Document:

<PAGE>

                                                                    EXHIBIT 10.4

                               November 1, 1997

John Burd, Ph.D.
LXN Corporation
5830 Oberlin Drive
San Diego, CA 92121

Re:  Employment Agreement

Dear Dr. Burd:

     This letter (the "Agreement") sets forth the terms of your continued
employment by LXN Corporation ("LXN" or the "Company") and will take effect upon
the date the Company hires a new Chief Executive Officer (the "Effective Date").
The terms and conditions of the future employment relationship between you and
LXN as of the Effective Date are set forth below.

     1.   Position and Duties.  You shall continue for the present to be
          -------------------
employed by LXN as President and Chief Operating Officer reporting to LXN's
Board of Directors (the "Board").  However, LXN may, at its sole option, change
your position to one or more positions including, but not limited to, Chairman
of the Board.  In no event will you be asked to accept a position lower than
that of Chairman of the Board.  You accept continued employment with LXN as of
the Effective Date on the terms and conditions set forth in this Agreement, and
you agree to devote your full business time, energy and skill to your duties at
LXN.  These duties shall include, but not be limited to, any duties consistent
with your position which may be assigned to you from time to time by the Board.

     2.   Term of Employment.  Your employment with LXN pursuant to this
          ------------------
Agreement may be terminated by you or LXN at any time, with or without cause.
Upon the termination of your employment with LXN for any reason, and subject to
Paragraph 8 below, neither you nor LXN shall have any further obligation or
liability to the other.

     3.   Compensation.  You shall be compensated by LXN for your services as
          ------------
follows:

          (a)  Salary.  You shall be paid a monthly salary of $13,416.67
               ------
($161,000 per year), subject to standard payroll deductions and withholdings, in
accordance with LXN's normal
<PAGE>

John Burd, Ph.D.
November 1, 1997
Page 2

payroll procedures.  Such salary shall be subject to periodic review and
increase in accordance with LXN's salary review policies/practices then in
effect for its senior management.  In no event will your salary fall below
$161,000 per year.

          (b)  Bonus.  The Board of Directors will determine with you your
               -----
targeted bonus (the "Targeted Bonus") for the next 12 months, and the milestones
which must be achieved by you to earn the Targeted Bonus.

          (c)  You will receive an option to purchase 10,000 shares of the
Company's Common Stock as of the Effective Date at a price per share equal to
its fair market value on the Effective Date, which option will vest one year
from the Effective Date.

          (d)  Benefits.  You shall have the right, on the same basis as other
               --------
executive staff employees of LXN, to participate in and to receive benefits
under the current or future LXN employee benefits plans, including medical,
disability or other group insurance plans.  In addition, you shall be entitled
to the benefits afforded to other senior management under LXN's business expense
reimbursement policies.  Finally, you shall receive six (6) weeks of vacation
annually.

     4.   Voluntary Termination Without Twelve Months' Notice.  In the event
          ---------------------------------------------------
that you voluntarily resign from your employment with LXN prior to the first
anniversary of the Effective Date, or in the event that your employment
terminates prior to the first anniversary of the Effective Date as a result of
your death or disability, you shall be entitled to no compensation or benefits
from LXN other than those earned under Paragraph 3 through the date of your
termination.

     5.   Voluntary Termination with Twelve Months' Notice or Board Termination
          ---------------------------------------------------------------------
Without Cause.  If you resign your employment on or after the first anniversary
-------------
of the Effective Date or if the Board notifies you that they have chosen to
terminate your employment prior to the first anniversary of the Effective Date
without cause, as defined in Paragraph 6 below, ("Notice") you shall be entitled
to the following severance:

          (a)  You will receive your base salary in effect as of the
termination date, subject to standard payroll deductions and withholdings, in
accordance with LXN's normal payroll procedures, on the Company's regular dates
for a one year period following the employment termination date.  In addition,
you will receive an amount equal to the Targeted Bonus amount paid to your
pursuant to Section 3(b) on the first anniversary of the employment termination
date.  In addition, all outstanding options and share grants will fully vest.
[Need to verify with accountants that no pooling problem].

          (b)  For a period of up to eighteen months following the employment
termination date, to the extent permitted by the federal COBRA law and by the
Company's
<PAGE>

John Burd, Ph.D.
November 1, 1997
Page 3

current group health insurance policies, LXN shall also reimburse your premium
payments for any medical or other employee insurance coverage which you elect to
continue in accordance with federal law.  The Company's obligation to make such
payments shall cease immediately if you become eligible for other health
insurance benefits at the expense of a new employer.  You agree to notify the
Company immediately, in writing, upon your acceptance of any employment which
provides health insurance benefits.

