<PAGE>   1


                                                                     EXHIBIT 2.9





                            ASSET PURCHASE AGREEMENT


                                    between



                                PHARMACARE, INC.
                                   the Seller



                               DAVID STEPHENSON,
                        MIKE LAUTIGAR, WILLIAM CUNDIFF,
                      SAMUEL CUNDIFF, AND WALLACE CUNDIFF,
                                the Shareholders



                                      and




                     INSTITUTIONAL PHARMACY SERVICES, INC.,
                                   the Buyer

<PAGE>   2
                               TABLE OF CONTENTS


<TABLE>
<S>                                                                                                            <C>
ARTICLE I.   PURCHASE AND SALE.................................................................................1
             1.1   Purchase and Sale...........................................................................1
             1.2   Excluded Assets.............................................................................3
             1.3   Assumed Contracts, Leases and Liabilities...................................................3

ARTICLE II.  RECEIVABLES.......................................................................................4
             2.1  Collection of Receivables....................................................................4

ARTICLE III. PURCHASE PRICE....................................................................................4
             3.1 Purchase Price................................................................................4
             3.2 Allocation of Purchase Price..................................................................4

ARTICLE IV.  REPRESENTATIONS AND WARRANTIES OF SELLER
             AND SHAREHOLDERS..................................................................................5
             4.1   Organization, Qualification and Authority...................................................5
             4.2   Absence of Default..........................................................................6
             4.3   Financial Statements........................................................................6
             4.4   Operations Since December 31, 1996 .........................................................6
             4.5   Absence of Certain Liabilities..............................................................8
             4.6   Employment Discrimination...................................................................8
             4.7   Licenses and Permits........................................................................8
             4.8   Medicare, Medicaid and Other Third-Party Payors.............................................9
             4.9   [Reserved]..................................................................................9
             4.10  Title to Assets.............................................................................9
             4.11  Leases and Contracts.......................................................................10
             4.12  Environmental Matters......................................................................11
             4.13  Miscellaneous Representations Relating to Real Estate......................................13
             4.14  Litigation.................................................................................14
             4.15  Seller's Employees.........................................................................14
             4.16  Labor Relations............................................................................14
             4.17  Insurance..................................................................................15
             4.18  Broker's or Finder's Fee...................................................................15
             4.19  Conflicts of Interest......................................................................15
             4.20  Intellectual Property......................................................................15
             4.21  Inventories................................................................................15
             4.22  Motor Vehicles.............................................................................16
             4.23  Employee Benefit Plans.....................................................................16
</TABLE>


                                       i

<PAGE>   3

<TABLE>
           <S>     <C>                                                                                        <C>
           4.24    Compliance with Healthcare Laws and Other Laws.............................................16
           4.25    Condition of Assets........................................................................17
           4.26    Tax Returns; Taxes.........................................................................17
           4.27    Operating Targets..........................................................................17
           4.28    Value of Assets............................................................................18
           4.29    Beds.......................................................................................18
           4.30    No Omissions or Misstatements..............................................................18
           4.31    Bulk Sales Law.............................................................................18
           4.32    Covenant Not to Compete....................................................................18

ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF BUYER...........................................................19
           5.1     Organization, Qualification and Authority..................................................19
           5.2     Absence of Default.........................................................................19
           5.3     Broker's or Finder's Fee...................................................................19

ARTICLE VI. COVENANTS OF PARTIES..............................................................................20
           6.1     Preservation of Business and Assets........................................................20
           6.2     Absence of Material Change.................................................................20
           6.3     Ownership of Intellectual Property.........................................................20
           6.4     Access to Books and Records................................................................20
           6.5     Preserve Accuracy of Representations and Warranties........................................22
           6.6     Maintain Books and Accounting Practices....................................................22
           6.7     Indebtedness; Liens........................................................................22
           6.8     Compliance with Laws and Regulatory Consents...............................................22
           6.9     Maintain Insurance Coverage................................................................23
           6.10    Medicare and Medicaid Reporting............................................................23
           6.11    Current Return Filing......................................................................23
           6.12    WARN Act...................................................................................23
           6.13    No Sale, Merger or Consolidation...........................................................23
           6.14    Risk of Loss...............................................................................23
           6.15    Condemnation...............................................................................24
           6.16    Use of Medicare and Medicaid Provider Numbers..............................................24

ARTICLE VII.  CLOSING.........................................................................................24
           7.1     Closing....................................................................................24

ARTICLE VIII.  SELLER'S AND SHAREHOLDERS' CONDITIONS TO CLOSE.................................................24
           8.1     Representations and Warranties True at Closing; Compliance with
                   Agreement..................................................................................24
           8.2     No Action/Proceeding.......................................................................25
           8.3     Order Prohibiting Transaction..............................................................25
</TABLE>



                                      ii
<PAGE>   4


<TABLE>
<S>        <C>                                                                                                <C>
           8.4     Employment Agreement.......................................................................25

ARTICLE IX.  BUYER'S CONDITIONS TO CLOSE......................................................................25
           9.1     Representations and Warranties True at Closing; Compliance with
                   Agreement..................................................................................25
           9.2     Regulatory Approvals.......................................................................25
           9.3     No Action/Proceeding.......................................................................25
           9.4     Inspection of Assets; UCC Searches, etc....................................................26
           9.5     Order Prohibiting Transaction..............................................................26
           9.6     No Loss, Damage or Destruction.............................................................26
           9.7     Employment Agreement.......................................................................26
           9.8     Operating Targets..........................................................................26
           9.9     Value of Assets............................................................................26
           9.10    Beds.......................................................................................27
           9.11    Third-Party Consents.......................................................................27
           9.12    Approval of Board of Directors.............................................................27

ARTICLE X.  OBLIGATIONS OF SELLER AND SHAREHOLDER AT CLOSING..................................................27
           10.1    Documents Relating to Title................................................................27
           10.2    Possession.................................................................................28
           10.3    Opinion of Counsel.........................................................................28
           10.4    Corporate Good Standing and Corporate Resolutions..........................................28
           10.5    Closing Certificate........................................................................28
           10.6    Third-Party Consents.......................................................................28
           10.7    Taxes and Other Payments...................................................................29
           10.8    Insurance..................................................................................29
           10.9    Employment  Agreements.....................................................................29
           10.10   Additionally Requested Documents; Post Closing Assistance..................................29

ARTICLE XI.  OBLIGATIONS OF BUYER AT CLOSING..................................................................29
           11.1    Purchase Price.............................................................................29
           11.2    Assumption of Liabilities..................................................................29
           11.3    Opinion of Counsel.........................................................................30
           11.4    Corporate Good Standing and Board Resolutions..............................................30
           11.5    Closing Certificate........................................................................30

ARTICLE XII.  OPINION OF BUYER'S COUNSEL......................................................................30

ARTICLE XIII.  SURVIVAL OF PROVISIONS AND INDEMNIFICATION.....................................................30
           13.1    Survival...................................................................................30
           13.2    Indemnification by Seller and Shareholders.................................................31
</TABLE>




                                      iii
<PAGE>   5

<TABLE>
           <S>     <C>                                                                                        <C>
           13.3    Indemnification by Buyer...................................................................31
           13.4    Rules Regarding Indemnification............................................................32
           13.5    Indemnity Period...........................................................................33
           13.6    Limitation on Claims.......................................................................33
           13.7    Indemnification Net of Benefits............................................................34

ARTICLE XIV.  PRESERVATION OF BUSINESS
           AND NONCOMPETE RESTRICTIONS........................................................................34
           14.1    Covenant Not to Compete....................................................................34
           14.2    Enforceability.............................................................................35

ARTICLE XV.  MISCELLANEOUS....................................................................................36
           15.1    Assignment.................................................................................36
           15.2    Other Expenses.............................................................................36
           15.3    Notices....................................................................................36
           15.4    Confidentiality; Prohibition on Trading....................................................37
           15.5    Controlling Law............................................................................37
           15.6    Headings...................................................................................37
           15.7    Benefit....................................................................................37
           15.8    Partial Invalidity.........................................................................37
           15.9    Waiver.....................................................................................37
           15.10   Counterparts...............................................................................38
           15.11   Interpretation; Knowledge..................................................................38
           15.12   Entire Agreement...........................................................................38
           15.13   Legal Fees and Costs.......................................................................38
           15.14   Disclosure.................................................................................38
</TABLE>




                                       iv


<PAGE>   6

                            ASSET PURCHASE AGREEMENT

                    THIS ASSET PURCHASE AGREEMENT (this "Agreement"), is made
on March 24, 1997, by and among PHARMACARE, INC., a Virginia corporation (the
"Seller"), DAVID STEPHENSON, MIKE LAUTIGAR,  WILLIAM CUNDIFF, SAMUEL CUNDIFF,
and WALLACE CUNDIFF, residents of the State of Virginia (the "Shareholders"),
and INSTITUTIONAL PHARMACY SERVICES, INC., a Maryland corporation (the "Buyer")
and wholly-owned subsidiary of Capstone Pharmacy Services, Inc., a Delaware
corporation ("Capstone").

                                R E C I T A L S:

          WHEREAS, Seller owns and operates a pharmacy business in the Vinton,
Virginia area providing institutional pharmacy services, all as more
particularly described on the attached Exhibit A describing the services and
products provided by Seller at each of its locations (the "Business"); and

          WHEREAS, Shareholders own all of the issued and outstanding
securities of Seller; and

          WHEREAS, except for the Excluded Assets (as such term is defined
herein), Seller and Shareholders desire to sell and transfer all of the Assets
(as such term is defined herein) of the Business to Buyer, and Buyer desires to
purchase the same from Seller, subject to the terms and conditions set forth in
this Agreement.

          NOW, THEREFORE, in consideration of the premises, the mutual
covenants contained in this Agreement, and of other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties, intending to be legally bound  agree as follows:


                         ARTICLE I.  PURCHASE AND SALE

          1.1       Purchase and Sale. Seller agrees to sell, transfer, assign,
convey and deliver to Buyer, and Buyer agrees to purchase from Seller, all
right, title and interest in all assets (except the Excluded Assets listed on
Exhibit 1.2) of Seller of every kind and type, tangible or intangible, real and
personal, that are owned or leased by Seller necessary or reasonably needed to
operate the Business (collectively, the "Assets"), free and clear of all
encumbrances, mortgages, pledges, liens, security interests, obligations and
liabilities other than the Assumed Liabilities (as defined in Section 1.3)
(except for those certain agreements included in the term "Assets" and more
particularly identified on Exhibit 10.1(d)
<PAGE>   7
which require the consent of the other contracting party to any assignment and
for which consent was not obtained), which Assets include, without limitation,
the following:

                    (1)       All right, title and interest of Seller in and to
all of the land and real estate owned or leased by Seller and used in connection
with the Business as listed on the attached Exhibit 1.1(1) and in and to all
structures, improvements, fixed assets and fixtures including fixed machinery
and fixed equipment situated thereon or forming a part thereof and all
appurtenances, easements and rights-of-way related thereto (collectively, the
"Real Estate");

                    (2)        All tangible personal property, pharmaceutical
and other equipment, machinery, data processing hardware and transferable
software, furniture, furnishings, appliances, vehicles and other tangible
personal property of every description and kind and all replacement parts
therefor used in connection with the Business including, without limitation,
the items listed on the attached Exhibit 1.1(2) (collectively, the "Equipment
and Furnishings");

                    (3)        All inventory of goods and supplies used or
maintained in connection with the Business (collectively, the "Inventory");

                    (4)        All accounts and notes receivable (the
"Receivables");

                    (5)        All patient, medical, personnel and other
records related to the Business (including both hard and microfiche copies),
and all manuals, books and records used in operating the Business, including,
without limitation, personnel policies and files and manuals, accounting
records, and transferable computer software;

                    (6)        To the full extent transferable, all licenses,
permits, registrations, certificates, consents, accreditations, approvals and
franchises necessary to operate and conduct the Business, together with
assignments thereof, if required, and all waivers which Seller currently has,
if any, of any requirements pertaining to such licenses, permits,
registrations, certificates, consents, accreditations, approvals and
franchises;

                    (7)        All goodwill, and, to the extent assignable by
Seller, all warranties (express or implied) and rights and claims related to
the Assets or the operation of the Business;

                    (8)        All prepaid expenses;

                    (9)        All contract and leasehold rights and interests
pursuant to contracts for purchase or lease of personal property, contracts for
purchase, sale, or lease

                                      2
<PAGE>   8

of pharmaceuticals, supplies, equipment, goods or services, including those
relating to long-term care facilities, currently furnished or to be furnished in
connection with the Business and that are Assumed Liabilities (as such term is
defined in paragraph 1.3(1));

                    (10)       All intangible or intellectual property owned,
leased, licensed or possessed by either Seller or Shareholders and utilized in
connection with the Business, including without limitation, the name
"Pharmacare" and derivatives thereof; and

                    (11)       All Seller's right, title and interest in any
partnerships, joint ventures or similar arrangements, subject to Buyer's
approval.

          1.2       Excluded Assets.  Seller is not selling and Buyer is not
purchasing or assuming obligations with respect to the following (collectively,
the "Excluded Assets"):

                    (1)        Seller's corporate and fiscal records and other
records that Seller is required by law to retain in its possession; and

                    (2)        The Excluded Assets set forth on the attached
Exhibit 1.2.

The parties acknowledge and agree that Seller is not conveying to Buyer any of
the Excluded Assets and that, following Closing (as such term is defined
herein), Buyer will not have any right, title, interest or obligation with
respect to the Excluded Assets.

