<PAGE>

                                                                EXHIBIT 10.59


                             TRANSITION AGREEMENT


      TRANSITION AGREEMENT (the "Agreement") dated as of October 1, 1997 by
and among HEALTH MANAGEMENT, INC., a Delaware corporation ("HMI"), HEALTH
REIMBURSEMENT CORPORATION, a Delaware corporation, HMI ILLINOIS, INC., a
Delaware corporation, HMI MARYLAND, INC., a Delaware corporation, HMI
PENNSYLVANIA, INC., a Delaware corporation, HMI PMA, INC., a Delaware
corporation, HMI RETAIL CORP., INC., a Delaware corporation, and HOME CARE
MANAGEMENT, INC., a New York corporation (collectively, the "HMI
Subsidiaries"; HMI and the HMI Subsidiaries are referred to collectively as
the "Sellers" and individually as a "Seller"), and STADTLANDER DRUG
DISTRIBUTION CO, INC., a Delaware corporation ("Purchaser") .


                             W I T N E S S E T H :

      WHEREAS, Sellers, Purchaser, Transworld Healthcare Inc. and Counsel
Corporation are parties to an Asset Purchase Agreement dated October 1, 1997
(the "Asset Purchase Agreement") pursuant to which Sellers are transferring to
Purchaser, on the date hereof, certain of their assets (the "Purchased
Assets"), for the consideration specified in the Asset Purchase Agreement;

      WHEREAS, the parties desire to enter into this Agreement to set forth
their mutual understanding regarding (i) the use by Purchaser, to the extent
permitted by law, rule or regulation, of Sellers' provider identification
numbers in connection with Purchaser's use after the date hereof of the assets
being acquired from Sellers, pending issuance to Purchaser of its own provider
numbers, and (ii) certain actions to be taken by Sellers and Purchaser on an
interim basis from and after the date hereof; and

      WHEREAS, the parties agree that this Agreement is necessary to the
successful transition of the business connected with the Purchased Assets from
Sellers to Purchaser; and

      WHEREAS, pursuant to the Asset Purchase Agreement, the execution of this
Agreement is a condition precedent to the consummation of the transactions
under the Asset Purchase Agreement;

      NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties hereby agree as follows:

      1. Certain Definitions. Unless otherwise stated, all references in this
Agreement to days shall mean calendar days. If a period of days ends on a
weekend or holiday, such period shall be extended to the next business day.
Any terms not defined herein shall have the same meaning as set forth in the
Asset Purchase Agreement.

<PAGE>

      2. Operation, Access and Use by Purchaser of  Excluded Facilities.

            (a) To the extent permitted by law, rule and regulation, Sellers
      shall permit Purchaser to have full access at all times to, and to use
      and operate, for Purchaser's benefit, the Excluded Facilities and all
      furniture, fixtures and equipment (including, but not limited to,
      computer equipment) of Sellers which are Excluded Assets and are located
      at the Excluded Facilities, throughout the term of this Agreement (or,
      in the case of any particular Excluded Facility, until 30 days after any
      earlier date on which Purchaser shall advise HMI in writing that it no
      longer requires the use of such Excluded Facility). Sellers shall use
      commercially reasonable efforts to ensure that the Excluded Facilities
      and such Excluded Assets remain available for Purchaser's use in
      accordance with the preceding sentence, but Sellers shall not be
      required to renew or extend any lease with respect to an Excluded
      Facility or any other Excluded Assets upon final expiration thereof.
      Except with Purchaser's written consent, Sellers shall not (i) terminate
      any lease with respect to any of the Excluded Facilities during the term
      of this Agreement unless Purchaser advises HMI in writing that Purchaser
      no longer requires such Excluded Facility or (ii) assign Seller's rights
      under any such lease to another person or entity. Sellers shall promptly
      notify Purchaser in the event that any lessor of any of the Excluded
      Facilities takes any action to terminate the lease for such Excluded
      Facility while Purchaser continues to use such Excluded Facility.

