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                                                                   Exhibit 10.12

                              EMPLOYMENT AGREEMENT

         This Employment  Agreement (the "Agreement"),  made effective as of the
31st  day  of  July  1999  (the  "Effective   Date"),  by  and  between  REALMED
CORPORATION,  an Indiana  corporation  (the  "Company") and Scott E. Herbst,  an
individual resident of Indiana ("Executive").

         WHEREAS,  the  Company  desires to employ  Executive  as a Senior  Vice
President  and General  Counsel and  Executive  desires to be so employed on the
terms and conditions set forth in this Agreement.

         NOW, THEREFORE,  for good and valuable  consideration,  the receipt and
sufficiency  of which are  hereby  acknowledged  by  Executive  and the  Company
including,  without  limitation,  the promises and  covenants of the parties set
forth herein, the parties hereto, intending to be legally bound, hereby agree to
as follows:

                                    ARTICLE I
                                   EMPLOYMENT

         Section  1.1 Term of  Employment.  The term of  Executive's  employment
under this  Agreement  shall commence on July 31, 1999 and continue for a period
of five years,  unless earlier terminated as provided in this Agreement.  At the
end of the initial five year term, this Agreement shall  automatically renew for
consecutive  two year terms unless either party hereto gives  written  notice to
the other of its intent to terminate this Agreement at least sixty days prior to
the end of the initial term or any renewal  term (a "Section 1.1  Termination").
Notwithstanding the foregoing, the indemnification  provisions of this Agreement
contained  in Section  1.4  regarding  an Excess  Parachute  Payment (as defined
below) on account of a Change in Control  (as defined  below in Section  1.4(b))
shall survive until the expiration of the statute of limitations  for assessment
of any excise tax under  Section 4999 of the Internal  Revenue Code of 1986,  as
amended (the "Code").

         Section 1.2 Duties and  Responsibilities  of  Executive.  Executive  is
hereby  employed as a Senior Vice President and General  Counsel of the Company.
The Company acknowledges that Executive has prior commitments to Newcourt Credit
Group, Inc., its successors and assigns, and any of its affiliates (collectively
"Newcourt"),  and,while working as an executive employee for the Company,  shall
also remain an employee of  Newcourt.  Executive  may devote  whatever  time and
attention  to Newcourt  business  that he deems  reasonable  and proper.  In his
capacity  as a  Senior  Vice  President  and  General  Counsel  of the  Company,
Executive shall report to the Chief Executive Officer of the Company,  and shall
conduct and perform such additional services and activities as may be determined
from  time  to  time by the  Board  of  Directors  of the  Company.  Executive's
authority from, and responsibility to, the Company shall at all times be subject
to the  review  and  discretion  of the  Chief  Executive  Officer  and Board of
Directors of the Company.  Executive  acknowledges that he has a duty of loyalty
to the Company,  and, except for his  commitments to Newcourt,  shall not engage
in, directly or indirectly, any other business or activity that could materially
and adversely  affect the Company's  business or Executive's  ability to perform

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his duties under this Agreement;  provided, however, that the Executive shall be
free  to  participate  in  civic  and  charitable  activities  so  long  as such
activities  do not  materially  interfere  with his duties and  responsibilities
hereunder.

         Section 1.3       Compensation.  For  services  to be rendered  by
Executive under this Agreement, the Company shall pay Executive as follows:

                  (a)      Base Salary. Executive shall be paid a minimum annual
                           gross salary of one hundred twenty thousand and seven
                           hundred fifty dollars  ($120,750),  payable biweekly.
                           Executive's  annual  gross  salary  may  be  upwardly
                           adjusted  from time to time by the Board of Directors
                           of the  Company.  At no time  during the term of this
                           Agreement shall  Executive's base salary be decreased
                           from the  amount of the base  salary  then in effect.
                           Executive's  base salary  shall be earned and accrued
                           on a per diem basis.

                  (b)      Bonus.  The Executive shall be eligible for an annual
                           bonus of  thirty  percent  (30%)  of his base  salary
                           payable  in the  discretion  of the  Chief  Executive
                           Officer.  Such bonus shall be payable by January 1 of
                           the year  following the service and shall be prorated
                           for any partial year.

                  (c)      Bonus Advance.  Within ten days of Executive's
                           request,  the Company agrees to advance up to fifty
                           thousand dollars ($50,000) of Executive's bonuses in
                           order to repay all or a portion of  Executive's
                           shareholder loans to  Newcourt.  Such loan shall be
                           repaid by  Executive on or prior to the earlier of:
                           (i) Executive ceasing to be an employee of the
                           Company; or (ii) July 31, 2001.  The loan shall be
                           interest free and evidenced  by a Promissory Note in
                           the form attached hereto as Exhibit A and  shall be
                           subject  to the additional terms and conditions set
                           forth therein.  If requested by the Company,  such
                           loan shall be secured by a pledge of Participant's
                           options or stock and  Participant  agrees to execute
                           such  pledge and other agreements as the Company may
                           reasonably request to effect such pledge.

         Section 1.4       Tax Reimbursement Payment.

