Preview | Transition Agreement |

THIS TRANSITION AGREEMENT (the Agreement) is made effective as of October 2, 2004 (the Effective Date), between CURATIVE HEALTH SERVICES, INC., a Minnesota corporation (the Company), and JOSEPH L. FESHBACH (Executive), an individual resident of the State of California.

WHEREAS, the Company and Executive have agreed to change certain aspects of Executives relationship with the Company;

WHEREAS, Executive will continue as an employee but will transition from his role as Chief Executive Officer to a role as Special Advisor;

WHEREAS, the parties entered into an Employment Agreement dated July 24, 2002 (the Employment Agreement), which was amended in part by the Acknowledgment of Assignment of Employment Agreement dated June 3, 2003 (Assignment I) and the Amendment to and Second Acknowledgment of Assignment of Employment Agreement dated August 19, 2003 (Assignment II);

NOW, THEREFORE, in consideration of the promises and the mutual covenants and agreements herein contained, the Company and Executive hereby agree as follows:

1.1 Role as Special Advisor. Commencing on the date that Paul McConnell replaces Executive as Chief Executive Officer (the Transition Date), which will occur on November 15, 2004, Executive shall continue employment as Special Advisor to the Company, reporting directly to the Board of Directors during the Special Advisor Term (as defined in Section 2, below). Executive will expend the effort necessary and appropriate to perform such duties as may be reasonably requested of him as Special Advisor, including but not limited to, advising the Company, its subsidiaries and affiliates on long-term strategy and capital formation, proactively seeking out potential transactions for detailed review at the discretion of management, advising management, as requested, upon a number of topics including, but not limited to, investor relations, public relations and legislative affairs, evaluating, negotiating, and executing mergers and acquisitions, transitioning his duties as Chief Executive Officer and such other duties as the Board may assign. The Board shall conduct an annual review of Executives performance as Special Advisor beginning on the first anniversary of the Transition Date. In the event that Executive wishes to alter his role and/or lessen his commitment at any time during the Special Advisor Term, the Board agrees to consider such proposal with a corresponding modification in his then current base salary.

1.2 Location. The Company has set up an office in the San Francisco Bay area. The Company shall pay the rent for such office through February 28, 2005 and Executive shall be able to utilize such office during such time.

1.3 Resignation and Board of Directors During Special Advisor Term. While Special Advisor, Executive agrees to accept election and to serve as a director and Chairman of the Board of Directors of the Company, without any compensation therefor other than that specified herein, subject to shareholder approval and Board appointment or approval. Executive will perform such duties that are customary for such a position, including calling and running meetings of the Board of Directors. Effective on the Transition Date, Executive shall resign from his position as Chief Executive Officer of the Company and from all other positions as an officer or director of any of the Companys subsidiaries or affiliates. Upon the termination of this Agreement or Executives employment hereunder for any reason, Executive shall resign from any and all other positions as an officer or director of any of the Companys subsidiaries or affiliates, if applicable. On the date on which he signs this Agreement, Executive agrees to submit his resignation letter with respect to his role as Chief Executive Officer in the form attached as Exhibit A.

2. Employment Term. The term of Executives employment as Special Advisor shall be deemed to commence on the Transition Date and shall end on October 1, 2007 (the Special Advisor Term), or earlier in accordance with the provisions of Section 4.

2.1 General Release. In consideration for entering into this Agreement, no earlier than the Transition Date and no later than the twenty-first day after receipt, Executive agrees to execute and deliver to the Company a general release in form and substance reasonably satisfactory to the Company releasing the Company, its subsidiaries and affiliates, and their officers, directors, employees and agents from all liabilities, claims and obligations of any nature whatsoever, including but not limited to any and all obligations under the Employment Agreement, excepting only the Companys prospective obligations under this Agreement, under any Stock Option Award Agreements, any Restricted Stock Agreement and under any other employee benefit plans or programs in which Executive participates under Section 3.2, if applicable, subject to all terms and conditions of such plans or programs and this Agreement. The General Release is attached as Exhibit B.

3. Compensation and Benefits

3.1 Cash Compensation.

(a) Base Salary. Beginning on October 2, 2004 and continuing through October 1, 2005, the Company will pay Executive an annual base salary of $1.00 payable on October 2, 2004. For the period October 2, 2005 through October 1, 2006, and for the period October 2, 2006 through October 1, 2007, Executive shall be paid an annualized salary of at least $50,000, payable in equal monthly installments of at least $4,166.50 on regular Company payroll dates; however, no later than October 1, 2005 and October 1, 2006, if applicable, Executive and the Compensation Committee of the Board shall review Executives responsibilities and mutually agree on the appropriate amount of monthly compensation for Executives role as Special Advisor for the subsequent twelve month period. Except as set forth in this Section 3.1(a) and in Sections 4.5(a) and (c), Executive is not eligible for any cash compensation under this Agreement.