            (b) Sellers shall pay all rent, utility charges, real estate taxes
      and other occupancy expenses relating to Purchaser's use of the Excluded
      Facilities and the Excluded Assets during the initial six months after
      the date hereof. In the event that Purchaser elects to extend the term
      of this Agreement pursuant to Section 8 hereof, Purchaser shall pay, or
      reimburse Sellers for, all rent, utility charges, real estate taxes and
      other out-of-pocket occupancy expenses payable to third parties relating
      to Purchaser's use of the Excluded Facilities after such initial six
      month period. At all times during the term of this Agreement, Purchaser
      shall pay, or reimburse Sellers for, all personnel, insurance and other
      operating and similar costs relating to Purchaser's use of the Excluded
      Facilities and the Excluded Assets (other than, during such initial
      six-month period, rent, utility charges, real estate taxes and other
      occupancy expenses).

            (c) Any item included in the Purchased Assets which, on the date
      hereof, is located at an Excluded Facility may, at Purchaser's option,
      be stored by Purchaser at such Excluded Facility without charge during
      the term of this Agreement. Purchaser shall pay all applicable freight,
      handling and insurance costs in connection with the shipment of any
      items included in the Purchased Assets. Sellers shall have no
      responsibility with respect to any such item.

            (d) Sellers shall have the right, from and after the date hereof,
      to transfer and assign to any affiliate of Transworld any and all
      tangible property of Sellers constituting part of the Excluded Assets;
      provided, however, that in connection with any such transfer and
      assignment, Sellers shall cause such affiliate to make such assets
      available as required under this Section 2, and nothing in this
      paragraph shall relieve Sellers (or

                                     -2-
<PAGE>

      Transworld as guarantor of Sellers' obligations hereunder) of any of
      their obligations under this Section 2.

            (e) Notwithstanding anything contained in this Agreement,
      Purchaser's use of the Excluded Facilities and the other Excluded Assets
      are provided in Section 2(a) shall not be deemed to be an assignment or
      sublease with respect to any applicable lease for any such Excluded
      Facility or other Excluded Assets to the extent such an assignment or
      sublease would violate the terms of any such lease.

            (f) Upon the termination of this Agreement with respect to any
      Excluded Facility, Purchaser shall have the option, exercisable by
      written notice to HMI at least ten days prior to such termination, to
      sublease from the applicable Seller the pharmacy located at such
      Excluded Facility for the remaining term of the lease relating to such
      Excluded Facility, subject to any necessary consent from the landlord of
      such facility (and Sellers agree to use commercially reasonable efforts
      to obtain any such consent). In the event Purchaser exercises such
      option with respect to any or all the Excluded Facilities, Purchaser
      shall pay, or reimburse Sellers for, all rent, utility charges, real
      estate taxes and other out-of-pocket occupancy expenses payable to third
      parties during the remaining term of such lease.

            (g) Purchaser's rights under Section 2(a) of this Agreement, with
      respect to any Excluded Facility, shall be subject to the lessor of such
      Excluded Facility not taking any action to terminate the applicable
      lease as a result of Purchaser's use thereof. In the event any such
      action is taken or threatened, or in the event any necessary consent of
      a landlord to the sublease described in paragraph (f) is not obtained,
      Sellers shall cooperate with Purchaser in any reasonable arrangement
      designed to provide for Purchaser the benefits of the arrangements
      described in this Section 2, on terms equivalent, to the extent
      possible, to those set forth in this Section 2.

      1. Purchaser's Right to Use HMI  Provider Numbers.

            (c) To the extent permitted by law, rule or regulation and the
      terms of any applicable permit, license, agreement or other right, each
      of the Sellers hereby grants Purchaser the right to conduct business
      under the provider identification numbers issued to Sellers by
      governmental agencies and other third parties (the "HMI Provider
      Numbers") until such time as Purchaser shall have been issued its own
      provider identification numbers. If necessary, Sellers shall make
      available to Purchaser two officers of each Seller (who shall be Robert
      Fine and Greg Marsella or any replacement officers (other than James
      Mieszala or other employees of Purchaser) reasonably acceptable to
      Purchaser) to execute all documents necessary to effectuate Purchaser's
      use of the HMI Provider Numbers.