          1.3       Assumed Contracts, Leases and Liabilities.

                    (1)        At Closing, Buyer will assume and agree to pay
or perform, as the case may be, only (a) those obligations consisting of
current trade accounts payable and other current working capital liabilities
incurred in the ordinary course of business which Buyer expressly elects to
assume as specifically set forth on Exhibit 1.3(a) attached hereto, up to, in
the aggregate, Fifty One Thousand Two Hundred Eighty Six Dollars ($51,286.00)
(the "Assumed Liabilities Cap"), and (b) those obligations arising after
Closing and that do not relate to operation of the Business prior to Closing
under those Leases and Contracts (as such term is defined in paragraph 4.11)
that Buyer expressly elects to assume and (c) the vacation and sick-leave days
listed on Exhibit 1.3(b) (collectively, the "Assumed Liabilities").
Notwithstanding anything in the Agreement to the_contrary, all of the
liabilities set forth on Exhibit 1.3 (a) up to the Assumed Liabilities Cap and
Exhibit 1.3(b) and the Leases and Contracts set forth on Exhibit 4.11 shall be
assumed by Buyer at Closing unless otherwise noted on such Exhibit.

                    (2)        Except for the Assumed Liabilities, it is
expressly agreed and understood by each of the parties to this Agreement that
Buyer does not assume, and shall not be liable for, any debt, liability or
obligation of Seller or Shareholders, of any type or description whatsoever,
whether related or unrelated to the Assets, the Business or the



                                      3
<PAGE>   9

transactions contemplated within this Agreement and that Seller and/or
Shareholders shall remain liable and responsible for the payment or performance,
as the case may be, of all debts, liabilities, obligations, contracts, leases,
notes payable, accounts payable, commitments, agreements, suits, claims,
indemnities, mortgages, taxes, contingent liabilities and other obligations of
Seller and/or Shareholders including, without limitation, any and all investment
tax credit recapture, depreciation recapture, recapture or prior period
adjustments under Medicare, Medicaid and Blue Cross, all impositions of income
tax and other taxes including, without limitation, payroll-related taxes; all
employee wages, salaries and benefits including, without limitation, COBRA and
WARN obligations, sick pay, and other accrued employee benefits including rights
of Seller's retirees to participate in Seller's medical plans. Notwithstanding
any statement contained in this Agreement or otherwise seemingly to the
contrary, Buyer shall not be obligated to assume liabilities pursuant to
paragraph 1.3(1)(a) in excess of, in the aggregate, an amount equal to the
Assumed Liabilities Cap.


                            ARTICLE II.  RECEIVABLES

          2.1       Collection of Receivables.  At Closing, Seller and
Shareholder will take all appropriate action necessary to vest in Buyer all
right, title and interest in the Receivables, and Buyer will proceed to collect
the Receivables following Closing.  In the event that any Receivable cannot be
transferred to Buyer, then Seller and Shareholders shall collect the Receivable
in compliance with all applicable laws, as Buyer's agents for the limited
purpose of such collection, and shall immediately deliver to Buyer the gross
proceeds of such collection.  Seller and Shareholders shall each also provide
such additional assistance in the collection process as Buyer may reasonably
request.  If, within 180 days following Closing, Buyer has collected less than
the amount of the Receivables as reflected on the Financial Statements (as such
term is defined in paragraph 4.3(1) in excess of the reserves also therein set
forth, Seller and/or Shareholders shall promptly pay to Buyer the amount of the
shortfall, less the amount of the reserves, and such receivables shall be
transferred immediately by Buyer to Seller.


                          ARTICLE III.  PURCHASE PRICE

          3.1       Purchase Price.  The purchase price payable by Buyer to
Seller for the Assets and in consideration for the agreements contained herein,
including the agreements contained in Article XIV hereof, shall be Eight
Million Five Hundred Thousand Dollars ($8,500,000.00), subject to certain
adjustments pursuant to Section 15.2 of this Agreement, payable in immediately
available funds at Closing.

          3.2       Allocation of Purchase Price.  The Purchase Price shall be
allocated among the Assets in the manner set forth in Exhibit 3.2 attached
hereto (the "Allocation").

                                      4
<PAGE>   10

The parties to this Agreement expressly agree that the Allocation shall be used
by them for tax, reimbursement and all other purposes.  Each party to this
Agreement agrees that it will report the transaction completed pursuant to this
Agreement in accordance with the Allocation, including any report made under
Section 1060 of the Internal Revenue Code of 1986, as amended (the "Code"), and
that no such party will take a position inconsistent with the Allocation except
with the prior written consent of the other parties hereto.


             ARTICLE IV.  REPRESENTATIONS AND WARRANTIES OF SELLER
                                AND SHAREHOLDERS

          As a material inducement to Buyer to enter into this Agreement and to
consummate the transactions contemplated herein, Seller and Shareholders hereby
jointly and severally represent and warrant to Buyer, which representations and
warranties shall be true and correct on the date hereof and as of the date of
Closing, as follows:

          4.1       Organization, Qualification and Authority.  Seller is a
corporation duly organized and validly existing in the Commonwealth of Virginia
and is in good standing.  Since the date of its organization and incorporation,
Seller has consistently observed and operated within the corporate formalities
of the Commonwealth of Virginia and has consistently observed and complied with
the general corporation law of such jurisdiction.  Seller has full power and
authority to own, lease and operate its facilities and assets as presently
owned, leased and operated; to carry on its business as it is now being
conducted; and is duly qualified to do business and is in good standing in the
Commonwealth of Virginia.  Seller does not conduct business in any other state.
Except for Shareholders, no other person or entity owns or holds, has any
interest in, whether legal, equitable or beneficial, or has the right to
purchase, any capital stock or other security of Seller.  Seller owns no
capital stock, security, interest or other right, or any option or warrant
convertible into the same, of any corporation, partnership, joint venture or
other business enterprise.  Seller has the full right, power and authority to
execute, deliver and carry out the terms of this Agreement and all other
documents and agreements necessary to give effect to the provisions of this
Agreement and to consummate the transactions contemplated on the part of Seller
hereby.  Shareholders have the full right, power, and authority to execute,
deliver, and carry out the terms of this Agreement and all documents and
agreements necessary to give effect to the provisions of this Agreement, to
consummate the transactions contemplated on the part of Shareholders hereby,
and to take all actions necessary, in their capacity as the sole stockholders
of Seller, to permit or approve the actions of Seller taken in connection with
this Agreement.  The execution, delivery and consummation of this Agreement,
and all other agreements and documents executed in connection herewith by
Seller, have been duly authorized by all necessary action on the part of
Seller.  No other action, consent or approval on the part of Seller,
Shareholders or any other person or entity is necessary to authorize Seller's
due and valid execution, delivery and consummation of this Agreement and all
other agreements and documents executed in connection hereto.  This Agreement
and all other agreements and

                                      5


<PAGE>   11
documents executed in connection herewith by Seller and/or Shareholders, upon
due execution and delivery thereof, shall constitute the valid and binding
obligations of each of Seller and Shareholders, enforceable in accordance with
their respective terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting creditors' rights generally
and by general principles of equity.

          4.2       Absence of Default.   The execution, delivery, and
consummation of this Agreement, and all other agreements and documents executed
in connection herewith by Seller and/or Shareholders will not constitute a
violation of, or be in conflict with, will not, with or without the giving of
notice or the passage of time, or both, result in a breach of, constitute a
default under, create (or cause the acceleration of the maturity of) any debt,
indenture, obligation or liability affecting the Assets or the Business pursuant
to, result in the creation or imposition of any security interest, lien, charge
or other encumbrance upon any of the Assets, or otherwise adversely affect
Buyer, Seller, or Business under: (a) any term or provision of the Articles of
Incorporation or Bylaws of Seller; (b) except as set forth on the attached
Exhibit 10.1(d), any contract, lease, purchase order, agreement, document,
instrument, indenture, mortgage, pledge, assignment, permit, license, approval
or other commitment to which Seller and/or Shareholders are a party or by which
Seller and/or Shareholders or the Assets are bound; (c) any judgment, decree,
order, regulation or rule of any court or regulatory authority; or (d) except as
set forth on Exhibit 10.1(d) Item 2 any law, statute, rule, regulation, order,
writ, injunction, judgment or decree of any court or governmental authority or
arbitration tribunal to which Seller and/or Shareholders and/or the Assets are
subject.

          4.3       Financial Statements.

                    (1)        Attached hereto as Exhibit 4.3 are true and
correct copies of Seller's unaudited balance sheets as of December 31, 1996 and
its unaudited income statements for the year then ending (the "Fiscal Year
Financial Statements"), and the interim unaudited balance sheet and income
statement of Seller for the two month period ended February 28, 1997 (the
"Interim Financial Statements," which with the Fiscal Year Financial Statements
shall be the "Financial Statements").  The Financial Statements are based on
the books and records of Seller and present fairly, in compliance with
statements and standards established by the American Institute of Certified
Public Accountants, the financial position of Seller as of, and the results of
its operations for, the periods specified.

                    (2)        The books and records of Seller are in such
order and completeness so that an unqualified audit may be performed for any
period prior to Closing not already audited.  Seller and Shareholders shall
fully and readily cooperate with Buyer in Buyer's attempt to perform an audit
of Seller for any period prior to Closing not already audited.


                                      6
<PAGE>   12



          4.4       Operations Since December 31, 1996 .  Except as set forth
on Exhibit 4.4, since December 31, 1996 there has been no:

                    (a)        material change, financial or otherwise, which
has, or could reasonably be unexpected to have, an adverse effect on any of the
Assets, the Business or future prospects of the Business, or in the results of
the operations of Seller;

                    (b)        loss, damage or destruction of or to any of the
Assets, whether or not covered by insurance;

                    (c)        sale, lease, transfer or other disposition by
Seller of, or mortgages or pledges of or the imposition of any lien, charge or
encumbrance on, any portion of the Assets, other than those made in the
ordinary course of business;

                    (d)        increase in the compensation payable by Seller
to Shareholders,  any of Seller's employees, directors, independent contractors
or agents, or any increase in, or institution of, any bonus, insurance,
pension, profit-sharing or other employee benefit plan or arrangements made to,
for or with the employees, directors, Shareholders, independent contractors or
agents of Seller;

                    (e)        cumulative net operating loss incurred in the
operation of the Business;

                    (f)  adjustment or write-off of Receivables or reduction in
reserves for Receivables outside of the ordinary course of business;

                    (g)        change in the accounting methods or practices
employed by Seller or change in depreciation or amortization policies;

                    (h)        issuance or sale by Seller or Shareholders, or
contract or other commitment entered into by Seller or Shareholders, for the
issuance or sale of any shares of capital stock or securities convertible into
or exchangeable for capital stock of Seller;

                    (i)        payment by Seller of any dividend, distribution
(except to shareholders as listed on Exhibit 4.4 for payment of taxes,
consistent with past practices) or extraordinary or unusual disbursement or
expenditure or intercompany payable;

                    (j)        sale, transfer, pledge, mortgage or other
disposition of any of the Assets (except inventory and equipment held for rent
in the ordinary course of business);

                    (k)        merger, consolidation or similar transaction; or
solicitations therefor;

                                      7

<PAGE>   13


                    (l)        federal, state or local statutes, rule,
regulation, order or case adopted, promulgated or decided which, to the best
knowledge of Seller and Shareholders, adversely affects the Business or Assets;

                    (m)        strike, work stoppage or other labor dispute
adversely affecting the Business; or

                    (n)        termination, waiver or cancellation of any
rights or claims of Seller, under contract or otherwise.

          4.5       Absence of Certain Liabilities.  Except as set forth in
Exhibit 4.5 or in the Financial Statements, Seller has, and as of the Closing
will have, no contingent liabilities or obligations, which, if incurred, will
have a material adverse impact on the Assets.

          4.6       Employment Discrimination.  Except as disclosed in Exhibit
4.6 attached hereto, no person or party (including, without limitation, any
governmental agency) has asserted, or to the best knowledge of Seller or
Shareholders, has threatened to assert, any claim for any action or proceeding,
against Seller (or any officer, director, employee, agent or Shareholders of
Seller) arising out of any statute, ordinance or regulation relating to wages,
collective bargaining, discrimination in employment or employment practices or
occupational safety and health standards (including, without limitation, the
Fair Labor Standards Act, Title VII of the Civil Rights Act of 1964, as
amended, the Occupational Safety and Health Act, the Age Discrimination in
Employment Act of 1967, the Americans With Disabilities Act or the Family and
Medical Leave Act).  The claims disclosed in Exhibit 4.6 will not result in any
liability to or obligation of Buyer, and will not cause or lead to any lien or
encumbrance being placed, created or filed against or upon any of the Assets.

          4.7       Licenses and Permits.

                    (1)        Seller has all local, state and federal
licenses, permits, registrations, certificates, contracts, consents,
accreditations and approvals (collectively, the "Licenses and Permits")
necessary for Seller to occupy, operate and conduct the Business, and there do
not exist any waivers or exemptions relating thereto.  There is no default on
the part of Seller or any other party under any of the Licenses and Permits.
There exist no grounds for revocation, suspension or limitation of any of the
Licenses or Permits, except as set forth on Exhibit 4.7(1).  Copies of each of
the Licenses and Permits are attached to and listed on Exhibit 4.7(1) attached
hereto.  The most recent licensure surveys and deficiency reports related to
each of these items has also been included in Exhibit 4.7(1).  Seller is, and
at the time of Closing will be, licensed by the regulatory bodies listed on
Exhibit 4.7(1).  No notices have been received by Seller or Shareholders with
respect to any threatened, pending, or possible revocation, termination,
suspension or limitation of the Licenses and Permits.