     6.   Termination for Cause.  If your employment is terminated by LXN for
          ---------------------
cause as defined below, you shall be entitled to no compensation or benefits
from LXN other than those earned under Paragraph 3 through the date of your
termination.

     For purposes of this Agreement, a termination "for cause" occurs if you are
terminated for any of the following reasons:

          (a)  theft, dishonesty, or falsification of any employment or Company
records;

          (b)  improper disclosure of LXN confidential or proprietary
information;

          (c)  any intentional act by you which has a material detrimental
effect on LXN's reputation or business;

          (d)  your failure or inability to perform any reasonable assigned
duties after written notice from LXN of, and a reasonable opportunity to cure,
such failure or inability; and

          (e)  any material breach of this Agreement, which breach is not cured
within twenty (20) days following written notice of such breach from LXN.

     7.   Exclusive Remedy.  You shall be entitled to no compensation for any
          ---------------
damage or injury arising out of the termination of your employment by LXN.

     8.   Proprietary Rights Agreement.  You agree to abide by the terms and
          ----------------------------
conditions of the Proprietary Rights Agreement with LXN previously executed by
you.

     9.   Noninterference.  While employed by LXN, and for one (1) year
          ---------------
immediately following the termination of your employment with the Company, you
agree not to interfere with the business of the Company by:

          (a)  soliciting, attempting to solicit, inducing, or otherwise causing
any employee of LXN to terminate his or her employment in order to become an
employee, consultant or independent contractor to or for any competitor of the
Company;
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John Burd, Ph.D.
November 1, 1997
Page 4

            (b)  directly or indirectly soliciting the business of any customer
of LXN which at the time of termination or one (1) year immediately prior
thereto was listed on the Company's customer list; or

            (c)  providing any services (whether as a consultant, employee,
partner, director or otherwise) to any person or entity which provides or
markets any products or services in competition with LXN.

     10.    Dispute Resolution.  In the event of any dispute or claim relating
           -------------------
to or arising out of the employment relationship between you and LXN or this
Agreement, the parties agree that all such disputes shall be fully and finally
resolved by binding arbitration conducted by the American Arbitration
Association ("AAA") in San Diego, California, in accordance with the AAA rules
then in effect, provided, however, that this arbitration provision shall not
apply to any disputes or claims relating to or arising out of the misuse or
misappropriation of LXN's trade secrets or proprietary information.

     11.    Attorneys' Fees.  The prevailing party shall be entitled to recover
            ---------------
from the losing party its attorneys' fees and costs incurred in any action
required to enforce any right arising out of this Agreement.

     12.    Interpretation.  The parties agree that this Agreement shall be
            --------------
interpreted in accordance with and governed by the laws of the State of
California.

     13.    Successors and Assigns. This Agreement shall inure to the benefit of
            ----------------------
and be binding upon LXN and its successors and assigns. In view of the personal
nature of the services to be performed under this Agreement by you, you shall
not have the right to assign or transfer any of your rights, obligations or
benefits under this Agreement, except as otherwise noted herein.

     14.    Entire Agreement.  This Agreement constitutes the entire employment
            ----------------
agreement between you and LXN regarding the terms and conditions of your
employment, with the exception of (i) any stock option and/or stock purchase
agreements between you and LXN and (ii) the Proprietary Rights Agreement
described in Paragraph 8.  This Agreement supersedes all prior negotiations,
representations or agreements between you and LXN, whether written or oral,
concerning your employment by LXN.

     15.   No Representations.  You acknowledge that you are not relying, and
           ------------------
have not relied, on any promise, representation or statement made by or on
behalf of LXN which is not set forth in this Agreement.

     16.   Modification.  This Agreement may only be modified or amended by a
           ------------
supplemental written agreement signed by you and a duly authorized officer of
LXN.

<PAGE>

John Burd, Ph.D.
November 1, 1997
Page 5

   17. Notices. Any notices provided hereunder must be in writing and shall be
       ------
deemed effective upon the earlier of personal delivery (including personal
deliverey by telex) or the third day after mailing by first class mail, to LXN
at its primary office location and to you at your address as listed on the
Company payroll.

   18. Severability. Whenever possible, each provision of this Agreement will be
       ------------
interpreted in such manner as to be effective and valid under applicable law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or any other jurisdiction, but this Agreement will be
reformed, construed and enforced in such jurisdiction as if such invalid,
illegal or unenforceable provisions had never been contained herein.

