<PAGE>   1
                                                                   EXHIBIT 10.12
                     TERMS OF EMPLOYMENT WITH HS.COM, INC.


This document (the Agreement) outlines the terms of employment between Charles
Smith, of 380 Vista Abierta, El Cajon, California, 92019 (Smith), and hs.com,
Inc. a Delaware corporation with a principal place of business at 7777 Alvarado
Road, Suite 401, La Mesa, CA 91941 (the Company).

Position: Smith's position will be President of the Company.

Responsibilities: Smith will discharge faithfully and to the best of his ability
the duties of the office of President as they are set forth in the Company's
bylaws and as required under Delaware Corporation law. Smith will serve at the
direction and pleasure of the Board of Directors of the Company, and he will
devote substantially all of his working time and effort to performing his duties
and responsibilities on behalf of the Company.

Term: The term of Smith's employment is one (1) year, commencing on September
26, 1998, and this agreement will be renewed for successive periods of one (1)
year unless notice of termination is given by either party no fewer than
thirty (30) days prior to the expiration of any such one year employment period.

Salary: Smith's regular salary rate will be $150,000.  Payments will be
made twice each month in the amount of $6,250.00, less applicable payroll taxes
and other deductions required by law or that Smith authorizes in writing.
Smith's annual salary will be subject to review and increase, but not decrease,
from time to time as decided by the Board of Directors, provided that Smith's
annual salary rate will increase to $216,000 upon the occurrence of any of the
following events: the registration of the securities of the Company in a public
offering; the merger of the Company with a publicly traded corporation; or the
investment of a cumulative total of $3,000,000 in the capital stock of the
Company on or after November 1, 1998.

Bonus: Smith will be eligible to participate in any incentive bonus program that
the Company's Board of Directors may establish for its executive employees. The
expected terms of the bonus program will be a maximum bonus of 50% of the salary
paid during the year in which the bonus is earned, based on achievement of
company-wide financial and other success objectives.

Equity Compensation: In addition to the cash compensation to be paid as set
forth above, the Company will issue to Smith 42,000 shares of the Company's
common stock (the "Shares"). Three-fourths of the Shares, (including any
additional shares issued to Smith in respect of such Shares as a result of a
stock split, stock dividend or other event) are subject to divestiture on the
following condition:

        If Smith completes twelve (12) or more months of continuous employment
        with the Company under this Agreement but less than forty-eight (48)
        consecutive months, for each full month and any partial month less than
        forty-eight (48) months of such continuous employment, 2.0833% of the
        Shares shall be divested.



<PAGE>   2

Divested shares shall revert to the Company, and Smith shall receive no
compensation for them or have any rights whatever in regard to them.

The certificates representing the Shares shall bear a legend stating that the
Shares: 1) are not registered under federal or state securities laws; and 2) may
not be transferred until registered or the Company's legal counsel issues an
opinion stating that such restrictions need no longer apply. The legend shall
contain any other restrictions as are required by law. The Company will hold in
escrow the certificates representing the Shares that are subject to divestiture.
At Smith's request, the Company will deliver to him certificates representing
any Shares held in escrow by the Company that are no longer subject to
divestiture. During the period that the Shares or any part of them are subject
to being divested under this provision, Smith shall be deemed the record owner
and shall have all other rights incident to ownership of such Shares, including
the right to notice of meetings and the right to vote on any matters on which
holders of the Company's common stock are entitled to vote.

Anything in this provision to the contrary notwithstanding, upon a change in
control of the Company (as defined below), the divestiture conditions set forth
in this provision shall be of no further force and effect on the date such
change in control becomes effective. As used here, the term change in control
shall mean either: 1) a merger of the Company into or consolidation of the
Company with another corporation, and less than 50% of the directors of the
resulting corporation immediately following the merger or consolidation were
directors of the Company immediately prior to the merger or consolidation, or 2)
a sale by the Company of all or substantially all of its assets.

Benefits: The Company does not yet have a benefit program in place for its
executives and employees. When it establishes one, Smith and his dependents will
be eligible to participate in that program on the terms of eligibility
established by the Company.

Termination: Events that will automatically terminate this agreement will be
Smith's death or a disability that prevents him from performing substantially
all of his duties and responsibilities for a period of 90 days.