            (d) The parties acknowledge that to the extent any Legal Body or
      other third party is entitled, pursuant to any law or regulation or the
      terms of any contract, to receive notice of, or to consent to, the
      arrangements set forth in this Section 3, Sellers shall have no
      responsibility to make any such notification or to seek such consent
      (subject, to

                                     -3-
<PAGE>

      Sellers' compliance with the last sentence of Section 3(a)), and
      Purchaser shall make such notifications and seek such consents as
      Purchaser deems appropriate. Purchaser shall, if requested by Sellers,
      provide Sellers with copies of any such notification or application for
      approval submitted by Purchaser to any governmental authority. In the
      event any Legal Body or other third party object to the arrangements set
      forth in this Section 3, Seller and Purchaser shall cooperate in good
      faith to make suitable alternative arrangements to accomplish the
      purposes of this Section 3.

            (e) Nothing contained in this Section 3 shall be deemed to be an
      assignment, sublicense or sublease of the HMI Provider Numbers to
      Purchaser. To the extent that the provisions of this Section 3 would
      violate any law, rule or regulation or the terms of any applicable
      permit, license, agreement or other right relating to the HMI Provider
      Numbers, the provisions of this Section 3 shall be subject to obtaining
      any necessary consent or waiver of a third party relating to Purchaser's
      use of the HMI Provider Numbers. Sellers shall cooperate in any
      reasonable arrangement designed to provide for Purchaser the benefits of
      the HMI Provider Numbers on terms equivalent, to the extent possible, to
      those set forth in this Section 3.

            (f) Purchaser shall take any and all action necessary to:

                  (i) maintain or renew each HMI Provider Number during such
            time as Purchaser shall have a right to se such HMI Provider
            Number in accordance with this Agreement; and

                  (ii) promptly apply to the appropriate authority, in each
            state in which Purchaser shall use an HMI Provider Number under
            this Agreement, for a new provider number in Purchaser's name, or
            to transfer the existing HMI Provider Number where permitted by
            law, as the case may be.

            (a) Seller shall not be liable for:

                  (i) any failure to take any action in connection with the
            transfer of any HMI Provider Number, including any obligation to
            file a notice prior to Closing, provided that Sellers are in
            compliance with Section 3(a), 3(c) and 6 of this Agreement; and

                  (ii) any failure by Purchaser to file an application for, or
            to obtain, a new Provider Number under this Agreement.

      1.     Collection of Accounts Receivable.

            (d) Sellers hereby appoint Purchaser as Sellers' agent during the
      term of this Agreement to collect the accounts receivable owned by
      Sellers (the "HMI Receivables"). Purchaser agrees to use commercially
      reasonable efforts to collect the HMI Receivables on Sellers' behalf
      during the term of this Agreement, but Purchaser shall be under no
      obligation to commence or threaten litigation to effect collection. In
      its collection of the

                                     -4-
<PAGE>

      HMI Receivables, Purchaser shall act in accordance with procedures to be
      agreed upon by the parties within two weeks after the date hereof (as
      such procedures may be modified from time to time by mutual agreement).
      Sellers shall make available to Purchaser all existing bookkeeping
      records, files, data and computer software of Seller necessary to permit
      Purchaser to collect the HMI Receivables, to the extent not otherwise
      transferred to Purchaser as part of the Purchased Assets.

