AMENDED AND RESTATED EMPLOYMENT AGREEMENT
 
 
           THIS AMENDED AND RESTATED  EMPLOYMENT  AGREEMENT (the "Agreement") is
made effective as of September 1, 1997 (the "Effective Date"),  between CURATIVE
HEALTH  SERVICES,  INC.,  a  Minnesota  corporation  (the  "Company"),  and JOHN
VAKOUTIS ("Executive").
 
           WHEREAS, the Executive has been in the employ of the Company pursuant
to that certain  Employment  Agreement  (the "Original  Agreement")  dated as of
October 26, 1994, as amended, on the terms and conditions set forth therein;
 
           WHEREAS, the Company recognizes that Executive's  contribution to the
growth and success of the Company has been substantial and therefore  desires to
assure the Company of Executive's continued employment; and
 
           WHEREAS,  based on the foregoing,  the Company and Executive now wish
to amend and restate the terms of the Original Agreement.
 
           NOW,  THEREFORE,  in  consideration  of the  promises  and the mutual
covenants and  agreements  herein  contained,  the Company and Executive  hereby
agree that the Original Agreement shall be and is hereby amended and restated in
its entirety to read as follows:
 
1.    Employment
 
      1.1 Employment and Duties.  The Company hereby agrees to employ  Executive
for the Term (as hereinafter  defined) as President and Chief Executive Officer,
subject to the direction of the Board of Directors, and in connection therewith,
to  perform  such  duties as he shall  reasonably  be  directed  by the Board of
Directors to perform.  Executive  hereby  accepts such  employment and agrees to
render  such  services.  Executive  shall  perform  his duties and carry out his
responsibilities  hereunder in a diligent manner, shall devote his exclusive and
full working time, attention and effort to the affairs of the Company, shall use
his best  efforts to promote the  interests of the Company and shall be just and
faithful  in  the   performance   of  his  duties  and  in   carrying   out  his
responsibilities.
 
      1.2  Location.  The  principal  location for  performance  of  Executive's
services  hereunder  shall be at the  Company's  executive  offices,  which  are
currently  located in East  Setauket,  New York,  subject to  reasonable  travel
requirements during the course of such performance.
 
      1.3 Board of Directors.  Executive  agrees to accept election and to serve
during  all or any  part of the Term as a  director  of the  Company  and of any
subsidiary or affiliate of the Company,  without any compensation therefor other
than that  specified  herein,  if elected to any such  position  by the Board of
Directors  or by  the  stockholders  of the  Company  or of  any  subsidiary  or
affiliate,  as the case may be. The Company  will use its best  efforts to cause
and maintain the election of Executive to the Company's  Board of Directors.  In
connection  therewith,  the  Company  shall  use its  best  efforts  to  include
Executive  in the  management  slate for  election as a director at every annual
meeting of  shareholders  of the  Company at which his term as a director  would
otherwise  expire.  Upon  the  termination  of  this  Agreement  or  Executive's
employment  hereunder for any reason,  Executive shall resign from the Board and
from all other  positions  as an officer  or  director  of any of the  Company's
subsidiaries or affiliates.
 
2.    Employment Term
 
      The term of Executive's  employment hereunder (the "Term") shall be deemed
to commence on the Effective Date and shall end on the first  anniversary of the
Effective  Date,  unless sooner  terminated as hereinafter  provided;  provided,
however,  that the Term  shall be  automatically  renewed  and  extended  for an
additional  period of one (1) year on each anniversary  thereafter unless either
party gives a Notice of  Termination  (as  defined  below) to the other party at
least three (3) months prior to such anniversary.
 
3.     Compensation and Benefits
 
      3.1   Cash Compensation.
 
                Base Salary. The Company shall pay Executive an annual salary of
                $285,000  payable in  bi-weekly  installments,  in arrears  (the
                "Base  Salary").  The Base Salary shall be reviewed  annually by
                the Company's  Board of Directors and may be increased,  but not
                decreased  (unless  mutually  agreed upon by  Executive  and the
                Company).
 
           (b)  Bonus Plan.  Executive  shall be entitled to  participate in the
                Company's  Executive Bonus Compensation  Program,  in accordance
                with and subject to the terms and provisions thereof.
 