                                      8

<PAGE>   14

                    (2)        Each employee of Seller has all Licenses and
Permits required for each such employee to perform such employees' designated
functions and duties for Seller in connection with conducting the Business, and
there exists no waivers or exemptions relating thereto.  There is no default
under, nor does there exist any grounds for revocation, suspension or
limitation of, any such Licenses and Permits.

          4.8       Medicare, Medicaid and Other Third-Party Payors.

                    (1)        Seller participates in the Medicare and Medicaid
Programs (the "Programs").  A list of and copies of its existing Medicare and
Medicaid contracts or, if such contracts do not exist, other documentation
evidencing such participation (collectively, the "Program Agreements") are
included in Exhibit 4.11 attached hereto.  Seller is, and will be at the time of
Closing, in full compliance with all of the terms, conditions and provisions of
the Program Agreements.

                    (2)        No notice of any offsets against future
reimbursements under or pursuant to the Programs has been received by either
Seller or Shareholders, nor is there any basis therefor.  There are no pending
appeals, adjustments, challenges, audits, litigation, notices of intent to
recoup past or present reimbursements with respect to the Programs.  Seller has
not been subject to or threatened with loss of waiver of liability for
utilization review denials with respect to the Programs during the past twelve
(12) months, nor have either Seller or Shareholders received notice of any
pending, threatened or possible decertification or other loss of participation
in, any of the Programs.

                    (3)        Seller currently has contractual arrangements
with Blue Cross and other third party payors.  A list of and copies of its
existing Blue Cross contracts and other third party payor contract(s) are
included in Exhibit 4.11 attached hereto.  Seller is, and will be at the time
of Closing, in full compliance with all of the material terms, conditions and
provisions of such contracts.

                    (4)        All liabilities and contractual adjustments of
Seller under any third party payor or reimbursement programs have been properly
reflected and adequately reserved for in the Financial Statements.  In the
event that, following Closing, Buyer suffers any offsets against any
reimbursement under any third-party payor or reimbursement programs due to
Buyer relating to Seller's (or any agents of Seller's, including, without
limitation, employees, officers and directors) actions or inactions during the
periods on or prior to the Closing, then, to the extent not reserved for in the
Financial Statements, Seller and/or Shareholders shall pay to Buyer the amounts
so offset, with interest at a rate equal to eight percent (8%) per annum that
shall begin to accrue ninety (90) days following notice to the Seller and
Shareholders.

          4.9       [RESERVED]

                                      9

<PAGE>   15



          4.10      Title to Assets.

                    (1)        Seller is the sole legal and beneficial owner
of, or has the exclusive, unrestricted right and authority to use and transfer
to Buyer, the personal property included in the Assets, free and clear of all
mortgages, security interests, liens, leases, covenants, assessments,
easements, options, rights of refusal, restrictions, reservations, defects in
the title, encroachments, and other encumbrances, except for the failure to
obtain consent set forth on Exhibit 10.1(d) in the Leases and Contracts
attached hereto.  The Assets are all the assets set forth on the Interim
Financial Statements and/or used in the operation of the Business.

                    (2)        The descriptions of the Real Estate contained in
Exhibit 1.1(1) hereto and in each of the Assignment and Assumption of Lease
Agreements required to be delivered by Seller to Buyer pursuant to paragraph
10.1(a) of this Agreement are accurate and sufficient for their intended
purposes, and such descriptions include all real property leased or owned by
Seller and used in connection with the Business or set forth on the Financial
Statements. Seller owns no real estate.  Seller is in lawful possession of all
of the Real Estate, including, without limitation, the buildings, structures and
improvements situated thereon and appurtenances thereto, in each case free and
clear of all mortgages, liens and other encumbrances or restrictions that are
related to or impair the Assets or the Business.  Additionally, Seller, as
tenant, has the right and authority to transfer and convey the Real Estate to
Buyer as contemplated by the terms of this Agreement, and such transfer and
conveyance, once effected as contemplated hereunder, will vest in Buyer the
lawful right to possess and use the leased Real Estate, superior in right to all
others.

          4.11      Leases and Contracts.

                    (1)        Exhibit 4.11 attached hereto sets forth a
complete and accurate list of all contracts, including the Program Contracts,
agreements, purchase orders, leases, subleases, options and commitments, oral
or written, and all assignments, amendments, schedules, exhibits and appendices
thereof, affecting or relating to the Business or any Asset or any interest
therein, to which either Seller and/or Shareholders are a party or by which
Seller, the Assets or the Business are bound or affected, including, without
limitation, service contracts, management agreements, equipment leases and
building leases pertaining to any part of the Real Estate (collectively, the
"Leases and Contracts").  Complete and accurate copies of all written Leases
and Contracts, as well as written summaries of the key terms of all oral Leases
and Contracts, are also included in Exhibit 4.11.  Except for the Assumed
Liabilities, all Leases and Contracts and all other obligations and liabilities
relating to the Assets and the Business shall be retained by Seller.

                    (2)        None of the Leases and Contracts have been
modified, amended, assigned or transferred and each is in full force and effect
and is valid, binding and

                                      10
<PAGE>   16

enforceable in accordance with its respective terms, except as enforcement may
be limited by bankruptcy, insolvency, reorganization or similar laws affecting
creditors' rights generally and by general principles of equity.

                    (3)        Except as set forth on Exhibit 4.11, no event or
condition has happened or presently exists which constitutes a default or
breach or, after notice or lapse of time or both, would constitute a default or
breach by any party under any of the Leases and Contracts.  There are no
counterclaims or offsets under any of the Leases and Contracts.

                    (4)        There does not exist any security interest,
lien, encumbrance or claim of others created or suffered to exist on any
interest created under any of the Leases and Contracts (except for those that
result from or relate to leased Assets).

                    (5)        No purchase commitment by Seller is in excess of
Seller's ordinary business requirements.

                    (6)        Assignment to Buyer of those Leases and
Contracts constituting part of the Assumed Liabilities will not default (other
than defaults caused by Buyer's failure to obtain consent of the other party in
those agreements described on Exhibit 10.1(d)), alter or terminate any such
Leases and Contracts, and such assignment will confer and convey all of
Seller's rights thereunder to Buyer.

          4.12      Environmental Matters.

                    (1)        Hazardous Substances.  As used in this Section,
the term "Hazardous Substances" means any hazardous or toxic substances,
materials or wastes, including but not limited to those substances, materials,
and wastes defined in Section 101 of the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA") listed in the
United States Department of Transportation Table (49 CFR 172.101) or by the
Environmental Protection Agency as hazardous substances pursuant to 40 CFR Part
302, or which are regulated under any other Environmental Law (as such term is
defined below), or any of the following:  hydrocarbons, petroleum and petroleum
products, asbestos, polychlorinated biphenyls, formaldehyde, radioactive
substances (other than naturally occurring materials in place), flammables and
explosives.

                    (2)        Compliance with Laws and Regulations.  All
operations or activities upon, or any use of occupancy of the Real Estate, or
any portion thereof, by Seller, any Affiliates of Seller (wherein the term
"Affiliates" shall mean any person or entity controlling, controlled by or
under common control at any time with Seller, and the term "control" shall mean
the power, directly or indirectly to direct the management or policies of such
person or entity), and any agent, contractor or employee of any agent or
contractor of Seller or its Affiliates ("Agents"), or any tenant or subtenant
of Seller of any part of the Real Estate is

                                      11

<PAGE>   17

and has been in compliance with any and all laws, regulations, orders, codes,
judicial decisions, decrees, licenses, permits and other applicable requirements
of governmental authorities with respect to Hazardous Substances, pollution or
protection of human health and safety  (collectively, "Environmental Law"),
including but not limited to the release, emission, discharge, storage and
removal of Hazardous Substances. Seller, Affiliates and Agents have kept the
Real Estate free of any lien imposed pursuant to Environmental Law.  To the best
knowledge of Seller and Shareholders, all prior owners, operators and occupants
of the Real Estate complied with Environmental Law.  Except for uses and storage
or presence of Hazardous Substances reasonably necessary or incidental to the
customary operation of a business similar to the Business, as appropriate, which
if required, was duly licensed or authorized by appropriate governmental
authorities or otherwise permitted by and complies with Environmental Law:

                               (a)       Neither Seller nor Affiliates nor, to
the best knowledge of Seller and Shareholders, the Agents have allowed the use,
generation, treatment, handling, manufacture, voluntary transmission or storage
of any Hazardous Substances over, in or upon the Real Estate, nor, to the best
knowledge of Seller and Shareholders, has the Real Estate ever been used for
any of the foregoing.
                               (b)       Neither Seller, Affiliates nor, to the
best knowledge of Seller and Shareholders, the Agents have installed or
permitted to be installed, in or on the Real Estate friable asbestos or any
substance containing asbestos in condition or amount deemed hazardous by
Environmental Law respecting such material.

                               (c)       Seller has not at any time engaged in
or permitted, nor, to the best knowledge of Seller and Shareholders, has any
tenant of Seller, Agent, Affiliate or any other occupant of the Real Estate, or
any portion thereof, engaged in or permitted any  dumping, discharge, disposal,
spillage, or leakage (whether legal or illegal, accidental or intentional) of
such Hazardous Substances, at, on, in or about the Real Estate, or any portion
thereof that would subject the Real Estate or Buyer to clean-up obligations
imposed by governmental authorities.

                               (d)       None of the Real Estate, nor any part
thereof, nor Seller nor any present owner or operator of the Real Estate (i)
has either received or been issued a notice, demand, request for information,
citation, summons or complaint regarding an alleged failure to comply with
Environmental Law, or (ii) is subject to any existing, pending, or threatened
investigation or inquiry by any governmental authority for failure to comply
with, or any remedial obligations under, Environmental Law, and there are no
circumstances known to Seller or Shareholders which could serve as a basis
therefor.  Seller has not assumed any liability of a third party for clean up
under, or noncompliance with, Environmental Law.

                                      12

<PAGE>   18

                               (e)       Neither Seller, its Affiliates nor, to
the best knowledge of Seller and Shareholders, its Agents have transported or
arranged for the transportation of any Hazardous Substances to any location
which is listed or, to the best knowledge of Seller and Shareholders, proposed
for listing under Environmental Law, or is the subject of any enforcement
action, investigation or other inquiry under Environmental Law.

          Seller and Shareholders shall promptly notify Buyer in writing of any
order of which either is aware, receipt of any notice of violation or
noncompliance with any Environmental Law, any threatened or pending action of
which either is aware by any regulatory agency or governmental authority, or
any claims made by any third party of which it is aware relating to Hazardous
Substances on, emanations on or from, releases on or from, any of the Real
Estate which relate to the period prior to Closing; and shall promptly furnish
Buyer with copies of any written correspondence, notices or legal pleadings and
written summaries of any oral communications or notices in connection
therewith.  If, and only if, required by law or the failure to do so would
impose liabilities on Buyer or the Assets, Buyer shall have the right, but
shall not be obligated, to notify any governmental authority of any state of
facts which may come to its attention with respect to Hazardous Substances on,
released from or emanating from any part of the Real Estate.  Buyer shall give
Seller prior or simultaneous notice of such notification.

                    (3)        Other Environmental Matters.  There are no
underground storage tanks on any portion of the Real Estate, and the Real Estate
is free of dangerous levels of naturally-emitted radon.  To the best knowledge
of Seller and Shareholders, no portion of the Real Estate has ever been used as
a landfill.  Seller has furnished to Buyer a copy of any environmental audit,
study, report or other analysis on the Real Estate, which Seller or its
Affiliates obtained or was furnished.

          4.13      Miscellaneous Representations Relating to Real Estate.

                    (1)        No part of the Real Estate is currently subject
to condemnation proceedings, and, to the best knowledge of Seller and
Shareholders, no condemnation or taking is threatened or contemplated.  There
are no public improvements which may result in special assessments against or
otherwise affect the Real Estate.  There are no facts known to either Seller or
Shareholders that would adversely affect the possession, use or occupancy of
the Real Estate.

                    (2)        Attached as Exhibit 4.13 are complete copies of
all appraisals, mechanical and structural studies or reports or assessments,
engineering plans, architectural drawings, soil studies or surveys that have
been prepared by or at the direction of Seller or Shareholders within the last
five years relating to any of the Assets.

                    (3)        All utilities serving the Real Estate are
adequate to operate the Real Estate in the manner it is currently operated.

                                      13
<PAGE>   19

                    (4)        All potable and industrial water and all gas,
electrical, steam, compressed air, telecommunication, sanitary and storm sewage
lines and systems and other similar systems serving the Real Estate and the
facilities of the Business are installed and operating and are sufficient to
enable the Real Estate and the facilities of the Business to continue to be
used and operated in the manner currently being used and operated, and any
so-called hook-up fees or other associated charges accrued to date have been
fully paid.  Seller has received no written recommendation from any insurer to
repair or replace any of the Assets with which Seller has not complied.