Severance Compensation: In the event that the Company terminates or elects not
to renew Smith's employment without cause, as defined below, he will be entitled
to continue to receive his regular salary only for the period of one year
following the effective date of termination. That salary continuation shall be
payable at the Company's election in either a lump sum or on the same basis as
his regular salary. The Company will withhold from such severance payment or
payments those payroll taxes and other amounts required by law or authorized by
Smith in writing. If Smith's employment is terminated for cause, he will not be
entitled to receive any severance pay or any other severance compensation. For
purposes of this provision, cause is defined as any of the following: 1)
material acts of dishonesty; 2) a repeated violation of Company policy (whether
or not written) after receiving written notice of such policy; 3) failure by
Smith to perform any material aspect of his duties after written warning
received from the Board of Directors; or 4) the breach by Smith of any term of
this Agreement.



<PAGE>   3


Non-Competition and Confidentiality: By virtue of Smith's position as President
of the Company, he will come to possess significant amounts of confidential
information about the Company and the way that it conducts its business. Even if
some or all of that information is available from other or public sources, Smith
will have been exposed to it in a way such that his use of that information
after termination of his employment would enable him to compete unfairly against
the Company. For that reason, for one (1) year following the termination of
Smith's employment with the Company, he will not engage, directly or indirectly,
in any activity that is competitive with the business of Company as and where it
was conducted or planned to be conducted at the time of Smith's termination,
regardless of the reason for or circumstances of his termination. Smith will be
obligated to maintain the confidentiality of any trade secret or confidential
business information that he acquires about the Company during his employment,
and Smith will refrain from using any such information until it becomes publicly
available through lawful means. These restrictions are in addition to, not in
place of, any protection provided to trade secret information under California
law.

Assignment: The Company may assign its rights and obligations under this
agreement, in which event it shall be binding upon, and inure to the benefit of,
the person or entity to whom it is assigned.

Entire Agreement: This Agreement contains the entire understanding and agreement
reached between Smith and the Company, and it supersedes any discussions or
agreements that have been had or made prior to its execution. It may only be
modified by a writing signed by the party against which the modification is to
be enforced.

Governing Law: This Agreement will be enforce in accordance with the laws of the
State of California.


hs.com, Inc.                           Charles Smith




By: /s/ MICHAEL D. CHERMAK              /s/ CHARLES SMITH
   ---------------------------         --------------------------
Michael D. Chermak
Chairman


Date:  11/12/98                        Date:   11/12/98


Per M. Chermak at signing on 11/12/98. The interpretation of employment is one
year guaranteed, and then one year roll-overs automatically unless the 30 day
notice is given by either party. There is no "at will" clause or intent in this
agreement.

/s/ LORI O'BRIEN                       11/17/98
------------------------------
LORI O'BRIEN




<PAGE>   4
                            [MEDIBUY.COM LETTERHEAD]
May 14,1999



Mr. Charlie Smith
President
Medibuy.com
7777 Alvarado Road
Suite 401
La Mesa, CA 91941


Dear Charlie:

Per your original employment agreement, the level of compensation promised in
the agreement exceeds your current compensation by $18,000. This decision was
required to maintain executive salaries at a consistent level during company
financing negotiations.

To ensure the terms of your original agreement remain intact, you will be
granted a single cash bonus of $18,000 to accommodate this difference in salary
structure. This payment will be made no later than June 15th, 1999.

Sincerely,



/s/ MICHAEL D. CHERMAK
------------------------
Michael D. Chermak
Chairman
<PAGE>   5
                     FIRST AMENDMENT TO EMPLOYMENT AGREEMENT

        THIS FIRST AMENDMENT TO EMPLOYMENT AGREEMENT (this "Amendment") is
entered into as of October 26, 1999 (the "Effective Date"), by and between
MEDIBUY.COM, INC., a Delaware corporation (the "Company") and CHARLES R. SMITH
("Executive").

        WHEREAS, the Company and Executive previously entered into an Employment
Agreement, dated November 12, 1998 (the "Employment Agreement"); and

        WHEREAS, the parties desire to amend the Employment Agreement as set
forth in this Amendment.

        NOW THEREFORE, in consideration of the mutual benefits contained herein,
the parties, intending to be legally bound, hereby agree as follows:

        1.      Except as otherwise defined herein, capitalized terms used but
not defined herein shall have the meanings given to them in the Employment
Agreement.

        2.      The Employment Agreement is hereby amended as follows:

                (a)     Executive will hold the position of Executive Vice
President of Customer Advocacy and no longer hold the position of President of
the Company.