      3.2  Participation  in  Benefit  Plans.  Executive  shall be  entitled  to
participate  in all  employee  benefit  plans or  programs of the Company to the
extent  that  his  position,  title,  tenure,  salary,  age,  health  and  other
qualifications make him eligible to participate.  The Company does not guarantee
the  continuance of any particular  employee  benefit plan or program during the
Term, and Executive's participation in any such plan or program shall be subject
to all terms,  provisions,  rules and regulations applicable thereto.  Executive
will be  entitled  to twenty  (20)  days of  vacation  per  year,  to be used in
accordance with the Company's  vacation  policy for senior  executives as it may
change  from time to time.  For the  Benefit  Period,  if any,  (as  hereinafter
defined),  the Company will arrange to provide  Executive with welfare  benefits
(including life and health insurance  benefits) of substantially  similar design
and cost to  Executive  as the  welfare  benefits  and other  employee  benefits
available to Executive  prior to Executive's  or the Company's,  as the case may
be, receipt of Notice of Termination (as hereinafter defined). In the event that
Executive shall obtain full-time  employment  providing  welfare benefits during
the Benefit Period, such benefits as otherwise receivable hereunder by Executive
shall be discontinued.
 
      3.3  Expenses.  The  Company  will  pay or  reimburse  Executive  for  all
reasonable  and  necessary   out-of-pocket  expenses  incurred  by  him  in  the
performance of his duties under this  Agreement.  Executive  shall keep detailed
and accurate records of expenses  incurred in connection with the performance of
his duties  hereunder and  reimbursement  therefor  shall be in accordance  with
policies and procedures to be established from time to time by the Board.
 
      3.4 Automobile  Expenses.  During the Term, Executive shall be entitled to
the use of an automobile leased in the name of the Company.  The Executive shall
be repaid by the Company for all automobile  expenses  incurred by the Executive
in the performance of his duties under this Agreement.
 
4.    Termination of Employment
 
      4.1  Definitions
 
           (a) "Benefit Period" shall mean (i) the twenty-four (24) month period
commencing  on the  Date  of  Termination  which  occurs  in  connection  with a
termination of employment  described in the first sentence of Section 4.5(a), or
(ii) the period consisting of the remainder, if any, of the then current Term in
which occurs a  termination  of  employment  described in the first  sentence of
Section 4.5(b), plus the immediately succeeding twenty-four (24) month period.
 
           (b)  "Cause" shall mean any of the following:
 
                 (i)  any  act or  failure  to act  (or  series  or  combination
thereof) by Executive  done with the intent to harm in any  material  respect to
the interests of the Company;
 
                (ii) the commission by Executive of a felony;
 
                (iii)the  perpetration  by Executive  of a dishonest  act
or common law fraud against the Company or any subsidiary thereof;
 
                (iv) a grossly  negligent  act or  failure  to act (or series or
combination  thereof) by Executive  detrimental  in any material  respect to the
interests of the Company;
 
                (v)  the material breach by Executive of his agreements or 
obligations  under this Agreement; or
 
                (vi) the continued refusal to follow the directives of the Board
of Directors that are consistent with  Executive's  duties and  responsibilities
identified in Section 1.1 hereof.
 
           (c) A "Change of Control" shall mean any of the following:
 
                (i)a sale of all or substantially all of the assets of the
Company;
                (ii) the  acquisition  of more than eighty  percent (80%) of the
Common  Stock of the Company  (with all classes or series  thereof  treated as a
single class) by any person or group of persons,  except a Permitted Shareholder
(as hereinafter defined),  acting in concert. A "Permitted  Shareholder" means a
holder, as of the date of the Plan was adopted by the Company, of Common Stock;
 
                (iii)a  reorganization  of the  Company  wherein  the holders of
Common Stock of the Company  receive stock in another  company,  a merger of the
Company with another company wherein there is an eighty percent (80%) or greater
change in the  ownership  of the Common Stock of the Company as a result of such
merger,  or any other transaction in which the Company (other than as the parent
corporation) is  consolidated  for federal income tax purposes or is eligible to
be consolidated for federal income tax purposes with another corporation;
 