          4.14      Litigation.  Except as set forth in Exhibit 4.14, neither
Seller nor Shareholders have received notice of any violation of any law, rule,
regulation, ordinance or order of any court or federal, state, municipal or
other governmental department, commission, board, bureau, agency or
instrumentality (including, without limitation, legislation and regulations
applicable to the Medicare and Medicaid programs, Food and Drug Administration,
Drug Enforcement Administration, state controlled substance agencies and boards
of pharmacy, environmental protection, civil rights, public health and safety
and occupational health). Except as set forth in Exhibit 4.14 attached hereto
(for which Buyer assumes no liability), there are no lawsuits, proceedings,
actions, arbitrations, governmental investigations, claims, inquiries or
proceedings pending or, to the best knowledge of Seller and Shareholders,
threatened involving Seller, Shareholders, any of the Assets or the Business.

          4.15      Seller's Employees.  Exhibit 4.15 attached hereto sets
forth:  (a) a complete list of all of Seller's employees, and rates of pay, (b)
true and correct copies of any and all fringe benefits and personnel policies,
(c) the employment dates and job titles of each such person, and (d)
categorization of each such person as a full-time or part-time employee of
Seller.  For purposes of this paragraph, "part-time employee" means an employee
who is employed for an average of fewer than twenty (20) hours per week or who
has been employed for fewer than six of the twelve (12) months preceding the
date on which notice is required pursuant to the "Worker Adjustment and
Retraining Notification Act" ("WARN"), 29 U.S.C. Section 2102 et seq.  Except
as provided in Exhibit 4.11, Seller has no employment agreements with its
employees and all such employees are employed on an at "at will" basis.
Exhibit 4.15 lists all ex-employees of Seller utilizing or eligible to utilize
COBRA (health insurance).  Seller will terminate all of its employees at
Closing, and each of Seller and Shareholders agree, jointly and severally, to
indemnify and hold Buyer harmless, from and against any and all claims of
Seller's employees relating to their employment by Seller through Closing and
such termination by Seller, whenever made.  Other than Assumed Liabilities
which include, without limitation, the vacation pay and sick leave specified on
Exhibit 1.3(b), the parties expressly agree that Seller shall retain
responsibility for and fully and timely pay all salaries and wages, related
payroll taxes and all sick leave, holiday, vacation benefits, retirement and
other fringe benefits that have accrued to its employees through the date of
Closing, including related payroll taxes.

                                      14
<PAGE>   20

Seller shall use its best efforts to retain its employees in their current
positions up to Closing.

          4.16      Labor Relations.  Seller is not a party to any labor
contract, collective bargaining agreement, contract, Letter of Understanding,
or any other arrangement, formal or informal, with any labor union or
organization which obligates Seller to compensate Seller's employees at
prevailing rates or union scale, nor are any of its employees represented by
any labor union or organization.  There is no pending or, to the best knowledge
of Seller and Shareholders, threatened labor dispute, work stoppage, unfair
labor practice complaint, strike, administrative or court proceeding or order
between Seller and any present or former employee(s) of Seller.  There is no
pending or, to the best knowledge of Seller and Shareholders, threatened suit,
action, investigation or claim between Seller and any present or former
employee(s) of Seller.  There has not been any labor union organizing activity
at any location of Seller, or elsewhere, with respect to Seller's employees
within the last three years.

          4.17      Insurance.  Seller has in effect and has continuously
maintained insurance coverage for all of its operations, personnel and assets,
and for the Assets and the Business.  A complete and accurate list of all such
insurance policies is set forth in Exhibit 4.17 attached hereto, which policies
have previously been provided to Buyer.  Exhibit 4.17 also sets forth a summary
of Seller's current insurance coverage (listing type, carrier and limits), and
includes a list of any pending insurance claims relating to Seller.  Seller and
Shareholders agree, jointly and severally, to indemnify and hold harmless Buyer
from and against such pending insurance claims.  Seller is not in default or
breach with respect to  any provision contained in any such insurance policies,
nor has Seller failed to give any notice or to present any claim thereunder in
due and timely fashion.

          4.18      Broker's or Finder's Fee.  Neither Seller nor Shareholders
have employed, or is liable for the payment of any fee to, any finder, broker,
consultant or similar person in connection with the transactions contemplated
by this Agreement.

          4.19      Conflicts of Interest.  None of the following is either a
supplier of goods or services to Seller, or directly or indirectly controls or
is a director, officer, employee or agent of any corporation, firm,
association, partnership or other business entity that is a supplier of goods
or services to Seller:  (a) Shareholders, (b) any director or officer of
Seller, or (c) any entity under common control with Seller or controlled by or
related to Shareholders.

          4.20      Intellectual Property.  All trademarks, service marks,
trade names, patents, inventions, processes, copyrights and applications
therefor, whether registered or at common  law (collectively, the "Intellectual
Property"), owned by Seller are listed and described in Exhibit 4.20 attached
hereto.  No proceedings have been instituted or are pending or, to the best
knowledge of Seller and Shareholders, threatened which challenge the validity
of the ownership by Seller of any such Intellectual Property.  Seller has not


                                      15
<PAGE>   21

licensed anyone to use any such Intellectual Property, and neither Seller nor
Shareholders have any knowledge of the use or the infringement of any of such
Intellectual Property by any other person.  Seller owns or possesses adequate
and enforceable licenses or other rights to use all Intellectual Property now
used in the conduct of its Business.

          4.21      Inventories.  The Inventory is and on Closing will be of a
quality and quantity previously used by Seller in the ordinary course of
business determined and valued consistent with Seller's past practice and
containing no significant amount of excess, dated or obsolete inventory.  The
Inventory is properly valued at the lower of third party acquisition cost or
market value on a first-in/first-out basis in accordance with generally
accepted accounting principles consistently applied.  Since the date of the
Financial Statements, Seller has not decreased or substituted its items of
Inventory other than in the ordinary course of business.  Seller has fairly
represented the nature and extent of the Inventory to its outside accountants
on a consistent basis and in the exercise of good faith.

          4.22      Motor Vehicles.  All motor vehicles used in the Business,
whether owned or leased, are listed in Exhibit 1.1(2) attached hereto.  All
such vehicles are properly licensed and registered in accordance with
applicable law.

          4.23      Employee Benefit Plans.

                    (1)        Welfare Benefit Plans.  Exhibit 4.23(1) attached
hereto contains a true, accurate and complete list of each "employee welfare
benefit plan" (as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974 as amended ("ERISA")) maintained by Seller or to which
Seller contributes or is required to contribute (such employee welfare benefit
plans being hereinafter collectively referred to as the "Welfare Benefit
Plans").  Copies of all Welfare Benefit Plans have previously been provided to
Buyer.

                    (2)        Pension Benefit Plans.  Exhibit 4.23(2) attached
hereto contains a true and complete list of each "employee pension benefit
plan" (as defined in Section 3(2) of ERISA) maintained by Seller, to which
Seller contributes or is required to contribute, or which covered employee of
Seller during the period of their employment with any predecessor of Seller,
including any multi-employer pension plan as defined under Internal Revenue
Code of 1986, Section 414(f) (such employee pension benefit plans being
hereinafter collectively referred to as the "Pension Benefit Plans").  Copies
of all Pension Benefit Plans have previously been provided to Buyer.

                    (3)        Liabilities.  Unfunded liabilities under any
Welfare Benefits Plans or Pension Benefit Plans are described on Exhibit
4.23(3) attached hereto.  Buyer shall not be liable and not be responsible for
any debt, obligation, responsibility or liability of Seller under any such
plans.  Seller shall be liable under its Welfare Benefit Plans and Pension

                                      16

<PAGE>   22
Benefit Plans for all claims due and unpaid at Closing and for all claims
incurred before Closing, whether or not paid or presented before Closing.

          4.24      Compliance with Healthcare Laws and Other Laws.  Seller has
not made any kickback, bribe or payment to any person or entity, directly or
indirectly, for referring, recommending or arranging business or patients with,
to or for Seller which action could have a material adverse effect on the
Business.  The transactions contemplated under this Agreement comply with any
applicable state antitrust or similar laws.  None of the Leases and Contracts
and no activity of Seller violates Section 1877 of the Social Security Act or
any similar provision of applicable state law in any material respect.  None of
the Leases and Contracts and no activity of Seller violates provisions of
applicable state law relating to the corporate practice of medicine in any
material respect.  The Seller is in compliance (without obtaining waivers,
variances or extensions) with, all federal, state and local laws, rules and
regulations which relate to the operations of the Business, except where the
failure to be in compliance does not have a material adverse effect on the
Business.  All healthcare, tax and other returns, reports, plans and filings of
any nature required to be filed by Seller with any federal, state or local
governmental authorities and any third party payors have been properly
completed, except where the failure to be so completed or filed does not have a
material adverse effect on the Business, and timely filed in compliance with
all applicable requirements.  Each return, report, plan and filling contains no
materially untrue or misleading statements and does not omit anything which
would cause it to be misleading or inaccurate in any material respect.  Seller
shall retain and be responsible, for any liability incurred, and Seller shall
be entitled to receive any refund or other benefit which may result from the
same in connection with any such return, report, plan and filing.

          4.25      Condition of Assets.  The Equipment and Furnishings are all
of the "Equipment" reflected on the Financial Statements, other than those items
sold and replaced in the ordinary course of business.  The Assets together with
the Excluded Assets comprise all of the following:  all assets owned by Seller
and all assets used in connection with the Business and any related businesses.
All components of all of the Equipment and Furnishings (a) operate in accordance
with their respective specifications, (b) perform the functions they are
supposed to perform, (c) are free of structural, installation, engineering, or
mechanical defects or problems, and (d) are otherwise in good working order.
Seller has received no written recommendation from any insurer to repair or
replace any of the Assets with which Seller has not complied.  Except as
otherwise disclosed in Exhibit 4.4, since December 31, 1996, the Business has
been operated in conformity with the methods and procedures observed and
utilized during the two year period immediately preceding December 31, 1996, and
that since December 31, 1996 and except as required in the ordinary and usual
course of the Business, no assets have been removed, distributed, assigned or
paid by or from Seller.

          4.26      Tax Returns; Taxes.  Seller has filed all federal, state
and local tax returns and tax reports required by such authorities to be filed.
Seller has paid all taxes,


                                      17

<PAGE>   23
assessments, governmental charges, penalties, interest and fines due or claimed
to be due (including, without limitation, taxes on properties, income,
franchises, licenses, sales and payrolls) by any federal, state or local
authority.  Additionally, the reserves for taxes reflected in the Financial
Statements are adequate to cover all tax liabilities accrued as of the
respective dates thereof.  There has never been and is not now pending a tax
examination or audit of, nor any action, suit, investigation or claim asserted
or, to the best knowledge of Seller and Shareholders, threatened against Seller
by any federal, state or local authority; and Seller has not been granted any
extension of the limitation period applicable to any tax claims.

          4.27      Operating Targets.  For the twelve (12) month period ended
at December 31, 1996, Seller achieved income, before interest, taxes and
depreciation, and after the add-back of "Redundant or Unnecessary Expenses" (as
defined on Exhibit 4.27 hereto), of at least One Million Six Hundred Thousand
Dollars ($1,600,000.00).  For the twelve (12) month period ended at December
31, 1996, Seller achieved net revenues of no less than Five Million Four
Hundred Seventy Thousand Dollars ($5,470,000.00).  These operating targets
shall be computed in the manner set forth in Exhibit 4.27.

          4.28      Value of Assets.  As of the date of Closing, the Assets
shall have a net value (being the aggregate book value of the Assets, less the
amount of Assumed Liabilities listed on Exhibit 1.3(a) and (b) hereto) of at
least One Million Two Hundred Fifty One Thousand Three Hundred Ninety Nine
Dollars ($1,251,399.00).  From December 31, 1996 through Closing,  no assets
were removed, distributed, assigned or paid by or from Seller except (1) as
required in the ordinary and usual course of the Business, and (2) as disclosed
in this Agreement and/or the Exhibits hereto.  At Closing the Assets shall be
free from liabilities, mortgages, security interests, liens, leases, covenants,
assessments, easements, options, rights of first refusal, restrictions,
reservations, defects in title, encroachments or other encumbrances except
those acceptable to Buyer which are associated with the Assumed Liabilities,
except as set forth in Exhibit 10.1(d) and Section 4.31.

          4.29      Beds.  As of the date of Closing, there shall be a minimum
of 1,900 beds being actively serviced by Seller under agreements as set forth
on Exhibit 4.11.

          4.30      No Omissions or Misstatements.  There is no fact material
to the Assets, liabilities, Business or prospects of Seller or the Business
which has not been set forth or described in this Agreement or in the Exhibits
hereto and that is material to the conduct, prospects, operations or financial
condition of Seller, the Business or the Assets.  None of the information
included in this Agreement and Exhibits hereto, or other documents furnished or
to be furnished by Shareholders or Seller, or any of its representatives,
contains any untrue statement of a material fact or is misleading in any
material respect or omits to state any  material fact necessary in order to
make any of the statements herein or therein not misleading in light of the
circumstances in which they were made.  Copies

                                      18

<PAGE>   24

of all documents referred to in any Exhibit hereto have been delivered or made
available to Buyer and constitute true, correct and complete copies thereof and
include all amendments, exhibits, schedules, appendices, supplements or
modifications thereto or waivers thereunder.

          4.31      Bulk Sales Law.  Buyer and Seller agree that Seller has not
provided notice of the sale of the Assets and Seller's creditors under the
Uniform Commercial Code - Bulk Sales Act.  Nevertheless, Seller's indemnity in
Section 13.2 hereof shall apply as to its failure to comply with the Bulk Sales
Act.