                  (a)      Notwithstanding anything to the contrary contained in
                           this Agreement, or in any plan of the Company, or in
                           any other agreement or understanding,  the Company
                           will pay to the Executive, at the times herein
                           specified, an amount (the "Additional Amount") equal
                           to the excise  tax under  Section  4999 of the Code,
                           if any, incurred or to be incurred by the Executive
                           by reason of the payments under this Agreement,
                           acceleration of vesting of stock options,  stock
                           appreciation rights or restricted stock granted under
                           the Company's various stock option, stock
                           appreciation or other  employee incentive plans,  or
                           payments under any other plan, agreement or
                           understanding between the Executive and the Company,

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                           constituting Excess Parachute Payments (as defined
                           below), plus all excise taxes and federal,  state and
                           local income taxes incurred or to be incurred by the
                           Executive with respect to the receipt of the
                           Additional  Amount.  For  purposes of this Agreement,
                           the term "Excess Parachute Payment" shall mean any
                           payment or any portion thereof which would be an
                           "excess  parachute  payment" within the meaning of
                           Section 280G(b) of the Code, and which would result
                           in the imposition of an excise tax on the Executive
                           under Section 4999 of the Code.

                  (b)      All determinations required to be made regarding the
                           Additional Amount,  including whether payment of any
                           Additional Amount is required and the amount of any
                           Additional Amount, shall be made by the  independent
                           accounting firm which is advising the Company (the
                           "Accounting Firm"),  which shall provide detailed
                           support calculations to the Company and the Executive
                           on or before the last day of the calendar year during
                           which occurs the Change in Control (the "Change in
                           Control Year").  In computing  taxes, the Accounting
                           Firm shall use the highest marginal  federal,  state
                           and local income tax rates applicable to single
                           taxpayers for the year in which the Additional Amount
                           is to be paid (unless, within thirty (30) days after
                           the occurrence of the Change in Control the Executive
                           specifies in writing to the Company his marginal tax
                           rate) and shall assume the full  deductibility  of
                           state and local income  taxes  for purposes  of
                           calculating federal income tax liability.  For
                           purposes of Article I only,  "Change of Control"
                           shall have the meaning set forth in the Code.  The
                           portion of the Additional Amount based on the excise
                           tax as determined by the Accounting  Firm to be due
                           for the Change in  Control  Year shall be paid to the
                           Executive  no later than March 1  immediately
                           following the end of the Change in Control Year. The
                           portion of the  Additional Amount based on the excise
                           tax as determined by the  Accounting  Firm to be due
                           for each calendar year following the Change in
                           Control Year  shall be paid to the  Executive  on or
                           before March 1 immediately following the end of each
                           such calendar year.  If the Company determines  that
                           the excise tax for any year will be  different  from
                           the amount originally calculated in the report of the
                           Accounting Firm delivered at the end of the Change in
                           Control  Year,  then the  Company  shall  provide to
                           the Executive detailed support  calculations  by the
                           Accounting Firm specifying the basis for the change
                           in the Additional Amount.

                  (c)      As a result of the  uncertainty in the application of
                           Section  280G of the Code at the time of the  initial
                           determination by the Accounting Firm of an Additional
                           Amount under Section  1.4(b)  hereof,  it is possible
                           that an  Additional  Amount in  excess of the  amount
                           initially determined which will not have been made by
                           the    Company    should    have    been   made   (an
                           "Underpayment").  In the  event  that the  Accounting

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                           Firm,  based upon controlling  precedent,  determines
                           that any Underpayment has occurred, such Underpayment
                           shall  promptly  be paid by the Company to or for the
                           benefit of the  Executive,  together with interest at
                           the  applicable  federal rate provided for in Section
                           7872(f)(2)(A) of the Code.

                  (d)      The  Executive shall notify the Company in writing of
                           any claim by the Internal  Revenue  Service  that, if
                           successful,  would  require the  payment by the
                           Executive of any excise tax under Section 4999 of the
                           Code beyond any amount of such excise tax for which
                           an Additional Amount had theretofore been determined
                           by the Accounting  Firm under Section 1.4(b) hereof.
                           Such  notification  shall  be  given as  soon as
                           practicable but no later than ten business days after
                           the Executive is informed in writing of  such claim
                           and shall apprise the  Company of the nature of such
                           claim and the date on which  such claim is requested
                           to be paid.  The Executive shall not pay such claim
                           prior to the expiration of the 30-day period
                           following the date on which he gives such  notice to
                           the Company (or such  shorter  period  ending on the
                           date that any payment of taxes with respect  to such
                           claim is due).  If the Company notifies the Executive
                           in writing prior to the expiration of such period
                           that it desires to contest such claim, the Executive
                           shall:

                           (i)      give  to  the Company any information
                                    reasonably requested by the Company relating
                                    to such claim;

                           (ii)     take  such  action,  at the  expense  of the
                                    Company,  in connection with contesting such
                                    claim  as  the  Company   shall   reasonably
                                    request  in  writing   from  time  to  time,
                                    including,  without  limitation,   accepting
                                    legal  representation  with  respect to such
                                    claim by an attorney reasonably satisfactory
                                    to the Executive;

                           (iii)    cooperate with the Company in good faith in
                                    order effectively to contest such claim; and

