<PAGE>

                                                                    EXHIBIT 10.4

                       Managing Director Service Agreement

                                     between

                                   ORMED GmbH
                           Merzhauser Stra(B)e 112
                                 79100 Freiburg

                    - hereinafter referred to as "Company" -

                                       and

                                Rudiger Hausherr
                                 Lindengarten 17
                                  79219 Staufen

               - hereinafter referred to as "Managing Director" -

<PAGE>

                                       I.

1.   Mr. Rudiger Hausherr renders his services as Managing Director of ORMED
     GmbH since June 1, 1994.

2.   All former employment agreements or other Service Contracts between the
     parties shall be cancelled by signing this Service Agreement. Especially
     all employment protection provisions resulting from the prior activity
     within this company or within the HUG group shall not be transferred to
     this Service Agreement. The Allianz Pension fund existing at present time
     for Managing Director and all other insurance contracts
     (Direktversicherung, Unfall, Reisversicherung ) will remain the same.

                                       II.

                                      (S) 1
                               Activity and duties

1.   The Managing Director has to conduct the business of the Company with the
     due diligence of a conscientious businessman and must conscientiously
     fulfil the duties imposed on him by Law, the Articles of Association of the
     Company, the attached Business Instructions, other general or specific
     instructions received from the Company's shareholder's meeting and this
     Service Agreement.

2.   The Managing Director is obliged to obtain the prior approval (consent) of
     the shareholders' meeting or the majority shareholder for all transactions
     pursuant to the Business Instructions in their respective applicable
     version.

                                      (S) 2
                                  Working time

1.   The Managing Director shall devote his full and unrestricted work capacity
     to the Company unless otherwise agreed in this Service Agreement.

2.   Each assumption of paid or unpaid secondary activities or honorary
     positions as well as appointments to supervisory boards, advisory boards
     etc. require the prior written approval of the shareholders' meeting. The
     Approval can be revoked at any time, whereby in the event of a revocation
     any provisions as to notice periods for the termination of an assumed
     office must be taken into consideration.

                                      (S) 3
                                  Remuneration

1.   The Managing Director shall receive an annual salary in the amount of DM
     330.000 payable in twelve monthly instalments in the amount of DM 27.500
     each.

2.   In addition, the Managing Director receives an annual premium subject to
     the fulfilment of the following requirements.

                                        2

<PAGE>

     As of January 1, 2000 the annual premium amounts to DM 80,000 in case
     certain targets agreed with the shareholders are met by 100 %, it being
     understood that the respective proportion of the premium indicated below
     becomes due in case only one of the two targets is met. If the targets are
     only met by 90 % or less, no premium has to be paid. In case the targets
     are met by 90 - 100 %, half of the premium is due. If the targets are met
     in excess of 100 % the premium may be increased by shareholders' resolution
     at the shareholders' meeting's discretion.

     The targets consist of:

     -     Revenue as planned             45% of the premium amount

     -     EBIT as planned                55% of the premium amount

                                     (S) 4
                                   Company car

1.   The Company shall provide the Managing Director with a car in accordance
     with its car policy applicable from time to time which is appropriate for
     Mr. Hausherr's position as Managing Director and his appearance vis-a-vis
     customers.

2.   The Managing Director is entitled to also use the company car for private
     purposes. An amount corresponding to the private use shall be added to his
     monthly salary and shall be taxed according to the directives for income
     taxes.

                                     (S) 5
                        Continued payment during sickness

In case the Managing Director is not able to work due to sickness, not based on
his fault, he shall receive the difference between sickness benefits and his net
salary for the duration of six months, but limited to the duration of this
Service Agreement.

                                     (S) 6
                                    Vacation

The Managing Director is entitled to 30 working days of vacation per year. His
vacation shall be co-ordinated with other key employees of the Company and shall
comply with the interest of the Company.

                                     (S) 7
                                 Confidentiality

1.   The Managing Director is obliged during the duration of this Service
     Agreement and afterwards to keep confidential all information or data
     relating to the Companies or any other associated Company he becomes aware
     of and not to disclose any documents concerning the Companies or any other
     associated Companies either by himself or by third parties. This includes
     trade secrets, know-how, inventions, designs, processes, formulae,
     notations, improvements financial information and lists of customers

                                        3

<PAGE>

     concerning the affairs, business or products of the Company or of the
     associated Companies or of any of their predecessors in business or of any
     of their suppliers, agents, distributors or customers.

2.   Publications of facts of which the Managing Director received knowledge
     during his services for the Company or which relate to his sphere of duty
     require the prior approval of the shareholders' meeting.

                                     (S) 8
                               Disability to work

The Managing Director has to notify the Company within three working days of
every disability to work and the approximate duration thereof. If so requested,
the Managing Director is obliged to disclose the reasons for his disability to
work.

                                     (S) 9
                               Payment after death

In case the Managing Director dies, his widow or a person to be named by the
Managing Director shall receive the complete remuneration based on this contract
for a period of three months.

                                     (S) 10
                            Non competition covenant

1.   During the term of the Service Agreement, the Managing Director is not
     allowed to act for or on behalf of a direct or indirect competitor of the
     Company as a self-employed entrepreneur, an employee or in any other way.
     Furthermore, the Managing Director is not allowed to establish or to
     acquire such a Company or to directly or indirectly participate in such a
     competitive company.

2.   In case of the Managing Director's violation of the non-competition clause
     pursuant to Section 1 above, the Managing Director is obligated to pay a
     penalty in -the amount of five monthly remuneration(s) based on the average
     monthly net remuneration, excluding bonuses. The penalty has to be paid for
     each violation separately. In case of a permanent violation the penalty has
     to be paid for each month commenced. Additional claims of the Company shall
     remain unaffected.