   19. Waiver. If either party should waive any breach of any provision of this
       ------
Agreement, you or LXN shall not thereby be deemed to have waived any preceding
or succeeding breach of the same or any other provision of this Agreement.

   20. Confidentiality. The provisions of this Agreement shall be held in
       ---------------
strictest confidence by you and LXN, and shall not be publicized or disclosed in
any manner whatsoever provided, however, that: (a) you may disclose this
                      -----------------
Agreement to your immediate family; (b) the parties may disclose this Agreement
in confidence to their respective attorneys, accountants, auditors, tax
preparers, and financial advisors; (c) the Company may disclose this Agreement
as necessary to fulfill standard or legally required corporate reporting or
disclosure requirements; and (d) the parties may disclose this Agreement insofar
as such disclosure may be necessary to enforce its terms or as otherwise
required by law.

   Please sign this letter in the space provided below to acknowledge your
acceptance of the terms of this Agreement.

Sincerely,

LXN Corporation

            /s/ Gary H. Stroy
By: __________________________________

   I agree to and accept continued employment with LXN Corporation on the terms
and conditions set forth in this Agreement.
<PAGE>

John Burd, Ph.D.
November 1, 1997
Page 6

Dated November 3, 1997
      ----------------

                                                /s/ John Burd
                                           ------------------------
                                           John Burd, Ph.D.<PAGE>

                                                                    EXHIBIT 10.5

                                   AGREEMENT

    AGREEMENT entered by and between Chronimed Inc., a Minnesota corporation
("CHMD") and LXN Corporation, a Delaware corporation ("LXN") executed and deemed
effective November 24, 1998 (the "Effective Date").

    WHEREAS, LXN is the owner of certain proprietary know-how, technology and
patent rights ("Proprietary Technology," as defined in more detail below)
relating to blood glucose test strips and meters, and

    WHEREAS,  CHMD desires to obtain a worldwide, non-exclusive, license to
manufacture, distribute, market and sell a blood glucose test embodying the
Proprietary Technology developed by LXN, all on the terms and conditions set
forth herein below;

    NOW, THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties herein contained, the parties hereby agree as
follows:

1.  DEFINITIONS

    1.1  "Proprietary Technology" shall mean the technology embodied in that
certain blood glucose test strip and glucose test algorithm of the Duet(R) meter
as the same exists in the current Duet(R) Glucose Control System commercially
provided by LXN as of the Effective Date.

    1.2  "Licensed Product(s)" shall mean any glucose Test System or glucose
Test Strip marketed by CHMD which embodies, is made using, or otherwise
incorporates the Proprietary Technology (a "Proprietary Test System" or
"Proprietary Test Strip," respectively). For Purposes of this Agreement, "Test
System" shall mean any device capable of measuring analyte in a sample (i.e.,
blood or other bodily material), but not including a Test Strip; and "Test
Strip" shall mean any device containing chemical reagents to which a sample is
applied which allows analysis of an analyte by a Test System.

    1.3  "Net Revenues" shall mean CHMD's gross revenues for sales of
Proprietary Test Strips by CHMD or its Affiliates to non-affiliated third
parties, less any separately itemized shipping charges, sales or exercise taxes
paid directly by CHMD, normal and customary trade discounts, returns, rebates
and allowances.

    1.4  "Royalty Year" shall mean annual period commencing Ninety (90) days
from the date of the Food and Drug Administration (FDA) registration (i.e.,
clearance by the FDA of a 510(k) application for a Proprietary Test Strip) or
April 1, 2000 whichever occurs first and continuing each year thereafter during
the term of this Agreement.

    1.5  "Dollar(s) shall mean United States Dollars. All royalty due for sales
in countries foreign to the United States shall be converted (for the purpose of
calculation only)

<PAGE>

into equivalent United States funds at the rate set forth in The Wall Street
                                                             ---------------
Journal (U.S., Eastern Edition) for the last business day of the calendar
-------
quarter for which such royalties are owed.

    1.6  "Affiliates(s)" shall mean any corporation or other business entity
controlled or under common control with CHMD for so long as such control exists.
For this purpose "control" shall mean direct and indirect beneficial ownership
of at least fifty one percent (51%) of the voting stock of, or at least a fifty
one percent (51%) interest in the income of such corporation or other business
entity.

2.  GRANT OF LICENSE

   2.1  Subject to the terms and conditions stated herein, LXN grants to CHMD
and CHMD accepts a non-exclusive, worldwide non-transferable (except as set
forth in Section 9.1 below) right and license under the Proprietary Technology
to make, have made, use, distribute, market and sell Licensed Product(s)
including the right to have any or all of the foregoing performed by an
Affiliate.

