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                                                                  EXHIBIT 10. 17

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, dated March 1, 2003, is entered by and between
CHRONIMED INC., a Minnesota corporation (the "COMPANY"), and ANTHONY J. ZAPPA
(the "EMPLOYEE").

         1. ENGAGEMENT. The Company agrees to employ the Employee and the
Employee accepts such employment on the terms and conditions set forth in this
Agreement and, except to the extent superceded by this Agreement, subject to
those policies and procedures applying to the employees of the Company, as may
be amended from time to time. The Employee shall apply his best efforts and
devote substantially all of his time and attention to the Company's affairs.
Employee's title within the Company shall be Executive Vice President,
Operations. Employee shall perform those duties as may from time to time be
assigned to him consistent with the offices held by Employee.

         2. COMPENSATION. As consideration for the covenants and agreements
herein and Employee's services rendered, the Company shall provide Employee the
following compensation:

                  A. BASE SALARY. The Employee shall be paid an annual base
         salary of not less than $230,000.00 during the term of this Agreement,
         payable on the 15th and last day of each month by direct deposit to a
         bank account designated by Employee.

                  B. BONUS. The Employee shall participate in a Company
         management incentive compensation plan, commencing with a plan
         applicable to the Company's fiscal year beginning July 1, 2002, which
         is designed to offer employee the potential for an annual bonus
         targeted at 40% of base salary and up to 60% of base salary. Employee
         shall meet with the Company's Chief Executive Officer to establish
         qualitative and quantitative initiatives and objectives for the purpose
         of assessing the amount of bonus to be paid Employee at the end of the
         bonus period.

                  C. STOCK OPTIONS AND INCENTIVES. Employee shall be eligible to
         participate in annual stock options and incentives consistent with
         option and incentive plans made available to the management of the
         Company and pursuant to the Company's Board of Director's discretion.
         The terms of future stock options or incentives, including the number
         of shares available, exercise price, and vesting provisions shall be
         determined pursuant to each option or incentive agreement.

                  D. EMPLOYEE BENEFIT PLANS, INSURANCE, AND TIME-OFF. During the
         term of his employment, Employee shall be entitled to participate in
         any employee benefit plan or plans established and maintained by the
         Company for comparable employees, in accordance with the eligibility
         requirements and other terms and provisions of such plan or plans.
         Employee acknowledges and agrees that the Company is under no
         obligation to Employee to establish or maintain any employee benefit
         plan in which Employee may participate, and that the terms and
         provisions of any employee benefit plan of the Company are matters
         solely within the exclusive province of the Board of Directors.
         Employee shall be entitled to receive health, life, and disability
         insurance coverage on terms consistent with the Company's insurance
         offerings to comparable employees. Employee shall receive vacation and
         medical time-off pursuant to the Company's standard employee policies.

         3. TERM AND TERMINATION. The term of this Agreement shall commence on
February 1, 2003, and shall continue thereafter until terminated according to
this Section 3. This Agreement shall earlier terminate upon the occurrence of
any of the following:

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                  A. Written agreement of the parties to terminate;

                  B. Employee's death or Employee's eligibility for and receipt
         of long-term disability benefits under a Company sponsored plan of
         disability insurance;

                  C. Following 45 days written notice by one party to the other
         indicating the party's intention to terminate without cause; or

                  D. Termination by the Company for Cause. Cause shall be
         defined as (I) Employee's gross negligence or willful misconduct in the
         performance of Employee's duties; (II) the commission by Employee of
         any criminal act, act of fraud or dishonesty by Employee related to, or
         in connection with his employment by the Company, or conviction of a
         crime for which a sentence of more than 90 days incarceration may be
         imposed; or (III) Employee's persistent failure to meet the reasonable
         expectations of or duties consistent with the office held by Employee.

         4. SEVERANCE. In the event the Company terminates this Agreement
pursuant to Section 3C, the Company shall continue to pay Employee monthly
severance payments in an amount equal to what Employee would have received in
salary for twelve months following the date of termination, plus the average of
any incentive compensation paid or payable by the Company for the most recent
two fiscal years, payable according to the Company's ordinary incentive bonus
payment schedule. In addition to such salary and incentive compensation
payments, all unvested options held by Employee shall immediately vest on the
date of termination. Other than the severance payment identified herein, the
Company shall have no obligation past the date of termination to provide
Employee with employee benefits as identified in Section 2.D., except as may be
mandated by State or federal benefits contributions laws.

         5. COVENANT NOT TO COMPETE. Employee hereby covenants and agrees that
during the term of this Agreement and until the later of (I) one year following
termination of this Agreement or any renewal thereof, or (II) Employee's receipt
of the last of any severance payments to Employee under Section 4, Employee
shall not be engaged within the United States, either directly or indirectly, in
any manner or capacity, whether as an advisor, principal, agent, partner,
officer, director, employee, or otherwise, in any business or activity, or own
beneficially or of record five per cent (5%) or more of the outstanding stock of
any class of equity securities in any corporation, in competition with the
business then being conducted by the Company, its subsidiaries or affiliates,
which business includes but may not be limited to the distribution of
medications for treatment of chronic illnesses, the management of chronic
disease states, and all research, analysis, and data services related to the
foregoing. Further, Employee will not for one year following termination of his
employment directly or indirectly attempt to hire away any then-current employee
of the Company, its subsidiaries or affiliates, or take any action to persuade
any such employee to leave employment with the Company, its subsidiaries or
affiliates.