                (iv)  in the  event  that  the  Common  Stock  is  traded  on an
established  securities  market,  a  public  announcement  that any  person  has
acquired or has the right to acquire  beneficial  ownership of fifty-one percent
(51%) or more of the  then-outstanding  Common  Stock and for this  purpose  the
terms "person" and "beneficial  ownership"  shall have the meanings  provided in
Section  13(d) of the  Securities  and  Exchange  Act of 1934 or  related  rules
promulgated by the Securities and Exchange Commission, or the commencement of or
public announcement of an intention to make a tender offer or exchange offer for
fifty-one percent (51%) or more of the then outstanding Common Stock;
 
                (v) a majority of the Board of  Directors  is not  comprised  of
Continuing  Directors.  A "Continuing  Director" means a director recommended by
the Board of  Directors of the Company for election as a director of the Company
by the stockholders; or
                (vi) the  Board of  Directors  of the  Company,  in its sole and
absolute  discretion,  determines that there has been a sufficient change in the
share ownership of the Company to constitute a change of effective  ownership or
control of the Company.
 
           (d) "Good  Reason"  shall mean,  within the twelve (12) month  period
immediately  following a Change of Control, the occurrence of any one or more of
the following events:
 
                (i) the  assignment to Executive of any duties  inconsistent  in
any respect with Executive's  position  (including status,  offices,  title, and
reporting  requirements),  authority,  duties  or other  responsibilities  as in
effect  immediately  prior to the Change of  Control or any other  action of the
Company that results in a diminishment  in such position,  authority,  duties or
responsibilities,  other than an  insubstantial  and inadvertent  action that is
remedied  by the  Company  promptly  after  receipt of notice  thereof  given by
Executive;
 
                (ii) a reduction by the Company in Executive's Base Salary as in
effect on the date hereof and as the same shall be  increased  from time to time
hereafter;
 
                (iii)the Company's requiring Executive to be based at a location
in excess of fifty (50) miles from the location of Executive's  principal office
immediately prior to the Change of Control;
 
                (iv) the  failure by the  Company to (a)  continue in effect any
material  compensation  or benefit  plan,  program,  policy or practice in which
Executive was  participating at the time of the Change of Control or (b) provide
Executive  with  compensation  and  benefits at least equal (in terms of benefit
levels and/or reward  opportunities)  to those  provided for under each employee
benefit plan, program, policy and practice as in effect immediately prior to the
Change of Control (or as in effect following the Change of Control, if greater);
 
                (v)  the  failure  of  the  Company  to  obtain  a  satisfactory
agreement  from any successor to the Company to assume and agree to perform this
Agreement; and
 
                (vi) any  purported  termination  by the Company of  Executive's
employment that is not effected  pursuant to a Notice of Termination (as defined
below).
 
           (e) "Date of Termination" shall mean the date specified in the Notice
of  Termination  (as  hereinafter  defined)  (except in the case of  Executive's
death, in which case Date of Termination shall be the date of death);  provided,
however, that if Executive's  employment is terminated by the Company other than
for Cause,  the date  specified in the Notice of  Termination  shall be at least
thirty (30) days from the date the Notice of  Termination  is given to Executive
and if  Executive's  employment is terminated by Executive for Good Reason,  the
date  specified in the Notice of  Termination  shall not be more than sixty (60)
days from the date the Notice of Termination is given to the Company.
 
           (f) "Notice of  Termination"  shall mean a written notice either from
the Company to Executive,  or Executive to the Company, that indicates Section 2
or the  specific  provision  of Section 4 of this  Agreement  relied upon as the
reason for such  termination or  nonrenewal,  the Date of  Termination,  and, in
reasonable  detail,  the facts and circumstances  claimed to provide a basis for
termination  or  nonrenewal  pursuant  to  Section  2 or this  Section 4 of this
Agreement.
 
      4.2 Termination Upon Death or Disability.  This Agreement, and Executive's
employment hereunder, shall terminate automatically and without the necessity of
any action on the part of the Company upon the death of Executive.  In addition,
if at any time during the Term  Executive  shall become  physically  or mentally
disabled,  whether totally or partially,  so that he is unable  substantially to
perform  his  duties  and  services  hereunder  for  (i) a  period  of  six  (6)
consecutive  months,  or (ii) for  shorter  periods  aggregating  six (6) months
during any twelve (12) month period,  the Company may at any time after the last
day of the sixth consecutive month of disability or the day on which the shorter
periods of  disability  shall have equaled an  aggregate  of six (6) months,  by
written  notice to  Executive  (but before  Executive  has  recovered  from such
disability), terminate this Agreement and Executive's employment hereunder.
 
