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                                                                    EXHIBIT 10.3


                              EMPLOYMENT AGREEMENT


THIS EMPLOYMENT AGREEMENT (this "Agreement"), effective as of October 1, 1999
(the "Effective Date"), is between STARNET FINANCIAL, INC., a Delaware
corporation (the "Company"), and THOMAS DEUTSCH ("Deutsch"). The Company and
Deutsch are collectively referred to in this Agreement as the "Parties."

                                   Background

The Company wishes to employ Deutsch as its Executive Vice President--National
Production, and the Parties desire to provide for the employment of Deutsch as
of the Effective Date in accordance with the terms of this Agreement.

                               Terms of Agreement

The Parties agree as follows:

1. EMPLOYMENT. The Company employs Deutsch to devote his personal services to
the business and affairs of the Company, and Deutsch accepts such employment, on
the terms and conditions stated in this Agreement.

         1.1. Duties. Deutsch's title and position shall be Executive Vice
         President--National Production of the Company. Deutsch's duties will be
         those customarily performed by persons acting in that capacity and
         those that may be designated by the Board of Directors, the Chief
         Executive Officer and the President of the Company consistent with the
         title and position of Executive Vice President--National Production.
         Deutsch shall report directly to the Company's President. Deutsch shall
         also serve, upon request and without additional compensation, as an
         officer or a director, or both, of any subsidiary, division, or
         affiliate of the Company or any other entity in which the Company holds
         an equity interest or which it sponsors.

         1.2. Full-Time Employee. Deutsch shall devote his full time (except for
         reasonable vacation time and absence for any disability), attention,
         and best efforts to the performance of his duties described in Article
         1.1.

2. TERM. The term of Deutsch's employment under this Agreement (the "Term")
shall commence on the Effective Date and shall continue for five (5) years or
until terminated pursuant to Article 5.

3. COMPENSATION. As compensation for the services rendered by Deutsch under this
Agreement, the Company shall, during the Term, pay or provide Deutsch the
following:


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         3.1. Base Salary. The Company shall pay Deutsch during the Term a base
         salary equal to One Hundred Eight Thousand Dollars ($108,000.00) per
         fiscal year of the Company ("Base Salary"). Base Salary shall be paid
         in equal installments every two weeks, in arrears, at the Company's
         regular and routine payroll dates, or at such intervals as may
         otherwise be agreed upon by the Parties, and in accordance with any
         other payroll procedures of the Company. Base Salary shall be prorated
         in any fiscal year during which Deutsch is employed under this
         Agreement for less than the entire fiscal year, in accordance with the
         number of days in that fiscal year during which Deutsch is so employed.
         Base Salary shall also be prorated (on a daily basis) for any partial
         payroll period of employment under this Agreement.

         3.2. Incentive Bonus. The Company shall also pay Deutsch a sum equal to
         two basis points of funded loans of StarNet Mortgage for the first
         $10,000,000 during a month and four basis points of funded loans of
         StarNet Mortgage over $10,000,000 during a month. This sum will be
         paid, in arrears, on the 15th of each month.

         3.3. Option. Deutsch shall be eligible to participate in any stock
         option, performance share, phantom stock, or similar long-term
         stock-based incentive plan adopted by the Company for its employees in
         effect during the Term, including the Option Plan. The extent to which
         Deutsch shall participate in any such plan will be determined by the
         Company's Board of Directors (the "Board") or the Compensation
         Committee of the Board.

         3.4. Savings and Retirement Plans. Deutsch shall be eligible to
         participate in any bonus, savings, deferred compensation, retirement or
         pension, or death benefit plan adopted by the Company for its employees
         generally in effect during the Term.

         3.5. Welfare Benefit Plans. Deutsch shall be eligible to participate in
         any life insurance, medical, dental, and hospitalization insurance,
         disability insurance benefit, or other similar employee welfare benefit
         plan or program adopted by the Company covering its employees generally
         in effect during the Term.

         3.6. Paid Time Off. Deutsch shall be entitled to fifteen (15) days of
         paid vacation or time off ("PTO") per fiscal year of the Company, in
         accordance with the Company's PTO policies, practices, and procedures
         in effect during the Term. Such PTO shall, however, be prorated in any
         fiscal year during which Deutsch is employed under this Agreement for
         less than the entire fiscal year, in accordance with the number of days
         in that fiscal year during which Deutsch is so employed.