         6. CONFIDENTIALITY. Employee will in the course of his employment with
the Company have access to confidential or proprietary data or information
belonging to the Company, its subsidiaries or affiliates. Employee will not at
any time divulge or communicate to any person (other than to a person bound by
confidentiality obligations to the Company similar to those contained in this
Agreement) or use to the detriment of the Company, its subsidiaries or
affiliates, or for the benefit of any other person Confidential or Proprietary
Data or Information. The provisions of this Section 6 shall survive Employees'
employment hereunder regardless of the cause of termination of employment or
this Agreement and shall remain intact for a period of three (3) years following
termination for any reason. "Confidential or Proprietary Data or Information"
shall mean information Employee learns or develops during the course of
employment that derives economic value by being not generally known or
ascertainable by others and includes, without limitation, financial information,
customer lists, supplier lists, trade secrets, secret processes, computer data
and programs, pricing, marketing, and advertising data, strategic or operational
plans, methods of research and testing, management systems and matters related
to sales and marketing techniques. Employee acknowledges and agrees that any
Confidential or Proprietary Data or Information that Employee has already
acquired was in fact received in confidence and in Employee's fiduciary

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capacity with respect to the Company.

         All written materials, records and documents made by Employee or coming
into Employee's possession during the term of employment concerning any product,
processes, information or services used, developed, investigated or considered
by the Company, its subsidiaries or affiliates, or otherwise concerning the
business or affairs of the Company, its subsidiaries or affiliates, shall be the
sole property of the Company and upon termination of Employee's employment for
any reason, or upon request of the Board of Directors during Employee's
employment, Employee shall promptly deliver the same to the Company. In
addition, upon termination of Employee's employment for any reason, or upon
request of the Board of Directors during Employee's employment, Employee shall
deliver to the Company all other property of the Company in Employee's
possession or under Employee's control including, but not limited to, financial
statements, marketing and sales data, computer hardware and software, and
Company credit cards.

         7. OTHER BUSINESS ACTIVITIES. Employee shall not serve as a director,
officer, employee, consultant, independent contractor or agent of another
company, whether for-profit, not-for-profit, charitable organization, foundation
or otherwise, during the term of this Agreement without the express prior
consent of the Company's Board of Directors.

         8. NOTICES. All notices, requests, demands and other communications
provided for by this Agreement shall be in writing and shall be deemed to have
been given when mailed at any general or branch United States Post Office
enclosed in a certified postpaid envelope, return receipt requested, and
addressed to the address of the respective party stated below or to such changed
address as the party may have fixed by notice:

                  If to the Employee:
                  Anthony J. Zappa
                  7110 W. 83rd St.
                  Bloomington, MN 55438

                  If to the Company:
                  Chronimed Inc.
                  10900 Red Circle Drive
                  Minnetonka, MN 55343
                  Attn: Chief Executive Officer

Any notice of change of address shall only be effective, however, when received.

         9. SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit
of, and be binding upon, the Company, its successors and assigns, including,
without limitation, any corporation which may acquire all or substantially all
of the Company's assets and business or into which the Company may be
consolidated or merged, and the Employee, his heirs, executors, administrators
and legal representatives. The Employee may not assign his rights or obligations
under this Agreement without the prior consent of the Company. The Company may
assign this Agreement to any entity acquiring substantially all the assets or
business of the Company or any subsidiary entity of the Company to which
Employee is assigned, by way of purchase, merger, or otherwise.

         10. APPLICABLE LAW. This Agreement shall be governed by the laws of the
State of Minnesota.

         11. OTHER AGREEMENTS. This Agreement supersedes all prior
understandings and agreements between the parties. It may not be amended orally,
but only by a writing signed by the parties hereto.

         12. NON-WAIVER. No delay or failure by either party in exercising any
right under this Agreement, and no partial or single exercise of that right,
shall constitute a waiver of that or any other right.

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         13. HEADINGS. Headings in this Agreement are for convenience only and
shall not be used to interpret or construe its provisions.

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

         15. SEVERABILITY. If any provision of this Agreement is found to be
invalid, prohibited, or unenforceable, such provision shall be deemed modified
to the extent necessary to make it valid and enforceable or, if it cannot be
modified, then severed and the remainder of this Agreement shall remain in full
force and effect.

CHRONIMED INC.                                     EMPLOYEE

By /s/ Charles V. Owens, Jr.                /s/ Anthony J. Zappa
   ----------------------------             ---------------------------
Charles V. Owens, Jr.                       Anthony J. Zappa
Chairman,
Board Compensation Committee

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