  safety  and
environmental  matters,  including,  without  limitation,  those relating to the
emission,  discharge, storage, release or disposal of Materials of Environmental
Concern  into  ambient  air,  surface  water,  ground  water or land  surface or
sub-surface  strata  or  otherwise  relating  to  the  manufacture,  processing,
distribution, use, handling, disposal or transport of Materials of Environmental
Concern.  Purchaser has not received any notice of a possible  claim or citation
against or in respect of any real property  leased by Purchaser,  or with regard
to assets or the Purchaser Business,  relating to occupational health and safety
or  environmental  matters and  Purchaser is not aware of any basis for any such
Action.

4.16  Intellectual  Property.  Except as set  forth on  Schedule  4.16  attached
hereto,  Purchaser  is not a party  to or bound by any  contract  requiring  the
payment to any  person,  firm or  corporation  of any  royalty  with  respect to
Proprietary  Rights.  Purchaser is not infringing upon any Proprietary Rights or
is otherwise  violating the rights of any third party with respect thereto,  and
no  proceedings  have  been  instituted,  and no  claim  has  been  received  by
Purchaser,  and Purchaser is not aware of any claim alleging any such violation.
Purchaser has no pending applications with regard to any Proprietary Right.

4.17  Employee  Benefit  Plans.  Except as set forth in Schedule  4.17  attached
hereto, Purchaser does not maintain and has never maintained, nor does Purchaser
make or has ever made employer  contributions  with respect to its employees to,
any  "pension" or "welfare"  benefit plans  (within the  respective  meanings of
sections  3(2) and 3(1) of ERISA,  and  Purchaser has no Liability in connection
therewith or with regard thereto.

4.18 No Breach.  Neither  the  execution  and  delivery  of this  Agreement  nor
compliance  by  Purchaser  or  Acquisition  Sub  respectively  with  any  of the
provisions hereof nor the consummation of the Transaction will:

         (a)  violate or  conflict  with any  provision  of the  Certificate  of
Incorporation or By-Laws of Purchaser or Acquisition Sub;

         (b) violate or conflict with, or alone or with notice or the passage of
time, or both,  result in the breach or  termination  of, or otherwise  give any
party the right to  terminate,  or  declare  a Default  under,  the terms of any
Contract to which Purchaser is a party or by which it may be bound;

         (c)  result  in the  creation  of any Lien  upon any of the  assets  of
Purchaser;

         (d) violate any judgment,  order, injunction,  decree or award against,
or binding upon, Purchaser or upon any of its assets; or

         (e)  violate  any law or  regulation  of any  jurisdiction  relating to
Purchaser or Acquisition Sub.

4.19 Brokers. Purchaser has not engaged, consented to, or authorized any broker,
finder, investment banker or other third party to act on its behalf, directly or
indirectly, as a broker or finder in connection with the Transaction.

4.20 Employment Relations. Purchaser has no employees other than those set forth
on Schedule  4.20 attached  hereto.  In the past, to the knowledge of Purchaser,
Purchaser has complied with all United States federal,  state,  local,  foreign,
and other  applicable  laws,  rules and  regulations  respecting  employment and
employment  practices,  terms and  conditions of employment and wages and hours,
and has not engaged in any unfair labor practice  which, in any of the foregoing
cases,  could have a Material Adverse Effect.  There is not pending,  or, to the
knowledge of Purchaser threatened, any unfair labor practice charge or complaint
against  Purchaser  by or  before  the  United  States  Federal  National  Labor
Relations Board or any comparable  state,  local or foreign agency or authority.
No   litigation,   arbitration,   administrative   proceeding  or   governmental
investigation  is now pending,  and, to the knowledge of Purchaser no Person has
made  any  claim  or  has  threatened  litigation,  arbitration,  administrative
proceeding  or  governmental  investigation  against,  arising  out of  any  law
relating to discrimination against employees or employment practices.

4.21 Prior Names and  Addresses.  Since  inception,  Purchaser  has not used any
business  name or had any  business  address  other  than its  current  name and
business address except as set forth on Schedule 4.21 attached hereto.

4.22  Payments.  Purchaser has not directly or indirectly  paid or delivered any
fee,   commission   or  other  sum  of  money  or  item  or  property,   however
characterized,  to any finder,  agent, client,  customer,  supplier,  government
official or other Person,  in the United States or any other  country,  which is
illegal under any federal,  state or local laws of the United States (including,
without  limitation,  the U.S.  Foreign  Corrupt  Practices  Act) or such  other
country.

4.23 Books and Records. Purchaser has made and kept (and given Target access to)
its Books and Records and accounts,  which, in reasonable detail, accurately and
fairly  reflect the  activities of  Purchaser.  Purchaser has not engaged in any
material  transaction,  maintained  any bank  account or used any  corporate  or
company  funds in connection  with its business  except for  transactions,  bank
accounts and funds which have been and are reflected in the normally  maintained
Books and Records of Purchaser.

4.24 SEC  Reports.  Purchaser  has filed  with the SEC via the EDGAR  System all
reports since January 1, 2001, and all schedules and exhibits  thereto (the "SEC
Reports"),  required to be filed by it pursuant to the Exchange  Act,  except as
set forth on Schedule 4.24 attached hereto.  Each of the SEC Reports,  as of its
respective  date, did not contain any untrue  statement of material fact or fail
to state any material  fact  required to be stated  therein or necessary to make
the statements therein not misleading.

4.25  Untrue or Omitted  Facts.  No  representation,  warranty or  statement  by
Purchaser in this Agreement contains any untrue statement of a material fact, or
omits to state a material fact necessary in order to make such  representations,
warranties or statements not misleading.  Without limiting the generality of the
foregoing,  there is no fact known to  Purchaser  that has had,  or which may be
reasonably  expected  to  have,  a  Material  Adverse  Effect  that has not been
disclosed in this Agreement.

                                    ARTICLE V

                              PRE-CLOSING COVENANTS

5.1 Target  Covenants.  Target hereby  covenants  that,  from and after the date
hereof and until the Closing or earlier termination of this Agreement:

         (a) Access. Target shall afford to the officers, attorneys, accountants
and other authorized  representatives of Purchaser free and full access,  during
regular  business hours and upon  reasonable  notice,  to all of their Books and
Records,  personnel and properties so that Purchaser, at its own expense, except
for the  Purchaser  Expenses as set forth in Section  13.1 hereof which shall be
borne by Target, may have full opportunity to make such review,  examination and
investigation  as  Purchaser  may  desire  of  Target.  Target  shall  cause the
employees, accountants, attorneys and other agents and representatives of Target
to cooperate fully with said review,  examination and  investigation and to make
full  disclosure  to Purchaser  and its  representatives  of all material  facts
affecting Target. Target acknowledges and agrees that no review,  examination or
investigation   heretofore   or  hereafter   undertaken   by  Purchaser  or  its
representatives  shall limit or affect any  representation  or warranty  made by
Target or otherwise  relieve Target from any liability under this Agreement,  or
the obligation to consummate the Transaction.

         (b) Continuation of Target's Business Development. Target shall develop
its  business,  and shall  continue its business  development,  as stated in the
Recitals hereof and as described in Schedule 10.3.

         (c) No Breach.

                  (i) Target will (A) use its best efforts to assure that all of
its representations  and warranties  contained herein are true and correct as of
the Closing as if repeated at and as of such time,  that no Default  shall occur
with respect to any of its covenants,  representations  or warranties  contained
herein  that has not been cured by the Closing  and that all  conditions  to the
obligation of Purchaser to consummate the  Transaction are satisfied in a timely
manner;  (B) not  voluntarily  take any action or do anything which will cause a
Default respecting such covenants, representations or warranties or would impede
the  satisfaction of such  conditions;  and (C) promptly notify Purchaser of any
event or fact which represents or is likely to cause such a Default or result in
such an impediment.

                  (ii) Without limiting the generality of the foregoing,  Target
agrees to use its best efforts to take, or cause to be taken,  all actions,  and
to do, or cause to be done, all things reasonably necessary, proper or advisable
under   applicable  laws  and  regulations  to  consummate  and  effectuate  the
Transaction.

         (d)  Consents.  Promptly  following  the  execution of this  Agreement,
Target  will use its best  efforts  to obtain  consents  of all Bodies and other
Persons necessary for the consummation of the transactions  contemplated by this
Agreement,  including without limitation,  approval by Target's  shareholders of
this Agreement and the Transaction.

         (e) Unaudited Financial Statements.  Target will provide Purchaser with
such unaudited  financial  statements of, and other financial  information  with
respect to,  Target,  up to and  including  the Closing  Date,  as Purchaser may
reasonably request.

         (f) No  Negotiations.  For so long as this  Agreement  shall  remain in
effect,  Target  will not  directly  or  indirectly,  (a)  solicit  or  initiate
discussions or engage in  negotiations  with any Person (a "Potential  Offeror")
(whether  such  negotiations  are  initiated by them or  otherwise),  other than
Purchaser,  with  respect  to the  possible  acquisition,  merger,  or change of
control of Target, whether by way of merger,  acquisition of stock,  acquisition
of assets, or otherwise (a "Potential Target  Transaction");  (b) participate in
negotiations with, or provide information concerning Target to any Person, other
than the Purchaser, in connection with a Potential Target Transaction; (c) enter
into any Contract with any Person, other than Purchaser,  concerning or relating
to a  Potential  Target  Transaction;  or (d)  act in any way in  response  to a
Potential  Target  Transaction.  If Target  receives  any  unsolicited  offer or
proposal, or attempt to offer or propose, to enter into negotiations relating to
a Potential Target  Transaction,  whether oral or written,  it shall immediately
notify  Purchaser of such fact and shall  return,  or cause to be returned,  any
such written offer to such Potential Offeror.

         (g) Approval of Counsel.  All  actions,  proceedings,  instruments  and
documents required to carry out this Agreement,  or incidental thereto,  and all
other  related  legal  matters,  shall be approved as to form and  substance  by
counsel to Target, which approval shall not be unreasonably withheld or delayed.

         (h) Target Shareholder Approval.  Target shall secure an agreement from
its shareholders owning in the aggregate at least 51% of its voting stock (which
percentage is sufficient  under the Delaware  Statute,  Target's  Certificate of
Incorporation  and By-Laws,  and  contractually  and otherwise,  to approve this
Agreement and the Transaction) to vote their respective  shares of Target Common
Stock to approve this Agreement and the Transaction.