3.   For the period of one year after the expiration of this Service Agreement
     the Managing Director is not allowed to act for or on behalf of a direct or
     indirect competitor of the Company as a self-employed entrepreneur, an
     employee or in any other way. Furthermore, during this period the Managing
     Director is not allowed to establish or to acquire such company or to
     directly or indirectly participate in such competitive company. The
     post-contractual non-competition clause is subject to the condition
     precedent that this Service Agreement will not be terminated prior to six
     months following the expiration of the fix initial term pursuant to (S) 12
     Section 1 of this Service Agreement.

                                        4

<PAGE>

4.   For the duration of the aforementioned post-contractual non-competition
     clause the Company shall pay to the Managing Director a compensation in the
     amount to 50% of the average monthly net remuneration of the Managing
     Director calculated on the basis of the Managing Director's income of the
     last twelve months before the expiration of this Service Agreement. The
     average monthly net remuneration shall include any bonuses (pro rata for
     each month of service) pursuant to (S) 3 Section 2 of this Service
     Agreement, unless this Service Agreement is terminated by the Company for
     cause or by the Managing Director. The monthly compensation payment is due
     at the end of each calendar month.

5.   The Compensation will be reduced by earnings by the Managing Director
     during the period of the post-contractual non-competition covenant
     resulting from his activities as self-employed entrepreneur, as employee or
     any other activities according to sec. 74c German Commercial Code (HGB).
     This also applies to earnings which the Managing Director fails to realise
     and to unemployment benefits potentially obtained by the Managing Director.
     The Managing Director is obligated to disclose the amounts of earnings and
     the amounts of failed earnings upon the Company's request immediately.

6.   In case of the Managing Directors violation of the post-contractual
     non-competition clause, the Managing Director is obligated to pay a penalty
     in the amount of five monthly remuneration(s) based on the average monthly
     net remuneration, excluding any bonuses. The penalty has to be paid for
     each violation separately. In case of a permanent violation the penalty has
     to be paid for each month commenced. (Additional claims of the Company
     shall remain unaffected.)

7.   The Company can waive the restraint on competition until the end of the
     Service Agreement by written declaration, with the result that the
     non-competition compensation is to be paid until six months after the
     declaration of waiver, despite the prohibition having been lifted.

8.   If the Company terminates the Service Agreement for important reasons due
     to contract-breaching conduct of the Managing Director, the restraint on
     competition becomes invalid to the extent the Company informs the Managing
     Director in writing before one month after the termination.

9.   If the Company terminates the Service Agreement without an important
     reason, the restraint on competition becomes invalid if the Managing
     Director declares in writing within one month of receipt of the termination
     that he does not feel bound by the restraint on competition. If the Company
     undertakes to pay the full last average remuneration for the term of the
     restraint on competition, the restraint on competition continues to be
     valid.

                                     (S) 11
                                   Inventions

The Company has to be notified about all inventions made during the duration of
the employment contract.

                                        5

<PAGE>

                                     (S) 12
                            Duration and termination

1.   This Service Agreement is concluded for a fix initial term of thirty
     months, commencing June 01, 2000.

2.   Unless either party notifies the other party by October 31, 2002 at the
     latest that it does not desire to continue this Service Agreement beyond
     the fix initial term, the Service Agreement shall automatically extend for
     an indefinite term. Then it can be terminated by either party with six
     months notice to the end of a calendar month.

3.   The appointment of the Managing Director can be revoked at any time by
     resolution of the Shareholders' Meeting. The revocation of the appointment
     of the Managing Director is deemed to be a termination according to the
     previous sentence with effect as of the date provided for in the previous
     sentence.

4.   In the event of termination, the Company is entitled to suspend the
     Managing Director from his duties immediately after having received or sent
     the termination notice balancing the suspension with the remaining vacation
     entitlement.

5.   The right to terminate this Service Agreement for important cause shall not
     be affected by the previous provisions.

6.   The notice of termination has to be given in writing.

                                     (S) 13
                               Return of Documents

After termination of this Service Agreement, or in the event of release of the
Managing Director from his duties, the Managing Director is obliged to return
all items of Company property and documents in their entirety without undue
delay, in particular keys, books, datacarrier, printed items of any kind or
extracts or copies thereof which are in his possession at such time. The
Managing Director is not entitled to retain those items and documents for any
reason. The company car has to be returned at the end of this Service Agreement.

                                     (S) 14
                      Additional agreements and amendments

1.   This Service Agreement contains all contractual stipulations between the
     parties. There are no oral side agreements or other agreements than
     mentioned in this Service Agreement.

2.   All alterations or revisions of this Service Agreement must be in writing
     and must be approved by resolution of the Shareholders' Meeting.

3.   If provisions of this Service Agreement or parts of provisions of this
     Service Agreement are or become void, the validity of the other provisions
     of this Service Agreement shall

                                        6

<PAGE>

     not be affected thereby. The void provision shall be replaced by a legal
     provision which comes as close as possible to the economic and legal
     rationale of the void provision.

4.   Rights based on this Service Agreement have to be claimed within a period
     of two month after becoming due. Otherwise, those rights are deemed to be
     excluded.

5.   This contract will be exclusively governed by German Law.

6.   Both parties declare that they each have received a copy of this contract.

Freiburg, June 30, 2000             Shoreview, July 1, 2000


_____________________________       _________________________________

Rudiger Hausherr                    ORMED GmbH
                                    represented by:
                                    HOHENSTAUFENEINHUNDERTACHTUND-
                                    VIERZIGSTE Verwaltungs GmbH & Co. KG,
                                    in turn, represented by Patrick D. Spangler

                                        7