         3.7. Transportation Allowance. During the Term, the Company shall pay
         Deutsch a transportation allowance equal to Seven Hundred Fifty Dollars
         ($750.00) per month


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         ("Transportation Allowance"). The Transportation Allowance shall be
         payable in equal installments together with the payments of Base
         Salary.

         3.8. Tax Withholding. The Company may deduct from any compensation or
         other amount payable to Deutsch under this Agreement (including under
         Article 5) social security (FICA) taxes and all federal, state,
         municipal, and other taxes or governmental charges as may, in the
         Company's judgment, be required.

         3.9. Participation in Compensation and Benefit Plans. Deutsch's
         participation during the Term in any or all of the plans or programs
         adopted by the Company described in Articles 3.3 through 3.6
         ("Compensation and Benefit Plans") will be subject to the terms and
         conditions of those Compensation and Benefit Plans as they now exist or
         may hereafter be adopted, amended, restated, or discontinued by the
         Company, including the satisfaction of all applicable eligibility
         requirements and vesting provisions of those Compensation and Benefit
         Plans. The Company shall have no obligation under this Agreement to
         continue any or all of the Compensation and Benefit Plans that now
         exist or are hereafter adopted. To the extent that Deutsch is eligible
         to participate in any Compensation and Benefit Plan existing on the
         date of this Agreement for which a plan description or plan materials
         are available, the Company has provided to Deutsch, and Deutsch hereby
         acknowledges receipt of, a copy of the correct and complete written
         plan description or plan materials distributed to participants or
         prospective participants.

4. EXPENSE REIMBURSEMENT. During the Term, Deutsch may incur, and shall be
reimbursed by the Company for, reasonable, ordinary and necessary, and
documented business expenses to the extent that Deutsch complies with, and
reimbursement is permitted by, the Company's policies, practices, and
procedures.

5. EMPLOYMENT TERMINATION. Either Party may terminate Deutsch's employment under
this Agreement by giving written notice of termination to the other Party. If
the Company is terminating, it shall include in that notice a statement whether
the termination is because of Disability or for Cause or without Cause. The
Parties' respective rights and obligations upon the termination of Deutsch's
employment under this Agreement are as follows:

         5.1. Termination Generally. Upon any termination of Deutsch's
         employment under this Agreement, the Company shall pay or provide
         Deutsch the following:

                  5.1.a. Any amount of Base Salary and Transportation Allowance
                  earned by, but not yet paid to, Deutsch through the effective
                  date of termination of employment, as further described below
                  (the "Termination Date");

                  5.1.b. All benefits that have been earned by or vested in, and
                  are payable to, Deutsch under, and subject to the terms
                  (including all eligibility requirements) of,


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                  the Compensation and Benefit Plans in which Deutsch
                  participated through the Termination Date;

                  5.1.c. All reimbursable expenses due, but not yet paid, to
                  Deutsch as of the Termination Date under Article 4; and

                  5.1.d. An amount equal to all accrued and unused PTO,
                  calculated in accordance with the Company's PTO policies,
                  practices, and procedures (including authorized deductions and
                  the deductions required by law), through the Termination Date.

         The amount of Base Salary and Transportation Allowance due under
         Section 5.1.a shall be paid no later than thirty (30) business days
         after the Termination Date; the amounts or benefits due under Section
         5.1.b shall be paid or provided in accordance with the terms of the
         Compensation and Benefit Plans under which such amounts or benefits are
         due to Deutsch; and the amounts due under Sections 5.1.c and 5.1.d
         shall be paid in accordance with the terms of the Company's policies,
         practices, and procedures regarding reimbursable expenses and PTO,
         respectively. Except as expressly provided below in this Article 5,
         upon paying or providing Deutsch the preceding amounts or benefits, the
         Company shall have no further obligation or liability under this
         Agreement for base salary or any other cash compensation or for any
         benefits under any of the Compensation and Benefit Plans. Upon
         termination of Deutsch's employment, Deutsch shall be deemed to have
         resigned from any position as an officer or director, or both, of any
         subsidiary, division, or affiliate of the Company or any other entity
         in which the Company holds an equity interest or which it sponsors that
         Deutsch then holds; no written resignation need be given or delivered
         to the Company.