5.2 Purchaser  Covenants.  Purchaser  hereby  covenants that, from and after the
date hereof and until the Closing or earlier termination of this Agreement:

         (a)  Access.   Purchaser  shall  afford  to  the  managers,   officers,
attorneys,  accountants and other authorized  representatives of Target free and
full access, during regular business hours and upon reasonable notice, to all of
its Books and Records,  personnel  and  properties  so that Target,  at Target's
expense,  may  have  full  opportunity  to make  such  review,  examination  and
investigation  as it may desire of Purchaser  and its business.  Purchaser  will
cause its employees, accountants, attorneys and other agents and representatives
to cooperate fully with said review,  examination and  investigation and to make
full  disclosure  to  Target  and  its  representatives  of all  material  facts
affecting  its  business.  Purchaser  acknowledges  and  agrees  that no review,
examination or investigation heretofore or hereafter undertaken by Target or its
representatives  shall limit or affect any  representation  or warranty  made by
Purchaser  in, or otherwise  relieve  Purchaser  from any  Liability  under this
Agreement, or the obligation to consummate the Transaction.

         (b) Conduct of Business.  Purchaser  currently has no  operations,  and
will not conduct any operations, other than as contemplated in the PLRX Plan and
except for necessary regulatory  compliance activities without the prior written
consent of Target, and as otherwise provided in this Agreement. Without limiting
the generality of the foregoing,  and except as otherwise  expressly provided in
this  Agreement or in Schedule  5.2(b)  attached  hereto,  prior to the Closing,
Purchaser will not, without the prior written consent of Target:

                  (i) amend its Certificate of Incorporation and/or By-Laws;

                  (ii) enter  into,  adopt or amend any bonus,  profit  sharing,
compensation,  severance,  termination,  stock option, stock appreciation right,
restricted stock, performance unit, stock equivalent,  stock purchase,  pension,
retirement,  deferred  compensation,  employment,  severance  or other  employee
benefit  Contract,  trust,  plan,  fund or other  arrangement for the benefit or
welfare  of any  director,  officer  or  employee,  increase  in any  manner the
compensation or fringe benefits of any director,  officer or employee or pay any
benefit not required by any plan, contract or and arrangement as in effect as of
the date hereof;

                  (iii) acquire, sell, lease or dispose of any assets, except as
may be contemplated in the PLRX Plan;

                  (iv)  acquire (by merger,  consolidation,  or  acquisition  of
stock or assets) any corporation,  partnership or other business organization or
division thereof; or

                  (v) adopt any resolution, or enter into or amend any Contract,
with respect to any of the foregoing,  except as may be consistent with the PLRX
Plan.

         (c) Preservation of Business.  Except as contemplated by this Agreement
and the PLRX Plan,  Purchaser  will use its best efforts to preserve  intact its
business organization and preserve its goodwill.

         (d)      No Breach.
                  ---------

                  (i) Purchaser will (A) use its best efforts to assure that all
of its representations  and warranties  contained herein are true and correct as
of the  Closing as if  repeated  at and as of such time,  that no Default  shall
occur  with  respect  to any of its  covenants,  representations  or  warranties
contained  herein that has not been cured by the Closing and that all conditions
to the  obligation of Target to consummate  the  Transaction  are satisfied in a
timely  manner;  (B) not  voluntarily  take any action or do anything which will
cause a Default  respecting  such  covenants,  representations  or warranties or
would impede the satisfaction of such conditions; and (C) promptly notify Target
of any event or fact  which  represents  or is likely to cause such a Default or
result in such an impediment.

                  (ii)  Without   limiting  the  generality  of  the  foregoing,
Purchaser  agrees to use its best  efforts  to take,  or cause to be taken,  all
actions, and to do, or cause to be done, all things reasonably necessary, proper
or advisable under  applicable laws and regulations to consummate and effectuate
the Transaction.

         (e)  Consents.  Promptly  following  the  execution of this  Agreement,
Purchaser  will use its best efforts to obtain  consents of all Bodies and other
Persons  necessary for the  consummation by Purchaser and Acquisition Sub of the
Transaction. Such consents are listed on Schedule 4.3.

         (f) No  Negotiations.  For so long as this  Agreement  shall  remain in
effect,  Purchaser  will not  directly  or  indirectly,  (a) solicit or initiate
discussions or engage in negotiations  with any Potential  Offeror (whether such
negotiations  are  initiated  by them or  otherwise),  other than  Target,  with
respect to the possible  acquisition  by, or merger of Purchaser or a subsidiary
of Purchaser,  whether by way of merger,  acquisition  of stock,  acquisition of
assets,  or  otherwise of a company  which is in the same  Business as Target (a
"Potential  Purchaser  Transaction");  (b) participate in negotiations  with, or
provide information  concerning  Purchaser to any Person,  other than Target, in
connection with a Potential Purchaser  Transaction;  (c) enter into any Contract
with any  Person,  other than  Target,  concerning  or  relating  to a Potential
Purchaser  Transaction;  or (d)  act  in any  way  in  response  to a  Potential
Purchaser Transaction.  If Purchaser receives any unsolicited offer or proposal,
or  attempt  to offer or  propose,  to enter  into  negotiations  relating  to a
Potential Purchaser  Transaction,  whether oral or written, it shall immediately
notify Target of such fact and shall return,  or cause to be returned,  any such
written offer to such Potential Offeror.

         (g) Purchaser Board of Directors. At or prior to the Closing, effective
as of the Effective Time, Purchaser shall cause (i) all of Purchaser's directors
other than Michael Biendorff to resign (the "Resigned Purchaser  Directors") and
(ii) Purchaser's board of directors to be expanded to five (5) directors.

         (h)  Termination of Contracts.  Purchaser  shall have  effectuated  the
Contract Terminations effective prior to, or as of, the Effective Time.

         (i) Amendment to Annual Report on Form 10-K. Purchaser shall accurately
prepare  in  compliance  with the  Exchange  Act and the rules  and  regulations
promulgated  thereunder,  and file with the SEC, on or before April 30, 2002, an
amendment  to its  Annual  Report on Form 10-K for the year ended  December  31,
2001, containing the information required to be set forth in Part III thereof.

         (j)  Cancellation  of Stock  Options.  Purchaser  shall  cause  Michael
Beindorff and W. Todd Steele to agree to the  cancellation  of their  respective
unexercised  stock  options  listed on  Schedule  4.2(a)  attached  hereto,  and
Purchaser  shall  cancel such  unexercised  stock  options  effective  as of the
Effective Time.

         (k) Approval of Counsel.  All  actions,  proceedings,  instruments  and
documents required to carry out this Agreement,  or incidental thereto,  and all
other related legal  matters,  shall have been approved as to form and substance
by counsel to Target,  which  approval  shall not be  unreasonably  withheld  or
delayed.

                                   ARTICLE VI

                           CONDITIONS PRECEDENT TO THE
                        OBLIGATION OF PURCHASER TO CLOSE

         The obligation of Purchaser to consummate the Transaction is subject to
the  fulfillment,  prior  to or  at  the  Closing,  of  each  of  the  following
conditions, any one or more of which may be waived by Purchaser (except when the
fulfillment of such condition is a requirement of law):

6.1 Representations and Warranties. All representations and warranties of Target
contained in this Agreement and in any written  statement  (including  financial
statements), exhibit, certificate, schedule or other document delivered pursuant
hereto shall be true and correct in all material  respects (except to the extent
that  any  such   representation   and  warranty  is  already  qualified  as  to
materiality,  in which case such  representation  and warranty shall be true and
correct without further qualification) as at the Closing Date, as if made at the
Closing and as of the Closing Date.

6.2 Covenants. Target shall have performed and complied in all material respects
with all covenants and agreements  required by this Agreement to be performed or
complied with by it prior to or at the Closing.

6.3 Certificate.  Purchaser shall have received a certificate, dated the Closing
Date,  signed  by  the  Secretary  of  Target,  as to  the  satisfaction  of the
conditions contained in Sections 6.1 and 6.2 hereof.

6.4 Opinion.  Purchaser shall have received an opinion from counsel satisfactory
to it, dated the Closing  Date,  to the effect set forth in Exhibit 6.4 attached
hereto.

6.5 No Actions.  No Action shall have been  instituted  by a Person other than a
Party, directly or indirectly,  and be continuing before a court or before or by
any Body,  or shall have been  threatened  and be  unresolved,  to  restrain  or
prevent,  or obtain any  material  amount of damages in respect of, the carrying
out of the Transaction, or which might have a Material Adverse Effect thereon.

6.6 Consents;  Permits.  Target and Purchaser  shall have obtained all consents,
approvals,  licenses and other Permits of Bodies and other Persons necessary for
the  performance by each of them of all of their  respective  obligations  under
this Agreement,  and such other consents, if any, to prevent the occurrence of a
Default under any Contract to which Target is a party or is otherwise  bound, as
set forth on Schedule 5.2(e).

6.7  Corporate  Actions.  All actions  necessary  to  authorize  the  execution,
delivery and performance of this Agreement by Target and the consummation of the
Transaction  shall  have  been  duly  and  validly  taken  (including,   without
limitation,  approval of the  Transaction by Target's  shareholders)  and Target
shall have full power and right to consummate the Transaction.

6.8 Issuance of Shares of Purchaser Common Stock.  Purchaser shall have received
from each holder of shares of Target Common Stock entitled to receive  Purchaser
Common Stock therefor, an investment  representation letter in, or substantially
in, the form attached hereto as Exhibit 6.8.

6.9 Approval of Counsel.  All actions,  proceedings,  instruments  and documents
required  to carry  out this  Agreement  or  incidental  thereto,  and all other
related legal matters, shall have been approved as to legal form only by counsel
to Purchaser, which approval shall not be unreasonably withheld or delayed.

6.10  Additional  Documents.  Target  shall have  delivered  all such  certified
resolutions,   certificates  and  documents  with  respect  to  Target  and  the
Transaction as Purchaser or its counsel may have reasonably requested.

6.11  Purchaser  Expenses.  Purchaser,  Target,  and the Escrow Agent shall have
entered into the Escrow  Agreement.  Target shall have made an Escrow Deposit of
$145,000 with the Escrow Agent pursuant to the Escrow  Agreement.  All Purchaser
Expenses, up to an aggregate limit equal to the amount of the Escrow Fund, shall
have been paid from the Escrow Fund in accordance with the Escrow Agreement. All
Purchaser Expenses,  up to an aggregate limit of $200,000,  shall have been paid
either from the Escrow Fund or by Target.

6.12 Fairness Opinion.  Purchaser shall have received from an investment banking
firm which shall be acceptable to Purchaser and reasonably acceptable to Target,
a fairness opinion which shall be in form and substance  acceptable to Purchaser
and reasonably  acceptable to Target, to the effect that the Transaction is fair
to the common shareholders of Purchaser from a financial point of view.