   2.2  During the first four years of this Agreement, LXN shall not grant to a
third party rights with respect to the Licensed Product(s) royalty structures
more favorable to such third party than as provided to CHMD under this Agreement
without first offering such more favorable royalty structure to CHMD.

   2.3  Subject to CHMD's performance of its obligations under this Agreement
and upon LXN's prior written approval, not to be unreasonably withheld, CHMD may
assign any CHMD rights licensed or granted in Section 2.1; provided, however,
that such assignment shall be solely for the purpose of permitting CHMD to
engage the services of Licensed Product(s) manufacturers, sales representatives,
dealers and other persons to assist CHMD in its performance under this Agreement
and the same shall not alleviate CHMD of its obligations hereunder.

   2.4  LXN and CHMD agree that CHMD receives no licenses or rights whatsoever,
by implication or otherwise, with respect to any other LXN patents, patent
applications, trademarks, technology or other intellectual property except for
the rights to the Proprietary Technology as specifically granted herein; and
upon termination of this Agreement, other than as to inventory in CHMD's
possession at the time of termination, CHMD shall have no further right to use
LXN Proprietary Technology, distribute, market or sell the Licensed Products(s).
Upon termination of this Agreement, CHMD shall retain the sole ownership of and
rights to any manufacturing technologies, know-how, processes, or devices
related to the Licensed Product(s) production or design independently developed
by CHMD during the term of this Agreement. LXN may not, during the term of this
Agreement nor after its expiration, duplicate any Licensed Product(s) design
feature, technology, or formula enhancement developed by CHMD in each case to
the extent such duplication would infringe the valid claim of an issued patent
without the express written consent of CHMD.

   2.5  In consideration for the license and other rights conveyed herein, and
in addition to the royalties identified below, CHMD shall pay [***] to LXN on or
before December 15, 1998.

[***] CONFIDENTIAL TREATMENT REQUESTED. CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AN EXCHANGE COMMISSION.

                                      -2-
<PAGE>

    2.6  CHMD shall notify LSN on or before June 1, 1999, whether CHMD, in its
sole discretion, elects to manufacture, have made, market or sell a blood
glucose Proprietary Test System. In the event CHMD elects to manufacture, have
made, market or sell such a Proprietary Test System, CHMD shall pay to LXN, at
the time of CHMD's notice, an additional lump sum payment of [***]. In the event
CHMD elects not to manufacture, have made, market or sell such Proprietary Test
Systems, the license granted under Section 2.1 above shall be limited to
Proprietary Test Strips and CHMD shall have no license with respect to
Proprietary Test Systems or Proprietary Technology related thereto (i.e., the
subject matter claimed in that certain U.S. Patent Application number [***] and
the remaining terms of this Agreement shall remain intact and fully in force.

    2.7  In consideration of the rights granted and other obligations of the
parties herein, the parties agree that during the term of this Agreement that
neither party shall directly or indirectly make, have made, market, sell, have
sold or otherwise distribute any Test Strip (including without limitation a
Proprietary Test Strip) which at the time of the first commercial sale of such
Test Strip is compatible and could be used with a Test System then being
distributed commercially by or on behalf of the other party hereto.

3.  LICENSED PRODUCT(S) ROYALTIES

    3.1  CHMD shall pay to LXN royalties on all CHMD sales of Proprietary Test
Strips during the first five Royalty Years as follows payable in Dollars:

         (a)  [***] of Net Revenues on all Proprietary Test Strip sales up to
    [***] during a Royalty Year;

         (b)  [***] of Net Revenues on all Proprietary Test Strip sales between
    [***] and [***] during any Royalty Year; and

         (c)  [***] of Net Revenues on all Proprietary Test Strip sales
    exceeding [***] during a Royalty Year.

    3.2  CHMD shall pay to LXN royalties on all CHMD sales of Proprietary Test
Strips occurring after the first five Royalty Years as follows:

         (a)  [***] of Net Revenues on all Proprietary Test Strip sales up to
    [***] during a Royalty Year;

         (b)  [***] of Net Revenues on all Proprietary Test Strip sales between
    [***] and [***] during a Royalty Year; and

         (c)  [***] of Net Revenues on all Proprietary Test Strip sales
    exceeding [***] during a Royalty Year.

    3.3  CHMD shall pay to LXN, upon the commencement of the first Royalty Year
(as defined herein), a lump sum payment of [***]. The advance of [***] shall
off-set dollar-for-dollar the first

[***] CONFIDENTIAL TREATMENT REQUESTED.  CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                  -3-
<PAGE>

[***] in royalties to become due and payable to LXN based on Net Revenues
generated during the first Royalty Year.