            (e) Within fifteen (15) business days after the end of each
      calendar month during the term of this Agreement, Purchaser shall (i)
      deliver to Sellers a report summarizing the activity with respect to the
      HMI Receivables for the preceding month, showing total cash collected,
      write-offs and other adjustments, and (ii) subject to paragraph (h) of
      this Section 4, remit the full amount of all payments received by
      Purchaser in respect of the HMI Receivables to the applicable Seller;
      provided, however, that in the event that Purchaser is unable to finally
      determine the items to be set forth on such report by such date,
      Purchaser shall deliver to Sellers an estimate of such items and shall
      remit payment based upon Purchaser's estimates (in which event the
      parties shall make any necessary adjustments once such items are finally
      determined).

            (f) Sellers hereby expressly authorize Purchaser, from and after
      the date hereof, to receive, endorse, assign and/or deliver, in any
      Seller's name or in Purchaser's name, any and all checks, drafts and
      other instruments for the payment of money relating to any HMI
      Receivable. Sellers agree to execute such documents and take all such
      other actions as may be required from time to time to effectuate the
      payment of all such amounts to Purchaser. Sellers further agree to
      notify, on the date hereof, all banks with which Sellers maintain
      lock-box or other deposit accounts into which payments on HMI
      Receivables are deposited that all amounts received in such lock-box
      accounts from and after the date hereof shall be received by Purchaser,
      as agent for Sellers, and Sellers shall instruct such banks to
      immediately pay over such amounts to such account as Purchaser may
      designate in writing (and Sellers shall not revoke any such instruction
      except with Purchaser's prior written consent). Sellers shall fully
      cooperate with Purchaser in the collection of the HMI Receivables.

            (g) If a given account debtor owes both an HMI Receivable and an
      additional amount to Purchaser (including, but not limited to, an amount
      owing under an account receivable arising after the date hereof), then
      the payment received by Purchaser from such account debtor shall be
      applied (i) if the applicable account receivable or other obligation
      being paid is identified by the account debtor at the time of such
      payment, to the account receivable or other obligation so identified by
      such account debtor, (ii) if no such identification is made, in
      accordance with Purchaser's good faith determination as to the
      identification of the account receivable or other obligation being paid,
      and (iii) otherwise, to such account debtor's oldest obligation that is
      not more than two years old.

            (h) From and after the date of this Agreement, except with
      Purchaser's prior written approval, Sellers, their employees and their
      agents (other than Purchaser) shall not make any solicitation of account
      debtors for collection purposes or other direct

                                     -5-
<PAGE>

      attempts to collect from account debtors; provided, however, Sellers
      shall have the right to make reasonable collection efforts following the
      expiration of this Agreement to the extent permitted by the following
      paragraph (f).

            (i) Immediately following the expiration of this Agreement, if the
      total amount collected to the time of such expiration with respect to
      the HMI Receivables (net of any refunds, set-offs, adjustments or
      credits) is less than $20,000,000, Purchaser shall, if requested by HMI,
      return to Sellers originals or copies of all bookkeeping records and
      files concerning any uncollected HMI Receivables, following which
      Sellers shall have the right to make reasonable collection efforts with
      respect to the uncollected HMI Receivables. Purchaser shall thereafter
      have no further responsibilities hereunder except to remit promptly to
      the applicable Seller any amounts subsequently received by Purchaser on
      account of the HMI Receivables until such time as the total amount
      received by Purchaser with respect to the HMI Receivables (net of any
      refunds, set-offs, adjustments or credits) equals $20,000,000.

            (j) As compensation for Purchaser's agreement to use commercially
      reasonable efforts to collect the HMI Receivables on Sellers' behalf
      during the period of six months following the date hereof, Purchaser
      shall be entitled to receive a fee equal to 100% of all amounts in
      excess of $20,000,000 collected (net of any refunds, set-offs,
      adjustments or credits) during the term of this Agreement with respect
      to the HMI Receivables.