                (b)     For purposes of clarification, the parties agree that
Executive was entitled to receive 36,000 pre-stock split shares of the Company's
common stock rather than 42,000 pre-stock split shares; and

                (c)     The following provision hereby amends and restates the
last paragraph under the heading "Equity Compensation" in its entirety:

                        In the event of (i) a sale, lease or other disposition
                of all or substantially all of the assets of the Company, (ii) a
                merger or consolidation in which the Company is not the
                surviving corporation or (iii) a reverse merger in which the
                Company is the surviving corporation but the shares of Common
                Stock outstanding immediately preceding the merger are converted
                by virtue of the merger into other property, whether in the form
                of securities, cash or otherwise, then any surviving corporation
                or acquiring corporation shall assume the Shares or shall
                substitute similar stock awards for the Shares. In the event any
                surviving corporation or acquiring corporation refuses to assume
                the Shares or to substitute similar stock awards for the Shares
                and Executive employment has not been terminated, then with
                respect to the Shares held by Executive, the vesting of Shares
                subject to divesting shall be accelerated in full at or prior to
                such event.

                        After the first date upon which any security of the
                Company is listed (or approved for listing) upon notice of
                issuance on any securities exchange or designated (or approved
                for designation) upon notice of issuance as a national market
                security on an interdealer quotation system if such securities
                exchange or interdealer quotation system has been certified in
                accordance with the provisions


                                       1.
<PAGE>   6
                of Section 25100(o) of the California Corporate Securities Law
                of 1968 (the "Listing Date") and in the event of an acquisition
                by any person, entity or group within the meaning of Section
                13(d) or 14(d) of the Securities Exchange Act of 1934 (the
                "Exchange Act"), as amended, or any comparable successor
                provisions (excluding any employee benefit plan, or related
                trust, sponsored or maintained by the Company) of the beneficial
                ownership (within the meaning of Rule 13d-3 promulgated under
                the Exchange Act, or comparable successor rule) of securities of
                the Company representing at least fifty percent (50%) of the
                combined voting power entitled to vote in the election of the
                Board of Directors of the Company (the "Board"), then with
                respect to the Shares held by Executive, if Executive's
                continuous service has not terminated, the vesting of the Shares
                subject to the divesting shall be accelerated in full.

                        After the Listing Date, in the event that the
                individuals who, as of the Listing Date, are members of the
                Board (the "Incumbent Board"), cease for any reason to
                constitute at least fifty percent (50%) of the Board, then with
                respect to the Shares subject to divesting held by Executive, if
                Executive's continuous service has not terminated, the vesting
                of the Shares subject to divesting shall be accelerated in full.
                If the election, or nomination for election, by the Company's
                shareholders of any new director of the Board was approved by a
                vote of at least fifty percent (50%) of the Incumbent Board,
                such new director shall be considered as a member of the
                Incumbent Board.

        3.      This Amendment shall be governed by and construed in accordance
with the laws of the State of California as such laws are applied to contracts
entered into and performed entirely within California by California residents.

        4.      This Amendment may be signed in any number of counterparts, each
of which will be deemed an original, and all of which taken together shall
constitute one and the same instrument.

        5.      Except as specifically amended hereby, the Employment Agreement
shall remain in full force and effect. This Amendment constitutes the entire
understanding and agreement of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements or understandings, inducements
or conditions, express or implied, written or oral, between the parties with
respect to the subject matter hereof.

        IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the date first above written.


                                       MEDIBUY.COM, INC.


/s/ CHARLES R. SMITH                   By: /s/ DENNIS J. MURPHY
-----------------------------------       --------------------------------------
CHARLES R. SMITH                       Name: Dennis J. Murphy
                                           -------------------------------------
                                       Title: President & Chief Executive
                                              Officer
                                             -----------------------------------


                                       2.
<PAGE>   7




                       AMENDMENT TO EMPLOYMENT AGREEMENT

        THIS AMENDMENT TO EMPLOYMENT AGREEMENT (this "Agreement") is made and
entered into effective as of January 28, 2000 by and between MEDIBUY.COM, INC.,
a Delaware corporation (the "Company") and CHARLES R. SMITH ("Executive").