    3.4  In addition to the guaranteed royalty to be paid upon commencement of
the first Royalty Year, CHMD guarantees payment to LXN of [***] in minimum
royalties each of the second, third and fourth Royalty Years. If the total
royalties paid to LXN during one of the foregoing Royalty Years are less than
the minimum guaranteed royalty, then, together with the last royalty payment for
such Royalty Year pursuant to Section 3.5 below, CHMD shall pay to LXN an amount
equal to the difference of the minimum guaranteed royalty and the royalties paid
or payable to LXN pursuant to Section 3.1 above.

    3.5  CHMD shall pay all royalties on Net Revenues due LXN, on a calendar
quarterly basis in Dollars within 45 days following the quarter for which
royalties are paid. CHMD shall furnish LXN, with each royalty payment, a
statement specifying total Licensed Product(s) sales for which royalties have
been earned during the royalty quarter and the corresponding royalties paid.
CHMD will at all times during the term of this Agreement and two (2) years
thereafter keep and maintain complete and accurate books of accounting
containing records of Licensed Product(s) sales, billing, and accounts
receivable data in sufficient detail to enable royalties payable to be computed
and verified. CHMD will permit LXN or its representatives to audit such records
at LXN's expense upon reasonable notice to CHMD; provided, however, if a
variation or error producing an underpayment in amounts payable hereunder
exceeding [***] of the amount paid for any period covered by the audit is
established in the course of any such audit, whereupon all costs relating to the
audit and any unpaid amounts that are discovered shall be paid by CHMD, together
with interest on such unpaid amounts at the rate set forth in Section 3.7(a)
below.

    3.6  In the event CHMd shall fail to pay a minimum royalty as required under
Sections 3.3 or 3.4, LXN's exclusive remedy with respect to such non-payment of
a minimum royalty shall be to terminate the license granted under this
Agreement, and LXN shall have no other remedy of claim of damages of any nature
with respect to such non-payment of minimum royalty. The restriction of remedy
provided in this Section 3.6 shall not preclude any other remedy LXN may have
with respect to any other possible non-performance or breach by CHMD.

    3.7  In the event CHMD's non-performance or breach, LXN shall be entitled to
the following remedies:

         (a)  Subject to Section 3.6, if CHMD is in default on any payment due
under this Agreement, the amount in arrears will bear the interest from the date
of the default until the amount is paid in full, at a rate equal to the maximum
rate allowed by the State of California. This interest will be compounded
annually from the date of default and shall be payable on demand.

         (b)  LXN may terminate this Agreement, and such termination will be
without prejudice to any other rights or claims LXN may have against CHMD.

[***] CONFIDENTIAL TREATMENT REQUESTED.  CONFIDENTIAL PORTIONS HAVE BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

                                      -4-
<PAGE>

         (c)  Because CHMD's breach of this Agreement may cause LXN irreparable
    harm for which money is inadequate compensation, LXN will be entitled to
    injunctive relief to enforce this Agreement, in addition to damages and
    other available remedies.

4.  LXN COVENANTS, REPRESENTATIONS, AND WARRANTIES

    4.1  LXN hereby represents and warrants that to the best of its knowledge it
owns all the Proprietary Technology and has all rights necessary to grant the
license described in Section 2.1 under the terms contained herein.

    4.2  Nothing in this Agreement shall be construed as:

         (a)  A warranty or representation by LXN as to the scope or validity or
    enforceability of any Proprietary Technology; or

         (b)  A warranty or representation that anything made, use, sold under
    the license granted will be free from infringements of patents or other
    rights of any third parties; or

         (c)  An obligation or requirement that LXN file or prosecute any
    patents applications or secure or maintain any intellectual property rights
    in the Proprietary Technology; or

         (d)  Conferring any right on CHMD or its Affiliates, to use in
    advertising, publicity, or any other manner any trademark or trade name of
    LXN without prior written consent; or

         (e)  A warranty or representation that any product sold or services
    performed by CHMD, or its Affiliates, whether embodying, made using or
    otherwise incorporating by Proprietary Technology or not, is safe,
    efficacious, or in compliance with any law or regulations.

    4.3  LXN represents that it will make appropriate technical personnel
available for two (2) day meetings in Minnesota, to review the technology
involved in the Proprietary Technology and discuss ways of facilitating its use
by CHMD.