          4.32      Covenant Not to Compete.  The Seller and Shareholders
hereby agree that that certain covenant not to compete dated October 12, 1990
between Seller and the Shareholders is void and is of no further force and
effect.


              ARTICLE V.  REPRESENTATIONS AND WARRANTIES OF BUYER

          As an inducement to Seller and Shareholders to enter into this
Agreement and to consummate the transactions contemplated herein, Buyer hereby
represents and warrants to Seller and Shareholders, which representations and
warranties shall be true and correct on the date hereof and on the date of
Closing, as follows:

          5.1       Organization, Qualification and Authority.  Buyer is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Maryland. Buyer has the full corporate power and corporate
authority to own, lease and operate its properties and assets as presently
owned, leased and operated and to carry on its business as it is now being
conducted.  Buyer has the full right, power and authority to execute, deliver
and carry out the terms of this Agreement and all documents and agreements
necessary to give effect to the provisions of this Agreement and to consummate
the transactions contemplated on the part of Buyer hereby.  The execution,
delivery and consummation of this Agreement and all other agreements and
documents executed in connection herewith by Buyer has been duly authorized by
all necessary corporate action on the part of Buyer.  No other action on the
part of Buyer or any other person or entity is necessary to authorize the
execution, delivery and consummation of this Agreement and all other agreements
and documents executed in connection herewith.  This Agreement, and all other
agreements and documents executed in connection herewith by Buyer, upon due
execution and delivery thereof, shall constitute the valid binding obligations
of Buyer, enforceable in accordance with their respective terms, except as
enforcement may be limited by bankruptcy, insolvency, reorganization or similar
laws affecting creditors' rights generally and by general principles of equity.

          5.2       Absence of Default.  The execution, delivery and
consummation of this Agreement and all other agreements and documents executed
in connection herewith by

                                      19

<PAGE>   25
Buyer will not constitute a violation of, be in conflict with, or, with or
without the giving of notice or the passage of time, or both, result in a breach
of, constitute a default under, or create (or cause the acceleration of the
maturity of) any debt, indenture, obligation or liability or result in the
creation or imposition of any security interest, lien, charge or other
encumbrance upon any of the Assets (except in the ordinary course pursuant to
Buyer's existing credit agreement) under:  (a) any term or provision of the
Articles of Incorporation or Bylaws of Buyer; (b) any contract, lease,
agreement, indenture, mortgage, pledge, assignment, permit, license, approval or
other commitment to which Buyer is a party or by which Buyer is bound; (c) any
judgment, decree, order, regulation or rule of any court or regulatory
authority, or (d) any law, statute, rule, regulation, order, writ, injunction,
judgment or decree of any court or governmental authority or arbitration
tribunal to which Buyer is subject.

          5.3       Broker's or Finder's Fee.  Buyer has not employed and is
not liable for the payment of any fee to any finder, broker, government
official, consultant or similar person in connection with the transactions
contemplated by this Agreement, except for fees payable to Adirondack Capital.


                        ARTICLE VI. COVENANTS OF PARTIES

          6.1       Preservation of Business and Assets.  Until the Closing,
each of Seller and Shareholders shall use their best efforts and shall do or
cause to be done all such acts and things as may be necessary to preserve,
protect and maintain intact the operation of the Business and Assets as a going
concern consistent with prior practice and not other than in the ordinary course
of business, and to preserve, protect and maintain for Buyer the goodwill of the
suppliers, employees, clientele, patients and others having business relations
with Seller or the Business.  Each of Seller and Shareholders shall use their
best efforts to obtain all documents called for by this Agreement.  Buyer,
Seller and Shareholders shall use their best efforts to facilitate the
consummation of the transactions contemplated under this Agreement. Until
termination of this Agreement, Seller and Shareholders agree that except in the
ordinary course of business they will not sell or transfer, or negotiate the
sale or transfer of, either the Assets or any stock of Seller. Until the Closing
except as set forth on Exhibit 4.4, Seller shall pay no dividend, and shall make
no distribution or extraordinary payment to Shareholders or any third party or
pay any intercompany payable and, other than in the ordinary course of business,
Seller will not sell, discard or dispose of any of the Assets.  None of the
Leases and Contracts shall be amended between the date hereof and Closing
without the prior written consent of Buyer.  Until Closing, the Seller and any
party in possession of all or any part of the Real Estate will not perform any
material grading or excavation, construction or removal of any improvement, or
make any material other change or improvement upon or about the Real Estate.
Until the Closing, Seller and any party in possession of all or any part of the
Assets

                                      20

<PAGE>   26

will maintain and keep the Assets in a sanitary, well-maintained condition and
in good order and repair.

          6.2       Absence of Material Change.  Until Closing, neither Seller
nor Shareholders shall make any change in the Business or in the utilization of
the Assets outside the ordinary course of business and shall not enter into any
other material contract or commitment or any other transaction with respect to
the Business or the Assets without the prior written consent of Buyer.

          6.3       Ownership of Intellectual Property.  Company will provide
any and all assistance and cooperation required by Buyer (including, but not
limited to the execution of all necessary documents and agreements) in order
for Buyer to create, perfect or renew rights in any Intellectual Property
(including but not limited to rights which are created, perfected or renewed
subsequent to the Closing).



          6.4       Access to Books and Records.

                    (a)        From the date hereof until the Closing, Seller
shall give to Buyer and to Buyer's counsel, accountants and other
representatives, full access to all of Seller's offices, properties, books,
contracts, commitments, records and affairs relating to the Assets or the
Business so that Buyer may inspect and audit them and shall furnish to Buyer a
copy of all documents and information concerning the properties and affairs of
Seller, the Business or the Assets as Buyer may request.  If any such books,
records and materials are in the custody of third parties, Seller shall direct
such third parties to promptly provide them to Buyer.  Copies of documents
furnished to Buyer by Seller will be returned by Buyer upon request if the
transactions contemplated hereunder are not consummated.  Seller shall provide
Buyer promptly with interim financial statements of Seller and any other
management reports, as and when they are available.

                    (b)        Following the Closing, Buyer shall permit
Seller's representatives (including, without limitation, their counsel and
auditors), during normal business hours, to have reasonable access to, and
examine and make copies of, all books and records of the Business which relate
to transactions or events occurring prior to the Closing.  All out-of-pocket
costs associated with the delivery of the requested documents shall be paid by
Buyer.
                    (c)        Following the Closing, Seller shall permit Buyer
and its representatives (including, without limitation, their counsel and
auditors), to have access to, and examine and make copies of, all books and
records of Seller and its affiliates relating to the Business or Assets, which
books and records are retained by Seller and which relate to transactions or
events occurring prior to the Closing.  For a period of five

                                      21
<PAGE>   27
years after the Closing, Seller agrees that, prior to the destruction or
disposition of any such books or records, Seller shall provide not less than
forty-five (45) days', nor more than ninety (90) days', prior written notice to
Buyer of such proposed destruction or disposal.  If Buyer desires to obtain any
such documents or records, it may do so by notifying Seller in writing at any
time prior to the date scheduled for such destruction or disposal.  In such
event, Seller shall not destroy such documents or records and the parties shall
then promptly arrange for the delivery of such documents or records to Buyer,
its successors or assigns.  All out-of-pocket costs associated with the delivery
of the requested documents or records shall be paid by Buyer.

                    (d)        Seller shall cause its accounting firm to
consent to, and provide the necessary written consents for, the inclusion of
the Financial Statements in any registration statements, private placement
memoranda, and periodic reports, if any, necessary or appropriate in order to
enable Buyer or its affiliates to comply with any applicable registration or
reporting requirements of federal or state securities laws.

                    (e)        After Closing, Seller and Shareholder shall make
the books and records of Seller available to Buyer (and, without limitation, to
Buyer's auditors and other agents) and shall otherwise cooperate with Buyer in
order to permit Buyer to conduct an audit of Seller's financial statements for
any period prior to Closing not already audited.  Seller agrees to cooperate,
with Buyer in Buyer's preparation of financial statements relating to such
periods and Buyer's filing in a timely manner of registration statements,
private placement memoranda and periodic reports, if any, pursuant to any
applicable federal or state securities law.

          6.5       Preserve Accuracy of Representations and Warranties. Each
of Seller and Shareholders shall refrain from taking any action which would
render any representation and warranty contained in Article IV hereof untrue,
inaccurate or misleading as of Closing.  Seller and Shareholders will each
promptly notify Buyer of any lawsuit, claim, administrative action or other
proceeding asserted or commenced against Seller, its directors, officers or
Shareholders, that may involve or relate in any way to Buyer, the Assets or the
operation of the Business by Buyer.  Seller and Shareholders each shall
promptly notify Buyer of any facts or circumstances that come to either's
attention and that cause, or through the passage of time may cause, any of
Seller's and Shareholders' representations and warranties to be untrue or
misleading at any time from the date hereof to Closing.

          6.6       Maintain Books and Accounting Practices.  Until the
Closing, Seller shall maintain its books of account in the usual, regular and
ordinary manner on a basis consistent with prior years and shall make no change
in its accounting methods or practices.

                                      22

<PAGE>   28

          6.7       Indebtedness; Liens.  Until the Closing, with respect to
the Assets, including the Business and operations conducted with the Assets,
Seller shall not create, incur, assume, guarantee or otherwise become liable or
obligated with respect to any indebtedness for borrowed money, nor make any
loan or advance to, or any investment in, any person or entity, nor create any
lien, security interest, mortgage, right or other encumbrance in any of the
Assets, without Buyer's prior written approval.  At Closing the Assets will be
free and clear of all mortgages, security interests, liens, leases, covenants,
assessments, easements, options, rights of first refusal, restrictions,
reservations, defects in title, encroachments or other encumbrances, except as
specifically set forth in those Leases and Contracts which Buyer expressly
elects to assume.

          6.8       Compliance with Laws and Regulatory Consents.  Until the
Closing, (a) Seller shall comply with all applicable statutes, laws, ordinances
and regulations, (b) Seller shall keep, hold and maintain all certificates,
registrations, accreditations, participations, licenses, and other permits
necessary for the business and operation of the Assets, (c) Seller and
Shareholders shall use their best efforts and shall cooperate fully with Buyer
to obtain all consents, approvals, exemptions and authorizations of third
parties, whether governmental or private, necessary to consummate the
transactions contemplated under this Agreement, and (d) except as set forth on
Exhibit 10.1(d) and Section 4.31, Seller and Shareholders shall make and cause
to be made all filings and give and cause to be given all notices which may be
necessary or desirable under all applicable laws and under applicable
contracts, agreements and commitments in order to consummate the transactions
contemplated under this Agreement.

          6.9       Maintain Insurance Coverage.  Until the Closing, Seller
shall maintain and cause to be maintained in full force and effect the existing
insurance on the Assets and the operations of the Business and shall provide at
Closing evidence satisfactory to Buyer that such insurance continues to be in
effect and that all premiums due have been paid.  Seller will maintain its
existing product and professional liability insurance on an "occurrence" basis
policy, and covering at least five years after Closing.

          6.10      Medicare and Medicaid Reporting.  Until the Closing, Seller
shall timely file or cause to be filed all reports and claims of every kind,
nature or description, required by law or by written or oral contract to be
filed with respect to the purchase of services by third party payors,
including, but not limited to, Medicare, Medicaid and Blue Cross.  Seller has
paid or will pay all liabilities for contracted adjustments, discounts, refunds
and other offsets in connection with the filing of such reports and claims
through the date of Closing.

          6.11      Current Return Filing.  Seller shall be responsible for (a)
the preparation and filing of the federal, state and local income tax and gross
receipts and use tax returns for all the tax periods of Seller ending on or
before the Closing; and (b) the payment of all such taxes when due.



                                      23

<PAGE>   29


          6.12      WARN Act.  Within the period ninety (90) days prior to
Closing, Seller will not temporarily or permanently close or shut down any
"single site of employment" or any "facility" or any "operating unit,"
department or service within a single site of employment, as such terms are
used in WARN.

          6.13      No Sale, Merger or Consolidation.  Until the Closing,
Shareholders shall not sell, pledge or transfer any of their capital stock in
Seller, and Seller shall not sell all or substantially all of its assets, or
merge or consolidate with any other entity; neither party shall solicit any
inquiries, proposals or offers relating to any such transactions; and both
parties shall promptly notify Buyer orally, and confirm in writing, of all
relevant details relating to inquiries, proposals or offers which either may
receive relating to any of the matters referred to in this paragraph.

          6.14      Risk of Loss.  In the event there is any material damage to
or loss of any of the Assets (whether by fire, theft, vandalism, or other cause
or casualty), between the date hereof and the Closing, Buyer at its sole
option, may elect either (a) to terminate this Agreement in its entirety, or
(b) to terminate this Agreement with respect to the damaged Assets only, with a
reduction in the cash portion of the Purchase Price to be paid at Closing equal
to the appraised value of the Assets damaged or lost plus the cost of such
appraisal.  Seller, Shareholders and Buyer shall mutually select an appraiser
for such purpose.

          6.15      Condemnation.  Until the Closing, in the event that any
portion of the Assets become subject to or is threatened with any condemnation
or eminent domain proceedings, then Buyer, at its sole option, may elect either
(a) to terminate this Agreement in its entirety, or (b) to terminate this
Agreement with respect only to that portion of the Assets which is condemned or
threatened to be condemned, with a reduction in the cash portion of the
Purchase Price determined as provided in paragraph 6.14.