         In this Agreement, the Termination Date shall be (i) the date of
         Deutsch's death, (ii) the third business day after the date on which
         the Company gives notice of termination because of Disability, or (iii)
         the date of termination specified in any other notice of termination,
         or if not specified in the notice of termination, the date that notice
         of termination is given.

         In this Agreement, "Disability" means Deutsch's permanent and total
         disability, which shall be deemed to exist if he is unable reasonably
         to perform his duties under this Agreement because of any medically
         determinable physical or mental impairment which can be expected to
         result in death or which has lasted or can be expected to last for at
         least ninety (90) consecutive days. Any Disability shall be determined
         by the Board or an authorized committee or representative thereof
         ("Representative"), in its sole and absolute discretion, upon receipt
         of competent medical advice from a qualified physician selected by or
         acceptable to the Board or its Representative. Deutsch shall, if there
         is any question about his Disability, submit to a physical examination
         by a qualified physician selected by the Board or its Representative.


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         In this Agreement, "Cause" means any of the following: (i) Deutsch's
         failure to substantially perform his duties under this Agreement, other
         than any such failure resulting from his incapacity due to physical or
         mental illness or Disability; (ii) Deutsch's engaging in any action
         which, or omitting to engage in any action the omission of which, has
         been, is, or is reasonably expected to be substantially injurious
         (monetarily or otherwise) to the Company or its business or reputation;
         (iii) Deutsch's performance of any act or omission constituting
         dishonesty that results, directly or indirectly, in significant gain or
         enrichment of Deutsch or his family or affiliates at the expense of the
         Company; or (iv) any breach by Deutsch of any obligation under any of
         Articles 6, 7, 8, and 9. Whether an event or circumstance constituting
         Cause exists will be determined in good faith by the Board or its
         Representative. If the Company believes that Cause for termination
         exists under clause (i) above in this paragraph, the Company shall
         notify Deutsch of that belief, and that notice shall describe the event
         or circumstance believed to constitute Cause for termination. If that
         event or circumstance may reasonably be remedied or corrected, Deutsch
         shall have thirty (30) days to effect that correction or remedy. If not
         corrected or remedied within that thirty (30) day period, Cause for
         termination shall immediately be deemed to exist, and Deutsch's
         employment shall be deemed terminated. If the Company believes that
         Cause for termination exists under any of clauses (ii), (iii), and (iv)
         above in this paragraph, the Company shall notify Deutsch of that
         belief, and that notice shall constitute immediate termination of
         Deutsch's employment.

         Deutsch may voluntarily terminate his employment under this Agreement
         only by giving at least thirty (30) days' prior written notice to the
         Company. Deutsch shall not be liable to the Company for breach of this
         Agreement because of his termination of employment in accordance with
         the preceding sentence.

         5.2. Termination Without Cause or Upon Death or Disability. If
         Deutsch's employment is terminated by death or by the Company because
         of Disability or without Cause, Deutsch (or his legal representative,
         estate, or heirs) shall be entitled to receive from the Company, as
         liquidated damages:

                  5.2.a. The continued payment of Base Salary, at the rate in
                  effect at the Termination Date, for twelve (12) consecutive
                  months following the Termination Date (the "Severance
                  Payments"); and

                  5.2.b. If Deutsch elects and maintains continued coverage
                  under the Consolidated Omnibus Benefits Reconciliation Act of
                  1985 and corresponding regulations ("COBRA"), then for up to
                  the twelve (12) consecutive months immediately after the
                  Termination Date, payments in an amount equal to the
                  difference between (i) the premiums paid or payable by Deutsch
                  for coverage under COBRA for himself and his dependents (if
                  any) and (ii) the premiums that he would have paid for
                  comparable coverage under the Company's then current group
                  insurance plan or


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THOMAS DEUTSCH                         5

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                  plans if his employment under this Agreement had not ceased
                  (the "Insurance Payments"); except that the Insurance Payments
                  shall expire or terminate immediately upon Deutsch's becoming
                  eligible for coverage under another employer's plan or policy.