      4.3  Company's  and  Executive's  Right to  Terminate--Prior  to Change of
Control. Prior to a Change of Control, this Agreement and Executive's employment
hereunder may be terminated at any time by the Company,  with or without  Cause,
upon thirty (30) days prior written  notice to Executive,  and by Executive,  at
any time,  upon  thirty  (30) days  prior  written  notice to the  Company.  Any
termination  of Executive's  employment by the Company  without Cause prior to a
Change of Control that occurs at the request or  insistence of any person (other
than the  Company)  relating to such  Change of Control  shall be deemed to have
occurred after the Change of Control for the purposes of this Agreement.
 
      4.4 Company's and Executive's  Right to  Terminate--Following  a Change of
Control.   Following  a  Change  of  Control,  this  Agreement  and  Executive's
employment  hereunder may be terminated at any time (i) by the Company,  with or
without Cause, upon thirty (30) days prior written notice to Executive, and (ii)
by Executive for Good Reason upon thirty (30) days prior  written  notice to the
Company.  Executive's right to terminate his employment pursuant to this Section
4.4 shall not be affected  by  incapacity  due to  physical  or mental  illness.
Executive's  continued  employment  following  a Change  of  Control  shall  not
constitute  consent to, or a waiver of rights with respect to, any  circumstance
constituting Good Reason hereunder.
 
      4.5  Compensation Upon Termination.
 
           (a) Termination Prior to Change of Control.  In the event the Company
terminates  (or elects not to renew)  this  Agreement  without  Cause,  and such
termination (or nonrenewal) without Cause occurs prior to any Change of Control,
Executive  shall be  entitled  to receive  his Base  Salary  through the Date of
Termination,  the  welfare  benefits  described  in Section  3.2 for the Benefit
Period,  and not later than  thirty (30) days after the Date of  Termination,  a
lump sum  severance  payment  equal to the  product  of two (2) times the sum of
Executive's  then  Current Base Salary plus the  arithmetic  average of payments
made to Executive pursuant to the Company's Executive Bonus Compensation Program
with respect to the three (3) fiscal years immediately preceding the fiscal year
in which  the  Date of  Termination  occurs.  In  addition,  to the  extent  not
otherwise  required under the Company's Stock Option Plan or any award agreement
with  Executive,  any  unvested  stock  option  awards  theretofore  awarded  to
Executive  which would otherwise vest and become  exercisable  during the twelve
(12) month period  commencing on the Date of  Termination  shall vest and become
exercisable  on  the  Date  of  Termination.  In the  event  this  Agreement  is
terminated  (or not renewed)  for any reason  other than by the Company  without
Cause, and such termination (or nonrenewal) occurs prior to a Change of Control,
Executive shall not be entitled to the continuation of any compensation, bonuses
or benefits  provided  hereunder,  or any other  payments  following the Date of
Termination, other than Base Salary earned through such Date of Termination.
 
 
           (b)  Termination  Following  Change of Control.  If this Agreement is
terminated  (or  not  renewed)  (i) by the  Company  without  Cause,  or (ii) by
Executive  for Good  Reason  during the twelve  (12)  month  period  immediately
following a Change of  Control,  and such  termination  (or  nonrenewal)  occurs
following a Change of Control,  Executive  shall be entitled to receive his full
Base Salary through the Date of Termination,  the welfare benefits  described in
Section  3.2 for the Benefit  Period and,  not later than thirty (30) days after
the Date of  Termination,  a lump sum severance  payment equal to the sum of (a)
the Base Salary which would  otherwise  have been payable for the  remainder (if
any) of the then current Term,  plus (ii) an amount equal the product of two (2)
times the sum of Executive's then current annual Base Salary plus the arithmetic
average of payments made to Executive pursuant to the Company's  Executive Bonus
Compensation  Program  with  respect to the three (3) fiscal  years  immediately
preceding the fiscal year in which the Date of Termination  occurs. In addition,
to the extent not otherwise  required  under the Company's  Stock Option Plan or
any award agreement with Executive, any unvested stock option awards theretofore
awarded to Executive shall vest and become  immediately  exercisable in full. In
the event this  Agreement  is  terminated  (or not renewed) for any reason other
than (i) by the Company without Cause, or (ii) by Executive for Good Reason, and
such termination (or nonrenewal) occurs following a Change of Control, Executive
shall not be  entitled  to the  continuation  of any  compensation,  bonuses  or
benefits  provided  hereunder,  or any  other  payments  following  the  Date of
Termination, other than Base Salary earned through the Date of Termination.
 