            (k) Sellers hereby irrevocably authorize Purchaser to retain any
      amounts collected in respect of the HMI Receivables and to apply the
      amounts so retained to (i) the principal amount due to Purchaser
      pursuant to the Loan Agreement dated the date hereof among Purchaser and
      Sellers and the related promissory note and (ii) the payment to
      Purchaser of the fee to which Purchaser is entitled pursuant to Section
      4(g) of this Agreement. The parties acknowledge that any payments on
      accounts receivable of Purchaser relating to services performed after
      the date hereof (or other obligations owed to Purchaser by account
      debtors) which are collected by Purchaser or received in any lock-box or
      other deposit accounts do not relate to the HMI Receivables, are the
      sole property of Purchaser and shall not be applied to, or taken into
      account for purposes of, the payment of the obligations under such Loan
      Agreement or the payment of such fee.

      1.     Employees.

            (e) Purchaser shall make an offer of employment to certain
      employees of Sellers as provided in Section 9.02 of the Asset Purchase
      Agreement. On the date hereof, Sellers shall pay Purchaser, with respect
      to each such employee, an amount equal to (i) the accrued liability of
      Sellers with respect to accrued vacation and payroll tax obligations for
      such employee plus (ii) if such employee's principal place of employment
      is an Excluded Facility, the severance obligations Sellers would have
      incurred to such employee pursuant to Sellers' severance plans had
      Sellers terminated such employee on the date hereof. In the case of any
      such employee whose principal place of employment

                                     -6-
<PAGE>

      is an Excluded Facility, if such employee remains in Purchaser's
      continuous employ through the earlier of the 15th day after termination
      of this Agreement or nine months after the date hereof, Purchaser shall
      reimburse Sellers for the amount paid to Purchaser pursuant to clause
      (ii) of the preceding sentence.

            (f) Purchaser will employ James R. Mieszala ("Mieszala") from the
      date hereof through December 31, 1997 at his current salary and on such
      other terms as may be agreed between Purchaser and Mieszala. Subject to
      such terms as Purchaser and Mieszala may agree, on January 2, 1998,
      Purchaser shall pay Mieszala a termination payment of $265,000 (less any
      required withholdings). Such amount shall be paid by Sellers to
      Purchaser on the date hereof together with the amounts being paid
      pursuant to Section 5(a) hereof; provided, however, if for any reason
      Purchaser does not make such termination payment to Mieszala, Purchaser
      shall promptly refund such amount to Sellers. Nothing herein shall be
      construed to require Purchaser to assume any obligations under any
      existing employment agreements between Sellers and Mieszala, and Sellers
      shall indemnify Purchaser with respect to any liabilities to Mieszala
      arising under such agreements.

            (g) The parties agree that the total amount payable by Sellers to
      Purchaser on the date hereof pursuant to the provisions of this Section
      5 shall be as set forth on Annex I hereto. At Sellers' option, such
      amount may be paid by means of an offset against amounts due from
      Purchaser to Sellers on the date hereof pursuant to the Asset Purchase
      Agreement.

      1. Cooperation Generally. In addition to the other provisions set forth
in this Agreement, the parties recognize that, as a result of the transactions
contemplated by the Purchase Agreement, there will be a period of transition
after the Closing with respect to the delivery to, and operation and
utilization by, Purchaser of the Purchased Assets and the conduct of the
Business. Accordingly, it will be necessary for Sellers and Purchaser to work
together in a spirit of cooperation during the term of this Agreement (or
longer if the parties agree in good faith that such continued cooperation is
necessary) until any transitional problems relating to the delivery to, and
operation and utilization by, Purchaser of the Purchased Assets and the
conduct of the business relating thereto have been resolved to the
satisfaction of all parties. Accordingly, Seller and Purchaser shall cooperate
with each other to resolve such transitional problems and shall cause their
designated representatives to meet from time to time as may be necessary
during the term of this Agreement (or longer if the parties agree in good
faith that such additional meetings are necessary) to resolve such
transitional problems. During the term of this Agreement, Sellers shall make
available an officer of each Seller to execute documents necessary to
effectuate all of Sellers' obligations under this Agreement, and Sellers shall
provide Purchaser with copies of, and access to, Sellers' books and records to
the extent necessary for Purchaser to conduct the Business or as required by
any governmental agencies or third party payors. Sellers agree that they shall
not at any time disparage Purchaser or the Purchased Assets and Purchaser
agrees not at any time to disparage Sellers (provided, however, that this
sentence shall not prevent the parties from taking such actions as may be
necessary to enforce their rights under this Agreement and other agreements
among them).

