Exhibit 2








                          AGREEMENT AND PLAN OF MERGER

                                      AMONG

                               PLANETRX.COM, INC.,

                            PARAGON HOMEFUNDING, INC.

                             MORTGAGE EXPRESS, INC.

                                  PHILIP LAGORI

                                  JOHN LAGRASSA

                                       AND

                                 PHILIP LAGIGLIA




                          Dated as of October 14, 2002






<PAGE>
<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

1.  AGREEMENT

2.  SCHEDULES
     <S>                                <C>

         Schedule 2.8           Note Recipients
         Schedule 3.1           States Seller is Qualified as a Foreign Corporation
         Schedule 3.2           Consents Schedule 3.4(i) Audited Financial Statements
         Schedule 3.4(ii)       Interim Financial Statements Schedule 3.5 Liabilities
         Schedule 3.7.2(a)      Proprietary Rights Schedule 3.8 Litigation
         Schedule 3.9           Listed Agreements
         Schedule 3.12(e)       Exceptions to No Breach
         Schedule 3.14          Prior Names and Addresses of Seller
         Schedule 3.15          List of Seller's Permits From All Bodies
         Schedule 3.16          Principal Shareholder's Stock Ownership in Seller
         Schedule 3.19          Material Leases or Leased Real Property
         Schedule 3.21          Employees and Independent Contractors
         Schedule 3.22(a)       Employee Benefit Plans
         Schedule 3.22.7        Qualifications to Employee Benefit Plan Representations
         Schedule 4.2           Consents
         Schedule 4.5           Brokers
         Schedule 5.1(f)        Additional Consents

3.       EXHIBITS

         2.8(a)     Form of Promissory Note
         2.8(b)     Form of Promissory Note
         6.4        Form of Target Counsel Opinion
         6.7(a)     Form of Lagori Employment Agreement
         6.7(b)     Form of LaGrassa Employment Agreement
         6.7(c)     Form of LaGiglia Employment Agreement

</TABLE>

<PAGE>


     AGREEMENT AND PLAN OF MERGER dated as of October 14, 2002 (the "Agreement")
by and among PLANETRX.COM,  INC., a Delaware corporation ("Purchaser"),  PARAGON
HOMEFUNDING,  INC., a Delaware  corporation  and a  wholly-owned  subsidiary  of
Purchaser   ("Paragon"),   MORTGAGE  EXPRESS,   INC.,  an  Illinois  corporation
("Target") (Purchaser, Paragon and Target are sometimes collectively referred to
as the "Parties" and individually as a "Party"), Philip Lagori ("Lagori"),  John
LaGrassa  ("LaGrassa") and Philip LaGiglia  ("LaGiglia")  (Lagori,  LaGrassa and
LaGiglia are sometimes collectively referred to as the "Principals").

                                    RECITALS:

     Target is engaged  primarily in the business of home  mortgage  banking and
home mortgage origination through third party lenders (the "Business").

     Paragon is a wholly  owned  subsidiary  of  Purchaser  based in Ponte Vedra
Beach, Florida.

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

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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  Illinois  Statute and the  Delaware  Statute,  Paragon
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 Illinois.

     (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 or articles of
merger,  as applicable,  relating to the Merger (each a "Certificate of Merger")
shall be delivered as soon as practicable  after the Closing to the Secretary of
State of  Delaware  and the  Secretary  of  State of  Illinois,  for  filing  in
accordance with the Delaware Statute and the Illinois Statute respectively.  The
Merger  shall  become  effective  upon  the  acceptance  of such  filing  by the
Secretary  of State of  Illinois  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
Paragon's securities shall be as follows:

     (a)  Subject  to the  provisions  of this  Agreement,  each share of Common
Stock,  no  par  value,  of  Target  (the  "Target  Common  Stock")  issued  and
outstanding  immediately  prior to the  Effective  Time 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").

     (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  issued  and
outstanding

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immediately  prior to the Effective Time (the "Merger  Consideration")  shall be
Five  Hundred  Twenty Three  Thousand  Two Hundred  Ninety Seven and Thirty Five
Hundredths  (523,297.35)  shares of  Purchaser  Common Stock (or an aggregate of
Fifty Two Million Three Hundred  Twenty Nine Thousand  Seven Hundred Thirty Five
(52,329,735) shares of Purchaser Common Stock).

     (c) 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.

     (d) 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 Paragon shall be issuable with respect thereto.

     (e) Each share of Common Stock,  par value $.001 per share, of Paragon (the
"Paragon  Common  Stock")  shall be  converted  into and become one (1)  validly
issued, fully paid and non-assessable share of Target Common Stock.

     (f)  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  therefore (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
therefore 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.

     (g) 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

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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."

     (h) 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 therefore, 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.

     (i) 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 therefore.

     (j) 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

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Paragon 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 Paragon (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 Paragon  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 Paragon shall be the property, rights and interests
     of Target as the Surviving Corporation as they were of Paragon;

          (ii) No Action,  whether  civil or criminal,  pending at the Effective
     Time by or against either Paragon 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 Paragon; and

          (iii) All rights of  employees  and  creditors  and all Liens upon the
     property of Paragon shall be preserved unimpaired,  limited to the property
     affected  by  such  Liens  at  the  Effective  Time,  and  all  the  debts,
     liabilities  and duties of Paragon  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.  Paragon and Purchaser  agree 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 Paragon,  execute and deliver, or cause to be executed and delivered,  at the
sole expense of Purchaser,  all deeds,  assignments  and other  instruments  and
shall take or cause to be taken all such other and further  actions as Purchaser
or 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 Paragon 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.

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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.

2.8 Issuance of Promissory Notes. Subject to the effectiveness of the Merger, at
the Closing, Purchaser shall issue:

     (a) a $1,800,000  promissory note in, or substantially in, the form annexed
hereto as Exhibit 2.8(a), to the recipient set forth on Schedule 2.8.

     (b) a $1,200,000  promissory note in, or substantially in, the form annexed
hereto as Exhibit 2.8(b), to the recipient set forth on Schedule 2.8.

                                   ARTICLE III

                    REPRESENTATIONS AND WARRANTIES OF TARGET
                               AND THE PRINCIPALS

     Target and the Principals, jointly and severally, hereby make 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  of each of such
representations  and warranties.  For purposes of the following  representations
and warranties,  the Target shall be deemed to possess all information  actually
known to the  Principals  of the Target,  or which should  reasonably  have been
known to such Principals.

3.1 Valid  Existence;  Qualification.  Target is a corporation  duly  organized,
validly  existing and in good standing  under the laws of the State of Illinois.
Target has the power to carry on its  Business as now  conducted  and to own its
Assets.  Target is  qualified to do business in the states set forth on Schedule
3.1 attached  hereto,  is not required to qualify 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  Target is
required  to qualify or  otherwise  be  authorized  to do  business as a foreign
corporation therein. The copies of the Target's Certificate of Incorporation, as
amended to date  (certified by the Secretary of the State of Illinois),  and the
Target's By-Laws, as amended to date (certified by the Secretary of the Target),
which have been  delivered to Purchaser,  or are  delivered at the Closing,  are
true and complete  copies of those documents as in effect on the date hereof and
the Closing Date.

3.2  Consents.  Except as set forth on Schedule 3.2  attached  hereto and made a
part  hereof,  no  consents  of  federal,  state and local  Bodies,  foreign  or
domestic,  or of any other parties are

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required  to be  received by or on the part of Target to enable it to enter into
and carry out this Agreement and the Transaction contemplated hereby.

3.3 Authority;  Binding Nature of Agreement. Target and the Principals each have
the  power to enter  into  this  Agreement  and to carry  out  their  respective
obligations  hereunder.  The  execution  and delivery of this  Agreement and the
consummation of the transactions  contemplated  hereby have been duly authorized
by the  Board  of  Directors  of  Target  and  except  for  the  consent  of the
stockholders of Target,  no other  proceedings,  corporate or otherwise,  on the
part of Target are necessary to authorize the delivery of this Agreement and the
consummation of the transactions contemplated hereby. This Agreement constitutes
the valid and binding obligation of Target and the Principals and is enforceable
in accordance with its terms.