         The Severance Payments shall be paid at the dates on which Deutsch's
         Base Salary would have been payable if his employment under this
         Agreement had not been terminated. The Company will commence the
         Severance Payments and the Insurance Payments within ten (10) business
         days after the first business day on which the release executed and
         delivered in accordance with Section 5.3.a becomes irrevocable by
         Deutsch (or his legal representative, estate, or heirs). The Company's
         obligations for the Insurance Payments are not intended to negate or
         impair any obligation of the Company or right of Deutsch under COBRA.
         The Severance Payments and the Insurance Payments shall be in addition
         to the amounts or benefits to which Deutsch is entitled under Article
         5.1. Any Severance Payments or Insurance Payments (or both) under this
         Article 5.2 shall not be deemed the continuation of Deutsch's
         employment for any purpose.

         5.3. Conditions to Severance Payments. Except as provided in Section
         5.2.b and below in this Article 5.3, none of the Severance Payments and
         the Insurance Payments under Article 5.2 will be subject to reduction
         as the result of future compensation earned or received by Deutsch
         (including by self-employment), and Deutsch shall have no duty to
         mitigate his damages. The Severance Payments and the Insurance Payments
         shall, however, be conditioned upon:

                  5.3.a. The Company's receipt of a Settlement Agreement,
                  General Release, and Covenant Not to Sue executed and
                  performed by Deutsch (or his legal representative, estate, or
                  heirs) in substantially the form of Exhibit "A" to this
                  Agreement (the "Release Agreement"); and

                  5.3.b. the compliance by Deutsch (or his legal representative,
                  estate, or heirs) with Articles 6, 7, 8, and 9 after the
                  Termination Date as specified in those Articles, as well as
                  with the Release Agreement.

         The Company may cease or reduce the Severance Payments or the Insurance
         Payments (or both) if, and the Company shall be entitled to a return of
         the Severance Payments and the Insurance Payments (or both) made to the
         extent that, there is or has been any material violation by Deutsch (or
         his legal representatives, estate, or heirs) of any of Articles 6, 7,
         8, and 9 or of the Release Agreement.

         5.4. Termination for Cause or by Deutsch. If Deutsch's employment is
         terminated by the Company for Cause or is voluntarily terminated by
         Deutsch, then Deutsch shall not be


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         entitled to any payments under this Agreement other than the amounts or
         benefits to which he is entitled under Article 5.1.

         5.5. Post-Termination Survival. The provisions of this Article 5 shall
         survive the termination of Deutsch's employment by the Company and its
         subsidiaries to the extent necessary to effect the post-termination
         payments or benefits to which Deutsch is entitled under the terms of
         this Article 5.

6. CONFIDENTIAL INFORMATION. The Company shall provide to Deutsch, during the
Term, access to various trade secrets, confidential information, and proprietary
information of the Company (which, in this Article 6 as well as in Articles 7,
8, and 9, shall include the Company's subsidiaries and affiliates) which are
valuable and unique to the Company ("Confidential Information"). Confidential
Information includes the Company's plans, policies, and procedures as well as
the plans, policies and procedures of other persons having relationships that
are material to the Company's business and affairs. Deutsch shall not, either
while in the employ of the Company or at any time thereafter, (i) use any of the
Confidential Information, or (ii) disclose any of the Confidential Information
to any person not an employee of the Company or not engaged to render services
to the Company, except (in either case) to perform his duties under this
Agreement or otherwise with the Company's prior written consent. Nothing in this
Article 6 shall preclude Deutsch from the use or disclosure of information
generally known to the public or not considered confidential by the Company or
from any disclosure to the extent required by law or court order (though Deutsch
must give the Company prior notice of any such required disclosure and must
cooperate with any reasonable requests of the Company to obtain a protective
order regarding, or to narrow the scope of, the Confidential Information
required to be disclosed). All files, records, documents, information, data, and
similar items relating to the business or affairs of the Company, whether
prepared by Deutsch or otherwise coming into his possession, shall remain the
exclusive property of the Company and shall not be removed from the premises
from the Company, except in the ordinary course of business as part of Deutsch's
performance of duties under this Agreement, and (in any event) shall be promptly
returned or delivered to the Company (without Deutsch's retaining any copies)
upon the termination of employment under this Agreement.