                                   ARTICLE VII

                     CONDITIONS PRECEDENT TO THE OBLIGATION
                               OF TARGET TO CLOSE

         The  obligation of Target to consummate  the  Transaction is subject to
the  fulfillment,  prior  to or  at  the  Closing,  of  each  of  the  following
conditions,  any one or more of which may be waived by Target  (except  when the
fulfillment of such condition is a requirement of law):

7.1  Representations  and  Warranties.  All  representations  and  warranties of
Purchaser  contained in this Agreement and in any written  statement  (including
financial  statements),   exhibit,  certificate,   schedule  or  other  document
delivered  pursuant  hereto shall be true and correct in all  material  respects
(except to the  extent  that any such  representation  and  warranty  is already
qualified  as to  materiality,  in which case such  representation  and warranty
shall be true and correct without further qualification) as at the Closing Date,
as if made at the Closing and as of the Closing Date.

7.2  Covenants.  Purchaser  shall have  performed  and  complied in all material
respects  with all  covenants and  agreements  required by this  Agreement to be
performed or complied with by it prior to or at the Closing.

7.3  Certificate.  Target shall have received a  certificate,  dated the Closing
Date, signed by the Chief Executive Officer of Purchaser, as to the satisfaction
of the conditions contained in Sections 7.1 and 7.2 hereof.

7.4 Opinion.  Target shall have received an opinion from counsel satisfactory to
it,  dated the Closing  Date,  to the effect set forth in Exhibit  7.4  attached
hereto.

7.5 No Actions.  No Action shall have been  instituted  by a Person other than a
Party, directly or indirectly,  and be continuing before a court or before or by
a Body, or shall have been threatened and be unresolved, to restrain or prevent,
or obtain any material  amount of damages in respect of, the carrying out of the
Transaction.

7.6 Consents;  Permits. Purchaser shall have obtained all consents, licenses and
other  Permits of Bodies and other  Persons  necessary  for the  performance  by
Purchaser  of all of its  obligations  under  this  Agreement,  and  such  other
consents,  if any, to prevent the  occurrence of a Default under any Contract to
which Purchaser is a party or otherwise bound, as set forth on Schedule 4.3.

7.7  Corporate  Actions.  All actions  necessary  to  authorize  the  execution,
delivery and performance of this Agreement by Purchaser and the  consummation of
the  Transaction  shall have been duly and  validly  taken  (including,  without
limitation, shareholders' approval, if necessary), and Purchaser shall have full
power and right to consummate the Transaction.

7.8 Directors. Effective as of the Effective Time, all of the Resigned Purchaser
Directors shall have resigned and the Purchaser's  board of directors shall have
been expanded to five (5) directors.

7.9  Termination of Contracts.  Purchaser  shall have  terminated the Employment
Agreement  between  Purchaser  and  Michael  Beindorff  and all other  Contracts
relating to the  employment of  individuals  by Purchaser,  except the Contracts
described in Items 2-4 and 15-17 of Schedule 4.14 (the "Contract Terminations").

7.10 Issuance of Shares of Purchaser Common Stock. Purchaser shall have received
from each holder of shares of Target Common Stock entitled to receive  Purchaser
Common Stock therefor an investment  representation  letter in, or substantially
in, the form attached hereto as Exhibit 6.8.

7.11 Approval of Counsel.  All actions,  proceedings,  instruments and documents
required  to carry  out this  Agreement  or  incidental  thereto,  and all other
related  legal  matters,  shall have been  approved as to form and  substance by
counsel to Target, which approval shall not be unreasonably withheld or delayed.

7.12  Amendment to Annual Report on Form 10-K.  Purchaser  shall have filed with
the SEC, on or before April 30, 2002,  an amendment to its Annual Report on Form
10-K for the year ended December 31, 2001,  containing the information  required
to be set forth in Part III thereof.

7.13  Additional  Documents.  Purchaser  shall have delivered all such certified
resolutions,  certificates  and  documents  with  respect to  Purchaser  and the
Transaction as Target or its counsel may have reasonably requested.

                                  ARTICLE VIII

                   TERMINATION AND WAIVER; LIQUIDATED DAMAGES

8.1 Termination.  Anything herein or elsewhere to the contrary  notwithstanding,
this  Agreement may be terminated  and the  Transaction  may be abandoned at any
time prior to the Closing:

         (a) By mutual written consent of Purchaser and Target;

         (b) By  Purchaser  if any of the  conditions  set forth in  Article  VI
hereof  shall  not have been  fulfilled  on or prior to May 31,  2002,  or shall
become incapable of fulfillment, in each case except as such shall have been the
result,  directly or  indirectly,  of any action or inaction by  Purchaser,  and
shall not have been waived; or

         (c) By Target if any of the  conditions set forth in Article VII hereof
shall not have been  fulfilled on or prior to May 31, 2002, or shall have become
incapable  of  fulfillment,  in each  case  except as such  shall  have been the
result,  directly or indirectly,  of any action or inaction by Target, and shall
not have been waived.

         If this  Agreement is terminated  as described  above,  this  Agreement
shall be of no further force and effect,  without any liability or obligation on
the part of any of the parties except for any liability which may arise pursuant
to Sections 13.1 and 13.2 hereof or as a result of a Party's  willful failure to
consummate the Transaction or for any breach of any representation,  warranty or
covenant herein.

8.2 Waiver. Any condition to the performance of the Parties which legally may be
waived  on or prior to the  Closing  Date may be waived at any time by the Party
entitled to the benefit  thereof by action taken or  authorized by an instrument
in writing  executed  by the  relevant  Party or Parties.  Each party  agrees to
notify the other Party of any fact discovered in the course of its due diligence
investigation  that such Party believes  constitutes or will constitute a breach
of any representation,  warranty or covenant contained in this Agreement, and in
the absence of such notice, such breach shall be deemed waived.  Otherwise,  the
failure  of any  Party  at any  time or  times  to  require  performance  of any
provision  hereof  shall in no manner  affect the right of such Party at a later
time to enforce  the same.  Except for waivers  made in writing  pursuant to the
first sentence of this Section 8.2, or by failure to give notice pursuant to the
second sentence of this Section 8.2, no waiver by any Party of the breach of any
term,  covenant,  representation  or warranty  contained in this  Agreement as a
condition  to such Party's  obligations  hereunder  shall  release or affect any
liability  resulting  from such  breach.  No waiver of any  nature,  whether  by
conduct or  otherwise,  in any one or more  instances,  shall be deemed to be or
construed  as a further or  continuing  waiver of any such  condition  or of any
breach  of  any  other  term,  covenant,  representation  or  warranty  of  this
Agreement.

8.3 Breach by Purchaser of Section 5.2(f). Purchaser acknowledges that Target is
investing a significant amount of resources,  time,  expense,  and reputation in
pursuing the Transaction.  Purchaser  further  acknowledges that Target would be
irreparably  harmed by a breach  of  Section  5.2(f)  hereof  and that  monetary
damages to Target for such breach  would be  immeasurable.  Accordingly,  in the
event Purchaser  breaches  Section 5.2(f),  Purchaser shall in lieu of any other
damages  Target  suffers  as a result of such  breach pay Target the sum of Five
Hundred Thousand Dollars ($500,000) as liquidated damages immediately. Purchaser
acknowledges   that  Purchaser  has  received  good,   valuable  and  sufficient
consideration  for the  foregoing  agreement,  and that Target is relying on the
agreement in Section  5.2(f) and the  enforceability  of Section 5.2(f) and this
Section 8.3 in entering into this Agreement and pursuing the Transaction. Target
may  commence a lawsuit  for  specific  performance  of the  provisions  of this
Section 8.3 applicable to it and, if Target prevails in such lawsuit,  Purchaser
shall reimburse  Target for the reasonable  legal fees and costs Target incurred
in prosecuting such lawsuit.

8.4 Breach by Target of Section 5.1(f).  Target  acknowledges  that Purchaser is
investing a significant amount of resources,  time,  expense,  and reputation in
pursuing the Transaction.  Target further  acknowledges  that Purchaser would be
irreparably  harmed by a breach  of  Section  5.1(f)  hereof  and that  monetary
damages to Purchaser for such breach would be immeasurable.  Accordingly, in the
event Target breaches Section 5.1(f),  Target shall in lieu of any other damages
Purchaser  suffers  as a result of such  breach  pay  Purchaser  the sum of Five
Hundred Thousand Dollars  ($500,000) as liquidated damages  immediately.  Target
acknowledges   that  Target  has  received   good,   valuable   and   sufficient
consideration for the foregoing agreement,  and that Purchaser is relying on the
agreement in Section  5.1(f) and the  enforceability  of Section 5.1(f) and this
Section  8.4 in entering  into this  Agreement  and  pursuing  the  Transaction.
Purchaser may commence a lawsuit for specific  performance  of the provisions of
this Section 8.4  applicable  to it and, if Purchaser  prevails in such lawsuit,
Target  shall  reimburse  Purchaser  for the  reasonable  legal  fees and  costs
Purchaser incurred in prosecuting such lawsuit.

                                   ARTICLE IX

                                     CLOSING

9.1 Location;  Date. The closing of the Transaction  (the "Closing")  shall take
place at the offices of Purchaser's counsel in Memphis, Tennessee, at 10:00 a.m.
(Memphis  time) on or before May 31, 2002,  or, if, as of such date,  any or all
Parties  shall not be  obligated to close and shall not have waived such closing
condition(s),  subject to the  provisions  of Article VIII hereof,  on the third
business day after such later date as such  Parties  shall be obligated to close
or shall have waived such closing condition(s), or at such time and place as may
be mutually agreed to by the Parties.  The date of the Closing is referred to in
this Agreement as the "Closing Date."

9.2 Items to be Delivered to Purchaser.  At the Closing,  Target will deliver or
cause to be delivered to Purchaser:

         (a) the Certificate of Merger required by Section 2.2 hereof;

         (b) the certificate required by Section 6.3 hereof;

         (c) the opinion of counsel required by Section 6.4 hereof;

         (d) certified  copies of all corporate  actions required by Section 6.7
hereof;

         (e) a check or checks  for the  Purchaser's  Expenses,  which have been
itemized in a written  statement  certified  by the Chief  Executive  Officer of
Purchaser and delivered to Target (the "Purchaser Expenses Statement"), less any
and all amounts  disbursed from the Escrow Fund to pay Purchaser  Expenses prior
to the Closing; and

         (f) such other certified resolutions, documents and certificates as are
required  to be  delivered  to  Purchaser  pursuant  to the  provisions  of this
Agreement or which otherwise confirm that all of the conditions precedent to the
obligation of Purchaser to close have been satisfied.