3.4 Financial Statements. The books of account and related records of the Target
have been maintained in accordance with applicable  laws, rules and regulations,
are complete and correct in all material respects,  fairly reflect in reasonable
detail all  income,  expenses,  assets  and  liabilities  of,  and  transactions
relating to, the  Business in  accordance  with  generally  accepted  accounting
principles  ("GAAP") and provided a fair and accurate basis for the  preparation
of the Financial Statements (defined below).  Attached hereto as Schedule 3.4(i)
are copies of the audited  consolidated  financial  statements of the Target for
the years ended, and as of, December 31, 1999, 2000 and 2001, together,  in each
case,  with the audit  reports  thereon of Schafer &  Associates  (the  "Audited
Financial  Statements").  The  Audited  Financial  Statements  are  correct  and
complete and in accordance  with the Books and Records of the have been prepared
in  accordance  with  GAAP  consistently   applied,   and  fairly  present,  the
consolidated assets, liabilities and financial position of the Target, as at the
respective  dates thereof,  and the results of its  consolidated  operations and
cash flows for the years then ended.  Attached  hereto as Schedule  3.4(ii) is a
copy of the unaudited  balance sheet of the Target for the Interim period ending
August 31, 2002 (the  "Interim  Financial  Statements"  and,  together  with the
Audited Financial Statements, the "Financial Statements"). The Interim Financial
Statements are correct and complete and in accordance with the Books and Records
of the Target,  have been prepared in accordance with GAAP consistently  applied
(subject  to the  absence  of  footnotes  and to normal and  recurring  year end
adjustments,  none of which is  material  in amount),  and fairly  present,  the
consolidated assets, liabilities and financial position of the Target, as at the
date thereof.  All  adjustments  (consisting of normal  recurring  adjustments),
considered  necessary for a fair  presentation have been included in the Interim
Financial Statements.  The contingency,  tax and other reserves reflected on the
Financial Statements are adequate, appropriate and reasonable in accordance with
GAAP. During the Target's five previous fiscal years, the Target has not changed
any accounting methods or principles used in recording transactions on its books
or in preparing its financial  statements,  except to comply with new Statements
on Financial  Accounting  Standards issued by the Financial Accounting Standards
Board.

3.5  Liabilities.  Except as set forth in the Audited  Financial  Statements  or
Schedule 3.5, as of the date hereof,  Target has no direct or indirect Liability
contingent  or absolute,  inchoate or

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otherwise,  and there is no basis for the assertion  against  Target of any such
Liability,  which would have a material  adverse  effect on the Purchaser or the
future operation of the Business.

3.6 Taxes. All taxes, including,  without limitation,  income, property,  sales,
use, utility,  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 Target, and all interest and penalties  thereon,  whether disputed
or not,  have  been paid in full;  all  deposits  required  by law to be made by
Target or 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 not been audited within the past six years.

3.7 Ownership of Assets; Trademarks, Patents, Etc.

          3.7.1 Assets Generally.
                ----------------

               (a) Target owns outright,  and has good and marketable  title to,
          all of its assets  (the  "Assets"),  free and clear of all Liens.  The
          Assets are  sufficient to permit Target to conduct its Business as now
          conducted.  None of the Assets are  subject  to any  restriction  with
          regard to transferability.

               (b)   There   are  no   agreements,   options,   commitments   or
          understandings  with, of or to any person to acquire any of the Assets
          or any rights or interest therein, except for this Transaction.

          3.7.2  Trademarks,  Patents,  Etc. Schedule 3.7.2(a) sets forth a true
     and complete  list of  (including,  without  limitation,  each  application
     number,  serial  number  or  registration  number,  the  class  of goods or
     services  covered  and the  expiration  date  for each  country  in which a
     Proprietary  Right has been registered) and a brief  description of all any
     and all registered  trademarks,  registered  service  marks,  trademark and
     service mark  applications  and  unregistered  trademarks and service marks
     included in, or related to, the Assets  (collectively,  the  "Trademarks"),
     patents and copyrights (including,  without limitation,  all registrations,
     licenses and applications pertaining thereto), patent license rights, trade
     secrets, franchises, inventions, processes, designs, specifications, plans,
     drawings,   system   documentation,   programming,   databases,   know-how,
     confidential  information,  shop rights,  licenses,  internet domain names,
     world wide web addresses and all other proprietary  information,  processes
     and formulae  owned by the Target (the "Other  Intellectual  Property") and
     all other intellectual property rights related thereto (collectively,  with
     the  Trademarks  and the  Other  Intellectual  Property,  the  "Proprietary
     Rights"). No other person, firm or corporation has any proprietary or other
     interest  in any such  Proprietary  Rights  and Target is not a party to or
     bound  by any  contract  requiring  the  payment  to any  person,  firm  or
     corporation  of  any  royalty.  The  Target  is  not  infringing  upon  any
     Proprietary  Rights

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     or 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 the  Target  is not  aware  of any  claim,  alleging  any such
     violation. There are no pending applications with regard to any Proprietary
     Right.  Target has taken all  reasonable  and prudent  steps to protect the
     Proprietary  Rights from infringement by any other person. No other person,
     (i) has the right to use any of Target's  Trademarks on the goods on, or in
     connection with the services for, which they are now being used,  either in
     identical  form  or,  to the  best of  Target's  knowledge,  in  such  near
     resemblance  thereto as to be likely, when applied to the goods or services
     of any such person,  to cause  confusion with such Trademarks or to cause a
     mistake  or to  deceive,  (ii)  has a  license  or the  right  to  use  any
     Proprietary Right of Target, whether by license, sublicense or other rights
     (iii) has notified  Target that it is claiming any ownership of or right to
     use such Proprietary Rights, or (iv) to the best of Target's knowledge,  is
     infringing upon any such Proprietary Rights in any way.

3.8  Litigation;  Compliance  with  Law.  Except as set  forth on  Schedule  3.8
attached hereto, there are no Actions relating to Target or the Business pending
or, to the knowledge of Target,  threatened, or any order, injunction,  award or
decree outstanding,  against Target or relating to the Business and there exists
no basis for any such Action.  Target is not in  violation of any statute,  law,
regulation,  ordinance,  rule, order,  judgment,  injunction,  decree, award, or
other requirement of any Body.

3.9  Agreements  and  Obligations;  Performance.  Except as listed  and  briefly
described in Schedule  3.9  attached  hereto and made a part hereof (the "Listed
Agreements")  Target  is not party to, or bound  by,  any:  (i)  Contract  which
involves  aggregate  payments  or  receipts  in excess of $1,000  that cannot be
terminated at will without  penalty or premium or any  continuing  obligation or
Liability;  (ii) Contract of any kind with any officer, director or shareholder,
of Target; (iii) Contract which is in violation of applicable law; (iv) Contract
for the purchase, sale or lease of any equipment,  materials, products, supplies
or  services  which  contains,  or which  commits or will commit it for, a fixed
term;  (v)  license or royalty  Contract;  (vi)  Contract  which,  by its terms,
requires  the  consent  of  any  party  thereto  to  the   consummation  of  the
transactions  contemplated  hereby; (vii) Contract containing covenants limiting
the  freedom of Target or any  officer,  employee  or  shareholder  to engage or
compete in any line or  business  or with any person in any  geographical  area;
(viii)  Contract or option  relating to the acquisition or sale of any business;
(ix) voting  agreement  or similar  agreement  or  Contract;  (x) option for the
purchase of any Asset, tangible or intangible;  or (xi) distributor,  franchise,
license,  technical assistance agency or advertising  Contracts;  (xii) Contract
with the  United  States,  or any  state or local  government  or any  agency or
department  thereof,  and/or (xiii) any other  Contract which affects any of the
Assets, 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 Listed Agreements has been delivered, or
made available, to Purchaser. Except as set forth on Schedule 3.9, Target has in
all material respects  performed all obligations  required to be performed by it
to date under all of the Listed  Agreements,  is not in Default under any of the
Listed Agreements and has received no notice of any dispute,  Default or alleged

                                        9

<PAGE>

Default  thereunder  which has not heretofore been cured or which notice has not
heretofore been withdrawn.  The Target does not know of any Default under any of
the Listed Agreements by any other party thereto or by any other person, firm or
corporation  bound thereunder.  In addition,  the Merger and the consummation of
the Transaction  contemplated by this Agreement does not constitute a prohibited
assignment under the terms of any of the Listed Agreements.