                           (iv)     permit the Company to participate in any
                                    proceedings relating to such claim;

                           provided,  however,  that the Company  shall bear and
                           pay  directly  all  costs  and  expenses   (including
                           additional   interest  and  penalties)   incurred  in
                           connection  with such contest and shall indemnify and
                           hold the Executive  harmless,  on an after-tax basis,
                           for any excise tax or federal, state and local income
                           tax  (including  interest and penalties  with respect
                           thereto)  imposed as a result of such  representation
                           and payment of costs and expense.  Without limitation
                           on the  foregoing,  the  Company  shall  control  all
                           proceedings  taken in  connection  with such  contest
                           and, at its sole option,  may pursue or forgo any and

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                           all administrative appeals, proceedings, hearings and
                           conferences  with the  Internal  Revenue  Service  or
                           other  taxing  authority in respect of such claim and
                           may, at its sole option,  either direct the Executive
                           to pay the tax  (including any penalties or interest)
                           claimed   and   pursue   a   claim   for   a   refund
                           administratively  or  by  bringing  a  proceeding  in
                           court,  and the  Executive  agrees to prosecute  such
                           contest  to  a  determination   before  the  Internal
                           Revenue Service or other taxing authority, in a court
                           of initial  jurisdiction and in one or more appellate
                           courts,  as the Company  shall  determine;  provided,
                           however, that if the Company directs the Executive to
                           pay such claim and seek a refund,  the Company  shall
                           advance the amount of such payment to the  Executive,
                           on an  interest-free  basis and shall  indemnify  and
                           hold the Executive  harmless,  on an after-tax basis,
                           from any  excise  tax or  federal,  state  and  local
                           income tax  (including  interest and  penalties  with
                           respect thereto) imposed with respect to such advance
                           or with respect to any imputed income with respect to
                           such advance; and further provided that any extension
                           of the statute of limitations  relating to payment of
                           taxes  for the  taxable  year of the  Executive  with
                           respect to which such contested  amount is claimed to
                           be due is limited  solely to such  contested  amount.
                           Furthermore,  the  Company's  control of the  contest
                           shall be limited to issues  with  respect to which an
                           Additional  Amount would be payable hereunder and the
                           Executive shall be entitled to settle or contest,  as
                           the  case  may be,  any  other  issue  raised  by the
                           Internal   Revenue   Service  or  any  other   taxing
                           authority.

                  (e)      If, after the receipt by the  Executive of an amount
                           advanced by the Company pursuant to the last sentence
                           of Section 1.4(d), the Executive receives any refund
                           of any amount paid with the amount  advanced,  the
                           Executive shall promptly pay to the Company the
                           amount of such refund  (together with any interest
                           paid or credited thereon net of any federal,  state,
                           or local income taxes of the  Executive  (determined
                           in the manner  prescribed by Section  1.4(b) hereof)
                           with respect to such interest). If, after the receipt
                           by the Executive of any  amount  advanced  by the
                           Company  pursuant to the last sentence of Section
                           1.4(d),  a final determination  is  made that the
                           Executive is not be entitled  to any  refund with
                           respect to such claim, then  such advance  shall be
                           forgiven and shall not be required to be repaid and
                           the amount of such advance shall offset, to the
                           extent thereof, the amount of any Underpayment
                           otherwise payable under Section 1.4(c).

         Section 1.5       Benefits.

                  (a)      Vacation.  Executive  shall be entitled to four weeks
                           paid  vacation  during each  calendar year during the
                           term of this Agreement.  Vacation not used during any

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                           calendar  year  may be  carried  forward  to the next
                           year; provided, however, that no more than four weeks
                           of unused  vacation time may be carried  forward from
                           one year to the next year.

                  (b)      Life,  Disability and Retirement Programs.  Executive
                           shall  be  entitled  to   participate  in  any  life,
                           disability  and  retirement  programs  which may from
                           time to time be offered generally to all of the other
                           members of the  senior  management  personnel  of the
                           Company.

                  (c)      Group  Insurance.  Executive  shall  be  entitled  to
                           participate in any group health,  dental,  and vision
                           insurance  programs  which  may from  time to time be
                           offered  generally to all of the other members of the
                           senior management personnel of the Company.

         Section  1.6 Stock  Options.  Executive  shall be  granted an option to
purchase  450,000  shares of the  Company  pursuant to that  certain  1999 Stock
Option and Incentive  Plan (the "Plan") and that certain Stock Option  Agreement
dated  effective  as of July 31, 1999  ("Option  Agreement")  (such  options and
shares to be drawn from the  employee  option pool and subject to such terms and
conditions as set forth in the Option Agreement).  In addition,  Executive shall
be entitled to participate  in any other  incentive and stock option plans which
may from time to time be offered  generally  to all of the other  members of the
senior  management  personnel  of the  Company  and to  members  of the Board of
Directors.

         Section  1.7  Business   Expenses.   Executive  shall  be  entitled  to
reimbursement  of  all  ordinary  and  necessary  business  expenses  reasonably
incurred by him for business  travel  (including  reasonable  moving  expenses),
communications,  entertainment  and meals in connection  with the performance of
Executive's  duties  under  this  Agreement  in  accordance  with the  Company's
policies for  reimbursement of business  expenses in effect from time to time as
reasonably approved by the Board of Directors of the Company.