        A. Executive is the EXECUTIVE VICE PRESIDENT OF CUSTOMER ADVOCACY of the
Company pursuant to an employment agreement dated as of NOVEMBER 12, 1998, as
amended (the "Employment Agreement"); and

        B. Because of Executive's intimate knowledge of the business of the
Company, the Company and Executive desire to amend the Employment Agreement to
provide for a consulting agreement between the Company and Executive upon
Executive's termination of employment.

        NOW, THEREFORE, in consideration of the above facts and the mutual
promises set forth in this Agreement, the parties agree as follows:

1.      AMENDMENT OF EMPLOYMENT AGREEMENT.

        1.1 The parties agree to replace the provisions relating to severance
payments with the Consulting Agreement and terms as contemplated in this
Amendment.

        1.2 Section 5(b) of the Employment Agreement is hereby amended and
replaced in its entirety by the following:

               "Termination Not for Cause. In the event that COMPANY terminates
               this Agreement without cause, then upon EXECUTIVE furnishing
               COMPANY with an executed Waiver and Release (in the form attached
               hereto as Appendix B), COMPANY and EXECUTIVE shall then each
               execute and deliver a Consulting Agreement in the form attached
               hereto as EXHIBIT A. Notwithstanding the foregoing, if any party
               fails to deliver an executed copy of the Consulting Agreement,
               such agreement shall be deemed to be entered into by both parties
               and shall continue in full force and effect. The parties
               acknowledge that EXECUTIVE shall not be entitled to any payment
               or benefit under the Consulting Agreement unless EXECUTIVE shall
               first execute the Waiver and Release."

        1.3 The heading for Section 6 of the Employment Agreement is hereby
modified and replaced in its entirety by the following:

               "Confidentiality, Conflicts of Interest and Non-Interference."

        1.4 Section 6(b) ("Restrictive Covenant") of the Employment Agreement is
hereby deleted from the Employment Agreement and replaced with the following:
"[Deleted]"

        1.5 Except as expressly modified hereby, all of the terms of the
Employment Agreement shall continue in full force and effect.



                                       1.
<PAGE>   8

2. GOVERNING LAW. This Agreement is made in San Diego, California and shall be
interpreted and enforced under the internal laws of the State of California.

3. ENTIRE AGREEMENT. This Agreement and any agreements referenced herein
constitute the entire agreement between the parties and may be waived, modified
or amended only by an agreement in writing signed by both parties.

4. ASSIGNMENT. This Agreement shall inure to the benefit of, and be binding
upon, the successors and permitted assigns of the parties hereto. This Agreement
may not be assigned by Executive. This Agreement may not be assigned by the
Company except in connection with a merger of the Company or pursuant to the
sale, transfer or other conveyance of all or substantially all of the assets of
the Company.

5. WAIVER. No covenant, term or condition of this Agreement or breach thereof
shall be deemed waived unless the waiver is in writing, signed by the party
against whom enforcement is sought, and any waiver shall not be deemed to be a
waiver of any preceding or succeeding breach of the same or any other covenant,
term or condition.

6. NOTICE. All notices and other communications required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties at the following addresses or to such
other address as either party to this Agreement shall specify by notice to the
other:

               If to the Company:

                      Chairman of the Board
                      medibuy.com, Inc.
                      10120 Pacific Heights Boulevard, Suite 100
                      San Diego, California  92121

               If to Executive:

                      Charles R. Smith

                      --------------------
                      --------------------

7. HEADINGS. Headings or captions of paragraphs or sections of this Agreement
are for convenience of reference only and shall not be considered in the
interpretation of this Agreement.

8. COUNTERPART. This Agreements may be executed in two counterparts, each of
which shall be deemed an original, all of which together shall constitute one
and the same instrument.

9. ATTORNEY CONSULTATION. Each party has been informed of his/her/its right to
consult with his/her/its attorney prior to signing this Agreement and has either
done so or has considered the matter and decided not to do so.



                                       2.
<PAGE>   9

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT TO
EMPLOYMENT AGREEMENT as of the date set forth in the first paragraph hereof.

                                        The Company:

                                        MEDIBUY.COM, INC.
                                        a Delaware corporation


                                        By: /s/ Dennis J. Murphy
                                            ------------------------------------
                                        Name: Dennis J. Murphy
                                              ----------------------------------
                                        Title: CEO
                                               ---------------------------------


                                        Executive:


                                        /s/ Charles R. Smith
                                        ----------------------------------------
                                        3/6/00
                                        --------------------



                                       3.
<PAGE>   10

                                    EXHIBIT A

                              CONSULTING AGREEMENT


        THIS CONSULTING AGREEMENT (this "Agreement") is made and entered into
effective as of ________________, 200__ by and between MEDIBUY.COM, INC., a
Delaware corporation (the "Company") and CHARLES R. SMITH ("Consultant").