    4.4  The execution and delivery by LXN of this Agreement and any other
documents contemplated hereby, and the performance by LXN of any of its
obligations herein will not conflict with, result in a breach or violation of
the terms or conditions of, or constitute a default under any contract or
agreement of LXN, its Articles of Incorporation or By-laws, or any order,
judgment, statute, rule or regulation to which LXN is subject.

    4.5  The execution, delivery, and performance of this Agreement have been
duly authorized and approved by the board of directors of LXN and this Agreement
constitutes a valid and binding agreement of LXN in accordance with its terms.

5.  CHMD COVENANTS, REPRESENTATIONS, AND WARRANTIES

                                      -5-
<PAGE>

    5.1  CHMD has or will have the ability to manufacture, distribute, market
and sell the Licensed Product(s) worldwide and will diligently pursue it.

    5.2  The Licensed Product(s) shall be (i) manufactured in accordance with
high quality control standards and procedures appropriate for medical devices of
this nature, (ii) free from all defects in workmanship, of merchantable quality,
fit for the particular purpose intended, and (iii) manufactured in accordance
with all applicable federal, state,laws, rules, or regulations including, but
not limited to, FDA requirements.

    5.3  The execution and delivery by CHMD of this Agreement and any other
documents contemplated hereby, and the performance by CHMD of any of its
obligations herein will not conflict with, result in a breach or violation of
the terms or conditions of, or constitute a default under any contract or
agreement of CHMD, its Articles of Incorporation or By-laws, or any order,
judgment, statute, rule or regulation to which CHMD is subject.

    5.4  The execution, delivery, and performance of this Agreement have been
duly authorized and approved by the board of directors of CHMD and this
Agreement constitutes a valid and binding Agreement of CHMD in accordance with
its terms.

6.  INDEMNIFICATION

    6.1  Subject to Section 6.4, below LXN shall indemnify and hold CHMD
harmless from and against any and all liabilities, losses, damages, claims,
deficiencies, costs and expenses (including, without limitation, reasonable
attorney fees and other costs and expenses) incident to any suit, action or
proceeding brought by a third party arising out of or resulting from:

         (a)  The breach or inaccuracy of any warranty or representation by LXN
     herein;

         (b)  Any breach or failure to perform by LXN of any material term,
     covenant, or condition herein;

         (c)  Any act or omission of LXN, its officers, employees, or agents in
     the performance of its obligations or conduct of its business under this
     Agreement.

     6.2  In the event CHMD incurs any damage, judgment or expense, including
but not limited to attorneys fees or additional license or royalties fees,
arising out of any third party claim alleging that CHMD's exploitation of the
Proprietary Technology or exercise of the license granted herein constitutes
infringement of third party proprietary or intellectual property rights, CHMD
shall have the right to off-set any sums due or coming due LXN under this
Agreement by the amount of such CHMD damages, judgment or expense, without loss
of the license granted by LXN to CHMd herein. Notwithstanding the foregoing,
CHMD shall have no right of off-set under this Section 6.2 or otherwise with
respect to any infringement or alleged infringement arising out of or resulting
from: (i) use of intellectual property or technologies other than the
Proprietary Technology, including in completed products or equipment or any
assembly, combination, method or process in which the Proprietary Technology is
used when the infringement would not result when the Proprietary Technology is

                                      -6-

<PAGE>

used alone, or (ii) use of the Proprietary Technology in applications or for
purposes not licensed or contemplated under this Agreement.

     6.3  Subject to Section 6.4 below, CHMD shall indemnify and hold LXN
harmless from and against any and all liabilities, losses, damages, claims,
deficiencies, costs and expenses (including, without limitation, reasonable
attorney fees and other costs and expenses) incident to any suit, action or
proceeding brought by a third party arising out of or resulting from:

         (a)  The breach or inaccuracy of any warranty or representation by CHMD
     herein;

         (b)  Any breach or failure to perform by CHMD of any material term,
     covenant, or condition herein;

         (c)  Any act or omission of CHMD, its officers, employees, or agents
     in the performance of its obligations or conduct of its business under this
     Agreement; or

         (d)  The manufacture, sale or use of the Licensed Product(s) by or on
     behalf of CHMD, including products liability.