9.3 Items to be Delivered to Target.  At the Closing,  Purchaser will deliver or
cause to be delivered to Target:

         (a)      the Certificate of Merger required by Section 2.2 hereof;

         (b)      the certificate required by Section 7.3 hereof;

         (c)      the opinion of counsel required by Section 7.4 hereof;

         (d)      the Purchaser Expenses Statement;

         (e) certified  copies of all corporate  action  required by Section 7.7
hereof; and

         (f) such other certified resolutions, documents and certificates as are
required to be delivered to Target  pursuant to the provisions of this Agreement
or  which  otherwise  confirm  that  all  of  the  conditions  precedent  to the
obligation of Target to close have been satisfied.

                                    ARTICLE X

                              POST-CLOSING MATTERS

10.1 Further  Assurances.  On and after the Closing Date, the Parties shall take
all such further  actions and execute and deliver all such  further  instruments
and documents as may be necessary or appropriate to carry out the Transaction.

10.2  Continuation  of Director.  During the two (2) years following the Closing
Date,  Target shall use reasonable best efforts to cause Michael Beindorff to be
nominated  for election as a director  each time  nominations  for directors are
made during such period,  and Target shall use reasonable  best efforts to cause
Michael Beindorff to be elected as a director of Purchaser during such period.

10.3  Continuation  of  Target's  Business  Development.  As  an  inducement  to
Purchaser to acquire Target,  Target has represented  that it shall,  and Target
shall, develop and continue its business development,  as stated in the Recitals
hereof and as  described  in Schedule  10.3,  as a wholly  owned  subsidiary  of
Purchaser unless otherwise  determined by the Board of Directors of Purchaser in
accordance with the Board of Director's  fiduciary duties to the shareholders of
Purchaser.

10.4  Vacancies  on  Purchaser's  Board  of  Directors.  Immediately  after  the
Effective Time, the vacancies on Purchaser's  board of directors  created by the
Resigned  Purchaser  Directors  and the  expansion of the  Purchaser's  board of
directors  as set forth in Section 7.8 hereof  shall be filled by the  remaining
Purchaser  director  with the  individuals  set forth on Schedule  10.4 attached
hereto.

10.5 Directors and Officers  Liability  Insurance.  From and after the Effective
Time, neither  Purchaser,  Target, any affiliate of Purchaser or Target, nor any
of their respective directors,  officers,  employees, or agents shall (a) amend,
modify,  return,  cancel,  or terminate  the  Directors  and Officers  Liability
Insurance  policy  referred to in Schedule  4.11  attached  hereto,  (b) reduce,
eliminate or otherwise  adversely affect the insurance coverage provided and the
benefits and rights of the insureds under such insurance policy, or (c) take any
action or  attempt  to take any  action  with the intent or effect of causing or
facilitating  any  such  amendment,  modification,   cancellation,  termination,
reduction,  elimination or effect. It is expressly  understood and agreed by the
parties  hereto  that each of Michael  Beindorff,  W. Todd  Steele,  and Paul E.
Risner shall be entitled, as express third-party  beneficiaries,  to enforce the
provisions of this Section 10.5.

10.6 Assignment of Revelation  Contract Rights.  Immediately after the Effective
Time, (a) Purchaser's board of directors,  as reconstituted  pursuant to Section
10.4 hereof,  shall take all necessary corporate action to authorize and approve
the execution,  delivery and  performance by Purchaser of (i) the Assignment and
Agreement  between Purchaser and Michael  Beindorff,  W. Todd Steele and Paul E.
Risner (collectively,  the "Assignees"),  pursuant to which Purchase assigns the
Revelation  Contract Rights (as defined therein) to the Assignees,  and (ii) the
related  Consent  to  Assignment  between  Revelation  America  Incorporated,  a
Delaware corporation ("Revelation"),  and Purchaser, each in or substantially in
the form attached  hereto as Exhibit 10.6,  and (b) Purchaser  shall execute and
deliver the Assignment  and Agreement and the Consent to  Assignment,  and shall
use its best  efforts to obtain the  execution  and  delivery  of the Consent to
Assignment by Revelation.  It is expressly  understood and agreed by the parties
hereto that each of the  Assignees  shall be  entitled,  as express  third-party
beneficiaries, to enforce the provisions of this Section 10.6.

                                   ARTICLE XI

                  SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION

11.1  Survival.  The parties  agree that their  respective  representations  and
warranties contained in this Agreement shall survive the Closing for a period of
one (1)  year,  except  that the  representations  and  warranties  set forth in
Sections 3.1 through 3.4, 3.22 and 3.27 (with  respect to the foregoing  Article
III  representations  and warranties) and 4.1 through 4.4 and 4.19 (with respect
to the foregoing Article IV  representations  and warranties) shall continue for
an indefinite duration, subject to applicable statutes of limitation.

11.2 Indemnification.

         11.2.1 General Indemnification Obligation of Target. From and after the
Closing,  Target will  reimburse,  indemnify  and hold harmless  Purchaser,  its
current and former directors,  officers,  employees and/or agents  (collectively
the "Purchaser Indemnified Parties") against and in respect of:

         (a) any and all damages, losses, deficiencies,  liabilities,  costs and
expenses  incurred or suffered by any  Purchaser  Indemnified  Party that result
from,  relate to or arise out of any  misrepresentation,  breach of  warranty or
non-fulfillment  of any  agreement  or covenant on the part of Target under this
Agreement,  or from any  misrepresentation  in or omission from any certificate,
schedule,  statement,  document or  instrument  furnished to Purchaser  pursuant
hereto; and

         (b) any and all Actions,  assessments,  audits, fines, judgments, costs
and other expenses  (including,  without  limitation,  reasonable legal fees and
expenses) incident to any of the foregoing or to the enforcement of this Section
11.2.1.

         11.2.2 General Indemnification  Obligation of Purchaser. From and after
the Closing,  Purchaser will reimburse,  indemnify and hold harmless Target, its
current and former directors,  officers,  employees and/or agents  (collectively
the "Target Indemnified Parties") against and in respect of:

         (a) any and all damages, losses, deficiencies,  liabilities,  costs and
expenses incurred or suffered by any Target  Indemnified Party that result from,
relate  to or  arise  out  of  any  misrepresentation,  breach  of  warranty  or
non-fulfillment of any agreement or covenant on the part of Purchaser under this
Agreement,  or from any  misrepresentation  in or omission from any certificate,
schedule, statement, document or instrument furnished to Target pursuant hereto;
and

         (b) any and all Actions,  assessments,  audits, fines, judgments, costs
and other expenses  (including,  without  limitation,  reasonable legal fees and
expenses) incident to any of the foregoing or to the enforcement of this Section
11.2.2.

         11.2.3 Method of Asserting Claims, Etc.

         (a) In the event  that any claim or demand  for which  Target  would be
liable to any Purchaser Indemnified  Party(ies) hereunder is asserted against or
sought to be collected  from any such Purchaser  Indemnified  Parties by a third
party, the Purchaser Indemnified Party(ies) shall notify Target of such claim or
demand,  specifying  the  nature of such  claim or demand  and the amount or the
estimated  amount thereof to the extent then feasible  (which estimate shall not
be  conclusive  of the  final  amount  of such  claim and  demand)  (the  "Claim
Notice").  Target shall  thereupon,  at their sole cost and expense,  defend the
Purchaser  Indemnified  Party(ies)  against  such claim or demand  with  counsel
reasonably satisfactory to the Purchaser Indemnified Party(ies).

         (b)  Target  shall  not,  without  the  prior  written  consent  of the
Purchaser Indemnified  Party(ies),  consent to the entry of any judgment against
the Purchaser Indemnified  Party(ies) or enter into any settlement or compromise
which does not include,  as an unconditional  term thereof (i.e., there being no
requirement that the Purchaser Indemnified Party(ies) pay any amount of money or
give any other  consideration),  the giving by the  claimant or plaintiff to the
Purchaser   Indemnified   Party(ies)  of  a  release,   in  form  and  substance
satisfactory  to the  Purchaser  Indemnified  Party(ies)  from all  liability in
respect of such claim or  litigation.  If the Purchaser  Indemnified  Party(ies)
desire to participate  in, but not control,  any such defense or settlement,  it
may do so at its or their sole cost and expense.  If, in the reasonable  opinion
of the  Purchaser  Indemnified  Party(ies),  any  such  claim or  demand  or the
litigation or resolution of any such claim or demand involves an issue or matter
which could have a Material Adverse Effect on the business,  operations, assets,
properties  or  prospects  of  the  Purchaser  Indemnified   Party(ies)  or  its
affiliates,  then the Purchaser  Indemnified  Party(ies) shall have the right to
control the defense or  settlement of any such claim or demand and its costs and
expenses shall be included as part of the  indemnification  obligation of Target
hereunder;  provided,  however, that the Purchaser Indemnified  Party(ies) shall
not settle any such claim or demand without the prior written consent of Target,
which consent shall not be  unreasonably  withheld or delayed.  If the Purchaser
Indemnified  Party(ies)  should elect to exercise  such right,  the Target shall
have the right to participate in, but not control,  the defense or settlement of
such claim or demand at their sole cost and expense.

         (c) Notwithstanding anything hereinabove to the contrary, the Purchaser
Indemnified   Party(ies)  shall  have  the  right  to  employ  separate  counsel
(including local counsel),  and Target shall bear the reasonable fees, costs and
expenses of one (1) such separate  counsel (and local counsel) if (i) the use of
counsel chosen by Target to represent the Purchaser Indemnified Party(ies) would
present such  counsel with a conflict of interest,  (ii) the actual or potential
defendants  in, or  targets  of,  any such  action  include  both the  Purchaser
Indemnified Party(ies) and Target, and Target on the one hand, and the Purchaser
Indemnified  Party(ies) on the other hand, shall have reasonably  concluded that
there may be legal defenses  available to the Purchaser  Indemnified  Party(ies)
which are  different  from or  additional  to those  available to Target,  (iii)
Target shall not have employed counsel reasonably  satisfactory to the Purchaser
Indemnified  Party(ies) to represent the Purchaser Indemnified Party(ies) within
a reasonable  time after notice of the institution of such Action or (iv) Target
shall authorize the Purchaser Indemnified  Party(ies) to employ one (1) separate
counsel at the expense of Target.