           (c) At  Executive's  option to be exercised by written  notice to the
Company,  the severance benefits payable under this Section 4.5 shall be paid in
accordance  with the Company's  normal payroll  procedures  over the twenty-four
(24)month or longer period as contemplated  by Section  4.5(b),  as the case may
be, corresponding to the amount of the payments instead of in a lump sum.
 
           (d) Anything to the contrary contained herein  notwithstanding,  as a
condition to Executive  receiving severance benefits to be paid pursuant to this
Section  4.5,  Executive  shall  execute  and  deliver to the  Company a general
release in form and substance  reasonably  satisfactory to the Company releasing
the  Company  and  its  officers,  directors,  employees  and  agents  from  all
liabilities, claims and obligations of any nature whatsoever, excepting only the
Company's  obligations  under  this  Agreement,  under  any Stock  Option  Award
Agreements,  and under any other  employee  benefit  plans or  programs in which
Executive  participates  under  Section  3.2  hereof,  subject  to all terms and
conditions of such plans or programs and this Agreement.
 
           (e) Anything to the contrary contained herein notwithstanding, in the
event that any payment or benefit  received or to be  received by  Executive  in
connection with a Change in Control of the Company or termination of Executive's
employment (whether payable pursuant to the terms of this Agreement or any other
plan, contract, agreement or arrangement with the Company, with any person whose
actions  result  in a Change  in  Control  of the  Company  or with  any  person
constituting a member of an "affiliated  group" as defined in Section 280G(d)(5)
of the Internal Revenue Code of 1986, as amended (the "Code"),  with the Company
or with any person  whose  actions  result in a Change in Control of the Company
(collectively,  the "Total  Payments"))  would not be deductible (in whole or in
part) by the Company or such other person making such payment or providing  such
benefit  solely as a result of Section 280G of the Code,  the amount  payable to
Executive  pursuant to this Section 4.5 shall be reduced until no portion of the
Total Payments is not deductible  solely as a result of Section 280G of the Code
or such amount payable to Executive  pursuant to Section 4.5 is reduced to zero.
For  purposes  of this  limitation,  (a) no  portion of the Total  Payments  the
receipt or enjoyment of which Executive shall have effectively waived in writing
prior to the date of  payment  of the amount  pursuant  to Section  4.5 shall be
taken into  account;  (b) no portion of the Total  Payments  shall be taken into
account  which  in the  opinion  of tax  counsel  selected  by the  Company  and
reasonably  acceptable to Executive  does not  constitute a "parachute  payment"
within the meaning of Section  280G(b)(2) of the Code; (c) the payment  pursuant
to Section 4.5 shall be reduced  only to the extent  necessary so that the Total
Payments (other than those referred to in the immediately  preceding clause (b))
in their  entirety  constitute  reasonable  compensation  within the  meaning of
Section 280G(b)(4)(B) of the Code, in the opinion of the tax counsel referred to
in the immediately preceding clause (b); and (d) the value of any other non-cash
benefit or of any deferred cash payment  included in the Total Payments shall be
determined  by  the  Company's  independent  auditors  in  accordance  with  the
principles of Sections 280G(d)(3) and (4) of the Code.
 