7. NONCOMPETITION. Deutsch acknowledges that, in addition to his access to and
possession of Confidential Information, during the Term he will acquire valuable
experience and special training regarding the Company's business and that the
knowledge, experience, and training he will acquire would enable him to injure
the Company if he were to engage in any business that is competitive with the
business of the Company. Therefore, Deutsch shall not, at any time during the
Term and for the twenty-four (24) consecutive months immediately after the
Termination Date, directly or indirectly (as an employee, employer, consultant,
agent, principal, partner, shareholder, officer, director, or manager or in any
other individual or representative capacity), engage, invest, or participate in
any business in direct competition with the business of the Company within a
fifty (50)-mile radius of each location, or set or group of locations, (i) at,


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from, or to which the Company conducts or has conducted business or renders,
provides, or delivers, or has rendered, provided, or delivered, services or
products during the Measurement Period (as defined below) or (ii) that is or has
been, during the Measurement Period, the subject of a Proposal (as defined
below) to conduct business or render, provide, or deliver services or products
thereat, therefrom, or thereto. "Measurement Period" means, with respect to
Deutsch's activity (A) at any time during the Term, the Term, and (B) at any
time on or after the Termination Date, the six (6) consecutive months preceding,
and including, the Termination Date. "Proposal" means a written or formal
proposal, bid, arrangement, understanding, or agreement by the Company to or
with another person that reflects or contains negotiated or substantive terms,
but does not include any marketing contact by the Company where the other person
has not solicited that contact or indicated any interest in doing business with
the Company. (Deutsch shall not be prohibited, however, from owning, as a
passive investor, less than five percent (5%) of the publicly traded stock or
other securities of any entity engaged in a business competitive with that of
the Company.) Deutsch represents and agrees that (x) the Company has agreed to
provide him, and he will receive from the Company, special experience and
knowledge, including Confidential Information, (y) because the Confidential
Information is valuable to the Company, its protection (particularly from any
competitive business) constitutes a legitimate interest to be protected by the
Company by enforcement of the restriction in this Article 7, and (z) the
enforcement of the restriction in this Article 7 would not be unduly burdensome
to Deutsch and that, in order to induce the Company to enter into this Agreement
(which contains various benefits to Deutsch and obligations of the Company with
respect to Deutsch's employment), Deutsch is willing and able to engage, invest,
or participate in business after the Termination Date so as not to violate this
Article 7. The Parties agree that the restrictions in this Article 7 regarding
scope of activity, duration, and geographic area are reasonable; however, if any
court should determine that any of those restrictions is unenforceable, that
restriction shall not thereby be terminated, but shall be deemed amended to the
extent required to render it enforceable.

8. NONSOLICITATION. Deutsch shall not, at any time within the twenty-four (24)
consecutive months immediately after the Termination Date, either directly or
indirectly:

                  8.1. Disclose Contact Information. Make known to any person
                  the names and addresses, or other contact information, of any
                  of the customers, suppliers, or other persons having
                  significant business relationships with the Company within the
                  information technology industry, so that such person could
                  affect, or attempt to affect, any of those relationships to
                  the detriment of the Company; or

                  8.2. Solicit Employees. Solicit, recruit, or hire, or attempt
                  to solicit, recruit, or hire, any employee or consultant of
                  the Company, or in any other manner attempt to induce any
                  employee or consultant of the Company to leave the employ of
                  the Company or cease his or her consulting or similar business
                  relationship with the Company. References in this Article 8.2
                  to "any employee or consultant" shall include any person who
                  was an employee or consultant of the Company at any


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                  time within the six (6) consecutive months preceding, and
                  including, the Termination Date.