3.10  Condition of Assets.  All of the  tangible  personal  properties  owned by
Target  operate  according  to  their  respective  current   specifications  and
purposes.

3.11     Reserved.

3.12 No Breach.  Neither  the  execution  and  delivery  of this  Agreement  nor
compliance by the Target or the Principals with any of the provisions hereof nor
the consummation of the transactions contemplated hereby, will:

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

               (b)  violate  or,  alone or with  notice or the  passage of time,
          result in the material breach or termination of, or otherwise give any
          contracting party the right to terminate,  or declare a Default under,
          the terms of any Contract to which Target or any  Principal is a party
          or by which any of them or  Target's  Assets  may be bound  (except as
          disclosed in Schedule 3.2 regarding required consents);

               (c)  result  in the  creation  of any Lien  upon any of  Target's
          Assets;

               (d)  violate any  judgment,  order,  injunction,  decree or award
          against, or binding upon, Target,  which would have a material adverse
          effect on Target's Assets, or the Transaction  contemplated  hereby or
          the future operation of the Business by Purchaser or Target; and/or

               (e) violate  any  statute,  law,  regulation,  ordinance  or rule
          (collectively "Law") of any jurisdiction or Body relating to Target or
          the Business, except as set forth on schedule 3.12(e).

3.13  Brokers.  The Target 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
transactions contemplated by this Agreement.

3.14 Prior Names and  Addresses.  Since its  inception,  Target has not used any
business  name or had any business  address  other than its current name and the
names and the business addresses set forth in Schedule 3.14.

                                       10

<PAGE>

3.15 Permits and  Licenses.  Target has all Permits from all Bodies  required to
carry on the Business as presently conducted; all such Permits are in full force
and effect,  and, to the knowledge of Target,  no suspension or  cancellation of
any of such Permits is  threatened  and Target is in  compliance in all material
respects with all  requirements,  standards  and  procedures of the Bodies which
have issued such Permits.  Schedule 3.15 attached  hereto and made a part hereof
sets forth a true and  complete  list of all  Permits  from all  Bodies  held by
Target.

3.16 Capitalization.  The authorized capital stock of the Target consists of Ten
Thousand (10,000) shares of common stock, no par value per share. As of the date
hereof,  there  is one  hundred  (100)  shares  of  the  Target's  common  stock
outstanding.  Further,  each of the  Principals of the Target own that number of
common  shares  of the  Target as are  listed  next to his name as  provided  on
Schedule 3.16 attached hereto and made a part hereof, and except as set forth on
Schedule 3.16 attached hereto, there are no owners of capital stock or equity of
Target other than the Principals.

3.17 Investment Intent; Qualifications as Purchaser.
     ----------------------------------------------

     (a) The  Principals  represent  and  warrant  that the shares of  Purchaser
Common Stock to be acquired  pursuant to the terms hereof are being acquired for
their own account,  for investment and not for distribution or resale to others.
The Principals will not sell, assign, transfer, encumber or otherwise dispose of
any of such shares of Purchaser Common Stock unless (i) a registration statement
under the  Securities  Act with respect  thereto is in effect and the prospectus
included  therein meets the requirements of Section 10 of the Securities Act, or
(ii)  Purchaser  has received a written  opinion of its counsel  that,  after an
investigation  of the relevant  facts,  such counsel is of the opinion that such
proposed sale, assignment, transfer, encumbrance or disposition does not require
registration under the Securities Act.

     (b) The Principals  understand  that, the shares of Purchaser  Common Stock
are not being registered under the Securities Act and must be held  indefinitely
unless they are  subsequently  registered  thereunder or an exemption  from such
registration is available.

     (c) The  Principals  each  represent and warrant that he is an  "accredited
investor," as such term is defined in Rule 501(a)  promulgated by the Securities
and  Exchange  Commission  (the "SEC")  under the  Securities  Act, and that he,
alone,  or with his  purchaser  representative,  if any, has such  knowledge and
experience  in financial  and business  matters that he is capable of evaluating
the merits and risks of the acquisition of the shares of Purchaser  Common Stock
contemplated  hereby.  Each Principal will execute and deliver to Purchaser such
documents as Purchaser may  reasonably  request in order to confirm the accuracy
of the foregoing.

     (d) The Principals understand that the shares of Purchaser Common Stock are
not being  registered  under the  Securities  Act in part on the ground that the
issuance  thereof  is  exempt  under  Section  4(2) of the  Securities  Act as a
transaction by an issuer not involving any public

                                       11

<PAGE>

offering and that  Purchaser's  reliance on such exemption is predicated in part
on the foregoing representations and warranties of the Principals.

3.18 Restrictive Legend. The shares of Purchaser Common Stock to be issued to in
the  Transaction  contemplated  hereby may not be sold,  assigned,  transferred,
encumbered or disposed of unless they are registered under the Securities Act or
unless  an  exemption  from  such  registration  is  available.  Accordingly,  a
restrictive  legend, in or substantially in the form set forth in Section 2.3(g)
hereof placed on any  instrument,  certificate or other document  evidencing the
shares of Purchaser Common Stock.

3.19 Real Property. Except as set forth on Schedule 3.19 attached hereto, Target
does not own or lease, or use under license or the like, any real property.  The
leases for each of the Target's offices are listed on Schedule 3.19.

3.20 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 Bodies 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 any  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
its  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.

3.21  Employment  Relations.  Schedule 3.21 contains a true and complete list of
all current employees and independent  contractors of the Target, the address of
their place of work, and their respective salaries and or compensation  packages
for the past 12 months. No employees who are Material to the future operation of
the Business have expressed  intention to leave the Target.  Target has not made
any promises of increases in wages, salary, compensation,  payments, benefits or
otherwise. 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

                                       12

<PAGE>

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 current,  former or prospective employee 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.

3.22  Employee Benefit Plans.
      ----------------------

     3.22.1 Schedule 3.22(a) attached hereto,  contains a true and complete list
of  each  plan,  program,  policy,  practice,   contract,   agreement  or  other
arrangement providing for compensation,  severance, termination pay, performance
awards,  stock or  stock-related  awards,  fringe  benefits  or  other  employee
benefits of any kind, whether formal or informal,  proposed or final,  funded or
unfunded and whether or not legally binding, including, without limitation, each
employee  benefit  plan  within the  meaning of Section  3(3) of the  Employment
Retirement Income Security Act of 1974, as amended, and regulations  promulgated
thereunder  ("ERISA") (such employee benefit plan, an "Employee Plan"), which is
now  maintained,  contributed  to, or  required  to be  contributed  to, for the
benefit of any  current or former  employee,  officer,  independent  contractor,
agent or consultant  working for the Target  ("Employee")  and any Employee Plan
(whether  or not  currently  in effect)  as to which  Target has or may have any
continuing  obligations  or  liabilities,   and  each  management,   employment,
severance  or  consulting  agreement  or  contract  between  the  Target and any
Employee  which is  currently  in effect or pursuant to which  Target has or may
have  any  continuing   obligations  or   liabilities   (the  "Target   Employee
Agreements").  Target has provided to Purchaser true and complete  copies of all
documents,  if  any,  embodying  each  Employee  Plan  and the  Target  Employee
Agreements,   including  all  amendments  thereto  and  written  interpretations
thereof;  the three most  recent  annual  reports  filed  (Form 5500 Series with
applicable  schedules)  with respect to each Employee Plan required under ERISA;
the most recent summary plan description,  if any, with respect to each Employee
Plan required under ERISA; the most recent favorable  determination  letter from
the IRS, if  applicable,  with respect to each Employee  Plan;  and all material
communications, if any, to any Employee relating to each Employee Plan.