         (d) In the event the  Purchaser  Indemnified  Party(ies)  should have a
claim  against  Target  hereunder  that does not involve a claim or demand being
asserted  against  or  sought  to be  collected  from it by a third  party,  the
Purchaser Indemnified  Party(ies) shall send a Claim Notice with respect to such
claim to Target. If Target dispute their liability with respect to such claim or
demand,  such dispute shall be resolved in accordance  with Section 11.3 hereof;
if Target do not notify the Purchaser Indemnified Party(ies), within twenty (20)
days from  receipt of notice of such a claim,  that they  dispute  such claim or
demand,  the  amount of such  claim or  demand  shall be  conclusively  deemed a
liability of Target hereunder.

         (e) All claims for indemnification by any Target Indemnified Party(ies)
under this  Agreement  shall be asserted and resolved  under the  procedures set
forth  hereinabove  by  substituting  in  the  appropriate  place  "Target"  for
"Purchaser"  and "Target  Indemnified  Party(ies)"  for  "Purchaser  Indemnified
Party(ies)."

11.3 Arbitration.

         (a) All  disputes  under  this  Article  XI shall be settled by binding
arbitration  pursuant  to the  rules of the  American  Arbitration  Association.
Arbitration  may be  commenced at any time by any Party  hereto  giving  written
notice to each other  Party to a dispute of its  demand for  arbitration,  which
demand  shall set forth the name and address of its  arbitrator.  Within  twenty
(20) days of such  notice,  the other Party shall select its  arbitrator  and so
notify  the  demanding  Party.  Within  twenty  (20)  days  thereafter,  the two
arbitrators so selected shall select the third arbitrator.  In default of either
side naming its  arbitrator  as aforesaid or in default of the  selection of the
third  arbitrator  as  aforesaid,  the American  Arbitration  Association  shall
designate  such  arbitrator  upon the  application  of either  party.  If before
Closing,  or in the absence of Closing,  the arbitration  proceeding  shall take
place in Memphis,  Tennessee or such other location as agreed by the Parties. If
after the Closing, the arbitration  proceeding shall take place in Jacksonville,
Florida or such other location as agreed to by the Parties. The dispute shall be
heard by the  arbitrators  within thirty (30) days after  selection of the third
arbitrator. The decision of the arbitrators shall be rendered within thirty (30)
days after the hearing. Each Party shall pay its own expenses of arbitration and
the expenses of the arbitrators shall be equally shared; provided, however, that
if,  in  the  opinion  of  the  majority  of  the  arbitrators,  any  claim  for
indemnification  or any  defense or  objection  thereto  was  unreasonable,  the
arbitrators  may  assess,  as  part  of  their  award,  all or any  part  of the
arbitration expenses of the other Party (including  reasonable  attorneys' fees)
and of the  arbitrators  against  the Party  raising  such  unreasonable  claim,
defense or objection.

         (b) To the  extent  that  arbitration  may  not  be  legally  permitted
hereunder  or  contractually  permitted  under any  insurance  policy  providing
coverage,  and the parties to any dispute  hereunder may not at the time of such
dispute  mutually  agree to submit such  dispute to  arbitration,  any party may
commence  a civil  Action  in a court of  appropriate  jurisdiction  to  resolve
disputes hereunder.

         (c) The  decision  of a  majority  of the  arbitrators  shall be final,
binding and conclusive,  shall be specifically enforceable,  and judgment may be
entered upon it in accordance with  applicable law in the  appropriate  court in
the States of Florida and Tennessee with no right of appeal therefrom.

11.4 Other Rights and Remedies Not Affected.  The indemnification  rights of the
parties  under this  Article XI are  independent  of, and in  addition  to, such
rights and remedies as the parties may have at law or in equity or otherwise for
any misrepresentation, breach of warranty or failure to fulfill any agreement or
covenant  hereunder  on  the  part  of  any  party  hereto,  including,  without
limitation,  the right to seek specific performance,  rescission or restitution,
none of which rights or remedies shall be affected or diminished hereby.

                                   ARTICLE XII

                               REGISTRATION RIGHTS

12.1 Purchaser's Obligations.

         (a) Registration.

                  (i) If at any time after the date hereof the  Purchaser  shall
file with the SEC a registration  statement (a "Registration  Statement")  under
the Securities Act relating to an offering for its own account or the account of
others under the Securities Act of any of its equity  securities  (other than on
Form S-4 or Form S-8 or their then equivalents  relating to equity securities to
be issued solely in connection with any acquisition of any entity or business or
equity  securities  issuable in connection  with stock option or other  employee
benefit  plans),  the  Purchaser  shall  send  to the  Target  shareholders  who
received,  or who have the right to receive,  Purchaser Common Stock pursuant to
Section 2.3 hereof (the "Target Holders")  written notice of such  determination
and, if within  fifteen (15) days after the date of such  notice,  a majority in
interest of the Target Holders shall so request in writing,  the Purchaser shall
include  in  such  Registration  Statement  all or any  part  of the  shares  of
Purchaser  Common  Stock which the Target  Holders  received or are  entitled to
receive  pursuant  to  Section  2.3 hereof  (if not  covered  by a  registration
statement) (for the purpose of this Article XII,  collectively  the "Registrable
Securities")  that the Target Holders request to be registered,  except that if,
in connection with any underwritten public offering, the managing underwriter(s)
thereof shall impose a limitation on the number of Registrable  Securities which
may be included in the Registration  Statement because, in such  underwriter(s)'
judgment,  marketing or other  factors  dictate such  limitation is necessary to
facilitate public distribution, then the Purchaser shall be obligated to include
in such  Registration  Statement  only such limited  portion of the  Registrable
Securities  as the  underwriter  shall  permit  (limited to zero if  necessary).
Additionally,  each of the Target Holders,  by virtue of its request to have its
Registrable Securities included in the Registration  Statement,  shall be deemed
to make all of the Target Holders agreements set forth in this Article XII.

                  (ii) If an  offering  in  connection  with  which  the  Target
Holders  are  entitled  to  registration   under  this  Section  12.1(a)  is  an
underwritten offering, then the Target Holders shall, unless otherwise agreed by
the Purchaser,  offer and sell such  Registrable  Securities in an  underwritten
offering using the same  underwriter or  underwriters  and on the same terms and
conditions as other like securities included in such underwritten offering.

         (b) Amendments and Supplements;  Maintain Effectiveness.  The Purchaser
shall prepare and file with the SEC such  amendments  (including  post-effective
amendments)  and  supplements to the  Registration  Statement and the prospectus
used in connection with the  Registration  Statement as may be necessary to keep
the Registration  Statement effective at all times for a period expiring six (6)
months  following  the  effective  date  of  the  Registration   Statement  (the
"Registration Period").

         (c) Copies of Filings and  Correspondence.  The Purchaser shall furnish
to  Target  Holders  (i)  promptly  after  the  same is  prepared  and  publicly
distributed,  filed with the SEC, or received by the Purchaser,  one copy of the
Registration  Statement and any amendment thereto,  each preliminary  prospectus
and  prospectus  and each  amendment  or  supplement  thereto,  and each item of
correspondence  from the SEC or the  staff  of the SEC  which  comments  upon or
requests   information   relating  to  Target  Holders  and/or  the  Registrable
Securities (including,  without limitation,  the resale and plan of distribution
thereof),  in each case relating to such Registration  Statement (other than any
portion, if any, thereof which contains  information for which the Purchaser has
sought  confidential  treatment),  (ii)  on the  date  of  effectiveness  of the
Registration  Statement  or any  amendment  thereto,  a notice  stating that the
Registration Statement or amendment has become effective,  and (iii) such number
of  copies  of  a  prospectus,  including  a  preliminary  prospectus,  and  all
amendments  and  supplements  thereto  and such other  documents  as each Target
Holders may  reasonably  request in order to facilitate  the  disposition of the
Registrable Securities by such Target Holder.

         (d) Blue Sky. The Purchaser  shall use its best efforts to (i) register
and qualify the Registrable  Securities  covered by the  Registration  Statement
under such other  securities  or "blue  sky" laws of such  jurisdictions  in the
United  States as a majority  in interest of the Target  Holders  request,  (ii)
prepare   and   file  in  those   jurisdictions   such   amendments   (including
post-effective   amendments)   and   supplements  to  such   registrations   and
qualifications as may be necessary to maintain the effectiveness  thereof during
the  Registration  Period,  (iii) take such other actions as may be necessary to
maintain such registrations and qualifications in effect at all times during the
Registration  Period,  and (iv) take all other actions  reasonably  necessary or
advisable to qualify the Registrable  Securities for sale in such jurisdictions;
provided,  however,  that the  Purchaser  shall not be  required  in  connection
therewith  or as a  condition  thereto  to (i)  qualify  to do  business  in any
jurisdiction  where it would not  otherwise  be required to qualify but for this
Section   12.1(d),   (ii)  subject  itself  to  general  taxation  in  any  such
jurisdiction,  (iii) provide any  undertakings  that cause the  Purchaser  undue
expense or burden,  or (iv) make any change in its  charter or bylaws,  which in
each case the Board of Directors of the  Purchaser  determines to be contrary to
the best interests of the Purchaser and its shareholders.

         (e) Events Affecting Prospectus.  The Purchaser shall notify the Target
Holders of the happening of any event, of which the Purchaser has knowledge,  as
a result of which the prospectus included in the Registration Statement, as then
in effect,  includes an untrue statement of a material fact or omission to state
a  material  fact  required  to be  stated  therein  or  necessary  to make  the
statements  therein not  misleading,  as promptly as practicable  after becoming
aware of such event,  and if such  Registration  Statement  is  supplemented  or
amended to correct  such untrue  statement  or  omission,  the  Purchaser  shall
deliver such number of amended or supplement  Prospectuses as Target Holders may
reasonably request.

         (f)  Notification of Amendment or Supplement.  The Purchaser  shall, as
promptly as practicable  after becoming aware of such event described in Section
12.1(e),  notify the Target Holders of the issuance of any order related thereto
and the resolution  thereof (and if such Registration  Statement is supplemented
or amended,  deliver  such number of copies of such  supplement  or amendment to
Target Holders as they may each reasonably request).

         (g) Review by Target Holders'  Counsel.  The Purchaser shall permit one
firm of counsel  designated  by a majority in interest of the Target  Holders to
review the Registration  Statement and all amendments and supplements  thereto a
reasonable period of time prior to their filing with the SEC.