        A. Consultant and the Company previously entered into an employment
agreement dated as of _____________, as amended (the "Employment Agreement");
and

        B. Consultant and the Company desire to enter into a consultancy
arrangement upon the terms set forth in this Agreement.

        NOW, THEREFORE, in consideration of the above facts and the mutual
promises set forth in this Agreement, the parties agree as follows:

1.      CONSULTING.

        1.1 In consideration for the promises and covenants set forth herein,
for the period (the "Engagement Period") beginning on the effective date of
Consultant's termination of employment under the Employment Agreement (the
"Consulting Date") and ending on the date one year after the Consulting Date,
the Company and Consultant agree that Consultant shall perform the services and
undertake the duties and responsibilities set forth in Schedule A attached
hereto and incorporated herein (collectively, the "Services"). Consultant shall
render the Services under the terms and conditions set forth in this Agreement.

        1.2 During the Engagement Period, Consultant will not be considered an
agent or an employee of the Company; Consultant will not have authority to make
any representation, contract, or commitment on behalf of the Company and
Consultant agrees not to do so; and Consultant will not be entitled to any of
the benefits which the Company may make available to its employees, such as
group insurance, profit sharing, or retirement benefits.

        1.3 During the Engagement Period, Consultant will be solely responsible
for all tax returns and payments to any federal, state, or local tax authority
with respect to Consultant's performance of services and the receipt of fees or
other compensation and benefits under this Agreement. The Company will report
amounts paid to Consultant by filing Form 1099-MISC with the Internal Revenue
Service as required by law. The Company will not: make withholdings or
deductions from Consultant's payment checks; make contributions for Social
Security, employment insurance or disability insurance; or obtain workers'
compensation insurance on Consultant's behalf. During the Engagement Period,
Consultant shall comply with all applicable state and federal laws governing
self-employed individuals, including obligations such as payment of taxes,
Social Security, disability and other contributions based on compensation and
benefits paid to Consultant under this Agreement. Consultant hereby indemnifies
the Company against any and all such taxes or contributions, including penalties
and interest.



                                       1.
<PAGE>   11

        1.4 During the Engagement Period, subject to the terms and restrictions
of this Agreement, Consultant may engage in employment, consulting or other work
relationships in addition to Consultant's work for the Company. The Company
agrees to make reasonable arrangements to enable Consultant to perform
Consultant's consulting services for the Company at such times and in such a
manner so that it does not unreasonably interfere with other work activities in
which Consultant may engage.

2. TERM. The term of this Agreement (the "Term") shall commence upon the
Consulting Date. This Agreement shall remain in full force and effect until
completion of the Engagement Period.

3. CONSULTING FEES. As payment for the Services, Consultant shall receive cash
fees as set forth in Schedule B attached hereto and incorporated herein, which
shall constitute complete payment for the Services.

4. NO OTHER BENEFITS. During the Term, Consultant shall not be entitled to any
other compensation or benefits, including benefits provided generally to
employees of the Company, and Consultant's compensation shall not be subject to
withholding, unless, in the Company's view, withholding is required by
applicable law.

5. CONFIDENTIAL INFORMATION. In connection with the performance of Services
under the Employment Agreement and this Agreement, Consultant may become
familiar with trade secrets and confidential information of the Company (which
shall include all trade secrets and work product resulting from Consultant's
provision of the Services to the Company), which derive independent economic
value, actual or potential, from not being generally known to the public or to
other persons who can obtain economic value from its disclosure or use
("Confidential Information"). Except as may be reasonably necessary while
providing the Services, Consultant agrees that, during the Term of this
Agreement and thereafter, Consultant and any agents and employees of Consultant
will not disclose or utilize any of the Confidential Information (including
without limitation techniques, designs, buying plans, drawings, leases, store
designs, rollout plans, developments, equipment, prototypes, sales, supplier and
customer information and relationships, and business and financial information
relating to the business, products, practices and techniques of the Company) to
which Consultant has been privy, unless Consultant becomes legally required to
disclose any such Confidential Information, in which event Consultant shall
provide the Company with prompt notice thereof so that the Company may seek a
protective order or other appropriate remedy. Upon the termination of this
Agreement, Consultant shall deliver to the Company all equipment, notes,
documents, memoranda, reports, files, books, correspondence, lists or other
written or graphic records and the like belonging to the company which are or
have been in Consultant's possession or control.