     3.22.2  Each  Employee  Plan that is  intended  to be  qualified  under the
Internal  Revenue  Code of  1986,  as  amended  (the  "Code"),  has  received  a
determination  letter  from the IRS to the effect  that such  Employee  Plan and
related trust are qualified and exempt from Federal  income taxes under Sections
401(a) and 501(a) of the Code, respectively,  or is within a "remedial amendment
period"; such determination letter includes any requirements under the Code; and
no such determination letter has been revoked,  nor, to the knowledge of Target,
has revocation been threatened. To the knowledge of Target, nothing has occurred
or is expected to occur that would adversely affect the qualified status of such
Employee  Plan  or  any  related  trust  subsequent  to  the  issuance  of  such
determination letter.

     3.22.3  Seller has  performed  in all  material  respects  all  obligations
required to

                                       13

<PAGE>

be  performed  under  each  Employee  Plan,  and  each  Employee  Plan  has been
established and maintained in all material respects in accordance with its terms
and in compliance with all applicable Laws including but not limited to ERISA or
the Code.  No  Employee  Plan is a defined  benefit  plan  within the meaning of
Section 3(35) of ERISA, nor a Multiemployer Plan (as defined in Section 3(37) of
ERISA),  and Target  does not have any  liability  with  respect to any  defined
benefit plan or Multiemployer Plan as a result of having been treated as part of
a "single employer" within the meaning of Section 414(b),  (c), (m), (n) and (o)
of the Code, nor is there any basis for such liability being imposed.  There are
no Actions pending, or, to Target's knowledge,  threatened or anticipated (other
than routine claims for benefits) against any Employee Plan or the assets of any
Employee  Plan,  and to Target's  knowledge,  there are no facts that could give
rise to any material  liability in the event of any such Action.  Each  Employee
Plan can be amended,  terminated, or otherwise discontinued after the Closing in
accordance with its terms, without liability to the Target or the Purchaser. All
premiums  required  by  any  Employee  Plan  have  been  paid  thereunder;   all
outstanding  indebtedness for services  performed or accrued  vacation,  holiday
pay, earned commissions,  accrued bonuses or other benefits owed to any Employee
have  been  paid when due or  accrued  in  accordance  with  generally  accepted
accounting  principles  and  consistent  with past  practice on the books of the
Target;  all contributions due to and payments from, the Employee Plans that may
have been required to be made have been made. No "prohibited transaction" within
the  meaning of Section  4975 of the Code or Section  406 of ERISA has  occurred
with respect to any Employee  Plan;  no action or failure to act with respect to
any Employee Plan could subject the Target or the Purchaser or any Employee Plan
to any material tax, penalty or other liability, for breach of fiduciary duty or
otherwise,  under ERISA or any other applicable Law, whether by way of indemnity
or otherwise.

     3.22.4  Target does not maintain or  contribute  to any Employee Plan which
provides,  or has any  liability to provide,  life  insurance,  medical or other
employee welfare benefits (other than severance and accrued vacation and holiday
pay) to any Employee upon his or her  retirement or  termination  of employment,
except as may be required by applicable  Law, and the Target has never promised,
represented  to,  or  contracted  with  (orally  or  in  writing)  any  Employee
(individually  or as a group)  that life  insurance,  medical or other  employee
welfare  benefits  (other than  severance and accrued  vacation and holiday pay)
would be provided upon their retirement or termination of employment,  except to
the extent required by applicable Law.

     3.22.5 Each "group  health plan" within the meaning of Section  4980B(g)(2)
of the Code maintained by the Target or any entity with which it is considered a
"single employer" within the meaning of Section 414(b), (c), (m), (n) and (o) of
the  Code,  has  been   administered  in  good  faith  in  compliance  with  the
continuation coverage requirements  contained in the Consolidated Omnibus Budget
Reconciliation Act of 1985, as amended (COBRA), as set forth at Section 4980B of
the Code and any regulations promulgated or proposed thereunder.

     3.22.6  The  execution  of  this  Agreement  and  the  consummation  of the
transactions contemplated by this Agreement will not (either alone or when taken
together with any additional or subsequent events) constitute an event under any
Employee  Plan or Target

                                       14

<PAGE>

Employee  Agreements  that will or may result in any  payment,  upon a change in
control or otherwise,  whether of  severance,  accrued  vacation,  or otherwise,
acceleration,  vesting, distribution, increase in benefits or obligation to fund
benefits with respect to any  Employee.  No payment or benefit which will or may
be made by the Target or the Purchaser or  contemplated  by this  Agreement with
respect to any  Employee as a result of the  transactions  contemplated  by this
Agreement will be  characterized  as an "excess  parachute  payment"  within the
meaning of Section 280G(b)(1) of the Code.

     3.22.7 The  Representations  and Warranties set forth in Sections 3.22.1 to
3.22.6 above are qualified in their entirety by Schedule 3.22.7 attached hereto.

3.23 Untrue or Omitted Facts. No representation, warranty or statement by Target
in this  Agreement  or contained in any  Contract,  agreement,  document or item
furnished by Target or the  Principals to Purchaser  relating to this  Agreement
and the  transactions  contemplated  hereby,  contains any untrue statement of a
material  fact,  or  omits  to state a fact  necessary  in  order  to make  such
representations,  warranties or statements  not materially  misleading.  Without
limiting the  generality of the  foregoing,  there is no fact known to Target or
Principals that has had, or which may be reasonably expected to have, a material
adverse effect on the Transaction  contemplated by this Agreement, or the future
operation  of the  Business by  Purchaser  that has not been  disclosed  in this
Agreement.

                                   ARTICLE IV

                   REPRESENTATIONS AND WARRANTIES OF PURCHASER

     Purchaser  and  Paragon   jointly  and   severally,   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  Paragon  is  a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware.  Each of Purchaser  and Paragon 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 States of Tennessee and Florida,
and Paragon is qualified to do business as a foreign corporation in the State of
Florida, and neither is required to be so qualified in any other jurisdiction in
order to own its respective  assets or carry on its  respective  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.

4.2 Consents.  Except as set forth on Schedule 4.2 attached hereto,  consents of
any Bodies are required to be received by or on the part of Purchaser or Paragon
to enable them to enter into and carry out this  Agreement and the  Transactions
contemplated hereby.

                                       15

<PAGE>

4.3 Authority;  Binding  Nature of Agreement.  Each of Purchaser and Paragon has
the  power  to enter  into  this  Agreement  and to  carry  out its  obligations
hereunder.  The execution and delivery of this Agreement and the consummation of
the transactions contemplated hereby have been duly authorized by the respective
Boards of Directors of the  Purchaser  and  Paragon,  and  Purchaser as the sole
stockholder of Paragon, and no other proceedings, corporate or otherwise, on the
part of  Purchaser  or Paragon are  necessary to  authorize  the  execution  and
delivery of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement constitutes the valid and binding obligation of Purchaser
and Paragon and is enforceable in accordance with its terms.

4.4 No  Breach.  Neither  the  execution  and  delivery  of this  Agreement  nor
compliance  by Purchaser or Paragon  with any of the  provisions  hereof nor the
consummation of the transactions contemplated hereby, will:

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

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

     (c) violate any judgment,  order,  injunction,  decree or award against, or
binding upon, Purchaser or Paragon or their respective properties or assets, the
violation of which would have a Material Adverse Effect on Purchaser or Paragon;
or

     (d) violate any Law of any  jurisdiction  or Body  relating to Purchaser or
Paragon or their  respective  businesses,  the  violation  of which would have a
Material Adverse Effect on Purchaser or Paragon.

4.5  Brokers.  Except as set forth on  Schedule  4.5  attached  hereto,  neither
Purchaser  nor Paragon has  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  transactions
contemplated by this Agreement.

4.6 Paragon  Shares of Purchaser  Common Stock.  The shares of Purchaser  Common
Stock shall, upon issuance,  constitute duly authorized,  validly issued,  fully
paid non-assessable shares of Common Stock of the Purchaser.

4.7 Untrue or  Omitted  Facts.  No  representation,  warranty  or  statement  by
Purchaser or Paragon in this Agreement, or contained in any contract, agreement,
document or item  furnished by  Purchaser or Paragon to Target  relating to this
Agreement  and  the  transactions   contemplated

                                       16

<PAGE>

hereby,  contains any untrue  statement of a material  fact, or omits to state a
fact necessary in order to make such  representations,  warranties or statements
not materially misleading.