9. DEVELOPMENTS. Deutsch shall promptly disclose to the Company all inventions,
discoveries, improvements, processes, formulas, ideas, know-how, methods,
research, compositions, and other developments, whether or not patentable or
copyrightable, that Deutsch, by himself or in conjunction with any other person,
conceives, makes, develops, or acquires during the Term which (i) are or relate
to the properties, assets, or existing or contemplated business or research
activities of the Company, (ii) are suggested by, arise out of, or result from,
directly or indirectly, Deutsch's association with the Company, or (iii) arise
out of or result from, directly or indirectly, the use of the Company's time,
labor, materials, facilities, or other resources ("Developments").

Deutsch hereby assigns, transfers, and conveys to the Company, and hereby agrees
to assign, transfer, and convey to the Company during or after the Term, all of
his right and title to and interest in all Developments. Deutsch shall, from
time to time upon the request of the Company during or after the Term, execute
and deliver any and all instruments and documents and take any and all other
actions which, in the judgment of the Company or its counsel, are or may be
necessary or desirable to document any such assignment, transfer, and conveyance
to the Company or to enable the Company to file and process applications for,
and to acquire, maintain, and enforce, any and all patents, trademarks,
registrations, or copyrights with respect to any of the Developments, or to
obtain any extension, validation, re-issue, continuance, or renewal of any such
patent, trademark, registration, or copyright. The Company will be responsible
for the preparation of any such instrument or document and for the
implementation of any such proceedings and will reimburse Deutsch for all
reasonable expenses incurred by him in complying with this Article 9.

10. INDEMNIFICATION. To the extent Deutsch is an officer or director of the
Company, the Company shall include Deutsch under any existing or future (i)
directors' and officers' liability insurance policy that the Company obtains and
maintains or (ii) indemnification agreements between the Company and other
executives of the Company. Subject to the foregoing sentence, the Company will
indemnify Deutsch to the fullest extent permitted by the laws of the Company's
state of incorporation in effect at that time or by the articles or certificate
of incorporation and by-laws of the Company, whichever affords the greater
protection to Deutsch.

11. CERTAIN REMEDIES. Any breach or violation by Deutsch of any of Articles 6,
7, 8, and 9 shall entitle the Company, as a matter of right, to an injunction
issued by any court of competent jurisdiction, restraining any further or
continued breach or violation, or to specific performance requiring the
compliance with Deutsch's covenants. This right to an injunction or other
equitable relief shall be in addition to, and not in lieu of, any other remedies
to which the Company may be entitled. The existence of any claim or cause of
action of Deutsch against the Company, or any subsidiary or affiliate of the
Company, whether based on this Agreement or


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otherwise, shall not constitute a defense to the enforcement by the Company of
Deutsch's covenants in any of Articles 6, 7, 8, and 9. The covenants in Articles
6, 7, 8, and 9 and in this Article 11 shall survive the termination of Deutsch's
employment under this Agreement.

12. BINDING AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon, and shall inure to the benefit of, the Company and Deutsch and their
respective legal representatives, heirs, executors, administrators, and
successors and assigns (as permitted by this Article 12), including any
successor to the Company by merger, consolidation, or reorganization and any
other person that acquires all or substantially all of the business and assets
of the Company. The Company shall have the right, without the need for any
consent from Deutsch, to assign its rights, benefits, remedies, and obligations
under this Agreement to one or more other persons. The rights, benefits,
remedies, and obligations of Deutsch under this Agreement are personal to
Deutsch, however, and may not be assigned or delegated by him; except that this
shall not preclude (i) Deutsch from designating one or more beneficiaries to
receive any amount or benefit that may be paid or provided after Deutsch's death
or (ii) the legal representative of Deutsch's estate from assigning any right or
benefit under this Agreement to the person or persons entitled thereto under
Deutsch's will or the laws of intestacy applicable to Deutsch's estate, as the
case may be.

13. SEVERABILITY. If any provision of this Agreement is found to be invalid or
unenforceable for any reason, then (i) that provision shall be severed from this
Agreement, (ii) this Agreement shall be construed and enforced as if that
invalid or unenforceable provision never constituted a part of this Agreement,
and (iii) the remaining provisions of this Agreement shall be unaffected thereby
and shall remain in full force and effect to the fullest extent permitted by
applicable law. Further, in lieu of that invalid or unenforceable provision,
there shall be added to this Agreement a provision as similar in its terms to
that invalid or unenforceable provision as may be possible and be valid and
enforceable.