     6.4  A party (the "Indemnitee") that intends to claim indemnification under
Section 6.1 or 6.3 above, as applicable, shall: (i) promptly notify the
indemnifying party (the "Indemnitor") in writing of any suit, action, or other
proceeding brought by third parties in respect of which the Indemnitee intends
to claim such indemnification hereunder, (ii) provide the Indemnitor sole
control over the defense and settlement of such suit, action, or other
proceeding, and (iii) provide Indemnitor, at Indemnitor's expense and request,
with reasonable assistance and full information with respect to such suit,
action or other proceeding. The failure to deliver written notice to the
Indemnitor within a reasonable time after the commencement of any such action,
if prejudicial to its ability to defend such action, shall relieve such
Indemnitor of any liability to the Indemnitee under this Article 6 but the
omission so to deliver written notice to the Indemnitor shall not relieve the
Indemnitor of any liability that it may have to any Indemnitee otherwise than
under this Article 6. Notwithstanding the foregoing, the Indemnitor shall have
no obligations for any suit, action or other proceeding if the Indemnitee
seeking indemnification makes any admission, settlement or other communication
regarding the same without the prior written consent of Indemnitor, which
consent shall not be unreasonably withheld. Without limiting the foregoing, the
Indemnitee shall have the right to participate in any such suit, action or other
proceeding with counsel of its own choice at its expense; and in all cases,
Indemnitor shall keep the Indemnitee fully informed of the progress of any suit,
action, or other proceeding it controls under this Section 6.4. For purposes of
the indemnification obligations to a party pursuant to this Article 6, such
party shall be deemed to include its directors, officers and employees.

7.   TERM & TERMINATION

     7.1  This Agreement shall have an initial term of ten (10) years following
the Effective Date, unless otherwise earlier terminated as set forth herein.
This Agreement shall renew for successive one year terms only by a written
agreement executed by the Parties.

                                      -7-
<PAGE>

     7.2  Either party shall have the right to terminate this Agreement in the
event of any of the following:

          (a)  A party breaches the Agreement and does not cure such breach
     within (30) days after notice from the non-breaching party specifying the
     nature of such breach, including failure by CHMD to make timely royalty
     payments to LXN as specified herein.

          (b)  The dissolution, insolvency, bankruptcy or appointment of a
     trustee or receiver for a party, whether voluntary or involuntary.

     7.3  Termination of this Agreement for any reason shall not relieve a party
of any obligation owing at the time of termination. In the event this Agreement
is terminated for any reason, CHMD shall provide LXN with a written inventory of
all Licensed Products that CHMD and its Affiliates have in inventory and CHMD
and its Affiliates shall have the right to sell or otherwise dispose of such
Licensed Products, all subject to the payment to LXN royalties pursuant to
Article 3 hereof. Articles 1, 8 and 9 and Sections 3.5, 6.1, 6.3 and 6.4 shall
survive the expiration and any termination of this Agreement. In addition, in
the event of termination of this Agreement for breach pursuant to Section
7.2(a) above, the obligations of the breaching party (but not the terminating
party) under Section 2.7 shall continue for a period of one (1)-year after the
effective date of such termination. Except as otherwise provided in this Article
7, all rights and obligations of the parties under this Agreement shall
terminate upon the expiration or termination of this Agreement.

8.   CONFIDENTIALITY

     8.1  The parties acknowledge that the transactions herein will require the
exchange of information which is or may be confidential or proprietary. As used
herein, the term "Confidential Information" shall mean (i) proprietary
information of any of the parties; (ii) information marked or designated by any
of the parties as confidential; (iii) information, whether or not in written
form and whether or not designated as confidential, which is known to a party as
being treated as confidential by the other party; and (iv) information provided
to any party by third parties which any party is obligated to keep as
confidential. Confidential Information includes, but is not limited to,
discoveries, ideas, designs, specifications, drawings, techniques, models, data,
programs, documentation, processes, know-how, customer lists, marketing plans,
and financial and technical information. Confidential Information shall not '
include any information of a party now or hereafter (i) voluntarily disseminated
by that party to the public, or (ii) which otherwise becomes part of the public
domain through lawful means.

     8.2  Each party hereby acknowledges that each party's Confidential
Information is and shall continue to be the exclusive property of such party,
whether or not disclosed or entrusted to the under this Agreement. Each party
agrees to exercise the highest degree of care in safeguarding the Confidential
Information of the other party against loss, theft, or other inadvertent
disclosure, and agrees generally to take all steps necessary to ensure the
maintenance of confidentiality.

                                  -8-
<PAGE>

     8.3  Upon termination of this Agreement, or as otherwise reasonably
 requested, each party agrees to deliver promptly to the owning party all
 Confidential Information of the owning party, in all forms and copies, that may
 bc in the non-owning party's possession or under its control.