                                    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 reasonable access,
during regular business hours and upon reasonable  notice,  to all of its books,
records, information systems, technology (owned or licensed by Target) personnel
and properties so that Purchaser,  at its own expense, may have full opportunity
to make such review,  examination  and  investigation  as Purchaser  may desire.
Target will 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 the Assets.  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 in, or  otherwise  relieve  Target  from any  liability
under,  this  Agreement.  Purchaser  shall  not  disrupt  Target's  business  in
connection with any such investigation.

     (b)  Actions  Prior to  Closing.  Prior to the  Closing,  Target  will not,
without the prior written consent of Purchaser:

               (i) amend its Certificate of Incorporation or By-Laws.

               (ii) sell, lease or dispose of any of its Assets;

               (iii) acquire (by merger, consolidation,  or acquisition of stock
          or assets) any corporation,  partnership, limited liability company or
          other  business  organization  or  division  thereof  or any  material
          interest therein;

               (iv) issue,  sell or redeem any capital stock or otherwise change
          the capitalization of Target;

               (v)  acquire,  sell,  lease or  dispose  of any of the  Assets or
          subject the Assets to any Lien;

               (vi) enter into any material  transaction not in the ordinary and
          usual course of business consistent with past practice;

                                       17

<PAGE>

               (vii)  take any  other  action  outside  the  ordinary  course of
          business  consistent with past practice;

               (viii) adopt any resolution, or enter into or amend any Contract,
          with respect to any of the foregoing.

     (c) Liabilities.  (i) Target shall not incur any liability except for those
incurred in the ordinary and usual course of its business  consistent  with past
practice which are not singly or in the aggregate with other  liabilities,  more
than $5,000,  unless it does not have an Material Adverse Effect on the Business
(the  "Excepted  Liabilities"),   without  the  prior  written  consent  of  the
Purchaser;  (ii)  Target  shall  cause any loan,  extension  of  credit,  credit
arranged for by Target,  personal loan or any equivalent to any Person, which at
the time of closing  would  [violate  section 402 of the  Sarbanes-Oxley  Act of
2002] to be fully satisfied or extinguished in all respects,  in accordance with
GAP and applicable law.

     (d)  Preservation  of  Business.  Target shall use its best efforts to keep
available  the  services  of  its  present  officers,  managers,  employees  and
consultants,  and to  maintain  and  preserve  intact  good  relationships  with
customers and lenders, preserve its good will.

     (e) No Breach.

          (i) Target  will (A) use its best  efforts  to assure  that all of its
     representations  and warranties  contained  herein are true in all material
     respects as of the  Closing as if repeated at and as of such time,  that no
     breach  or  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 Purchaser's obligation to enter into
     and  complete  the  Closing  are  satisfied  in a  timely  manner;  (B) not
     voluntarily take any action or do anything which will cause a breach of, or
     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 breach or 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 to  consummate  and make  effective  the
     transactions contemplated by this Agreement, including, without limitation,
     taking  such  actions  as may  reasonably  be  required  to be taken  under
     applicable  state  securities  or Blue  Sky  laws in  connection  with  the
     issuance of the shares of Purchaser Common Stock and applicable federal and
     state banking and lending laws.

     (f)  Consents.  Promptly  following the  execution of this  Agreement,  the
Target  shall use its best efforts to obtain  consents of all third  parties and
Bodies (i) necessary to the  consummation  of the  transactions  contemplated by
this Agreement, and as set forth on Schedule 5.1(f) attached hereto.

                                       18

<PAGE>

     (g) Stockholder Approval. Target shall, in accordance with applicable legal
requirements and the Certificate of Incorporation  and By-laws of Target,  cause
the transaction contemplated hereby approved by the holders of its capital stock
to the extent required by Law.

5.2 Principal  Covenants.  The Principals  each hereby  covenant that they shall
vote  their  respective  voting  capital  stock of the  Target to  approve  this
Agreement and the transactions contemplated hereby.

5.3  Purchaser  Covenants.  It is hereby  agreed  that,  from and after the date
hereof and until the Closing or earlier termination of this Agreement:

     (a) Access.  Upon  request,  Purchaser and Paragon will cause its officers,
attorneys,  accountants  and other agents and  representatives  to meet with the
officers,  attorneys and  accountants  and other agents and  representatives  of
Target during regular business hours and upon reasonable  notice, to discuss the
financial condition and business operations of Purchaser and Paragon.  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 or Paragon,  otherwise relieve
Purchaser from any liability  under,  this  Agreement.  Target shall not disrupt
Purchaser's or Paragon's business in connection with any such investigation.

     (b) No Breach.

          (i) Purchaser and Paragon will each (A) use its best efforts to assure
     that all of its representations and warranties contained herein are true in
     all  material  respects  as of the Closing as if repeated at and as of such
     time, that no material breach or 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 Target's obligation to
     enter into and complete the Closing are satisfied in a timely  manner;  (B)
     not voluntarily take any action or do anything which will cause a breach of
     or 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
     breach or 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 to  consummate  and make  effective  the
     transactions contemplated by this Agreement, including, without limitation,
     taking  such  actions  as may  reasonably  be  required  to be taken  under
     applicable  state  securities  or Blue  Sky  laws in  connection  with  the
     issuance of the shares of Purchaser Common Stock and applicable federal and
     state banking and lending laws.

                                       19

<PAGE>

                                   ARTICLE VI

                     CONDITIONS PRECEDENT TO THE OBLIGATION
                        OF PURCHASER AND PARAGON TO CLOSE

     The  obligation of Purchaser and Paragon 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 in writing by Purchaser  and
Paragon (except when the fulfillment of such condition is a requirement of Law):

6.1 Representations and Warranties. All representations and warranties of Target
and  Principals  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,  and further
except to the  extent  that  Target has acted in  compliance  with  Section  5.1
hereof) 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 Target shall have obtained 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 in Section  5.1(f) and on  Schedule
5.1(f).

                                       20

<PAGE>

6.7  Employment  Agreements.  Purchaser  shall have  tendered to each of Lagori,
LaGrassa and LaGiglia  respectively,  an employment  agreement (the  "Employment
Agreements")  in, or  substantially  in, the forms  attached  hereto as Exhibits
6.7(a), 6.7(b) and 6.7(c) respectively.

6.8  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.

6.9 No  Insider  Loans.  At the  time of the  Closing,  there  shall be no loan,
extension  of credit,  financing  arrangements  and the like from  Target to any
Person, the existence of which would, as a result of the Merger, be in violation
of Section 402 of the Sarbanes-Oxley Act of 2002.

6.10 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 by counsel to Purchaser,  which
approval shall not be unreasonably withheld or delayed.

6.11  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.

                                   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 in  writing  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 and Paragon  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,  and further
except to the extent that  Purchaser and Paragon have acted in  compliance  with
Section 5.3 hereof) as at the Closing  Date, as if made at the Closing and as of
the Closing Date.

7.2  Covenants.  Purchaser and Paragon 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.

                                       21
<PAGE>

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 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.

7.5 Consents;  Permits.  Purchaser and Paragon shall have obtained all consents,
licenses  and other  Permits  of  Bodies  and other  Persons  necessary  for the
performance  by  Purchaser  and  Paragon  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 4.2.

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

7.7  Employment  Agreements.  Each of Lagori,  LaGrassa and LaGiglia  shall have
executed and delivered their respective Employment Agreement.

7.8 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.

7.9  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  transactions  provided  for herein
abandoned at any time prior to the Closing:

     (a) By mutual  consent of the  respective  Boards of Directors of Purchaser
and Target;

                                       22

<PAGE>

     (b) By  Purchaser if any of the  conditions  set forth in Article VI hereof
shall not have been  fulfilled  on or prior to December 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 or its
officers and directors, and shall not have been waived.

     (c) By Target,  if any of the  conditions  set forth in Article  VII hereof
shall not have been  fulfilled  on or prior to  December  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 or its
officers and directors, 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
Section 8.3 hereof or as a result of a party's willful failure to consummate the
transactions contemplated hereby.