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 14. NOTICES. Any notice, request, or other communication to be given by either
Party under this Agreement by to the other shall be in writing and either (i)
delivered in person, (ii) delivered by prepaid same-day or overnight courier
service, (iii) sent by certified mail, postage prepaid with return receipt
requested, or (iv) transmitted by facsimile, in any case addressed to the other
Party as follows:

         If to the Company:         StarNet Financial, Inc.
                                    1700 Preston Road
                                    Suite 350
                                    Dallas, Texas 75248
                                    Attention: Daniel L. Jackson,
                                      Chief Executive Officer
                                    Facsimile: (972) 239-2893

         With a copy (which shall
         not constitute notice) to: Gardere & Wynne, L.L.P.
                                    1601 Elm Street, Suite 3000
                                    Dallas, Texas 75201-4761
                                    Attention: I. Bobby Majumder, Esq.
                                    Facsimile: (214) 969-4667

         If to Deutsch:             Thomas Deutsch

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

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

or to such other address or facsimile number as the Party to be notified may
have designated by notice previously given in accordance with this Article 14.
Communications delivered in person or by courier service or transmitted by
facsimile shall be deemed given and received as of actual receipt (or refusal)
by the addressee. Communications mailed as described above in this Article 14
shall be deemed given and received three (3) business days after mailing or upon
actual receipt, whichever is earlier.

15. CERTAIN DEFINED TERMS. In this Agreement, (i) "person" means an individual
or any corporation, partnership, trust, unincorporated association, limited
liability company, or other legal entity, whether acting in an individual,
fiduciary, or other capacity, and any government, court, or governmental agency,
(ii) "include" and "including" do not signify any limitation, (iii) "Article"
and "Section" means any Article and any Section, respectively, of this
Agreement, unless otherwise indicated, (iv) an "affiliate" of a person means any
other person controlling, controlled by, or under common control with that
person, and (v) "business day" means any Monday through Friday, other than any
such weekday on which the executive offices of the Company are closed. In
addition, the use in this Agreement of "year," "annual," "month," or "monthly"
(or similar terms) to indicate a measurement period shall not itself be deemed
to grant rights to Deutsch for employment or compensation for that period.



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<PAGE>   12

16. ENTIRE AGREEMENT. This Agreement, with Exhibit "A", constitutes the entire
agreement between the Company and Deutsch with respect to the subject matter
hereof and supersedes any prior agreement between the Company and Deutsch with
respect to the same subject matter.

17. MODIFICATION AND WAIVER. No amendment to or modification of this Agreement,
or waiver of any term, provision, or condition of this Agreement, will be
binding upon a Party unless the amendment, modification, or waiver is in writing
and signed by the Party to be bound. Any waiver by a Party of a breach or
violation of any provision of this Agreement by the other Party shall not be
deemed a waiver of any other provision or of any subsequent breach or violation.

18. GENDER. Whenever the context requires in this Agreement, words denoting
gender in this Agreement include the masculine, feminine, and neuter.

19. GOVERNING LAW; VENUE. This Agreement, and the rights, remedies, obligations,
and duties of the Parties under this Agreement, shall be governed by, construed
in accordance with, and enforced under the laws of the State of Texas. The
exclusive venue of any action or proceeding relating to this Agreement or its
subject matter shall be in Dallas County, Texas.

20. COUNTERPARTS. This Agreement may be executed in counterparts, each of which
constitutes an original, but all of which constitute one and the same document.







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EMPLOYMENT AGREEMENT -
THOMAS DEUTSCH                         12
<PAGE>   13

         The Parties have executed this Agreement to be effective as of the date
stated in the first paragraph.




                                        STARNET FINANCIAL, INC.,
                                        a Delaware Corporation



                                        By: /s/ Daniel L.Jackson
                                            ----------------------------------

                                                DANIEL L. JACKSON,
                                                Chief Executive Officer




                                         /s/ Thomas Deutsch
                                         ----------------------------------
                                         THOMAS DEUTSCH


EMPLOYMENT AGREEMENT -
THOMAS DEUTSCH                         13