                                   ARTICLE II
                             COVENANTS OF EXECUTIVE

         Section 2.1 Confidential  Information.  Executive  acknowledges that in
connection with his employment by the Company, Executive may be given access to,
generate,  or  otherwise  come  into  contact  with or become  aware of  certain
proprietary,  secret and/or confidential information and materials which are the
property of or relate to (a) the Company,  and/or (b) the Company's  business of
electronic health-care industry claims resolution procedures, customers, clients
or suppliers (collectively,  "Confidential Matters"). Confidential Matters shall
include, without limitation,  all information and materials created or developed
by,  provided  to  or  otherwise  disclosed  to  Executive  in  connection  with
Executive's  employment by the Company (excepting only information and materials
already  known  to  the  public),  including,  without  limitation,  all  of the
following:

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                  (a)      trade secrets,  know-how and all other  business,
                           financial or technical  information  which gives or
                           could give the Company a competitive advantage;

                  (b)      software used by the Company  (including  source code
                           and object code) and associated  layouts,  templates,
                           processes,  documentation,   databases,  designs  and
                           techniques,    and    all    modifications    thereto
                           (collectively, "Confidential Software");

                  (c)      the  names  and  addresses  of  the  Company's  past,
                           present or  prospective  customers or clients and all
                           documents, information and materials which concern or
                           relate to such  customers or clients,  regardless  of
                           whether such  documents,  information  and  materials
                           were  supplied  or  produced  by the  Company or such
                           customers or clients;

                  (d)      inventions,  improvements,  innovations, research and
                           development,  software and all other  discoveries  or
                           work   product   created  or  used  by  the  Company,
                           including  those which are  conceived or developed by
                           Executive  alone or with  others in  connection  with
                           Executive's  employment by the Company,  or which are
                           conceived or developed by Executive after termination
                           of such employment by using Confidential Matters; and

                  (e)      information   concerning   the  Company's   products,
                           services,  systems, methods,  employees,  technology,
                           suppliers, licensors,  affiliates, financing sources,
                           profits,  revenues,  financial condition and affairs,
                           marketing plans or programs,  and business strategies
                           and practices.

Notwithstanding  anything in this Agreement to the contrary,  any information or
other  matter of or relating to  Newcourt's  businesses,  customers,  clients or
suppliers  shall  not be  deemed  to be  Confidential  Matters  covered  by this
Agreement,  including, without limitation, any information relating to potential
financing  opportunities which may be discovered by Executive in his capacity as
an employee of the Company.

         Executive  acknowledges  and agrees that  Confidential  Matters are the
property  of the  Company and that  Executive  shall not  acquire any  ownership
rights in Confidential Matters. Executive shall:

                  (a)      use Confidential Matters solely in connection with
                           Executive's employment by the Company; and

                  (b)      hold  Confidential  Matters in trust and  confidence,
                           and use all reasonable  means to assure that they are
                           not directly or indirectly  disclosed to or copied by

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                           unauthorized  persons  or  used  in  an  unauthorized
                           manner, both during and after Executive's  employment
                           by the Company.

         Executive shall not load, install,  copy, store or otherwise retain any
Confidential  Software  on any  computer  or other  device  which is not Company
property without first obtaining the Company's written consent.

         To the extent  that  Executive  creates or  develops  any  Confidential
Matters, Executive shall:

                  (a)      promptly disclose them to the Company; and
                  (b)      at the Company's request,  assign them to the Company
                           and execute all documents and do all things necessary
                           to assist  the  Company  in  obtaining  such  patent,
                           copyright,   trademark,  trade  secret  and/or  other
                           protection  as the  Company  in its  sole  discretion
                           deems necessary or  appropriate,  with the Company to
                           pay all resulting expenses.

         Upon  termination  of Executive's  employment  with the Company for any
reason,  Executive shall delete all Confidential  Matters from the memory of any
computer  belonging  to  Executive  and shall turn over to the  Company  (a) all
documents and other materials (including,  without limitation, all tapes, floppy
disks and other forms of electronic storage media) which constitute,  contain or
are derived from Confidential Matters; and (b) all other documents,  notes, work
product  and  other  materials  connected  with or  arising  out of  Executive's
employment with the Company.

         Section 2.2 Non-solicitation of Customers and  Non-Competition.  During
the term of his  employment  with the Company  under this  Agreement,  and for a
period of two years (which shall be extended by the length of any period  during
which  Executive is in violation of this Section 2.2) after any  termination  of
the Executive's  employment for any reason,  Executive shall not (on Executive's
own behalf or that of any other person or entity) directly or indirectly sell or
otherwise  provide or solicit the sale or  provision  of any  product,  license,
process or service  which  directly or  indirectly  competes  with any  product,
license, process or service of the Company to any person or entity which was, at
the time of termination of Executive's  employment,  a customer or client of the
Company.