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.  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.  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, and
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 Liquidated Damages.

     8.3.1 Breach by Target.  Target  acknowledges that Purchaser is investing a
significant  amount of resources,  time,  expense and reputation in pursuing the
potential  acquisition  contemplated  hereby.  Target further  acknowledges that
Purchaser would be irreparably harmed if the Target terminated or abandoned this
Agreement at a time when the  conditions  set forth in Article VII have been met
(provided that any reference in Article VII to the conditions shall be construed
to mean only those  conditions that were required to be met prior to the date of
termination,  expiration  or  abandonment  of the  Agreement)  and that monetary
damages to Purchaser in such event would be immeasurable.  Accordingly,  in such
event, Target shall pay Purchaser's accounted for costs and expenses relating to
the review,  negotiation and preparation of this Agreement and the  transactions
contemplated hereby and related hereto (including, without limitation, any legal
fees and disbursements and travel costs) as liquidated damages for the breach of
this Agreement  immediately.  Target acknowledges that Target has received good,
valuable and  sufficient  consideration  for the foregoing  agreement,  and that
Purchaser is relying

                                       24

<PAGE>

on this Section 8.3.1 entering into this Agreement and pursuing the  transaction
contemplated hereby.

     8.3.2 Breach by Purchaser.  Purchaser acknowledges that Target is investing
a significant amount of resources,  time, expense and reputation in pursuing the
potential acquisition  contemplated hereby.  Purchaser further acknowledges that
Target would be irreparably harmed if the Purchaser terminated or abandoned this
Agreement  at a time when the  conditions  set forth in Article VI have been met
(provided that any reference in Article VI to the conditions  shall be construed
to mean only those  conditions that were required to be met prior to the date of
termination,  expiration or  abandonment  of the  Agreement),  and that monetary
damages  to Target in such event  would be  immeasurable.  Accordingly,  in such
event, Purchaser shall pay Target's accounted for costs and expenses relating to
the review,  negotiation and preparation of this Agreement and the  transactions
contemplated  hereby and related hereto (including,  without  limitation,  legal
fees and  disbursements) as liquidated  damages for the breach of this Agreement
immediately.  Purchaser  acknowledges that Purchaser has received good, valuable
and sufficient  consideration  for the foregoing  agreement,  and that Target is
relying on this Section  8.3.2  entering  into this  Agreement  and pursuing the
transaction contemplated hereby.

     8.3.3  Legal  Action.  Any  party  may  commence  a  lawsuit  for  specific
performance  of the provisions of this Section 8.3 applicable to it and, if such
party prevails in such lawsuit,  the other party shall  reimburse such party for
the reasonable  legal fees and costs of such party 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 Mortgage  Express,  at 10:00 a.m.  (central  time) on or
before  December 31, 2002, or, at such time and place as may be mutually  agreed
to by the Parties (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 Certificates 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) the  Employment  Agreements  executed by each of Lagori,  LaGrassa  and
LaGiglia, as the case may be;

                                       24

<PAGE>

     (e)  certified  copies of all  corporate  actions  required  by Section 6.8
hereof;

     (e) 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 and Other Parties. At the Closing, Purchaser
will deliver or cause to be delivered to Target,  and other parties as described
below:

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

     (b) the certificate required by Section 7.3 hereof;

     (c)  certified  copies of all  corporate  action  required  by Section  7.6
hereof;

     (d) the  Employment  Agreements  to each of Lagori,  LaGrassa  and LaGiglia
respectively;

     (e) the promissory note described in Section 2.8(a) to the recipient listed
on Schedule 2.8;

     (f) the  promissory  notes  described in Section  2.8(b) to the  recipients
listed on Schedule 2.8; and

     (g) 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 date hereof, Target agrees to take the
following actions at Purchaser's sole expense:

     (a) execute and  deliver,  from time to time after the date hereof upon the
request of the Purchaser,  all such further  instruments and documents as may be
necessary or appropriate to carry out this Transaction;

     (b) perform any other acts deemed necessary to carry out the intent of this
Agreement.

                                       25
<PAGE>

10.2  Compliance   with  Rule  145  of  the  Securities   Act;   Exemption  from
Registration.  With respect to the shares of Purchaser Common Stock on and after
the date hereof,  Target shall, at all times, comply with the provisions of Rule
145 of the  Securities Act and shall not take, or omit to take, any action which
would cause the issuance of the Paragon shares of Purchaser  Common Stock not to
be exempt from (a) Section 5 of the  Securities  Act pursuant to Section 4(2) or
otherwise, or (b) any registration provisions under any state securities laws.

10.3 Election as Director.  Immediately upon the Closing of this Agreement,  the
Board of Directors  of Purchaser  shall cause Lagori to be elected as a director
and Vice  Chairman of the Board of  Purchaser,  to serve until his  successor is
duly elected, and shall qualify.

10.4 Competition/Non-Solicitation by the Target and the Principals.

     10.4.1  Subject to the provisions of Section  10.4.4,  other than for or on
behalf of Purchaser, Target or Purchaser's affiliates, for a period of three (3)
years  following the Closing Date, the Principals  shall not,  without the prior
written  consent  of the  Purchaser,  engage,  directly  or  indirectly,  in the
mortgage loan brokerage or banking business, insurance business, or in any other
business which is similar in nature to that of the Target anywhere in the United
States,  or any other  jurisdiction in which the Target conducts  business or is
licensed to conduct  business,  or directly or  indirectly  own an interest  in,
manage,  operate,  join,  control,  lend  money  or  render  financial  or other
assistance  to or  participate  in or be connected  with (as a partner,  member,
stockholder,  consultant or  otherwise)  any person or entity that competes with
the Purchaser or the Business in the mortgage loan business;  provided, however,
that, for the purposes of this Section 10.4 ownership of securities  having less
than five percent (5%) of the outstanding  voting power of any competitor  which
are  listed  on any  national  securities  exchange  or traded  actively  in the
national  over-the-counter market shall not be deemed to be in violation of this
Section  10.4  so  long  as the  Person  owning  such  securities  has no  other
connection or relationship with such competitor.

     10.4.2 In  addition,  subject  to the  provisions  of Section  10.4.4,  the
Principals  agree that,  for a period of three (3) years  following  the Closing
Date,  none of the  Principals  will,  in any manner  and  through  any  medium,
directly or  indirectly,  (i) call upon,  solicit,  advise or  otherwise  do, or
attempt to do, business with any borrower or any prospective borrower which does
business with the Purchaser,  Target or Purchaser's  affiliates or with whom the
Target or Principals had any dealings prior to the Closing Date, or take away or
interfere or attempt to interfere with any custom,  trade, business or patronage
of  the  Purchaser,  Target  or  Purchaser's  affiliates,  for  the  purpose  of
conducting or engaging in the  residential  mortgage loan or any other  business
that is similar in nature to that of the Business, or (ii) employ,  compete for,
solicit,  divert,  take away,  interfere,  or attempt to do any of the foregoing
with  respect  to,  any  officers,   employees,   representatives,   independent
contractors, agents or other individuals who rendered services to either (A) the
Purchaser,  Target and/or  Purchaser's  affiliates during the period between the
Closing  and the third (3rd)  anniversary  thereof and (B) Target as of the date
hereof, or to solicit any of the foregoing referenced people to leave the employ
of the Purchaser, Target

                                       26

<PAGE>

or  Purchaser's  affiliates  or  violate  the terms of their  contracts,  or any
employment arrangements, with the Purchaser or Target.

     10.4.3 The three year period  referred to in 10.4.1 and 10.4.2  above shall
be extended by the length of any period during which any of the  Principals  are
in breach of the terms of this Section 10.4 and shall be shortened by the length
of any period  during which  Purchaser  is in default of any of its  obligations
under this Agreement.

     10.4.4 Notwithstanding  anything to the contrary in Sections 10.4.1, 10.4.2
and  10.4.3,  the  provisions  set  forth  therein  shall  expire  on the  first
anniversary  of the Closing  hereof,  if on that date the shares of  Purchaser's
Common Stock are not listed or included on a national stock exchange, the Nasdaq
National  Market or the Nasdaq SmallCap  Market.  The provisions of this Section
10.4.4  shall not  effect  any  restrictive  covenant  in any of the  Employment
Agreements.