     8.4 Each party acknowledges that any disclosure of Confidential Information
in violation of this Agreement will cause irreparable harm to the owning party.
If a party fails to abide by the requirements of this Section 8, the other party
will be entitled to specific performance immediate issuance of a temporary
restraining order or preliminary injunction, and to judgment for any damages
caused by such breach, as well as expenses and reasonable attorneys fees
incurred in enforcement of these rights, in addition to and not to the exclusion
of any other remedies provided in equity or at law.

     8.5  The terms of this Section 8, and the rights and obligations created
herein, shall survive the termination of this Agreement for any reason.

     8.6  Any written communication, including press releases, regarding the
fact of this Agreement or any terms hereunder shall be mutually approved in
writing prior to its publication.

9.   MISCELLANEOUS

     9.1  This Agreement shall be binding upon and inure to the benefit of the
parties and their legal representatives, successors, and assigns. This Agreement
and the various rights and obligations herein may not be assigned without the
mutual written consent of the parties. Notwithstanding the foregoing, either
party shall have the right to assign this Agreement to a party that succeeds to
all or substantially all of the assigning party's business or assets relating to
this Agreement whether by sale, merger, operation of law or otherwise; provided
that such assignee or transferee promptly agrees in writing to be bound by the
terms and conditions of this Agreement.

     9.2  Any notices permitted or required under this Agreement shall be deemed
given upon the date of personal delivery, 24 hours after deposit with an
overnight express delivery service, or 72 hours after deposit in the United
States mail, postage fully prepaid, addressed to the respective party:

If to CHMD:

Chronimed Inc.
10900 Red Circle Drive
Minnetonka, MN 55343-9126
Arm: President

With copy to:
Chronimed Inc.
10900 Red Circle Drive
Minnetonka, MN 55343-9126
Attn: General Counsel

                                 -9-
<PAGE>

If to LXN:

LXN Corporation
5830 Oberlin Drive
San Diego, CA 92121
Attn: President

With copy to:

or at any other address as any party may, from time to time, designate by notice
given in compliance with this Section.

     9.3  This Agreement shall be governed by and construed in accordance with
the laws of the State of Minnesota without regard to its choice of law
provisions.

     9.4  This Agreement contains the entire understanding between the parties
with respect to the subject matter herein and supercedes any prior
understandings and agreements among them regarding the same.

     9.5  In the event of any action by a party under this Agreement to enforce
any of its terms, it is agreed that the prevailing party shall be entitled to
recovery of its costs and reasonable attorneys fees in bringing or defending
such action.

     9.6  This Agreement or any section hereof shall not be construed against a
party due to the fact that the Agreement or any section was drafted by that
party.

     9.7  If any provision of this Agreement or application of a provision is
held to be invalid or unenforceable, the remainder of this Agreement and the
enforceability thereof shall not be affected by such determination.

     9.8  Any failure or delay by a party to enforce this Agreement or any right
herein shall not constitute in any instance a waiver of such right or ability to
obtain a permitted remedy.

     9.9  This Agreement may not be amended or supplemented except by a written
instrument signed by the parties. Any action by a party contrary to or in
modification of the terms of this Agreement shall not create a new agreement
among the parties unless specifically consented to in writing by the non-acting
parting.

     9.10 Any dispute that arises between the parties with respect to the
performance of this Agreement shall be submitted to binding arbitration by the
American Arbitration Association (or such other arbitration agreed to in writing
by the Parties) to be determined and resolved by said association under its
rules and procedures in effect at the time of the submission. The final
arbitration decision shall be enforceable throughout the courts of the State of
Minnesota and the State of California.

                                     -10-
<PAGE>

     9.11 CHMD agrees to mark and require its Affiliates to mark, all Licensed
Products sold with all applicable patent numbers or otherwise conform to patent
laws and practices of the country in which such Licensed Products are sold.

     9.12 The relationship of CHMD and LXN established by this Agreement is that
of independent contractors. Nothing in this Agreement shall be construed to
create any other relationship between CHMD and LXN. Neither party shall have any
right, power or authority to assume, create or incur any expense, liability or
obligation, express or implied, on behalf of the other.

     9.13 Except as expressly provided herein, each party agrees not to disclose
any terms of this Agreement to any third party without the consent of the other
party, except as required by securities or other applicable laws, to prospective
and other investors and such party's accountants, attorneys and other
professional advisors.

THIS AGREEMENT CONTAINS A BINDING ARBITRATION PROVISION, WHICH MAY BE ENFORCED
BY THE PARTIES.

CHRONIMED INC.                    LXN CORPORATION

By: /s/ Senior V.P. of CHMD       By: /s/  Randy Nelson
   ------------------------          -----------------------

Its: Senior V.P.                  Its: President & CEO
   ------------------------          -----------------------

                                     -11-

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