         During the term of Executive's  employment  with the Company under this
Agreement,  and for a period of two years (which shall be extended by the length
of any period during which  Executive is in violation of this Section 2.2) after
any  termination  of  Executive's  employment  with the  Company for any reason,
Executive  shall not (on  Executive's  own behalf or that of any other person or
entity), without prior written consent of the Board of Directors of the Company,
which  consent may be withheld at the sole  discretion of the Board of Directors
of the Company, directly or indirectly own, manage, operate, control, invest in,
lend to, acquire an interest in, or otherwise engage or participate in, (whether
as an employee, independent contractor,  consultant, partner, shareholder, joint
venturer, investor or any other type of participant),  the management or conduct

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of any electronic  health-care industry claims resolution business or enterprise
that directly or indirectly  competes in any Market Area (as defined below) with
any product,  license,  process or service which the Company sold or provided at
the time of Executive's termination of employment with the Company ("Competitive
Product"). For purposes of this Agreement, Market Area shall mean either (i) the
standard  metropolitan  statistical area as designated by the federal government
in which the Company  sold or provided  any  Competitive  Product or (ii) in all
other cases,  the county in which the Company  sold or provided any  Competitive
Product.  Provided,  however,  that nothing in this  Section 2.2 shall  prohibit
Executive from acquiring or holding,  for  investment  purposes only,  less than
five  percent  (5%)  of  the  outstanding  publicly  traded  securities  of  any
corporation  which may compete  directly or indirectly  with the Company or from
engaging in the business of investment banking.  Provided,  further that nothing
contained in this  section 2.2 shall  prohibit  Executive  from  continuing  his
employment with Newcourt and if necessary financing a Competitive Product in the
Market  Area for and on  behalf  of  Newcourt,  including,  without  limitation,
financing  Competitive Products for and on behalf of Newcourt in the Market Area
after termination of his employment with the Company.

         Section  2.3   Non-Solicitation  of  Employees.   During  the  term  of
Executive's  employment with the Company under this Agreement,  and for a period
of two years (which  shall be extended by the length of any period  during which
Executive  is in  violation  of this  Section  2.3),  after any  termination  of
Executive's  employment  with the Company for any reason (the  "Non-solicitation
Period"),  Executive  shall not,  directly  or  indirectly,  through one or more
intermediaries or otherwise,  hire, employ, induce,  solicit for employment,  or
assist others in hiring,  employing,  inducing or soliciting  for employment any
individual who is at any time during the Non-solicitation  Period an employee of
the  Company.Provided,  however, that nothing in this section 2.3 shall apply to
Executive  hiring any  employee of the Company as an employee or  consultant  of
Newcourt nor shall it apply to Executive  hiring any employee of the Company who
was related to or affiliated withNewcourt prior to working for the Company.

         Section 2.4 Injunctive Relief.  Executive  acknowledges that his actual
or threatened breach of any provision of Article II of this Agreement will cause
or threaten irreparable injury to the Company that cannot adequately be measured
in money  damages,  and that the Company shall be entitled to obtain  injunctive
relief  with  respect  to any such  actual or  threatened  breach by  Executive.
Injunctive relief shall be in addition to and not in lieu of any other available
remedies.

         Section 2.5  Individual  Capacity.  This Agreement is entered into with
Executive  in his  individual  capacity  and  not as an  agent  or  employee  of
Newcourt.  Notwithstanding the fact that Executive shall also remain an employee
of Newcourt,  Executive's  obligations under this Article II are personal to him
and shall not be imputed to or otherwise effect Newcourt.

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                                   ARTICLE III
                            TERMINATION OF EMPLOYMENT

         Section 3.1 Termination by Company. In addition to termination pursuant
to Section 1.1, Executive's employment under this Agreement may be terminated by
the Company by giving notice to Executive  during the term of this  Agreement as
follows:

                  (a)      upon Executive's  death or, subject to any applicable
                           federal,  state or  local  laws  (including,  but not
                           limited to, the Americans With Disabilities Act), any
                           disability  which  renders  Executive   incapable  of
                           performing  his  duties  hereunder  for more than one
                           hundred twenty calendar days (termination  under this
                           Section 3.1(a) shall be deemed  termination  "without
                           Cause");

                  (b)      for any  reason  not  constituting  "for  Cause"  (as
                           defined below) following a determination by the Board
                           of Directors of the Company to terminate  Executive's
                           employment  (termination  under this  Section  3.1(b)
                           shall  also be deemed  termination  "without  Cause";
                           provided,  however,  that a Section  1.1  Termination
                           shall not constitute a termination  "without Cause");
                           or

                  (c)      "for Cause," which for purposes of this Agreement
                           shall mean that the Executive shall have:

                           (i)      committed  an act of  fraud,  embezzlement
                                    or theft in connection with his duties under
                                    this Agreement at any time subsequent to the
                                    date of this Agreement;
                           (ii)     intentionally  inflicted material damage to
                                    any material  asset of the  Company;
                           (iii)    breached any provision  of  Article  II of
                                    this Agreement;
                           (iv)     engaged in the illegal  use of drugs during
                                    the term of this Agreement or been under the
                                    influence of alcohol during the performance
                                    of his duties under this Agreement, which
                                    has or may have a material adverse effect on
                                    the business or operations of the Company or
                                    on the reputation of  the  Company  or  the
                                    Executive provided,  however, in the case of
                                    any issues  relating  to the use of alcohol,
                                    the  Company  has  given  Executive  written
                                    notice  of  any  conduct  and  such  conduct
                                    thereafter continues;
                           (v)      been  convicted  of any crime  constituting
                                    a felony under applicable law, other than a
                                    felony related to the operation of a motor
                                    vehicle;
                           (vi)     intentionally    committed    any   act   of
                                    dishonesty against the Company, which has or
                                    may have a  material  adverse  effect on the
                                    business or  operations of the Company or on
                                    the   reputation   of  the  Company  or  the
                                    Executive;
                           (vii)    intentionally committed any intentional tort
                                    against the  Company or any  employee of the
                                    Company,  which  has or may have a  material
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                                    adverse effect on the business or operations
                                    of the Company or on the  reputation  of the
                                    Company or the Executive; or
                           (viii)   intentionally  committed  any  act of  gross
                                    insubordination,  which  has or  may  have a
                                    material  adverse  effect on the business or
                                    operations   of  the   Company   or  on  the
                                    reputation of the Company or the Executive.

         Section 3.2 Termination by Executive. Executive's employment under this
Agreement may be terminated by Executive for "Good Reason" (as defined below) or
otherwise,  by  giving  Company  at least 30 days  advanced  written  notice  or
termination.  For purposes of this  Agreement,  "Good  Reason"  shall mean,  the
occurrence of any of the following events,  unless such event has been consented
to by Executive in writing or such event is fully corrected as provided below:

                  (a)      A material  breach by the Company of any material
                           provision of this Agreement, including, but not
                           limited to, the assignment to Executive of any duties
                           materially inconsistent  with  Executive's  position
                           in the Company or a material adverse alteration in
                           the nature or status of Executive's responsibilities;
                           provided, however,  that in the event of this
                           subsection (a) being the sole basis for  termination,
                           Executive shall furnish the Company in writing a
                           notice of proposed  termination  setting  forth a
                           specific  statement of the Good Cause for which
                           termination  is sought.  The Company shall then have
                           a period of ninety days after the giving of such
                           notice of proposed  termination  by Executive  in
                           which to cure the breach  specified in such
                           notice. If at the end of such ninety day period no
                           such cure has been  effected,  the  Executive's
                           employment shall be terminated at the end of such
                           ninety day period.

                  (b)      the occurrence of a "Change in Control" as defined
                           below.

         For  purposes of this  Agreement  a "Change in  Control"  shall mean an
event as a result of which:  (i) any  "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934 (the "Exchange Act")), is
or becomes the  "beneficial  owner" (as defined in Rule 13d-3 under the Exchange
Act, except that a person shall be deemed to have "beneficial  ownership" of all
securities  that such  person has the right to  acquire,  whether  such right is
exercisable  immediately  or only  after  the  passage  of  time),  directly  or
indirectly,  of more than 40% of the total  voting  power of the voting stock of
the  Company;  (ii) (A) the Company  consolidates  with,  or merges with or into
another  corporation,  and (B) in  connection  with  any such  transaction,  the
outstanding  voting stock of the Company is changed into or exchanged  for cash,
securities  or other  property,  other than any such  transaction  where (x) the
outstanding  voting stock of the Company is changed into or exchanged for voting
stock of the  surviving,  or  transferee  corporation,  or for cash,  securities
(whether or not including  voting stock) or other property,  and (y) the holders
of the voting stock of the Company  immediately  prior to such  transaction own,
directly  or  indirectly,  not less than 60% of the  voting  power of the voting

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<PAGE>

stock of the surviving corporation immediately after such transaction;  or (iii)
the Company sells, assigns, conveys,  transfers, leases or otherwise disposes of
substantially  all of its assets,  or (iv)  individuals  who at the date of this
Agreement  constitute the Board of the Company  (together with any new directors
whose  election  by  such  Board  or  whose   nomination  for  election  by  the
stockholders  of the Company was approved by a vote of 66 2/3% of the  directors
then still in office who are either  directors at the date of this  Agreement or
whose election or nomination for election was previously so approved) ceased for
any reason to  constitute a majority of the Board of the Company then in office;
or (v) the Company is liquidated  or dissolved or adopts a plan of  liquidation;
provided,  however that a Change in Control shall not be deemed to have occurred
if (aa) all of the  shares of common  stock of the  Company  owned  (legally  or
beneficially)  by Executive were not voted against the transaction  which would,
but for this  proviso,  constitute  a Change in Control,  or (bb) such Change in
Control relates to an IPO.

                  (c)      Executive  provides  the Board of  Directors or Chief
                           Executive Officer a written notice that Executive has
                           been  requested  to  undertake  or support an illegal
                           activity  and the  Board or Chief  Executive  Officer
                           refuses to revoke or  withdraw  such  request  within
                           five  days  after  the  Board's  or  Chief  Executive
                           Officer's receipt of such notice.