     10.4.5 The covenants of the  Principals  set forth in this Section 10.4 are
an essential  element of this  Agreement and that,  but for the agreement of the
Principals to comply with these  covenants,  the Purchaser and Paragon would not
have entered into this Agreement.  This Section 10.4  constitutes an independent
covenant and shall not be affected by performance or nonperformance of any other
provision of this  Agreement by the Purchaser or Paragon.  The  Principals  have
independently   consulted   with  their   respective   counsel  and  after  such
consultation  agree  that  the  covenants  set  forth in this  Section  10.4 are
reasonable and proper.

     10.4.6 It is the intent and  understanding  of each party hereto that if in
any action before any Body legally  empowered to enforce the terms and covenants
contained  in this  Section  10.4 any term,  restriction,  covenant  or  promise
contained herein is found to be unreasonable and accordingly unenforceable, then
such term,  restriction,  covenant  or promise  shall be deemed  modified to the
extent necessary to make it enforceable by such Body.

                                   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 of this
Agreement.

11.2 Indemnification.
     ---------------

     11.2.1  General  Indemnification  Obligation of Target.  From and after the
Closing,  Target and the Principals,  jointly and severally,  (collectively  the
"Target  Indemnifying  Parties")  will  reimburse,  indemnify  and hold harmless
Purchaser,  Paragon and their respective directors,  officers,  employees and/or
agents,  successors  and  assignees  (collectively  the  "Purchaser  Indemnified
Parties) against and in respect of:

                                       27

<PAGE>

     (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  or the
Principals 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
directors,  officers, employees and/or agents, successors and assignees, and the
Principals  (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 or Paragon
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  Indemnifying
Parties 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  Indemnifying  Parties 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  Indemnifying  Parties
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  Indemnifying  Parties  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

                                       28

<PAGE>

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 Purchaser's 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 Indemnifying Parties,  which consent
shall not be  unreasonably  withheld or delayed.  If the  Purchaser  Indemnified
Party(ies) should elect to exercise such right, the Target Indemnifying  Parties
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  Indemnifying  Parties  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  Indemnifying
Parties, 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  Indemnifying  Parties,  (iii) Target
Indemnifying Parties 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  Indemnifying  Parties  shall  authorize  the  Purchaser
Indemnified  Party(ies)  to employ one (1)  separate  counsel at the  expense of
Target Indemnifying Parties.

     (d) In the event the Purchaser  Indemnified  Party(ies) should have a claim
against Target  Indemnifying  Parties 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  Indemnifying  Parties.  If Target  Indemnifying
Parties  dispute  their  liability  with  respect to such claim or demand,  such
dispute  shall be resolved in  accordance  with Section  11.3 hereof;  if Target
Indemnifying Parties 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 Indemnifying Parties hereunder.

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<PAGE>

     (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  "Purchaser" or
"Indemnifying Target Parties" and "Target Indemnified Party(ies)" for "Purchaser
Indemnified Party(ies)."

11.3  Payment;  Right of  Setoff . Upon the  determination  of  liability  under
Section 11.2 hereof, the amount of any claim for indemnification made hereunder.
Notwithstanding  the  foregoing  and any other  rights that  Purchaser  may have
against any other person, firm or corporation, Purchaser shall have the right to
setoff the unpaid  amount of any such claim against any amounts owed by it under
any agreements or instruments entered into pursuant to this Agreement.  Further,
pending  final  determination  of any claims,  demands or disputes in accordance
with the  provisions  of this  Article  XI,  Purchaser  shall  have the right to
withhold from any amounts due pursuant to this Agreement or any other agreement,
if any,  the amount of such  claims,  demands  and/or  disputes.  Upon the final
payment in full of any claim,  either by setoff or otherwise,  the entity making
payment shall be subrogated to the rights of the  indemnified  party against any
person, firm or corporation with respect to the subject matter of such claim.

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 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), Purchaser shall send to Principals
     written notice of such determination and, if within fifteen (15) days after
     the date of such  notice,  Principals  shall so  request in  writing,  that
     Purchaser shall include in such  Registration  Statement all or any part of
     the Purchaser Shares (for the purpose of this Article XII, the "Registrable
     Securities") that Principals  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  or other  securities  of  Purchaser

                                       30

<PAGE>

     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 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).

          (ii) If an offering in connection  with which  Principals are entitled
     to registration  under this Section  12.1(a) is an  underwritten  offering,
     then Principals shall, unless otherwise agreed by 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)  Copies of  Filings  and  Correspondence.  Purchaser  shall  furnish to
Principals  (i) promptly  after the same is prepared  and publicly  distributed,
filed with the SEC,  or  received  by  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 Principals  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 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 Principals may reasonably  request in order to facilitate the
disposition of the Registrable Securities by Principals.

     (c) Blue Sky.  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 Principals 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, and (iii) take all other
actions reasonably necessary or advisable to qualify the Registrable  Securities
for sale in such jurisdictions;  provided,  however, that 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(c),  (ii) subject  itself to general  taxation in any
such  jurisdiction,  (iii) provide any  undertakings  that cause Purchaser undue
expense or burden,  or (iv) make any change in its  charter or bylaws,  which in
each case the Board of Directors of Purchaser  determines  to be contrary to the
best interests of Purchaser and its shareholders.

     (d) Events Affecting  Prospectus.  Purchaser shall notify Principals of the
happening of any event, of which  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

                                       31

<PAGE>

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, Purchaser shall deliver
such number of amended or supplement  Prospectuses  as Principals may reasonably
request.

     (e)  Notification of Amendment or Supplement.  Purchaser shall, as promptly
as practicable  after becoming aware of such event described in Section 12.1(d),
notify  Principals  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
Principals as he may reasonably request).

     (f)  Review by  Principals'  Counsel.  Purchaser  shall  permit one firm of
counsel  designated by Principals to review the  Registration  Statement and all
amendments and  supplements  thereto a reasonable  period of time prior to their
filing with the SEC.

     (g)   Principals'  Due  Diligence;   Confidentiality   of  the  Purchaser's
Information.  Purchaser  shall make available for inspection by (i)  Principals,
and (ii) a firm of attorneys and a firm of accountants or other agents  retained
by Principals (collectively, the "Inspectors") all pertinent financial and other
records,   and  pertinent   corporate  documents  and  properties  of  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  Purchaser's   officers,   directors  and  employees  to  supply  all
information  which  Principals 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  Principals)  of any record or other
information which 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 other 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.
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 Purchaser with respect thereto,  substantially
in the form of this  Section  5.1(g).  Principals  agrees  that he  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  Purchaser  and  allow  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
Principals's  ability  to sell  Registrable  Securities  in a  manner  which  is
otherwise consistent with applicable laws and regulations.

     (h)  Confidentiality  of Principals'  Information.  Purchaser shall hold in
confidence  and not make any  disclosure of  information  concerning  Principals
provided to Purchaser  unless (i) disclosure of such information is necessary to
comply  with  federal or state  securities  laws,  (ii)

                                       32

<PAGE>

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) Principals consents to the form and content
of any such  disclosure  regarding  it.  Purchaser  agrees  that it shall,  upon
learning that  disclosure of such  information  concerning  any of Principals is
sought  in or by a court  or  governmental  body of  competent  jurisdiction  or
through  other  means,  give prompt  notice to  Principals  prior to making such
disclosure,  and allow  Principals,  at its expense,  to  undertake  appropriate
action to prevent  disclosure  of, or to obtain a  protective  order  for,  such
information.

     (i) Compliance  with Laws.  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 Bodies 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  Principals.  In  connection  with a  registration  of the
Registrable Securities, Principals shall have the following obligations:

     (a)  Principals'  Information.  It shall be a  condition  precedent  to the
obligations of Purchaser to complete the registration of Registrable  Securities
for  each  Principal  respectively  pursuant  to  this  Article  XII  that  each
respective  Principal  shall  furnish to Purchaser  such  information  regarding
himself,  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 Purchaser
may  reasonably  request.  At least  five (5)  business  days prior to the first
anticipated  filing date of the Registration  Statement,  Purchaser shall notify
Principals of the information Purchaser requires from Principals.