         (h) Target Holders' Due Diligence;  Confidentiality  of the Purchaser's
Information. The Purchaser shall make available for inspection by (i) the Target
Holders,  and (ii) a firm of attorneys and a firm of accountants or other agents
retained  by a majority in interest  of the Target  Holders  (collectively,  the
"Inspectors") all pertinent financial and other records, and pertinent corporate
documents and  properties of the Purchaser  (collectively,  the  "Records"),  as
shall be reasonably  deemed necessary by each Inspector to enable each Inspector
to  exercise  its  due  diligence  responsibility,  and  cause  the  Purchaser's
officers,  directors  and employees to supply all  information  which the Target
Holders may  reasonably  request for purposes of such due  diligence;  provided,
however,  that each  Inspector  shall hold in confidence  and shall not make any
disclosure  (except to the Target  Holders)  of any record or other  information
which the Purchaser  determines in good faith to be  confidential,  and of which
determination  the  Inspector so  notified,  unless (i) the  disclosure  of such
records is  necessary  to avoid or correct a  misstatement  or  omission  in any
Registration Statement,  (ii) the release of such records is ordered pursuant to
a  subpoena  or  other  order  from a court  or  government  body  of  competent
jurisdiction,  or (iii) the  information in such records has been made generally
available  to the public  other than by  disclosure  in violation of this or any
other   agreement.   The  Purchaser  shall  not  be  required  to  disclose  any
confidential  information in such records to any Inspector until and unless such
Inspector  shall  have  entered  into  a  confidentiality  agreements  with  the
Purchaser  with  respect  thereto,  substantially  in the  form of this  Section
12.1(h).  The Target  Holders  shall  agree that it shall,  upon  learning  that
disclosure  of such records is sought in or by a court or  governmental  body of
competent  jurisdiction  or  through  other  means,  give  prompt  notice to the
Purchaser  and allow the  Purchaser,  at its expense,  to undertake  appropriate
action to  prevent  disclosure  of, or to obtain a  protective  order  for,  the
records deemed confidential.  Nothing herein shall be deemed to limit the Target
Holders' ability to sell  Registrable  Securities in a manner which is otherwise
consistent with applicable laws and regulations.

         (i) Confidentiality of the Target Holders'  Information.  The Purchaser
shall hold in confidence and not make any  disclosure of information  concerning
the Target  Holders  provided to the  Purchaser  unless (i)  disclosure  of such
information is necessary to comply with federal or state  securities  laws, (ii)
the  disclosure  of  such  information  is  necessary  to  avoid  or  correct  a
misstatement  or omission in any  Registration  Statement,  (iii) the release of
such  information is ordered  pursuant to a subpoena or other order from a court
or governmental body of competent  jurisdiction,  (iv) such information has been
made generally  available to the public other than by disclosure in violation of
this or any other  agreement,  or (v) a Target  Holder  consents to the form and
content of any such disclosure regarding it. The Purchaser agrees that it shall,
upon learning that disclosure of such  information  concerning any of the Target
Holders  is  sought  in  or  by  a  court  or  governmental  body  of  competent
jurisdiction  or through other means,  give prompt notice to such Target Holders
prior to  making  such  disclosure,  and allow  such  Target  Holders,  at their
respective expense, to undertake appropriate action to prevent disclosure of, or
to obtain a protective order for, such information.

         (j)  Compliance   with  Laws.  The  Purchaser  shall  comply  with  all
applicable  laws related to a  Registration  Statement  and offering and sale of
securities and all applicable rules and regulations of governmental  authorities
in connection therewith (including,  without limitation,  the Securities Act and
the Exchange Act, and the rules and regulations promulgated by the SEC.

12.2 Obligations of the Target Holders. In connection with a registration of the
Registrable Securities the Target Holders shall have the following obligations:

         (a) Target Holders'  Information.  It shall be a condition precedent to
the obligations of the Purchaser to complete the  registration  pursuant to this
Article XII that each of the Target  Holders shall furnish to the Purchaser such
information regarding itself, the Registrable Securities and the intended method
of  disposition  as  shall  be  required  to  effect  the  registration  of such
Registrable  Securities and shall execute such documents in connection with such
registration as the Purchaser may reasonably request. At least five (5) business
days prior to the first anticipated  filing date of the Registration  Statement,
the Purchaser  shall notify each of the Target  Holders of the  information  the
Purchaser requires from each of the Target Holders.

         (b)  Cooperation.  Each of the Target  Holders shall agree to cooperate
with  the  Purchaser  as  requested  by the  Purchaser  in  connection  with the
preparation  and  filing of the  Registration  Statement  hereunder,  except for
Target Holders who do not include any of their respective Registrable Securities
in the Registration Statement.

         (c)  Underwritten  Offering.  In the  event any of the  Target  Holders
determine to engage the services of an  underwriter,  such Target  Holders shall
agree to enter into and perform its obligations under an underwriting agreement,
in  usual  and  customary  form,   including,   without  limitation,   customary
indemnification and contribution  obligations,  with the managing underwriter of
such offering and take such other actions as are reasonably required in order to
expedite or facilitate the disposition of the Registrable Securities.

         (d) No  Disposition  of  Registrable  Securities.  Target Holders shall
agree that,  upon receipt of any notice from the  Purchaser of the  happening of
any event of the kind described in Sections  12.1(e) or 12.1(f),  Target Holders
will immediately  discontinue  disposition of Registrable Securities pursuant to
the Registration  Statement  covering the resale of such Registrable  Securities
until  Target  Holders'  receipt  of the copies of the  supplemented  or amended
prospectus  contemplated  by Sections  12.1(e) or 12.1(f) and, if so directed by
the  Purchaser,  Target  Holders  shall deliver to the Purchaser or destroy (and
deliver to the  Purchaser a  certificate  of  destruction)  all copies in Target
Holders's  possession,  of the prospectus covering such Common Shares current at
the time of receipt of such notice.

         (e)  Method  of  Underwritten  Distribution.  Target  Holders  may  not
participate  in any  underwritten  distribution  of the  Registrable  Securities
unless Target Holders respectively (i) agree to sell the Registrable  Securities
on the basis provided in any  underwriting  arrangements  in usual and customary
form entered into by the Purchaser,  and (ii) complete,  in a manner  reasonably
acceptable  to  the  Purchaser,  and  executes  all  questionnaires,  powers  of
attorney,  indemnities,  underwriting  agreements and other documents reasonably
required under the terms of such underwriting arrangements.

12.3 Expenses of Registration.  All reasonable expenses, other than underwriting
discounts and commissions, incurred in connection with registrations, filings or
qualifications,  relating to two (2) Registration Statements pursuant to Article
XII, except that if a portion of any Target Holders' Registrable  Securities are
not  permitted  to  be  included  in  two  (2)  Registration  Statements  by  an
underwriter as provided in Section 12.1(a), then relating to the least number of
Registration  Statements  which  will  cover the  resale of all the  Registrable
Securities  of such Target  Holders,  including  all  registration,  listing and
qualifications fees, printers and accounting fees, the fees and disbursements of
counsel for the Purchaser hereof, shall be borne by the Purchaser.

12.4 Exemption from  Registration.  The provisions of Sections 12.1 through 12.3
notwithstanding,  The Purchaser  shall have no obligation to register the resale
of the Registrable  Securities to the extent the  Registrable  Securities may be
resold without  registration  without  violating Section 5 of the Securities Act
pursuant to Rule 144 promulgated  thereunder or any other exemption or exception
from registration under the Securities Act.

                                  ARTICLE XIII

                            MISCELLANEOUS PROVISIONS

13.1  Expenses.  Target  shall  be  responsible  for  and pay  when  due all the
Purchaser Expenses up to an aggregate limit of $200,000,  and Purchaser shall be
responsible  for and pay when due all the Purchaser  Expenses in excess thereof.
In connection  with the  Transaction,  and on the date of execution and delivery
hereof, Target,  Purchaser and J.P. Morgan Trust Company,  National Association,
as escrow agent (the "Escrow Agent"), shall enter into the Escrow Agreement (the
"Escrow  Agreement"),  in, or  substantially  in,  the form  attached  hereto as
Exhibit 13.1, and Target shall deposit $145,000 in cash with the Escrow Agent as
the Escrow  Deposit (as defined in the Escrow  Agreement)  by a wire transfer of
immediately  available  funds  to the  bank  account  designated  in the  Escrow
Agreement. The Escrow Agent shall hold, invest, and disburse the Escrow Fund (as
defined in the Escrow  Agreement) in accordance with the terms and provisions of
the Escrow  Agreement.  Target  and  Purchaser  understand  and agree  that,  as
contemplated  in the Escrow  Agreement,  (a)  Purchaser  shall have the right to
unilaterally  instruct the Escrow Agent to make a  disbursement  from the Escrow
Fund to pay  Purchaser  Expenses  so long as the  total  amount of the prior and
present disbursements for the particular category of Purchaser Expenses to which
the  disbursement  relates does not exceed the estimated  maximum amount thereof
set forth in Section 14.1 hereof,  and (b)  Purchaser  and Target shall have the
right,  but not the obligation,  to jointly  instruct the Escrow Agent to make a
disbursement  from the Escrow Fund to pay  Purchaser  Expenses in the event that
either  (i) the total  amount of the prior and  present  disbursements  from the
Escrow  Fund for the  particular  category  of  Purchaser  Expenses to which the
disbursement  relates exceeds the estimated  maximum amount thereof set forth in
Section 14.1 hereof or (ii) the disbursement  relates to a category of Purchaser
Expenses not included in Section 14.1 hereof. Subject to the foregoing,  each of
the  Parties  shall bear its own  expenses  in  connection  herewith;  provided,
however,  that the  Parties  acknowledge  and  agree  that,  if any  Party  (the
"Breaching  Party") either fails to consummate the  Transaction  notwithstanding
that all  conditions  to such  Party's  obligation  to close  are  fulfilled  or
otherwise  breaches this  Agreement  prior to Closing which breach causes any of
the non-Breaching Party's conditions to closing set forth in Section 6.1 or 7.1,
as the case may be, not to be fulfilled,  and the Closing does not occur because
the  non-Breaching  Party terminates this Agreement as a result thereof pursuant
to Section  8.1(b) or  8.1(c),  as the case may be, the  Breaching  Party  shall
reimburse each  non-Breaching  Party for all out-of-pocket  expenses incurred in
connection with the preparation,  negotiation, execution and performance of this
Agreement,   including,   without  limitation,  fees  and  expenses  payable  to
attorneys,  accountants,  consultants,  advisors and investment  bankers. In the
case the  Purchaser is the  Breaching  Party,  such  Breaching  Party shall also
reimburse Target for any Purchaser  Expenses paid by Target directly,  or out of
the Escrow Fund.

13.2 Confidential Information. All information that a disclosing party furnishes
in  connection  with  the   Transaction   (the   "Information")   will  be  kept
confidential,  will be used solely in connection  with the  Transaction and will
not,  without  prior  written  consent  of the  disclosing  party,  be  used  or
disclosed,  directly or  indirectly,  in any manner  whatsoever,  in whole or in
part.