         Section 3.3       Severance.  For  purposes  of  this  Agreement,
Executive's  entitlement  to any  severance  payments  upon  termination  of his
employment shall be as set forth below:

                  (a)      If Executive is terminated by the Company  "without
                           Cause" pursuant to Section 3.1(a) or Section 3.1(b)
                           or resigns for Good  Reason,  then (i)  Executive
                           shall be entitled to severance  pay of 1.5 times the
                           sum of Executive's annual rate of base salary then in
                           effect plus Executive's bonus for the last full
                           fiscal year, payable in a lump sum on the date of
                           such termination; (ii) all of Executive's  rights to
                           purchase common stock of the Company pursuant to the
                           Option Agreement, or any rights to receive restricted
                           stock pursuant to any restricted  stock  agreement
                           shall vest,  and (iii) at the option of  Executive,
                           the Company shall either (A) loan Executive an amount
                           equal to all  applicable  federal  and state taxes
                           recognized by Executive as a result of the vesting of
                           any restricted stock  pursuant  to  subsection  (ii)
                           above (the "Recognized Taxes"),  including,  without
                           limitation, all federal and state income and Medicare
                           taxes, which loan shall bear  interest at the lowest
                           rate at which  interest  income shall not be imputed
                           to Executive  for federal income tax purposes,
                           interest and principal  being due and payable at the
                           earlier of an IPO or 3 years from the date of
                           Severance,  or (B) purchase from  Executive,  at such
                           price as Executive and Company may agree upon, so
                           many shares so vested as are necessary to pay the
                           Recognized Taxes;

                  (b)      In the event of a Section 1.1 Termination,  a
                           termination by Company of Executive "for Cause," a
                           termination by Executive for any  reason other than

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<PAGE>

                           Good Reason,  or  any  other termination  of or by
                           Executive (other than as set forth in Section
                           3.3(a)),  then  Executive  shall not receive any
                           severance pay (and Executive shall forfeit all unused
                           vacation  time and any stock  options or  restricted
                           stock which has not then  vested), unless, and to the
                           extent that, some severance pay is approved in
                           writing by the Board of Directors of the Company in
                           its sole  discretion.  In the  event the Executive
                           shall provide thirty days prior written notice of
                           his intent to resign,  the Company  may accept  such
                           resignation  effective  as of any date during such
                           thirty day period as the Company deems  appropriate,
                           provided  that the  Executive  shall receive from the
                           Company the per  diem  portion of his salary and be
                           entitled to participate at the Company's  expense in
                           any Company  sponsored  benefit  programs  in  which
                           he was a participant as of  the effective date of his
                           resignation  for the duration of such thirty day
                           period.  Notwithstanding  the  foregoing,  Executive
                           shall receive  the per diem  portion  of such  annual
                           salary that is accrued but unpaid up to the date of
                           any termination for Cause.

         Section 3.4  Anticipated  Increase in Compensation  and Severance.  The
Company  anticipates  that it will make an initial public  offering of its stock
pursuant to an effective registration statement under the Securities Act of 1933
(the  "IPO").  In  conjunction  with or shortly  after the IPO, the Company will
retain  an  independent  consulting  firm to study  its  executive  compensation
arrangements  and to recommend  to the Board of  Directors  such changes in base
salaries,  annual bonuses, and lump sum severance payments,  and such changes in
stock incentive arrangements, as will be needed to attract and retain top flight
senior  management  executives and to insure that the compensation and incentive
opportunities  provided to such  executives  will be equal to or better than, in
the  aggregate,  those  provided  by  other  similarly-situated  public  company
executives  having  the same title or  performing  the same  duties.  Subject to
approval  by  the  Board,  the  Company  and  Executive   anticipate  that  such
arrangements  will  result in an annual  salary  and bonus in the  aggregate  of
approximately $350,000.

         Section 3.5 Delay of IPO. In the event that the IPO is not closed on or
before July 31, 2001,  Company and Executive agree that the Company will either:
(a) retain an independent  consulting  firm to study its executive  compensation
arrangements  and to recommend  to the Board of  Directors  such changes in base
salaries,  annual bonuses, and lump sum severance payments,  and such changes in
stock incentive arrangements, as will be needed to attract and retain top flight
senior  management  executives and to insure that the compensation and incentive
opportunities  provided to such  executives  will be equal to or better than, in
the  aggregate,  those  provided to  executives  of public  companies  which are
similarly  situated to the  Company;  or (b) agree with  Executive on a mutually
agreeable revised  compensation plan. In the event that on or prior to September
31,  2001,  the Board does not either:  (i) reach an  agreement  with  Executive
regarding a new  compensation  plan;  or (ii) adopt the  recommendations  of the
independent consultant,  Executive shall give the Board thirty (30) days written
notice of Executive's  conclusion that the requirements of this Section 3.5 have
not been satisfied. In the event that the Board does not cure such breach within
thirty (30) days of its receipt of such notice,  then  Executive  may resign and

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<PAGE>

shall be entitled to a one-time  payment equal to 75% of the sum of  Executive's
annual rate of base salary  then in effect plus  Executive's  bonus for the last
full fiscal year.