                                     -7-
<PAGE>

      2. Term. This Agreement shall continue in force and effect until the
six-month anniversary of the date of this Agreement. Notwithstanding the
foregoing, Purchaser shall have the option to extend the term of this
Agreement for up to two additional three-month renewal periods by giving
written notice to HMI at least 30 days prior to the beginning of any such
renewal period. The provisions of Section 2(e), Section 3, Sections 4(b) and
4(h), the last sentence of Section 5(a), Section 6 and Section 8 shall survive
termination of this Agreement.

      3. Indemnification. Purchaser agrees to indemnify, hold harmless and
defend Sellers and their officers, directors, employees, shareholders,
affiliates, agents and authorized representatives, from and against any and
all Liabilities, Claims, expense, costs, attorneys' fees, settlements, fines,
judgments, damages, penalties or court awards actually incurred which result
from (i) any violation by Purchaser or any of its employees or other personnel
of any applicable Legal Requirements relating to Purchaser's use of the HMI
Provider Numbers, (ii) any liability arising out of Purchaser's use of the HMI
Provider Numbers after the date hereof or the execution, delivery or
performance of this Agreement by Purchaser, (iii) Sellers' execution of
documents pursuant to the last sentence of Section 3(a), or (iv) any breach of
this Agreement by Purchaser . Sellers agree, jointly and severally, to
indemnify, hold harmless and defend Purchaser, and its officers, directors,
employees, shareholders and authorized representatives, from and against any
and all expense, costs, attorneys' fees, settlements, fines, judgments,
damages, penalties or court awards actually incurred which result from any
breach of this Agreement by Sellers.

      4. Applicable Law; Dispute Resolution.

            (f) This Agreement and its validity, construction and performance
      shall be governed in all respects by the laws of the State of New York
      without giving effect to principles of conflict of law.

            (g) The parties shall promptly cooperate in good faith to carry
      out the provisions of this Agreement and the activities contemplated
      hereby and shall also cooperate in good faith to resolve any disputes or
      differences which may arise in connection with the provisions hereof and
      the activities contemplated hereby.

            (h) Any dispute, question, difference, controversy or claim
      arising out of or relating to this Agreement, or the Breach thereof,
      shall be finally settled by arbitration in New York City in accordance
      with the Commercial Arbitration Rules of the American Arbitration
      Association, as then in effect at the time of filing of the notice of
      demand. The parties consent to the jurisdiction of the Supreme Court of
      the State of New York, and of the United States District Court for the
      Southern District of New York, for all purposes in connection with
      arbitration. The application to either of said courts, and any paper in
      connection requested or by personal service or in such other manner as
      may be permissible under the rules of the applicable court or
      arbitration tribunal, provided a reasonable time for appearance is
      allowed. The arbitrators shall not alter or disregard any express
      provisions of this Agreement. Any arbitration award in accordance with
      this Section 9 shall be final and binding upon the parties and judgment
      thereon may be
                                     -8-
<PAGE>

      entered in any court having jurisdiction over such party. In the event
      of litigation or arbitration hereunder, the prevailing party in such
      action shall be entitled to recover from the other party any actual
      expenses incurred by him or it for reasonable attorney fees and
      disbursements.

      1. Notices.  All notices under this Agreement shall be given in
accordance with Section 10.02 of the Purchase Agreement.

      2. Binding Effect; No Third Party Rights; Assignability. This Agreement
shall be binding upon and inure to the benefit of and be enforceable against
the parties hereto and their respective successors. Nothing in this Agreement,
express or implied, shall be construed as creating or giving rise to any
rights in any third parties or any persons other than the parties hereto,
except as specifically provided elsewhere in this Agreement. This Agreement
shall not be assignable by any Seller. Purchaser may assign its rights under
this Agreement to any Affiliate of Purchaser that agrees to be jointly and
severally liable with Purchaser, but no such assignment shall release
Purchaser from its obligations hereunder.