         Notwithstanding  anything hereinabove to the contrary,  the obligations
imposed upon the parties herein shall not apply to Information:

         (a) which is publicly available prior to the date hereof; or

         (b) which hereafter becomes available to the public through no wrongful
act of the receiving party; or

         (c) which was in the  possession  of the  receiving  party prior to the
commencement of negotiations  between the parties with regard to the Transaction
and not subject to an existing agreement of confidence between the parties; or

         (d) which is received  from a third party without  restriction,  not in
violation of an agreement of confidence and without breach of this Agreement; or

         (e) which is independently developed by the receiving party; or

         (f) which is  disclosed  pursuant  to a  requirement  or  request  of a
government  agency,  arbitrator  or court,  or pursuant to a  requirement  under
applicable laws, rules or regulations.

         Purchaser  understands  that Target is currently  undertaking a private
placement to raise capital.  In connection with such private  placement,  it has
delivered,  and is delivering,  to potential  investors a  confidential  private
offering  memorandum,  which may be required from  time-to-time to be amended or
supplemented  to update  any  material  information  herein  or to add  material
information about Target which is not included therein, which the recipients are
required to keep confidential.  In order for Target to meet its responsibilities
to its  offerees,  and to protect  Target and its  affiliates  under  applicable
securities laws, rules and regulations,  Purchaser  acknowledges  that Target is
required to give the offerees adequate disclosure about Target, its business, it
business  plan and the proposed  uses of the funds that the offerees may invest,
so that the offerees can make an informed  investment  decision as to whether or
not to invest in Target.  Accordingly,  certain  information about Purchaser and
the  Transaction  proposed in this  Agreement may be required to be disclosed by
Target in its  private  offering  memorandum.  In such case,  Target may include
Information  about the Purchaser  and the  Transaction  in its private  offering
memorandum or any amendment or supplement thereto without breach of this Section
13.2 to the extent such  information  has been  previously or  contemporaneously
disclosed  by  Purchaser  in a press  release or its SEC  Reports,  or Purchaser
consents in writing to its inclusion,  which consent shall not  unreasonably  be
withheld,  provided  however  that  such  restriction  shall  not  apply  if the
Purchaser does not disseminate a press release or file an SEC Report  disclosing
Information about Purchaser and the Transaction  within three (3) days following
the date of this Agreement. Target will not be liable under this Section 13.2 if
a recipient of the private offering memorandum  wrongfully discloses information
about the Purchaser or the Transaction  contemplated  hereby,  unless Target has
not informed such recipient in the private  offering  memorandum or otherwise in
writing,  of the  confidential  nature  of such  Information,  or  Target or its
affiliates  acted  negligently  in connection  with, or willfully to facilitate,
such wrongful disclosure.

         Upon the request of a disclosing  party made at any time  following any
termination of this Agreement in accordance with the terms hereof, the receiving
party will  redeliver to the  disclosing  party any and all written  Information
furnished to the receiving party and will not retain any copies thereof.

13.3 Equitable  Relief.  The parties agree that the remedy at law for any breach
or threatened  breach of the  provisions of Section 13.2 will be inadequate  and
the  aggrieved  party  shall be  entitled  to  injunctive  relief to compel  the
breaching  party to  perform or  refrain  from  action  required  or  prohibited
thereunder.

13.4 Publicity.  Neither Purchaser nor Target will issue any report,  statement,
release or other public announcement  pertaining to the matters  contemplated by
this Agreement without the prior written consent of the other unless required by
law, rule or regulation.

13.5 Entire  Agreement.  This  Agreement,  including  the schedules and exhibits
attached  hereto,  which are a part hereof,  constitutes the entire agreement of
the Parties  with respect to the subject  matter  hereof.  The  representations,
warranties,  covenants  and  agreements  set forth in this  Agreement and in the
financial statements, schedules or exhibits delivered pursuant hereto constitute
all the representations, warranties, covenants and agreements of the Parties and
upon which the Parties  have  relied,  shall not be deemed  waived or  otherwise
affected by any  investigation  made by any party  hereto and,  except as may be
specifically provided herein, no change,  modification,  amendment,  addition or
termination  of this  Agreement  or any part  thereof  shall be valid  unless in
writing and signed by or on behalf of the party to be charged therewith.

13.6 Notices. Any and all notices or other communications or deliveries required
or  permitted  to be given or made  pursuant  to any of the  provisions  of this
Agreement  shall be deemed to have been duly given or made for all purposes when
in writing and hand  delivered or sent by certified or registered  mail,  return
receipt  requested and postage prepaid,  overnight mail,  nationally  recognized
overnight courier or telecopier as follows:

         If to Purchaser, at:

         PlanetRx.com, Inc.
         6419 Shelby View Drive
         Memphis, Tennessee 38134
         Attention:  Chief Executive Officer
         Telecopier Number: (901) 379-2389

         With a copy to:

         Baker, Donelson, Bearman & Caldwell
         165 Madison Avenue, Suite 2000
         Memphis, Tennessee 38103
         Attention: Peter H. Kesser
         Telecopier Number (901) 577-0800

         If to Target at:

         Paragon Homefunding, Inc.
         2207 Sawgrass Village Drive
         Ponte Vedra Beach, Florida 32082
         Attention: Chief Executive Officer
         Telecopier Number: (904) 285-0606

         With a copy to:

         Certilman Balin Adler & Hyman, LLP
         90 Merrick Avenue
         East Meadow, New York  11554
         Attention:  Gavin C. Grusd, Esq.
         Telecopier Number: (516) 296-7111

or at such other  address as any party may specify by notice  given to the other
party in accordance with this Section 13.6.

13.7 Choice of Law;  Severability.  This  Agreement  shall be  governed  by, and
interpreted and construed in accordance with, the laws of the State of Delaware,
excluding choice-of-law  principles thereof. In the event any clause, section or
part of this Agreement shall be held or declared to be void,  illegal or invalid
for any reason, all other clauses, sections or parts of this Agreement which can
be effected without such void, illegal or invalid clause,  section or part shall
nevertheless continue in full force and effect.

13.8 Successors and Assigns; No Assignment. This Agreement shall be binding upon
and inure to the  benefit of the  parties and their  respective  successors  and
assigns; provided,  however, that neither Target nor Purchaser may assign any of
its  respective  rights or  delegate  any of its  respective  duties  under this
Agreement without the prior written consent of the other.

13.9  Counterparts.  This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, and all of which taken together shall
constitute one and the same instrument.

13.10  Facsimile  Signatures.   Signatures  hereon  which  are  transmitted  via
facsimile shall be deemed original signatures.

13.11 Representation by Counsel; Interpretation. Each Party acknowledges that it
has been  represented  by  counsel in  connection  with this  Agreement  and the
Transaction.  Accordingly,  any rule or law or any  legal  decision  that  would
require the interpretation of any claimed  ambiguities in this Agreement against
the party that drafted it has no  application  and is  expressly  waived by each
Party.  The  provisions of this  Agreement  shall be interpreted in a reasonable
manner to give effect to the intent of the parties hereto.

13.12 Headings; Gender. The headings, captions and/or use of a particular gender
or neuter under sections of this Agreement are for convenience of reference only
and do not in any way modify, interpret or construe the intent of the parties or
affect any of the provisions of this Agreement.

                                   ARTICLE XIV

                                   DEFINITIONS

14.1 Defined  Terms.  As used herein,  the terms below shall have the  following
meanings.  Any of such terms, unless the context otherwise requires, may be used
in the singular or plural, depending upon the reference.

         "Acquisition  Sub" shall have the meaning ascribed to it in the heading
of this Agreement.

         "Acquisition Sub Common Stock" shall have the meaning ascribed to it in
Section 2.3(g) hereof.

         "Action"  shall  mean any  action,  claim,  suit,  demand,  litigation,
governmental or other proceeding,  labor dispute, arbitral action,  governmental
audit, inquiry,  investigation,  criminal  prosecution,  investigation or unfair
labor practice charge or complaint.

         "Agreement"  shall mean this  Agreement  and Plan of Merger dated as of
April 22, 2002, among Purchaser, Acquisition Sub, and Target.

         "Assignees"  shall have the  meaning  ascribed  to it in  Section  10.6
hereof.

         "Body" shall mean a federal,  state,  local, and foreign  governmental,
political  subdivision of such foreign  governmental  body, or other  regulatory
body.

         "Books and  Records"  shall mean all books,  ledgers,  files,  reports,
plans, drawings, records and lists, including,  without limitation, all computer
programs and other  software,  of every kind  relating to an entity's  business,
operations, assets, liabilities, personnel, customers and suppliers.

         "Breaching Party" shall have the meaning ascribed to it in Section 13.1
hereof.

         "Business"  shall have the meaning  ascribed  to it in the  Recitals of
this Agreement.

         "Certificate  of  Merger"  shall  have the  meaning  ascribed  to it in
Section 2.2 hereof.

         "Claim  Notice"  shall  have  the  meaning  ascribed  to it in  Section
11.2.3(a) hereof.

         "Closing" shall have the meaning ascribed to it in Section 9.1 hereof.

         "Closing  Date"  shall have the  meaning  ascribed to it in Section 9.1
hereof.

         "Contract" shall mean any agreement, contract, note, lease, evidence of
indebtedness,  purchase order, letter of credit,  indenture,  security or pledge
agreement, franchise agreement, undertaking, covenant not to compete, employment
agreement,  license, instrument,  obligation,  commitment,  course of dealing or
practice,  understanding  or  arrangement,  whether  written or oral, to which a
particular Person is a party or is otherwise bound.

         "Contract  Terminations"  shall  have  the  meaning  ascribed  to it in
Section 7.9 hereof.

         "Copyrights" shall mean registered  copyrights,  copyright applications
and unregistered copyrights.

         "Default" shall mean any breach, default and/or other violation, and/or
the  occurrence  of any event  that with or without  the  passage of time or the
giving of notice or both would constitute a breach,  default or other violation,
under, or give any Person the right to accelerate, terminate or renegotiate, any
Contract.

         "Delaware  Statute"  shall  have  the  meaning  ascribed  to it in  the
Recitals of this Agreement.

         "Derivative Securities" shall mean warrants, options, rights, shares of
capital  stock,  evidences  of  indebtedness,  or other  securities,  which  are
convertible, exercisable or exchangeable into shares of common stock.

         "Effective  Time" shall have the meaning  ascribed to it in Section 2.2
hereof.

         "ERISA" shall have the meaning ascribed to it in Section 3.20 hereof.