          6.16      Use of Medicare and Medicaid Provider Numbers.  Seller
agrees to allow Buyer to use Seller's Medicare and Medicaid provider numbers to
the extent that income from Medicare and Medicaid has been allocated to Buyer
from March 1 to Closing (the "Interim Period") pursuant to Section 7.1.  Buyer
agrees that it will hold all billings after closing until such time as Buyer
receives Medicare and/or Medicaid Provider Numbers in its name, for a period
not to exceed 90 days from Closing.  Buyer agrees to use its best efforts to
obtain its own Provider Numbers.  Buyer hereby agrees to indemnify and hold
Seller harmless from any and all claims which may arise from Buyer's use of
Seller's Medicare and Medicaid provider numbers, including, but not limited to,
any claims under the federal and state anti- kickback and anti-referral laws
and the federal False Claims Act or similar laws except to the extent such
claims arise from Seller's actions prior to closing.  Buyer agrees to reimburse
Seller and/or Shareholders, no later than April 15, 1997, for any tax liability
incurred by Seller and/or Shareholders which is attributable to Buyer due to
Buyer's use of such Provider Numbers during the Interim Period.


                                      24

<PAGE>   30

                             ARTICLE VII.  CLOSING

          7.1       Closing.  If all of the conditions to Closing set forth in
Articles VIII and IX hereof are satisfied, then the Closing shall occur on or
by March 24, 1997, at the offices of Harwell Howard Hyne Gabbert & Manner,
P.C., 1800 First American Center, 315 Deaderick Street, Nashville, Tennessee
37238, or at such other time or place as the parties may mutually agree (the
"Closing"). Notwithstanding any statement herein seemingly to the contrary,
upon consummation, for accounting purposes only, the parties hereto agree that
Closing will be deemed to be effective, and the transfer of the Assets and
assumption of the Assumed Liabilities will be deemed to have occurred, as of
12:01 a.m.  local time on March 1, 1997 (the "Effective Date").  Accordingly,
for accounting purposes, all income generated from operation of the Business on
and after the Effective Date (and the corresponding income tax liability) will
belong to Buyer, and adjustments to reflect the distribution of income and
liabilities with respect to the Business as contemplated under this Agreement
will be made as of the Effective Date in a manner mutually satisfactory to
Buyer and Seller.


         ARTICLE VIII.  SELLER'S AND SHAREHOLDERS' CONDITIONS TO CLOSE

          The obligations of Seller and Shareholders under this Agreement are
subject to the satisfaction on or prior to Closing, of the following conditions
(which may be waived in writing by Buyer in whole or in part):

          8.1       Representations and Warranties True at Closing; Compliance
with Agreement.  The representations and warranties of Buyer contained in this
Agreement (including the Exhibits and attachments hereto) or in any certificate
or document delivered to Seller pursuant hereto, shall be deemed to have been
made again at the Closing and shall then be true in all respects; and Buyer
shall have performed and complied with all covenants, agreements and conditions
required by this Agreement to be performed or complied with by it prior to or
at Closing.

          8.2       No Action/Proceeding.  No action or proceeding before a
court or any other governmental agency or body shall have been instituted or
threatened to restrain or prohibit the transactions hereunder contemplated, and
no governmental agency or body or other entity shall have taken any other
action or made any request of Seller or Buyer as a result of which Seller
reasonably and in good faith deems that to proceed with the transactions
hereunder may constitute a violation of law.

          8.3       Order Prohibiting Transaction.  No order shall have been
entered in any action or proceeding before any court or governmental agency,
and no preliminary or permanent injunction by any court shall have been issued
which would have the effect of

                                      25


<PAGE>   31

(a) making the transactions contemplated under this Agreement illegal, or (b)
otherwise preventing consummation of such transactions.  There shall have been
no United States federal or state statute, rule or regulations enacted or
promulgated after the date of this Agreement that would reasonably, directly or
indirectly, result in any of the consequences referred to in this paragraph.

          8.4       Employment Agreement.  Buyer and each of David Stephenson
and Mike Lautigar shall have entered into an employment agreement in the form
attached hereto as Exhibit 9.7(a) and (b), respectively.


                    ARTICLE IX.  BUYER'S CONDITIONS TO CLOSE

          The obligations of Buyer under this Agreement are subject to the
satisfaction, on or prior to Closing, of the following conditions (which may be
waived in writing by Seller and Shareholders in whole or in part):

          9.1       Representations and Warranties True at Closing; Compliance
with Agreement.  The representations and warranties of Seller and Shareholders
contained in this Agreement (including the Exhibits and attachments hereto) or
in any certificate or document delivered to Buyer in connection herewith, shall
be deemed to have been made again at the Closing and shall then be true in all
respects; and Seller and Shareholders shall have performed and complied with
all covenants, agreements and conditions required by this Agreement to be
performed or complied with by them prior to or at Closing.

          9.2       Regulatory Approvals.  As set forth in Section 6.16, Seller
has permitted Buyer to use Seller's Medicare and Medicaid numbers for the
limited purposes set forth therein.  Buyer will obtain (a) certification for
participation in the Medicaid Programs of the states where the Business is
conducted, (b) certification from the appropriate agency of the federal
government for participation in the federal Medicare Program, and (c) all other
consents, licenses, registrations, permits, approvals, provider contracts,
necessary in the judgment of Buyer to acquire and operate the Assets and
Business as contemplated hereunder.

          9.3       No Action/Proceeding.  No action or proceeding before a
court or any other governmental agency or body shall have been instituted or
threatened to restrain or prohibit the transaction hereunder contemplated, and
no governmental agency or body or other entity shall have taken any other
action or made any request of Seller or Buyer as a result of which Buyer
reasonably and in good faith deems that to proceed with the transactions
hereunder may constitute a violation of law.

          9.4       Inspection of Assets; UCC Searches, etc.  Buyer and its
representatives shall have had and continue to have reasonable rights of
inspection of the Assets in


                                      26

<PAGE>   32

connection with Buyer's due diligence review, and the results of Buyer's
inspection and due diligence review shall be acceptable to it.  Seller shall
have delivered to Buyer, at Seller's expense, all UCC financing statements and
title searches, local and central, including fixtures, and federal and state
pending litigation, tax lien and judgment searches, with respect to Seller,  the
Assets and the Business, including all "DBA's," tradenames and fictitious names
of Seller, dated no more than ten (10) days prior to Closing, with results
satisfactory to Buyer.

          9.5       Order Prohibiting Transaction.  No order shall have been
entered in any action or proceeding before any court or governmental agency,
and no preliminary or permanent injunction by any court shall have been issued
which would have the effect of (a) making the transactions contemplated under
this Agreement illegal, (b) otherwise preventing consummation of such
transactions, or (c) imposing material limitations on the ability of Buyer
effectively to acquire and hold Assets, to operate the Business, or, in any
case, to exercise rights of ownership pursuant thereto.  There shall have been
no federal or state statute, rule or regulations enacted or promulgated after
the date of this Agreement that would reasonably result, directly or
indirectly, in any of the consequences referred to in this paragraph.

          9.6       No Loss, Damage or Destruction.  In the event there is any
damage to or loss of any of the Assets, the terms of paragraphs 6.14 and/or
6.15, as applicable, shall have been complied with to the satisfaction of
Buyer.

          9.7       Employment Agreement.  Buyer and each of David Stephenson
and Mike Lautigar shall have entered into an employment agreement in the form
attached hereto as Exhibit 9.7(a) and (b), respectively.

          9.8       Operating Targets.  As of the date of Closing, Seller and
the Business shall meet the following minimum operating thresholds:  (i) for
the twelve (12) month period ended at December 31, 1996, Seller shall have
achieved income, before interest, taxes and depreciation, and after the
add-back of Redundant or Unnecessary Expenses, of at least One Million Six
Hundred Thousand Dollars ($1,600,000.00); and (ii) for the twelve (12) month
period ended at December 31, 1996, Seller shall have achieved net revenues of
no less than Five Million Four Hundred Seventy Thousand Dollars
($5,470,000.00);

          9.9       Value of Assets.  As of the date of Closing, the Assets
shall have a net value (being the aggregate book value of the Assets, less the
amount of Assumed Liabilities listed on Exhibit 1.3 hereto) of at least One
Million Two Hundred Fifty One Thousand Three Hundred Ninety Nine Dollars
($1,251,399.00).  From December 31, 1996 through Closing and except as required
in the ordinary and usual course of the Business, no assets shall have been
removed, distributed, assigned or paid by or from Seller.  Further, upon
Buyer's request, just prior to the time of Closing, Seller shall provide to
Buyer interim, unaudited financial statements evidencing that no material
change has occurred


                                      27

<PAGE>   33

in connection with the Business or the Assets since the date of the Financial
Statements.  At Closing the Assets shall be subject to no liabilities,
mortgages, security interests, liens, leases, covenants, assessments, easements,
options, rights of first refusal, restrictions, reservations, defects in title,
encroachments or other encumbrances except for the Assumed Liabilities, and
except for any restrictions which arise due to failure to obtain consent as
disclosed on Exhibit 10.1(d).

          9.10      Beds.  As of the date of Closing, there shall be a minimum
of 1,900 beds being actively serviced by Seller under agreements as set forth
on Exhibit 4.11.

          9.11      Third-Party Consents.  Seller shall provide to Buyer all
consents and  authorizations of governmental agencies and other third parties
believed by Buyer to be necessary or advisable for the legal and proper
consummation of all agreements and transactions contemplated within this
Agreement, each in form and substance acceptable to Buyer, except as set forth
on Exhibit 10.1(d).

          9.12      Approval of Board of Directors.  This Agreement and
consummation of the transactions contemplated hereunder shall have been
approved by the Board of Directors of Seller.


          ARTICLE X.  OBLIGATIONS OF SELLER AND SHAREHOLDER AT CLOSING

          At Closing, Seller and Shareholder shall deliver or cause to be
delivered to Buyer the following in form and substance reasonably satisfactory
to Buyer:

          10.1      Documents Relating to Title.  Seller shall execute,
acknowledge, deliver and cause to be executed, acknowledged and delivered to
Buyer:

                    (a)        An Assignment and Assumption of Lease agreement
for each location of the leased Real Estate, each in form and substance
reasonably satisfactory to Buyer, with all recording, stamp tax or other
transfer fees paid by Seller, and conveying to Buyer the legal right to possess
and use the leased Real Estate free and clear of all liens, mortgages, superior
rights of possession or use, except for those expressly acceptable to Buyer.

                    (b)        A Bill of Sale, in form attached hereto as
Exhibit 10.1(b) and substance satisfactory to Buyer, warranting and conveying
to Buyer good, valid and marketable title to all Assets, free and clear of all
liens, mortgages, pledges, encumbrances, security interests, covenants,
easements, rights of way, equities, options, rights of first refusal
restrictions, special tax or governmental assessments, defects in title,
encroachments and other burdens, except for the Assumed Liabilities and except
as set forth in Exhibit 10.1(d).


                                      28
<PAGE>   34


                    (c)        Certificates of title to all vehicles that
constitute Assets endorsed by Seller together with completed originals of any
forms required by all applicable states to transfer the same, free and clear of
all liens, except for the Assumed Liabilities.

                    (d)        An effective and enforceable assignment (except
for the failure to obtain consent as set forth in Exhibit 10.1(d)) to Buyer of
each of the Leases and Contracts which Buyer has agreed to assume.

          10.2      Possession.  Seller shall deliver to Buyer full possession
and control of the Business and Assets in accordance with the terms and
conditions of this Agreement.

          10.3      Opinion of Counsel.  Seller and Shareholders shall deliver
to Buyer the favorable opinion of counsel for Seller and Shareholders, dated as
of Closing, in the form attached hereto as Exhibit 10.3.

          10.4      Corporate Good Standing and Corporate Resolutions.  Seller
and Shareholders shall deliver to Buyer certificates of good standing from the
Secretary of State of its state of organization, and from each jurisdiction in
which Seller is qualified to do business, certified copies of the Bylaws and
Articles of Incorporation of Seller (all dated the most recent practical date
prior to Closing), certified copies of the resolutions of the Board of
Directors and Shareholders of Seller authorizing the execution, delivery and
consummation of this Agreement and the execution, delivery and consummation of
all other agreements and documents executed in connection herewith by them,
including all deeds, bills of sale and other instruments required hereunder,
sufficient in form and content to meet the requirements of the law of the state
of Seller's incorporation relevant to such transactions and certified by
officers of Seller to be validly adopted and in full force and effect and
unamended as of Closing.

          10.5      Closing Certificate.  Seller and Shareholders shall deliver
to Buyer a  certificate of an officer of Seller and of Shareholders, dated as
of Closing, certifying that (a) each covenant and obligation of Seller and
Shareholders has been complied with by such parties, and (b) each
representation and warranty of Seller and Shareholders is true and correct at
the Closing as if made on and as of the Closing.

          10.6      Third-Party Consents.  Except as set forth on Exhibit
10.1(d), Seller shall deliver to Buyer, all consents, estoppels, approvals and
authorizations of governmental agencies and other third parties that Buyer
believes are necessary or advisable for the legal and proper execution,
delivery and consummation of this Agreement, and the transactions contemplated
hereby, including, without limitation, those consents necessary for the
assignment of Leases and Contracts pursuant to paragraph 10.1(d).