6. PRESERVATION OF CONFIDENTIAL INFORMATION; NONCOMPETITION.

        6.1 Consultant agrees that, in order to protect the Confidential
Information of the Company and in consideration of the fees received hereunder,
during the Term of this Agreement, Consultant shall not, without first obtaining
the prior written approval of the Company, directly or indirectly engage in any
activities in competition with the Company, or become an officer, director or
employee of, or consultant to, or investor in, a business engaged in



                                       2.
<PAGE>   12

competition with the Company's current business (specifically, any person or
entity whose principal business is promoting and facilitating via the Internet
transactions between third parties for the wholesale sale and distribution of
goods, equipment and services in the healthcare field) and such other business
or businesses in which the Company comes to be actively engaged during the term
of Consultant's employment with the Company under the Employment Agreement. For
purposes of this agreement, "healthcare field" means the provision of goods
and/or services to any person, firm, corporation, business, partnership, limited
liability company, association or other entity involved directly in the
healthcare industry and/or to any person with respect to their medical or
healthcare needs, including, without limitation, hospitals, surgical centers,
medical clinics, outpatient facilities, medical groups, managed care
organizations, health maintenance organizations, medical or health related
associations, nursing homes, extended care facilities, doctors, physicians,
dentists, chiropractors, veterinarians and other healthcare providers,
practitioners, suppliers, patients or any other person providing or receiving
healthcare service of any nature whatsoever.

        6.2 Ownership by Consultant, as a passive investment, of less than one
percent (1%) of the outstanding shares of capital stock of any corporation with
one or more classes of its capital stock listed on a national securities
exchange or publicly traded in the over-the-counter market shall not constitute
a breach of this Section 6.

7. SEVERABILITY. To the extent any provision of this Agreement shall be
adjudicated to be invalid or unenforceable, it shall be considered deleted
herefrom and the remainder of such provision and of this Agreement shall be
unaffected, such deletion to apply only with respect to the operation of this
Agreement in the particular jurisdiction in which such adjudication is made. In
furtherance and not in limitation of the foregoing, should the duration or
geographical extent of, or business activities covered by, any provision of this
Agreement be in excess of that which is valid and enforceable under applicable
law, then such provision shall be construed to cover only the duration, extent
or activities which may validly and enforceably be covered.

8. REMEDIES. In any event of a breach of Consultant's obligations under this
Agreement, Consultant agrees that (a) any and all proceeds, funds, payments and
proprietary interests, of every kind and description, arising from, or
attributable to, such breach shall be the sole and exclusive property of the
Company and (b) the Company shall be entitled to recover any additional actual
damages incurred as a result of such breach.

9. INJUNCTIVE RELIEF. Consultant understands and agrees that the Company could
not be reasonably or adequately compensated in damages in an action at law for
Consultant's breach of his obligations under this Agreement. Accordingly,
Consultant specifically agrees that the Company shall be entitled to an
injunction enjoining Consultant or any person or persons acting for or with
Consultant in any capacity whatsoever from violating any of the terms herein.
This provision with respect to injunctive relief shall not diminish the right of
the Company to claim and recover damages pursuant to Section 9 in addition to
injunctive relief.

10. REPRESENTATIONS AND WARRANTIES. Consultant represents and warrants that (a)
Consultant is not restricted or prohibited, contractually or otherwise, from
entering into and performing each of the terms and covenants contained in this
Agreement, and (b) Consultant's



                                       3.
<PAGE>   13

execution and performance of this Agreement is not a violation or breach of any
other agreement to which Consultant is a party.

11. GOVERNING LAW. This Agreement is made in San Diego, California and shall be
interpreted and enforced under the internal laws of the State of California.

12. ENTIRE AGREEMENT. This Agreement and any agreements referenced herein
constitute the entire agreement between the parties and may be waived, modified
or amended only by an agreement in writing signed by both parties.

13. ASSIGNMENT. This Agreement shall inure to the benefit of, and be binding
upon, the successors and permitted assigns of the parties hereto. This Agreement
may not be assigned by Consultant. This Agreement may not be assigned by the
Company except in connection with a merger of the Company or pursuant to the
sale, transfer or other conveyance of all or substantially all of the assets of
the Company.