         "Escrow  Agent"  shall have the meaning  ascribed to it in Section 13.1
hereof.

         "Escrow  Agreement"  shall have the  meaning  ascribed to it in Section
13.1 hereof.

         "Escrow  Deposit" shall have the meaning ascribed to it in Section 13.1
hereof.

         "Escrow  Fund"  shall have the meaning  ascribed to it in Section  13.1
hereof.

         "Exchange  Act"  shall mean the  Securities  Exchange  Act of 1934,  as
amended.

         "Information"  shall have the meaning  ascribed  to it in Section  13.2
hereof.

         "Inspectors"  shall have the meaning  ascribed to it in Section 12.1(h)
hereof.

         "Liability"  shall mean any direct or indirect  liability,  obligation,
indebtedness,  obligation,  commitment,  expense, claim, deficiency, guaranty or
endorsement  of or by  any  Person  of  any  type,  whether  accrued,  absolute,
contingent, matured, unmatured or otherwise.

         "Lien" shall mean any claim, lien, pledge, option, charge, restriction,
easement,   security   interest,   deed  of   trust,   mortgage,   right-of-way,
encroachment,   building  or  use  restriction,   conditional  sales  agreement,
encumbrance or other right of third  parties,  whether  voluntarily  incurred or
arising by operation of law, and includes,  without limitation, any agreement to
give any of the foregoing in the future,  and any contingent sale or other title
retention agreement or lease in the nature thereof.

         "Material  Adverse  Change" shall mean a change that creates a Material
Adverse Effect.

         "Material Adverse Effect" shall mean any material adverse effect on the
business, properties,  operations, assets, liabilities,  condition (financial or
otherwise),  or prospects of Purchaser, on the one hand, or Target, on the other
hand, as applicable.

         "Materials   of   Environmental   Concern"   shall   mean   pollutants,
contaminants, hazardous or noxious or toxic materials or wastes.

         "Merger" shall have the meaning  ascribed to it in the Recitals of this
Agreement.

         "Merger Consideration" shall have the meaning ascribed to it in Section
2.3(b) hereof.

         "Party" and "Parties"  shall have the meanings  ascribed to them in the
heading of this Agreement.

         "Patents"  shall  mean all  patents,  patent  applications,  registered
designs and registered design applications.

         "Permits"  shall mean all  licenses,  permits,  franchises,  approvals,
authorizations,  consents,  decrees or orders of, or filings  with,  any and all
Bodies.

         "Person" shall mean and include an individual,  a partnership,  a joint
venture,  a  corporation,  a limited  liability  company,  a  limited  liability
partnership,  a  trust,  an  unincorporated  organization,  any  other  business
organization and a government or other department or agency thereof.

         "PLRX Plan" shall have the  meaning  ascribed to it in the  Recitals of
this Agreement.

         "Potential  Offeror"  shall have the meaning  ascribed to it in Section
5.1(f) hereof.

         "Potential Purchaser Transaction" shall have the meaning ascribed to it
in Section 5.2(f) hereof.

         "Potential Target Transaction" shall have the meaning ascribed to it in
Section 5.1(f) hereof.

         "Proprietary Rights" shall mean Copyrights,  Patents, Trademarks, other
technology   rights  and  licenses,   computer  software   (including,   without
limitation,  any  source or  object  codes  thereof  or  documentation  relating
thereto), trade secrets, franchises, inventions, designs, specifications, plans,
drawings, data bases, know-how, domain names, world wide web addresses and other
intellectual property rights used or under development.

         "Purchaser"  shall have the meaning  ascribed to in the heading of this
Agreement.

         "Purchaser  Balance Sheet" shall mean the balance sheet of Purchaser as
of the  Purchaser  Balance Sheet Date which is included as part of the Purchaser
Financial Statements.

         "Purchaser Balance Sheet Date" shall mean December 31, 2001.

         "Purchaser  Business"  shall  have the  meaning  as  ascribed  to it in
Section 4.15 hereof.

         "Purchaser  Common  Stock"  shall have the  meaning  ascribed  to it in
Section 2.3(a) hereof.

         "Purchaser Expenses Statement" shall have the meaning ascribed to it in
Section 9.2(e) hereof.

         "Purchaser  Expenses"  shall mean the reasonable  expenses of Purchaser
relating to the negotiation, documentation, and consummation of the Transaction,
including,  but not limited to, the  following  categories  of expenses with the
indicated estimated maximum amounts:
<TABLE>
<CAPTION>

                                                                                 Estimated
         Category of Purchaser Expenses                                          Maximum Amount
         ------------------------------                                          --------------
<S>                                                                                     <C>
1.       Fees and expenses of Wunderlich Securities, Inc. (or another investment
         banking  firm  reasonably  acceptable  to  Purchaser)  relating  to the
         issuance of a fairness opinion regarding the Transaction.                    $  35,000

2.       Fees and  expenses  of Baker,  Donelson,  Bearman & Caldwell  (or other
         legal  counsel  reasonably  acceptable  to  Purchaser)  relating to the
         Transaction;  this  Agreement  and any and all  related  documents  and
         instruments;  all press releases issued by Purchaser in connection with
         the  Transaction;  all periodic  reports on Form 8-K,  10-Q,  and 10-K,
         amendments  thereto,  and  notifications of late filing thereof on Form
         12b-25  filed by Purchaser  with the SEC;  and all other legal  matters
         relating to the Transaction.                                                 $  50,000

3.       Fees and expenses of the Escrow Agent under the Escrow Agreement.            $   3,000

4.       Fees and expenses for the preparation of Purchaser's 2001 tax returns.       $   4,800

5.       Fees and expenses for the audit of the Purchaser Financial Statements.       $  15,000

6.       Franchise taxes payable to Delaware and other states, fees and expenses
         to  obtain  evidence  of  existence  and  good  standing,  and fees and
         expenses of registered agents.                                               $  17,500

7.       Travel  expenses of  Purchaser's  employees and agents  relating to the
         Transaction.                                                                 $   5,000

8.       Fees and expenses relating to issuance of press releases by Purchaser        $   3,000

9.       Fees and expenses of Purchaser's  transfer agent (i.e.,  Equiserve) and
         other companies providing stockholder services (e.g.,  Depository Trust
         Company and Corporate Investor Communications).                              $  10,000

10.      Expenses  from any  category of  Purchaser  Expenses  listed above that
         Purchaser paid directly (as opposed to from the Escrow Fund), for which
         Purchaser shall be reimbursed.                                                 Unknown
</TABLE>

Purchaser  has  estimated in good faith the maximum  amount of each of the above
categories of Purchaser Expenses. However, it is possible that the actual amount
of any one or more  categories of Purchaser  Expenses could exceed the estimated
maximum amounts set forth above. For example, while the costs of the preparation
of  Purchaser's  2001  tax  return  and the  audit  of the  Purchaser  Financial
Statements  are not  expected to exceed a total of  $20,000,  they could cost as
much as $30,000  depending  upon the  unique  requirements  of the  Transaction.
Purchaser  shall use its best  efforts to minimize  the  Purchaser  Expenses and
shall  confer  with  Target  in that  regard,  but  regardless  of  estimate  or
expectation by either Party,  Target shall be  responsible  for and pay when due
the actual amounts of all the Purchaser Expenses up to an aggregate of $200,000.

         "Purchaser Financial Statements" shall mean the financial statements of
Purchaser as of the Purchaser Balance Sheet Date and for the year ended December
31, 2001, consistent with those presented in the SEC Reports.

         "Purchaser  Indemnified  Parties" shall have the meaning ascribed to it
in Section 11.2.1. hereof.

         "Purchaser Listed  Agreements" shall have the meaning ascribed to it in
Section 4.14 hereof.

         "Records"  shall have the  meaning  ascribed  to it in Section  12.1(h)
hereof.

         "Registrable  Securities"  shall  have the  meaning  ascribed  to it in
Section 12.1(a)(i) hereof.

         "Registration  Period" shall have the meaning ascribed to it in Section
12.1(b) hereof.

         "Registration  Statement"  shall  have the  meaning  ascribed  to it in
Section 12.1(a)(i) hereof.

         "Resigned Purchaser Directors" shall have the meaning ascribed to it in
Section 5.2(g) hereof.

         "Restricted  Purchaser Common Stock" shall have the meaning ascribed to
it in Section 2.3(a) hereof.

         "Restricted  Target Common Stock" shall have the meaning ascribed to it
in Section 2.3(a) hereof.

         "Revelation"  shall have the  meaning  ascribed  to it in Section  10.6
hereof.

         "SEC" shall mean the United States Securities and Exchange Commission.

         "SEC  Reports"  shall have the meaning  ascribed to it in Section  4.24
hereof.

         "Securities Act" shall mean the Securities Act of 1933, as amended.

         "Surviving  Corporation"  shall  have  the  meaning  ascribed  to it in
Section 2.1(a) hereof.

         "Target"  shall have the meaning  ascribed to it in the heading of this
Agreement.

         "Target Balance Sheet" shall mean the balance sheet of Target as of the
Target  Balance  Sheet Date which is  included  as part of the Target  Financial
Statements.

         "Target Balance Sheet Date" shall mean December 31, 2001.

         "Target Common Stock" shall have the meaning  ascribed to it in Section
2.3(a) hereof.

         "Target Financial  Statements"  shall mean the financial  statements of
Target as of the Target  Balance Sheet Date and for the year ended  December 31,
2001.

         "Target  Holders"  shall  have the  meaning  ascribed  to it in Section
12.1(a)(i) hereof.

         "Target  Indemnified  Parties" shall have the meaning ascribed to it in
Section 11.2.2 hereof.

         "Target  Listed  Agreements"  shall have the meaning  ascribed to it in
Section 3.14 hereof.

         "Trademarks"  shall  mean  all  registered   trademarks  and  trademark
applications.

         "Transaction"  shall mean the Merger,  the manner of the conversion and
exchange of the Target Common Stock and Acquisition Sub Common Stock pursuant to
the Merger, and all other transactions contemplated by the Agreement.



<PAGE>


         WITNESS the execution and delivery of this  Agreement on the date first
above written.


                              PLANETRX.COM, INC.


                              By:/s/ Michael Beindorff
                                 ------------------------------------
                                 Michael Beindorff
                                 Chairman and Chief Executive Officer



                              PARAGON HOMEFUNDING, INC.


                              By:/s/ John Brink
                                 -------------------------------------
                                 John Brink
                                 Chief Executive Officer and President



                              PHI ACQUISITION CORP.


                              By: /s/ Michael Beindorff
                                 ------------------------------------
                                 Michael Beindorff
                                 President