     (b)  Cooperation.  Principals  shall agree to cooperate  with  Purchaser as
requested by  Purchaser in  connection  with the  preparation  and filing of the
Registration Statement hereunder.

     (c) Underwritten Offering. In the event Principals determines to engage the
services  of an  underwriter,  Principals  agrees to enter into and  perform his
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.  Principals agrees that, upon
receipt of any notice from  Purchaser of the  happening of any event of the kind
described  in  Sections   12.1(d)  or  12.1(e),   Principals  will   immediately
discontinue  disposition of Registrable  Securities pursuant to the Registration
Statement covering the resale of such Registrable  Securities until Principals's
receipt of the copies of the supplemented or amended prospectus  contemplated by

                                       33

<PAGE>

Sections  12.1(d) or 12.1(e) and, if so directed by Purchaser,  Principals shall
deliver to  Purchaser or destroy  (and  deliver to  Purchaser a  certificate  of
destruction) all copies in Principals's  possession,  of the prospectus covering
such Common Shares current at the time of receipt of such notice.

     (e) Method of Underwritten Distribution.  Principals may not participate in
any underwritten  distribution of the Registrable  Securities  unless Principals
(i)  agrees to sell the  Registrable  Securities  on the basis  provided  in any
underwriting arrangements in usual and customary form entered into by Purchaser,
and (ii) completes, in a manner reasonably acceptable to 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 one (1) Registration  Statement pursuant to Article
XII,  except that if a portion of  Principals'  Registrable  Securities  are not
permitted to be included in one (1) Registration  Statement 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 of  Principals's  Registrable
Securities,  including  all  registration,   listing  and  qualifications  fees,
printers  and  accounting  fees,  the  fees and  disbursements  of  counsel  for
Purchaser hereof, shall be borne by Purchaser.

12.4 Exemption from  Registration.  The provisions of Sections 12.1 through 12.3
notwithstanding,  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. Except as otherwise specifically provided in this Agreement, each
of the parties  shall bear its own  expenses  in  connection  herewith  and with
respect to any transactions and negotiations contemplated hereby, whether or not
consummated for any reason.

13.2 Publicity.  No Party may make any press releases,  announcements  and other
public disclosures  regarding the transactions  contemplated  hereby without the
written  consent of the other Parties,  except to the extent such  disclosure is
required  by Law or trading  market  regulations,  in which case the  disclosing
party shall provide the other with prior notice of such disclosures.

13.3 Confidential Information. All information that a disclosing Party furnishes
in connection with the Transaction  described herein and all information which a
disclosing Party

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<PAGE>

previously  furnished,  and the existence of, and the terms of, the  transaction
described herein (the "Information"),  will be kept confidential,  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 transactions
contemplated  hereby and not  subject to an  existing  agreement  of  confidence
between the Parties; or

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

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

     (f) which is  disclosed  pursuant  to a  requirement  or request of a Body,
arbitrator or court.

13.4 Equitable Relief. The parties agree that the remedy at law in any breach or
threatened breach of the provisions of Sections 10.4 and 13.3 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.

13.5 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 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

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<PAGE>

or registered  mail,  return receipt  requested and postage  prepaid,  overnight
mail, nationally recognized overnight courier or telecopier as follows:

                  If to Purchaser at:

                  2207 Sawgrass Village Drive
                  Ponte Vedra Beach, Florida 32082
                  Attention: Chief Executive Officer
                  Telecopier: (904) 285-2575
                  With a copy to:

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

                  If to Target and/or Principals:

                  801 North Cass Avenue
                  Suite 300
                  Westmont, Illinois 60559
                  Attention: President
                  Telecopier: (630) 323-7089

                  With a copy to:

                  Marlaine McVisk, Esq.
                  North Cass Avenue
                  Suite 300
                  Westmont, Illinois  60559
                  Telecopier:  (630) 323-7089

     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,  and with respect to the filing of
the Merger  Certificate  with the  Secretary of State of Illinois,  the Illinois
Statute.  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.

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<PAGE>

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 party may assign any of its rights or
delegate  any of its  duties  under this  Agreement  without  the prior  written
consent of the other party.

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. Seller acknowledges that it has
been  represented  by counsel or has had the  opportunity  to be  represented by
counsel in connection with this Agreement and the  transactions  contemplated by
this  Agreement.  Accordingly,  any rule or law or any legal decision that would
require  interpretation of any claimed ambiguities in this Agreement against the
party  that  drafted  it has no  application  and is  expressly  waived  by such
parties.  The provisions of this Agreement  shall be interpreted in a reasonable
manner to effect the intent of the parties hereto.

13.12 Headings; Gender. The headings, captions and/or use of a particular gender
under sections of this Agreement are for  convenience  and 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.

     "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, Paragon, and Target.

     "Assets" shall have the meaning ascribed to it in Section 3.7.1 hereof.

     "Audited  Financial  Statements"  shall have the meaning  ascribed to it in
Section 3.4 hereof.

                                       37

<PAGE>

     "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.

     "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.

     "COBRA" shall have the meaning ascribed to it in Section 3.22.5 hereof.

     "Code" shall have the meaning ascribed to it in Section 3.22.2 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.

     "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.

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

     "Employee" shall have the meaning ascribed to it in Section 3.22.1 hereof.

                                       38

<PAGE>

         "Employee Plan" shall have the meaning ascribed to it in Section 3.22.1
hereof.

     "Employment Agreement" shall have the meaning ascribed to it in Section 6.7
hereof.

     "ERISA" shall have the meaning ascribed to it in Section 3.22.1 hereof.

     "Excepted  Liabilities"  shall have the  meaning  ascribed to it in Section
5.1(c) hereof.

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

     "Financial Statements" shall have the meaning ascribed to it in Section 3.4
hereof.

     "Illinois  Statute"  shall have the meaning  ascribed to it in the Recitals
hereof.

     "Information" shall have the meaning ascribed to it in Section 13.3 hereof.

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

     "Interim  Financial  Statements"  shall have the meaning  ascribed to it in
Section 3.4 hereof.

     "Law" shall have the meaning ascribed to it in Section 3.12(e) 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.

     "Listed  Agreements"  shall have the meaning  ascribed to it in Section 3.9
hereof.

     "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.

                                       39

<PAGE>

     "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.

     "Other  Intellectual  Property"  shall have the  meaning  ascribed to it in
Section 3.7.2 hereof.

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

     "Paragon  Common  Stock"  shall have the meaning  ascribed to it in Section
2.3(e) 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.

     "Proprietary Rights" shall have the meaning ascribed to it in Section 3.7.2
hereof.

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

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

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

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

                                       40

<PAGE>

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

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

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

     "Target  Employee  Agreements"  shall have the  meaning  ascribed  to it in
Section 3.22.1 hereof.

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

     "Target  Indemnifying  Parties"  shall have the  meaning  ascribed to it in
Section 11.2.1 hereof.

     "Trademarks" shall have the meaning ascribed to it in Section 3.7.2 hereof.

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

                                       41

<PAGE>


     WITNESS the execution of this Agreement as of the date first above written.

                                       PLANETRX.COM, INC.

                                       By:
                                          -------------------------------
                                          Steven A. Burleson, Chief Executive
                                          Officer


                                       PARAGON HOMEFUNDING, INC.

                                       By:
                                          -------------------------------
                                       Name:
                                            -----------------------------
                                       Title:
                                             ----------------------------

                                       MORTGAGE EXPRESS, INC.


                                       By:
                                          -------------------------------
                                       Name:
                                            -----------------------------
                                       Title:
                                             ----------------------------

                                       WITH RESPECT TO ARTICLES III,
                                       XII, XIII, XIV, AND SECTIONS 5.2,
                                       10.4, 11.2.2, 11.2.3, AND 11.3,ONLY:


                                       ----------------------------------
                                       PHILIP LAGORI


                                       ----------------------------------
                                       JOHN LAGRASSA


                                       ----------------------------------
                                       PHILIP LAGIGLIA





                                       42



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