14. WAIVER. No covenant, term or condition of this Agreement or breach thereof
shall be deemed waived unless the waiver is in writing, signed by the party
against whom enforcement is sought, and any waiver shall not be deemed to be a
waiver of any preceding or succeeding breach of the same or any other covenant,
term or condition.

15. NOTICE. All notices and other communications required or permitted to be
given under this Agreement shall be in writing and shall be deemed to have been
given if delivered personally or sent by certified mail, return receipt
requested, postage prepaid, to the parties at the following addresses or to such
other address as either party to this Agreement shall specify by notice to the
other:

               If to the Company:

                      Chairman of the Board
                      medibuy.com, Inc.
                      10120 Pacific Heights Boulevard, Suite 100
                      San Diego, California  92121

               If to Executive:

                      --------------------
                      --------------------
                      --------------------

16. HEADINGS. Headings or captions of paragraphs or sections of this Agreement
are for convenience of reference only and shall not be considered in the
interpretation of this Agreement.

17. COUNTERPART. This Agreements may be executed in two counterparts, each of
which shall be deemed an original, all of which together shall constitute one
and the same instrument.



                                       4.
<PAGE>   14

18. ATTORNEY CONSULTATION. Each party has been informed of his/her/its right to
consult with his/her/its attorney prior to signing this Agreement and has either
done so or has considered the matter and decided not to do so.

        IN WITNESS WHEREOF, the parties hereto have executed this AMENDMENT TO
EMPLOYMENT AGREEMENT as of the date set forth in the first paragraph hereof.

                                        The Company:

                                        MEDIBUY.COM, INC.
                                        a Delaware corporation


                                        By:
                                           -------------------------------------
                                        Name:
                                             -----------------------------------
                                        Title:
                                              ----------------------------------


                                        Consultant:


                                        ----------------------------------------
                                        ----------------



                                       5.

<PAGE>   15

                                   SCHEDULE A


                      SERVICES, DUTIES AND RESPONSIBILITIES

        During the Term, Consultant shall, upon request, consult with the
Company by telephone, by mail and in person from time to time on a part-time
basis during regular business hours. The consultation shall concern the
management, operation, marketing, sales, purchasing, technology, financing and
other aspects of the business of the Company, and may include Consultant's
direct contacting of third parties at the reasonable request of the Company.



                                       1.
<PAGE>   16

                                   SCHEDULE B


                           CONSULTING FEE AND BENEFITS

        The Company shall pay to Consultant for the Services an annual amount
equal to the sum of:

               (i) an amount equal to the annual salary of Consultant in effect
               at the time of termination under the Employment Agreement (the
               "Consulting Fee") plus

               (ii) to the extent the payment of the amount described in (i)
               above is subject to state or federal taxation beyond that to
               which it would have been subject as severance pay under the
               Employment Agreement, the Company will pay an additional amount
               (the "Gross-Up Payment") such that after payment of all state and
               federal taxes on the Consulting Fee and the Gross-Up Payment,
               Consultant will retain an amount equal to the amount Consultant
               would have received as severance pay under the Employment
               Agreement.

The total amount described in (i) and (ii) above shall be paid monthly during
the Term as provided herein.

        To the extent provided by the federal COBRA law or, if applicable, state
insurance laws, and by the Company's group health insurance policies, Consultant
will be eligible to continue Consultant's health insurance benefits. In the
event Consultant elects continued coverage under COBRA, the Company, as part of
this Agreement and in consideration thereof, will reimburse Consultant for the
same portion of Consultant's COBRA health insurance premium that the Company
previously paid for Consultant's coverage under the Employment Agreement.
Consultant will be responsible for the same portion of the COBRA health
insurance that Consultant previously paid for coverage under the Employment
Agreement.

        The Company shall pay on Consultant's behalf, or reimburse Consultant
for, any expenses reasonably incurred in connection with his rendering of the
Services and which are not incurred in violation of any policy or policies
regarding expenses which may be adopted by the Board of Directors from time to
time. Consultant agrees to submit receipts and other documentation to support
the above expenses as a condition of reimbursement therefor.

        Consultant will fully and completely cooperate with the Company with
respect to all matters associated with the taxation or potential taxation of any
payments and reimbursements hereunder. Consultant acknowledges that Consultant
is responsible for consulting his or her own tax advisor with respect to any
taxation matters.



                                       1.