          10.7      Taxes and Other Payments.  Seller shall deliver to Buyer:

                                      29

<PAGE>   35

                    (a)        A certificate of non-foreign status signed by
the appropriate party and sufficient in form and substance to relieve Buyer of
all withholding obligations under Section 1445 of the Code.

                    (b)        Executed releases of all mortgages, security
interests, liens, pledges, restrictions or other encumbrances on or applicable
to the Assets, except those encumbrances permitted under Paragraph 9.10 or as
provided in Exhibit 10.1(d) and Section 4.31.

          10.8      Insurance.  Seller shall deliver evidence of its insurance
coverage required by paragraph 6.8.

          10.9      Employment  Agreements.   David Stephenson and Mike
Lautigar shall deliver to Buyer the agreements described in paragraphs 9.7(a)
and (b) herein.

          10.10     Additionally Requested Documents; Post Closing Assistance.
At the reasonable request of Buyer at Closing and at any time or from time to
time thereafter, Seller and Shareholders shall cooperate with Buyer to put
Buyer in actual possession and operating control of the Assets and Business,
execute and deliver such further instruments of sale, conveyance, transfer and
assignment, as Buyer may reasonably request in order to effectively sell,
convey, transfer and assign the Assets and Business to Buyer, to execute and
deliver such further instruments and to take such other actions as Buyer may
reasonably request to release Buyer from all obligation and liability with
regard to any obligation or liability retained by Seller and/or Shareholders
and to execute and deliver such further instruments and to cooperate with Buyer
as Buyer may reasonably request or to enable Buyer to obtain all necessary
health care or regulatory certifications, approvals, registrations, consents
and licenses, accreditations or permits.


                  ARTICLE XI.  OBLIGATIONS OF BUYER AT CLOSING

          At Closing, Buyer shall deliver or cause to be delivered to Seller
the following in a form and substance reasonably satisfactory to Seller:

          11.1      Purchase Price.  Buyer shall make available to Seller the
Purchase Price upon the terms specified in paragraph 3.1.

          11.2      Assumption of Liabilities.  Buyer shall covenant to fully
perform and comply with all of the Assumed Liabilities, subject to the
provisions of this Agreement, from and after Closing.

          11.3      Opinion of Counsel.  Buyer shall deliver to Seller a
favorable opinion of counsel for Buyer, dated as of Closing, in the form
specified in Article XII hereof.


                                      30

<PAGE>   36


          11.4      Corporate Good Standing and Board Resolutions.  Buyer shall
deliver to Seller a certificate of good standing from the Secretary of State of
Maryland, dated the most recent practical date prior to Closing, together with
a certified copy of the resolutions of the Board of Directors of Buyer
approving this Agreement and the consummation of the transactions hereunder
contemplated.

          11.5      Closing Certificate.  Buyer shall deliver to Seller a
certificate of an officer of Buyer, dated as of Closing, certifying that (a)
each covenant and obligation of Buyer has been complied with by Buyer, and (b)
each representation and warranty of Buyer is true and correct on the Closing as
if made on and as of the Closing.


                    ARTICLE XII.  OPINION OF BUYER'S COUNSEL

          At the Closing, Buyer shall deliver to Seller an opinion of Harwell
Howard Hyne Gabbert & Manner, P.C. dated the date of the Closing and pursuant
to the Legal Opinion Accord of the ABA Section of Business Law (1991), in form
and substance reasonably satisfactory to Seller and its counsel to the effect
that:

                    (a)        Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of Maryland and has
all requisite corporate power and corporate authority to own, operate and lease
its properties and assets and to carry on its business as now conducted.

                    (b)        Buyer has the corporate power and corporate
authority to execute, deliver and carry out the terms of this Agreement and all
documents and agreements delivered by Buyer at Closing and to consummate the
transactions contemplated on the part of Buyer hereby and thereby; Buyer has
taken all action required by law, and its Certificate of Incorporation and
Bylaws, to authorize such execution, delivery and consummation of this
Agreement, and this Agreement, and all other agreements delivered by Buyer at
Closing constitute the valid and binding obligations of Buyer enforceable in
accordance with their respective terms, except as enforcement may be limited by
bankruptcy, insolvency, reorganization or similar laws affecting creditors'
rights generally and by general principles of equity.


           ARTICLE XIII.  SURVIVAL OF PROVISIONS AND INDEMNIFICATION

          13.1      Survival.  The covenants, obligations, representations and
warranties of Buyer, Seller and Shareholder contained in this Agreement, or in
any certificate or document delivered pursuant to this Agreement, shall be
deemed to be material and to have been relied upon by the parties hereto
notwithstanding any investigation prior to the


                                      31
<PAGE>   37

Closing, and shall survive the date of Closing and shall not be merged into any
documents delivered in connection with the Closing.

          13.2      Indemnification by Seller and Shareholders.  Subject to
provisions of paragraph 13.4, Seller and Shareholders, jointly and severally,
shall promptly indemnify, defend, and hold harmless Buyer, the directors,
officers, shareholders, employees and agents of Buyer, and the Assets against
any and all losses, costs, and expenses (including reasonable cost of
investigation, court costs and legal fees) actually incurred resulting from (i)
any breach by either Seller or Shareholders of any of the covenants,
obligations, representations or warranties contained in this Agreement or any
certificate or document of Seller and/or Shareholders delivered pursuant to this
Agreement, (ii) any liability of Seller not expressly assumed by Buyer pursuant
to paragraph 1.3, and (iii) any claim (whether or not disclosed herein) that is
brought or asserted by any third party(ies) against Buyer arising out of the
ownership, licensing, operation or conduct of the Business or Assets related to
the operation of the Business prior to Closing or the conduct of any of Seller's
employees, agents or independent contractors, relating to all periods of time
through the date of Closing, except Seller and Shareholders shall not indemnify
Buyer for claims arising out of Buyer's use of Seller's Medicare and Medicaid
provider numbers and failure to obtain consent as set forth on Exhibit 10.1(d).
Any indemnification payment made pursuant to this Article shall include interest
at a floating rate equal to two points over the prime rate of Bankers Trust
Company established from time to time (the "Rate"), payable for the period
measured from one-hundred twenty (120) days following notice of the existence of
such claim until the date of payment.  The liability created under this
paragraph shall be joint and several between Seller and Shareholders.

          13.3      Indemnification by Buyer.  Subject to the provisions of
paragraph 13.4, Buyer shall promptly indemnify, defend, and hold Seller
harmless against any and all losses, costs, and expenses (including reasonable
cost of investigation, court costs and reasonable legal fees actually incurred)
and other damages resulting from (i) any breach by Buyer of any of its
covenants, obligations, representations or warranties contained in this
Agreement or any certificate or document of Buyer delivered pursuant to this
Agreement,(ii) any claim which is brought or asserted by any third party(ies)
against Seller for failure to pay or perform any of the Assumed Liabilities,
and (iii) any claim that is brought or asserted by any third party(s) against
Seller arising out of the ownership, licensing, operation or conduct of the
Business or Assets or the conduct of any of Buyer's employees, agents or
independent contractors, relating to all periods of time subsequent to the date
of Closing including without limitation claims arising out of Buyer's use of
Seller's Medicare and Medicaid provider numbers as more fully provided in
Section 6.16 and claims arising out of the liability for failure to obtain
consent for assignment as set forth in Exhibit 10.1(d), Item 1.  Any
indemnification payment pursuant to the foregoing shall include interest at the
Rate for the period measured from one- hundred twenty (120) days following
notice of the existence of such claim until the date of payment.


                                      32

<PAGE>   38


          13.4      Rules Regarding Indemnification.  The obligations and
liabilities of each party which may be subject to indemnification liability
hereunder (the "indemnifying party") to the other party (the "indemnified
party") shall be subject to the following terms and conditions:

                    (1)        Claims by Non-parties.  The indemnified party
shall give written notice within a reasonably prompt period of time to the
indemnifying party of any written claim by a third party which is likely to give
rise to a claim by the indemnified party against the indemnifying party based on
the indemnity agreements contained in this Article, stating the nature of said
claim and the amount thereof, to the extent known.  The indemnified party shall
give notice to the indemnifying party that pursuant to the indemnity, the
indemnified party is asserting against the indemnifying party a claim with
respect to a potential loss from the third party claim, and such notice shall
constitute the assertion of a claim for indemnity by the indemnified party.  If,
within thirty (30) days after receiving such notice, the indemnifying party
advises the indemnified party that it will provide indemnification and assume
the defense at its expense, then so long as such defense is being conducted, the
indemnified party shall not settle or admit liability with respect to the claim
and shall afford to the indemnifying party and defending counsel reasonable
assistance in defending against the claim.  If the indemnifying party assumes
the defense, counsel shall be selected by such party and if the indemnified
party then retains its own counsel, it shall do so at its own expense.  If the
indemnified party does not receive a written objection to the notice from the
indemnifying party within thirty (30) days after the indemnifying party's
receipt of such notice, the claim for indemnity shall be conclusively presumed
to have been assented to and approved, and in such case the indemnified party
may control the defense of the matter or case and, at its sole discretion,
settle or admit liability.  If within the aforesaid thirty (30) day period the
indemnified party shall have received written objection to a claim (which
written objection shall briefly describe the basis of the objection to the claim
or the amount thereof, all in good faith), then for a period of ten (10) days
after receipt of such objection the parties shall attempt to settle the dispute
as between the indemnified and indemnifying parties.  If they are unable to
settle the dispute, the unresolved issue or issues shall be settled by
arbitration in Roanoke, Virginia in accordance with the rules and procedures of
the American Arbitration Association.

                    (2)        Claims by a Party.  The determination of a claim
asserted by a party hereunder (other than as set forth in subparagraph (1)
above) pursuant to this Article shall be made as follows: The indemnified party
shall give written notice within a reasonably prompt period of time to the
indemnifying party of any claim by the indemnified party which has not been
made pursuant to subparagraph (1) above, stating the nature of such claim and
the amount thereof, to the extent known.  The claim shall be deemed to have
resulted in a determination in favor of the indemnified party and to have
resulted in a liability of the indemnifying party in an amount equal to the
amount of such claim estimated pursuant to this paragraph if within forty-five
(45) days after the indemnifying party's receipt of the claim the indemnified
party shall not have received written objection to the claim.  In such event,
the claim shall be conclusively presumed to have been assented to and approved.
If within the aforesaid forty-five (45) day period the indemnified party shall
have received written objection to a claim (which written objection shall
briefly describe the basis of the objection


                                      33

<PAGE>   39

to the claim or the amount thereof, all in good faith), then for a period of
sixty (60) days after receipt of such objection the parties shall attempt to
settle the disputed claim as between the indemnified and indemnifying parties.
If they are unable to settle the disputed claim, the unresolved issue or issues
shall be settled by arbitration in Roanoke, Virginia in accordance with the
rules and procedures of the American Arbitration Association.

                    (3)        Claims by a Straddle Customer or Patient.  Any
claim by a customer or patient relating to professional negligence or similar
matters involving a customer or patient served both prior to and subsequent to
Closing will be the responsibility of either Seller and Shareholders, jointly
and severally on the one hand, or Buyer, on the other hand,  in accordance with
the following guidelines: (i) if it is a claim in which the incident giving rise
to liability clearly arose on or before the date of Closing, Seller and
Shareholders shall respond to the loss and defense expenses; (ii)  if it is a
claim in which the incident giving rise to liability clearly arose subsequent to
the date of Closing, Buyer shall respond to the loss and defense expenses; and
(iii) in the event that the incident giving rise to liability as to time is not
clear, Seller, Shareholders and Buyer will jointly defend the case and each will
fully cooperate with the others in such defense.  Once the case is closed, if
Buyer and Seller and Shareholders cannot agree to the allocation of both
indemnity and expenses, then the matter shall be submitted to binding
arbitration in Roanoke, Virginia in accordance with the rules and procedures of
the American Arbitration Association.

          13.5      Indemnity Period. The representations, warranties and
covenants, and the indemnity obligations related thereto, under this Agreement
shall expire thirty-six (36) months from the Closing, except for claims under
sections 4.8, 4.12, 4.24, and 4.26 hereof, which shall expire upon the
expiration of the applicable statute of limitations.  The indemnification
obligations under this Agreement shall not expire as provided herein for a
claim made, but not resolved, within the above periods.

          13.6      Limitation on Claims.  The limitations provided in this
Section 13.6 apply solely to the liability of the Shareholders and the Seller.
The obligations of an indemnifying Shareholder or Seller under this Agreement
shall not begin until the indemnified party incurs one or more liabilities
which equal Fifty Thousand and No/100 Dollars ($50,000.00) (the "Basket").
Once the Basket is reached, the obligations of an indemnifying Seller or
Shareholder under this Agreement shall apply to all claims of the indemnified
party in excess thereof.  In no event shall the obligations of an indemnifying
Seller or Shareholder under this Agreement exceed the lesser of Five Million
Dollars ($5,000,000.00) (the "Cap") or the amount of total consideration that
such party received in connection with the sale of the Business, including the
amount received as consideration pursuant to this


                                      34

<PAGE>   40


Agreement and/or the amount received as a dividend from the Seller and/or
received as a non-compete payment in connection with the sale of the Business.

          The amount of the Basket notwithstanding, the Seller and Shareholders
shall be liable for any of the following regardless of whether said liability
is less than the amount of the Basket:

                    (1)        any litigation which is listed on (or should
have been listed on) Exhibit 4.14;

                    (2)        obligations of Seller consisting of current
trade accounts payable  and other current working capital liabilities incurred
in the ordinary course of business to the extent such liabilities exceed Fifty
One Thousand Two Hundred Eighty Six Dollars  ($51,286.00).