                                   ARTICLE IV
                               GENERAL PROVISIONS

         Section 4.1  Withholding  of Taxes.  The Company may withhold  from any
amounts payable under this Agreement all federal, state, city or other taxes and
withholding  as  shall be  required  pursuant  to any  applicable  law,  rule or
regulation.

         Section 4.2 Attorneys' Fees. If either party shall institute litigation
or arbitration to enforce any of its rights under this Agreement, the prevailing
party shall be entitled to recover from the other party the  prevailing  party's
reasonable  attorneys'  fees  and  costs  incurred  in any  such  litigation  or
arbitration.

         Section 4.3 Notice. For purposes of this Agreement,  all communications
including,  without  limitation,   notices,  consents,  requests  or  approvals,
provided  for herein  shall be in writing  and shall be deemed to have been duly
given when  personally  delivered  or five (5)  business  days after having been
mailed by United  States  registered  mail or  certified  mail,  return  receipt
requested,  postage  prepaid,  addressed to the Company (to the attention of the
Secretary of the Company) at its principal  executive  office or to Executive at
his  principal  residence,  or to such  other  address  as any  party  may  have
furnished to the other in writing and in accordance herewith, except the notices
of change of address shall be effective only on receipt.

         Section 4.4 Governing Law. The validity, interpretation,  construction,
performance  and  enforcement of this Agreement shall be governed by the laws of
the State of Indiana,  without  giving  effect to the  principles of conflict of
laws of such State.  Any and all actions  concerning  any dispute  arising under
this Agreement  shall be filed and  maintained  only in a state or federal court
sitting in the State of Indiana,  and each party hereby  consents and submits to
the jurisdiction of such state or federal court.

         Section  4.5  Validity.  It is not the  intent of any  party  hereto to
violate any public  policy of any  jurisdiction  in which this  Agreement may be
enforced. If any provision of this Agreement or the application of any provision
hereof  to any  person  or  circumstances  is  held  invalid,  unenforceable  or
otherwise  illegal,  the remainder of this Agreement and the application of such
provision to any other person or  circumstances  shall not be affected,  and the
provision so held to be invalid,  unenforceable  or otherwise  illegal  shall be
reformed  to the extent  (and only to the  extent)  necessary  to make it valid,
enforceable  and  legal;  provided,  however,  if the  provision  so  held to be
invalid, unenforceable or otherwise illegal constituted a material inducement to
a party's execution and delivery of this Agreement,  such provision shall not be
reformed  unless prior to any  reformation  that party agrees to be bound by the
reformation.

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<PAGE>

         Section  4.6 Entire  Agreement.  This  Agreement  supersedes  any other
agreements,  oral or written,  between the parties  with  respect to the subject
matter hereof, and contains all of the agreements and understandings between the
parties  with respect to the  employment  of the  Executive by the Company.  Any
waiver or  modification of any term of this Agreement shall be effective only if
it is set forth in a writing signed by all parties hereto.

         Section 4.7       Successors and Binding Agreement.

                  (a)      This Agreement shall be binding upon and inure to the
                           benefit of the Company and any Successor of or to the
                           Company,  but shall not  otherwise be  assignable  or
                           delegable by the Company.  "Successor" shall mean any
                           successor in interest, including, without limitation,
                           any entity, individual or group of persons acquiring,
                           directly or indirectly  all or  substantially  all of
                           the  business or assets of the  Company,  as the case
                           may  be,  whether  by  sale,  merger,  consolidation,
                           reorganization or otherwise.

                  (b)      The Company  shall  require any Successor to agree at
                           the time of  becoming a  Successor  to  perform  this
                           Agreement to the same extent as the original  parties
                           would be required if no succession had occurred.

                  (c)      This  Agreement  shall inure to the benefit of and be
                           enforceable   by   Executive's   personal   or  legal
                           representatives,  executors,  administrators,  heirs,
                           distributes and legatees.

                  (d)      This  Agreement  is personal in nature and neither of
                           the parties shall,  without the consent of the other,
                           assign,  transfer or delegate  this  Agreement or any
                           rights or obligations  hereunder  except as expressly
                           provided in this Section 4.7.

         Section 4.8       Captions.  The captions in this Agreement  are solely
for  convenience  of  reference  and  shall  not  be  given  any  effect  in the
construction or interpretation of this Agreement.

         Section 4.9  Miscellaneous.  No  provisions  of this  Agreement  may be
modified, waived or discharged unless such waiver,  modification or discharge is
agreed to in a writing signed by Executive and the Company. No waiver by a party
hereto at any time of any breach by another party hereto or compliance  with any
condition  or  provision  of this  Agreement to be performed by such other party
shall be deemed a waiver of similar or dissimilar provision or conditions at the
same or at any prior or subsequent time.

         Section 4.10  Counterparts.  This  Agreement  may be executed in one or
more  counterparts,  each of which shall be deemed to be an original  but all of
which together will constitute one and the same Agreement.

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<PAGE>

         IN WITNESS  WHEREOF,  the parties have caused this Agreement to be duly
executed and delivered as of the date first above written.


"Company"                                          "Executive"

RealMed Corporation

                                                   /s/ Scott E. Herbst

By: /s/ Robert J. Hicks
Print Name: Robert J. Hicks
Title: Chief Executive Officer








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