5.    Employment Covenants
 
      5.1 Trade Secrets and Confidential  Information.  Executive agrees that he
shall,  during the course of his employment and  thereafter,  hold inviolate and
keep secret all documents,  materials,  knowledge or other confidential business
or technical  information of any nature whatsoever  disclosed to or developed by
him or to  which  he had  access  as a  result  of his  employment  (hereinafter
referred to as "Confidential Information").  Such Confidential Information shall
include  technical  and  business  information,  including,  but not limited to,
inventions,   research  and   development,   engineering,   products,   designs,
manufacture, methods, systems, improvements, trade secrets, formulas, processes,
marketing, merchandising, selling, licensing, servicing, customer lists, records
or financial  information,  manuals or Company strategy concerning its business,
strategy or policies.  Executive agrees that all Confidential  Information shall
remain the sole and absolute  property of the Company.  During the course of his
employment,  Executive shall not use, disclose, disseminate,  publish, reproduce
or otherwise make available such Confidential  Information to any person,  firm,
corporation  or other entity,  except for the purpose of conducting  business on
behalf of the Company.  Following the Term,  Executive shall not use,  disclose,
disseminate,  publish,  reproduce or otherwise make available such  Confidential
Information to any person,  firm,  corporation or other entity. Upon termination
of his employment with the Company,  Executive will leave with or deliver to the
Company all records and any compositions, articles, devices, equipment and other
items which disclose or embody Confidential  Information including all copies or
specimens  thereof,  whether  prepared  by  him  or  by  others.  The  foregoing
restrictions  on disclosure of Confidential  Information  shall apply so long as
the  information  has not properly come into the public domain through no action
of Executive.
 
      5.2  Transfer  of  Inventions.  Executive,  for  himself and his heirs and
representatives, will promptly communicate and disclose to the Company, and upon
request will,  without  additional  compensation,  execute all papers reasonably
necessary  to  assign  to  the  Company  or  the  Company's  nominees,  free  of
encumbrance or restrictions, all inventions, discoveries,  improvements, whether
patentable or not,  conceived or originated by Executive  solely or jointly with
others,  at the  Company's  expense or at the  Company's  facilities,  or at the
Company's request, or in the course of his employment,  or based on knowledge or
information  obtained  during the Term. All such  assignments  shall include the
patent rights in this and all foreign countries.  Notwithstanding the foregoing,
this  Section  5.2  shall  not apply to any  invention  for which no  equipment,
supplies,  facilities  or trade secret  information  of the Company was used and
which  was  developed  entirely  on  Executive's  own time and (a) that does not
relate (1)  directly  to the  business  of the  Company or (2) to the  Company's
actual or demonstrably anticipated research or development, or (b) that does not
result from any work performed by Executive for the Company.
 
      5.3  Exclusivity  of  Employment.  During  the Term,  Executive  shall not
directly or indirectly engage in any activity competitive with or adverse to the
Company's  business  or  welfare  or render a material  level of  services  of a
business, professional or commercial nature to any other person or firm, whether
for compensation or otherwise.
 
      5.4  Covenant Not to Compete.  Executive  agrees to be bound and abide by 
the following covenant not to compete:
 
                Term and Scope. During his employment with the Company and for a
period  of two (2)  years  after  the  Term,  Executive  will not  render to any
Conflicting  Organization  (as  hereinafter  defined),   services,  directly  or
indirectly,  anywhere in the world in connection with any  Conflicting  Product,
except  that  Executive  may  accept   employment   with  a  large   Conflicting
Organization  whose business is diversified (and which has separate and distinct
divisions)  if  Executive  first  certifies to the Board of Directors in writing
that he has provided a copy of Section 5 of this  Agreement to such  prospective
employer,  that such prospective employer is a separate and distinct division of
the  Conflicting  Organization  and  that  Executive  will not  render  services
directly or indirectly  in respect of any  Conflicting  Product (as  hereinafter
defined).  Such  two-year  time  period  shall be tolled  during any period that
Executive is engaged in activity in violation of this covenant.
 
                Judicial  Action.  Executive  and the Company agree that, if the
period of time or the scope of the restrictive covenant not to compete contained
in this Section 5.4 shall be adjudged unreasonable in any court proceeding, then
the  period of time  and/or  scope  shall be reduced  accordingly,  so that this
covenant  may be  enforced  in such scope and during  such  period of time as is
judged by the court to be  reasonable.  In the event of a breach or violation of
this Section 5.4 by  Executive,  the parties agree than in addition to all other
remedies,  the  Company  shall be  entitled  to  equitable  relief for  specific
performance,  and Executive hereby agrees and acknowledges  that the Company has
no adequate remedy at law for the breach of the covenants contained herein.
                Definitions.  For purposes of this Agreement,  the following 
terms shall have the following meanings:
 
      "Conflicting  Product"  means any  product,  method or process,  system or
      service of any person or organization other than the Company, in existence
      or under  development at the time Executive's  employment with the Company
      terminates,  that is the same as or similar to or competes with a product,
      method or process,  system or service of or provided by the Company or any
      of  its  affiliates  or  about  which  Executive   acquires   Confidential
      Information.
 