                    (3)        offsets against any reimbursement under any
third-party payor or reimbursement programs as more fully provided in Section
4.8 (4).

          13.7      Indemnification Net of Benefits.  The amount for which any
Shareholder or the Seller shall be liable under Article XIII of this Agreement
shall be (i) net of any current tax benefits realized by the Buyer by reason of
the facts and circumstances giving rise to the Shareholder's liability, and (ii)
net of any insurance proceeds received by the Buyer which proceeds were
attributable to the facts and circumstances giving rise to the right of
indemnification.

                     ARTICLE XIV.  PRESERVATION OF BUSINESS
                          AND NONCOMPETE RESTRICTIONS

          14.1      Covenant Not to Compete.  Seller and Shareholders hereby,
jointly and severally, covenant and agree with Buyer that, during the
"NONCOMPETE PERIOD" (as such term is defined herein) neither Seller nor
Shareholders shall directly or indirectly, (a) within the "NONCOMPETE AREA" (as
such term if defined herein), acquire, lease, manage, consult for, serve as
agent or subcontractor for, finance, invest in, own any part of or exercise
management control over any pharmaceutical operation or business which provides
any goods or  services competitive with the goods and services provided by the
Business as of the Closing; (b) solicit for employment or employ any person who
at Closing or thereafter became an employee of Buyer or an Affiliate unless
such person is not so employed for at least six (6) months; or (c) with respect
to any customer, patient, physician, physician group, or healthcare provider
with whom Buyer or an Affiliate contracts with or serves in connection with the
Business subsequent to Closing, or any potential customer with whom Buyer or
Affiliate may reasonably be expected to contract with or service in connection
with the Business within six (6) months of the Closing, either solicit the same
in a manner which could adversely affect Buyer or an Affiliate or make
statements to the same which disparage Buyer, an Affiliate, the Business or
their respective operations in anyway.  The



                                      35

<PAGE>   41

"NONCOMPETE PERIOD" shall commence at the Closing and terminate on the fifth
anniversary thereof.  The "NONCOMPETE AREA" shall mean (a) the area within a
fifty (50) mile radius of each location at or for which Seller delivers
pharmaceuticals as of the Closing, and (b) the area within a one hundred fifty
(150) mile radius of (i) each Virginia location from which the business of Buyer
or Affiliate is operated or conducted as of the Closing, and (ii)  each location
from which the Business is operated or conducted as of the Closing.  Ownership
of less than five percent (5%) of the stock of a publicly held company shall not
be deemed a breach of this covenant. Notwithstanding the foregoing, neither
Wallace Cundiff, Samuel Cundiff nor William Cundiff nor Mike Lautigar shall be
prohibited during the Noncompete Period from 1) working for, or owning an
interest in, any  retail pharmacy, including without limitation, the Cundiff
Drug Store located in Vinton, Virginia, and the Blue Ridge Pharmacy in Blue
Ridge, Virginia or 2) working for, or owning an interest in, the Richfield
Pharmacy, Inc., which provides institutional pharmacy services in competition
with the Buyer in the Noncompete area or 3) working as a consultant pharmacist
at nursing homes which have captive institutional pharmacies which do not serve
any other facilities.  (1), 2), & 3) are hereinafter referred to as the
"Noncompete Carveout"); provided however, the Noncompete Carveout shall not
apply to Mike Lautigar for so long as he is employed by Buyer.  Provided
further, said exclusion of Cundiff Drug Store and Richfield Pharmacy, Inc.  from
the noncompete shall not be effective as to either the drug store or the
pharmacy if either becomes part of a major institutional drug company.

          The period and area covered are expressly acknowledged and agreed to
be fair, reasonable and necessary.  In the event any covenant of this
noncompete is held to be invalid, illegal or unenforceable because of the
duration of such covenant, the geographic area covered thereby or otherwise,
the parties agree that the tribunal making such determination shall have the
power to reduce the duration, the area and/or other provisions of any such
covenant to the maximum permissible and to include as much of its nature and
scope as will render it enforceable, and, in its reduced form said covenant
shall be valid, legal and enforceable.

          14.2      Enforceability.  In the event of a breach of paragraph
14.1, Seller and Shareholders recognize that monetary damages shall be
inadequate to compensate Buyer and Buyer shall be entitled, without the posting
of a bond or similar security, to an injunction restraining such breach, with
the costs (including attorneys fees) of securing such injunction to be jointly
and severally borne by Seller and Shareholders.  Nothing contained herein shall
be construed as prohibiting Buyer from pursuing any other remedy available to
it for such breach or threatened breach.

          All parties hereby acknowledge the necessity of protection against
the competition of Seller and Shareholders and that the nature and scope of
such protection has been carefully considered by the parties.  The period
provided and the area covered are expressly represented and agreed to be fair,
reasonable and necessary.  The consideration provided for herein is deemed to
be sufficient and adequate to compensate

                                      36

<PAGE>   42

Seller and Shareholders for agreeing to the restrictions contained in paragraph
14.1.  If, however, any court determines that the foregoing restrictions are not
reasonable, such restrictions shall be modified, rewritten or interpreted to
include as much of their nature and scope as will render them enforceable.


                           ARTICLE XV.  MISCELLANEOUS

          15.1      Assignment.  Following Closing, Buyer may freely assign any
or all of its rights or delegate any or all of its obligations under this
Agreement without the express written consent of Seller or Shareholders.
Neither Seller nor Shareholders may assign any rights or delegate any
obligations under this Agreement without the prior written consent of Buyer,
and any prohibited assignment or delegation will be null and void.

          15.2      Other Expenses.  Except as otherwise provided in this
Agreement, Seller and Shareholders shall pay all of their expenses in connection
with the negotiation, execution, and implementation of the transactions
contemplated by this Agreement and Buyer shall pay all of its expenses in
connection with the negotiation, execution, and implementation of the
transactions contemplated by this Agreement.  In the event Seller or
Shareholders has retained a broker or finder in connection with the transactions
contemplated hereunder, such fee shall be paid in full at Closing by a deduction
to the cash portion of the Purchase Price, and Seller will provide Buyer a
pay-off letter from the broker or finder in form satisfactory to Buyer.  All
state and local sales and use taxes, recording fees and transfer taxes incurred
in connection with the transactions contemplated within this Agreement shall be
borne and timely paid by Seller.  All ad valorem taxes incurred in connection
with the transactions contemplated within this Agreement shall be shared equally
by Seller and Buyer and shall be prorated as of Closing.  The Purchase Price
shall be reduced, on a dollar-per-dollar basis, to the extent and in an amount
equal to any taxes that are accrued but unpaid by Seller as of the date of
Closing.

          15.3      Notices.  All notices, requests, demands, waivers and other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given: (a) if delivered
personally or sent by facsimile, on the date received, (b) if delivered by
overnight courier, on the day  after mailing, and (c) if mailed, five days
after mailing with postage prepaid.  Any such notice shall be sent as follows:

                    To Seller or Shareholders:

                    Pharmacare, Inc.
                    P. O. Box 883
                    Vinton, VA  24179
                    Attn:  David Stephenson


                                      37
<PAGE>   43

                    with a copy to:

                    Nicholas C. Conte
                    Woods Rogers & Hazelgrove PLC
                    First Union Tower, Suite 1400
                    10 South Jefferson Street
                    Roanoke, Virginia 24011

                    To Buyer:

                    Capstone Pharmacy Services, Inc.
                    9901 East Valley Ranch Parkway, Suite 3001
                    Irving, Texas 75063
                    Attn: Chief Executive Officer

                    with a copy to:

                    Mark Manner
                    Harwell Howard Hyne Gabbert & Manner, P.C.
                    1800 First American Center
                    Nashville, Tennessee  37238-1800

          15.4      Confidentiality; Prohibition on Trading.  All parties agree
to maintain the confidentiality of the existence of this Agreement and the
transactions contemplated hereunder, unless disclosure is required by law.
Seller, Shareholders and their Affiliates agree not to trade in the securities
of Buyer or its Affiliates based upon any non-public information.

          15.5      Controlling Law.  This Agreement shall be construed,
interpreted and enforced in accordance with the laws of the Commonwealth of
Virginia.

          15.6      Headings.  Any table of contents and paragraph headings in
this Agreement are for convenience of reference only and shall not be
considered or referred to in resolving questions of interpretation.

          15.7      Benefit.  Subject to paragraph 15.1, this Agreement shall
be binding upon and shall inure to the exclusive benefit of the parties hereto
and their respective heirs, legal representatives, successors and assigns.
This Agreement is not intended to, nor shall it, create any rights in any other
party.

          15.8      Partial Invalidity.  The invalidity or unenforceability of
any particular provision of this Agreement shall not affect the other
provisions hereof, and this Agreement shall be construed in all respects as if
such invalid or unenforceable provisions were

                                      38
<PAGE>   44

omitted.  Further, there shall be automatically substituted for such invalid or
unenforceable provision a provision as similar as possible which is valid and
enforceable.

          15.9      Waiver.  Neither the failure nor any delay on the part of
any party hereto in exercising any rights, power or remedy hereunder shall
operate as a waiver thereof, or of any other right, power or remedy; nor shall
any single or partial exercise of any right, power or remedy preclude any
further or other exercise thereof, or the exercise of any other right, power or
remedy.  No waiver of any of the provisions of this Agreement shall be valid
unless it is in writing and signed by the party against which it is sought to
be enforced.

          15.10     Counterparts.  This Agreement may be executed
simultaneously in two or more counterparts each of which shall be deemed an
original and all of which together shall constitute but one and the same
instrument.

          15.11     Interpretation; Knowledge.  All pronouns and any variation
thereof shall be deemed to refer to the masculine, feminine, neuter, singular
or plural as the identity of the person or entity, or the context, may require.
Further, it is acknowledged by the parties that this Agreement has undergone
several drafts with the negotiated suggestions of both; and, therefore, no
presumptions shall arise favoring either party by virtue of the authorship of
any of its provisions or the changes made through revisions.  Whenever in this
Agreement the term "to the best knowledge of Seller or Shareholders" or the
like is used, Seller and Shareholders shall each be deemed to have the
knowledge of Seller's Shareholders, officers, directors and key employees, and
of its Affiliates; and Seller and Shareholders shall each be under a duty of
due inquiry.

          15.12     Entire Agreement.  This Agreement, including the Exhibits
and attachments hereto, which are incorporated herein by reference, constitutes
the entire agreement between the parties hereto with regard to the matters
contained herein and it is understood and agreed that all previous undertakings,
negotiations, letters of intent and agreements between the parties are merged
herein.  This Agreement may not be modified orally, but only by an agreement in
writing signed by Buyer, Seller and Shareholders.

          15.13     Legal Fees and Costs.  In the event any party incurs legal
expenses to enforce or interpret any provision of this Agreement, the
prevailing party will be entitled to recover such legal expenses, including,
without limitation, attorney's fees, costs and disbursements, in addition to
any other relief to which such party shall be entitled.

          15.14     Disclosure.  Any information fairly disclosed in any
Section or Paragraph of this Agreement or any Exhibit or attachment hereto or
in any document furnished by Seller or the Shareholders prior to the Closing
shall constitute disclosure for purposes of all other sections, paragraphs,
Exhibits, attachments or documents.


                                      39

<PAGE>   45

          IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.

                                        "SELLER":

                                        PHARMACARE, INC.


                                        By:    ________________________________
                                        Title: ________________________________

                                        "SHAREHOLDERS":



                                        _______________________________________
                                        DAVID STEPHENSON


                                        _______________________________________
                                        MIKE LAUTIGAR


                                        _______________________________________
                                        WILLIAM CUNDIFF


                                        _______________________________________
                                        SAMUEL CUNDIFF


                                        _______________________________________
                                        WALLACE CUNDIFF



                                        "BUYER"

                                        INSTITUTIONAL PHARMACY SERVICES, INC.



                                        By:    ________________________________
                                        Title: ________________________________





                                       40
<PAGE>   46

                                 EXHIBIT INDEX
                                PHARMACARE, INC.

        [Copies of Schedules and Exhibits to be Furnished Upon Request]


A        Type of services and products provided by the Seller at each location
1.1(1)   Real Estate
1.1(2)   Equipment and Furnishings, including vehicles
1.2      Excluded Assets
1.3(a)   Assumed Liabilities Cap
1.3(b)   Assumed Liabilities
3.2      Allocation of Purchase Price
4.3      Financial Statements
4.4      Operations since December 31, 1996
4.5      Absence Certain Liabilities
4.6      Employment Discrimination
4.7(1)   Licenses and Permits; Licensure Surveys; Deficiency Reports; List
         of Regulatory Bodies
4.11     List and Copies/Summaries of Leases, Agreements and Contracts
4.14     Litigation
4.15     Seller's Employees
4.17     Insurance; Summary of Coverage; Pending Claims
4.20     Intellectual Property
4.23(1)  Welfare Benefit Plans
4.23(2)  Pension Benefit Plans
4.23(3)  Unfunded Liabilities
4.27     Operating Targets
9.7      Form of Employment Agreement with:
              (a)      David Stephenson
              (b)      Mike Lautigar
10.1(b)  Form of Bill of Sale
10.1(d)  Leases and Contracts not assumed
10.3     Form of Opinion of Counsel for the Seller and Shareholders