      3. Modifications. This Agreement shall be amended or modified only by a
written instrument signed by Sellers and Purchaser.

      4. Waiver. The failure by any party at any time to require performance
or compliance by an other of any of its obligations or agreements shall in no
way affect the right to require such performance or compliance at any time
thereafter. The waiver by any party of a Breach of any provision hereof shall
not be taken or held to be a waiver of any preceding or succeeding Breach of
such provision or as a waiver of the provision itself. No waiver of any kind
shall be effective or binding, unless it is in writing and is signed by the
party against which such waiver is sought to be enforced.

      5. Captions; Language. All section headings, titles and subtitles
contained in this Agreement are inserted for reference purposes only, and
shall not in any way affect the meaning or interpretation of this Agreement.
Whenever the words "include," "includes," or "including" are used in this
Agreement, they shall be deemed to be followed by the word "without
limitation."

      6. Exhibits. All Exhibits referenced in this Agreement are incorporated
herein by reference and shall constitute a part of this Agreement.

      7. Invalid Provisions. Any provision of this Agreement which is
prohibited by, or unlawful or unenforceable under, any applicable law of any
jurisdiction shall be ineffective as to such jurisdiction without affecting
any other provision of this Agreement in such jurisdiction or all of the
provisions of this Agreement in other jurisdictions. To the full extent,
however, that the provisions of such applicable law may be waived, or the
provisions of this Agreement "blue-penciled" or reformed by any competent
court or arbitral panel, so that they become enforceable, such provisions of
law shall be hereby deemed waived or such provisions of this Agreement shall
be so blue-penciled or reformed to the end that this Agreement is deemed to be
a valid and binding agreement enforceable in accordance with its terms. If any
term or provision

                                     -9-
<PAGE>

of this Agreement shall be held invalid by a competent court or arbitral
panel, the remainder of this Agreement shall not be affected thereby and the
parties hereto shall continue to be bound by the remaining terms hereof. In
such event, the relevant term or provision (or should such term(s) or
provision(s) be such a material element of this Agreement, then the entire
Agreement) shall be renegotiated by the parties in a good faith effort to
achieve mutual agreement consistent with such holding and the parties shall
continue to perform under this Agreement in a manner consistent with the
intent and objectives of the parties to this Agreement.

      8. Interpretation. In the event of a conflict between any provisions of
this Agreement and of the Asset Purchase Agreement, the provisions of the
Asset Purchase Agreement shall prevail.

      9. Counterparts; Facsimile Signatures. This Agreement may be executed in
two or more counterparts, each of which shall be deemed an original, but which
together shall constitute one and the same agreement. The delivery of a
facsimile of a signed copy of this Agreement shall be deemed delivery of an
original.


                    [REMAINDER OF PAGE INTENTIONALLY BLANK]


<PAGE>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.


                                            HEALTH MANAGEMENT, INC.


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President


                                            HEALTH REIMBURSEMENT CORPORATION


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President


                                            HMI ILLINOIS, INC.


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President


                                            HMI MARYLAND, INC.


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President


                                            HMI PENNSYLVANIA, INC.


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President

                                     -11-

<PAGE>

                                            HMI PMA, INC.


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President


                                            HMI RETAIL CORP., INC.


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President


                                            HOME CARE MANAGEMENT, INC.


                                            By: /s/ Robert W. Fine
                                               ---------------------------
                                               Name: Robert W. Fine
                                               Title: President


                                            STADTLANDER DRUG DISTRIBUTION
                                              CO., INC.


                                            By: /s/ M.J. Graves
                                               ---------------------------
                                               Name: M.J. Graves
                                               Title: Treasurer