      "Conflicting  Organization"  means  any  person or  organization  which is
      engaged in or about to become  engaged  in,  research  on or  development,
      production,  marketing,  licensing,  selling or servicing of a Conflicting
      Product.
 
      5.5  Disclosure to Prospective  Employers.  Executive will disclose to any
prospective employer, prior to accepting employment,  the existence of Section 5
of this  Agreement.  The obligation  imposed by this Section 5.5 shall terminate
two (2) years after  termination  of  Executive's  employment  with the Company;
provided,  however,  the running of such two-year  period shall be tolled to the
extent the covenant not to compete contained in Section 5.4(a) hereof is tolled.
 
6.    Miscellaneous
 
      6.1 Notices.  Any notice  required or permitted to be delivered  hereunder
shall be in writing  and shall be deemed to be  delivered  on the earlier of (i)
the date  received,  or (ii)  the  date of  delivery,  refusal  or  non-delivery
indicated on the return receipt,  if deposited in a United States Postal Service
depository,  postage prepaid,  sent registered or certified mail, return receipt
requested,  addressed  to the party to receive  the same at the  address of such
party set forth below, or at such other address as may be designated in a notice
delivered or mailed as herein provided.
 
      To Company:    Curative Health Services, Inc.
                     14 Research Way
                     Box 9052
                     East Setauket, New York 11733-9052
 
      Executive:     John Vakoutis
                     35 Beach Road
                     Belle Terre, New York  11777
 
      6.2 Headings.  The headings of the articles and sections of this Agreement
are  inserted for  convenience  only and shall not be deemed a part of or affect
the construction or interpretation of any provision hereof.
 
      6.3  Modifications;  Waiver.  No  modification  of any  provision  of this
Agreement or waiver of any right or remedy  herein  provided  shall be effective
for any purpose unless  specifically  set forth in a writing signed by the party
to be bound  thereby.  No  waiver  of any  right or  remedy  in  respect  of any
occurrence  or event on one  occasion  shall be deemed a waiver of such right or
remedy in respect of such occurrence or event on any other occasion.
 
      6.4 Entire Agreement.  This Agreement contains the entire agreement of the
parties  with  respect to the subject  matter  hereof and  supersedes  all other
agreements,  oral or written,  heretofore made with respect thereto,  including,
without limitation, the Original Agreement.
 
      6.5  Severability.  Any  provision  of  this  Agreement  prohibited  by or
unlawful or unenforceable  under any applicable law of any jurisdiction shall as
to such  jurisdiction  be  ineffective  without  affecting  any other  provision
hereof. To the full extent,  however, that the provisions of such applicable law
may be waived, they are hereby waived, to the end that this Employment Agreement
be deemed to be a valid and binding agreement enforceable in accordance with its
terms.
 
      6.6  Controlling  Law. This Agreement has been entered into by the parties
in the State of New York and shall be continued and enforced in accordance  with
the laws of that State.
 
      6.7 Assignments. The Company shall have the right to assign this Agreement
and to delegate all rights,  duties and obligations hereunder to any entity that
controls the Company, that the Company controls or that may be the result of the
merger, consolidation,  acquisition or reorganization of the Company and another
entity.  Executive  agrees that this Agreement is personal to him and his rights
and interest  hereunder may not be assigned,  nor may his obligations and duties
hereunder  be  delegated  (except  as to  delegation  in the  normal  course  of
operation  of the  Company),  and any  attempted  assignment  or  delegation  in
violation of this provision shall be void.
 
      6.8 Attorney  Fees.  In the event of  litigation  between the parties,  to
enforce their respective rights under this Agreement, the prevailing party shall
be  entitled  to receive  from the  non-prevailing  party  reimbursement  of the
prevailing party's  reasonable  attorney's fees and costs at all levels of trial
and appeal.
 
      IN WITNESS  WHEREOF,  the parties have executed  this  Agreement as of the
Effective Date.
 
                                    CURATIVE HEALTH SERVICES, INC.
 
 
                                    By:
                                    Its: Chairman
 
 
 
                                         Executive